How to Avoid the Facebook Dilemma

No, I’m not talking about the IPO flop.

Facebook has been plagued by another much more serious problem since day one. It’s something that they’re still struggling to solve at a $100 billion valuation.

It’s something that all businesses and especially startups face as they start and grow. But it can be avoided.

The elephant in the room? Monetization.

Well, that’s what it was for Facebook and other tech startups. It comes down to making the leap to the next level.

Every business has a beta phase whether it’s official and obvious or not. You know those first few months where you’re still trying to figure out your pricing and sales process? That’s the beta phase.

Facebook’s problem was that it didn’t know how (or when) to get out of beta phase and into it’s profitable phase.

The Beta Phase

Restaurants call them “soft openings”. Solopreneurs refer to it as “giving it a shot”. Geeks call it the “beta release”.

The purpose of the beta phase is to work out the kinks in your business process. It’s inevitable that a business (even franchised) will run into hiccups when it opens doors.

You owe it to your customer and your fear of failure to have a beta phase. There’s plenty of resources and people out there to test your product or service on a small scale.

A beta phase can also help your business tremendously for four reasons.

1. People love free/cheap. It’s a lot easier to get people to sign up for free or cheap than at full price.
2. People love to help. They’ll gladly give their feedback to improve your business (if they know it’s in beta) because…
3. They’ll feel invested. When a customer feels invested in your business, they become the ultimate marketing tool.
4. Finally, you’ll have a solid customer base to start with. You should probably grandfather them in to the pricing structure you started with, but be sure to ask them for testimonials and/or references. Social proof is key to making sales.

But having a beta phase is useless unless you know when to make the leap to the alpha phase.

That’s the hard part. Facebook had a hard time with this because they didn’t plan sufficiently for this part.

Making the Leap

In the end you have to trust your instincts to know when to make the leap; there’s no set formula.

The key to knowing when the time is right is to anticipate it. When Zuck created Facebook, he was laser focused on his vision at that time.

The mistake he made was not thinking about how advertising would fit into the model from the very beginning (although he did know it would have to eventually).

A Note About Going Alpha

There’s something very tricky about going alpha that confuses entrepreneurs. Amateur entrepreneurs assume that once you make the leap, you’re done with product development; they assume that the only continuing improvements come as a result of customer feedback/backlash.

To really experience true growth, though, you should always be proactively improving. Making the leap to alpha is just symbolic; it’s a sign to your customers that you’ve matured and now have the confidence in your brand to charge what you’re really worth.