Why Carbonmade decided to bootstrap and go freemium

When I was studying design a few years ago, I discovered many of my peers were struggling to get a portfolio online. Many of them didn’t have the required technical knowledge to properly showcase their work. Some of them hired friends in the Computer Science division but their portfolios would grow stale because they didn’t know how to update them.

Carbonmade is attempting to solve that problem by taking care of the technical details while letting artists focus on their work. I had the chance to catch up with a co-founder of Carbonmade, Spencer Fry, to talk about the early days. In this interview we cover how Carbonmade identified a problem, how they determined pricing, and why the “freemium” model is working for them.

Were you bootstrapped or funded?

We bootstrapped Carbonmade because it’s all we know. I’d started a company previously called TypeFrag. Bootstrapped that as well. For me, it just makes sense to collect revenue from the start of your business and if you can’t collect enough of it then you shouldn’t be in business. It’s just a natural progression. Can’t sell enough of what you’re trying to sell? Then you’ve got to shutdown and try something else.

There are companies that can’t be built this way such as Facebook, Tumblr or Twitter where you need a large engaged group of users before you can make any money. To bootstrap you typically need a single user to be able to benefit from the service without having to connect with anyone else. That’s Carbonmade. A user can sign up and create their own online portfolio without needing other people in the system to benefit from it.

We get plenty of offers from investors to talk, but we’re doing well and not having a $5 million check has never held us back from doing what we want. If money is ever the thing holding us back then we might re-consider taking outside investment.

What problem are you solving?

Carbonmade solves a really basic problem. There are millions of creative people in the world, but many of them either don’t have the skills required to design their own online portfolio or the time. Using Carbonmade means they spend less time fussing around with their portfolio and more time focused on developing their artwork.

What’s the biggest challenge you’ve overcome while building Carbonmade?

The biggest challenge for us and for all companies for the most part is hiring. We’re very selective in who we hire. We’re looking for specific individuals that are self-starters, independent workers that don’t need constant handholding, and have built or designed web applications before.

We hired our first people in August 2010. Up until then the three of us worked on Carbonmade for nearly four years. We’re now eight and excited to continue to build out the nucleus of our team.

How did you identify that there was a market for an online portfolio?

We stumbled upon the online portfolio market. Dave and Jason created the first version of Carbonmade back in December 2005 as a tool for Dave to update his own portfolio. He was tired of having to manually update his portfolio every time he created something new. Together they built it ‒ without a sign up page at first ‒ and Dave’s friends bugged him to open it up for them.

I came on about a year later, but we still weren’t working on it full-time. We were consulting and working on other apps, but Carbonmade kept slowly gaining traction. Starting around early 2010 we were able to stop taking on new client jobs and focus our time and energy on developing and supporting Carbonmade. That’s when Carbonmade really started to blow up.

How did you determine pricing?

We experimented with having two pricing points early on: $9 and $15. We found that nearly everyone was choosing the $9 plan and the $15 plan was being neglected. There weren’t enough features to warrant having two paid plans, so we settled on $12, because we thought that $9 was too low.

The question you want to ask yourself is: “What would I pay for this?” $12 felt right to us at the time. The product has improved significantly since then, which makes us happy that the value of our product has risen, but the price has remained the same.

Have you had success with your freemium model?

People generally ask me about our freemium business model. I believe that giving away a taste for free is a great marketing strategy. With Carbonmade, the free model works for many users in the beginning but as their career develops and they start getting more work, they need to upgrade to take advantage of our paid plan features. We’ve had dozens of people upgrade after 1,000 days which is a significant figure. Forcing them to pay on day one may have kept them from signing up in the first place.

What’s difficult about having a freemium business model is determining where to set the restrictions. The free plan needs to be good enough that it doesn’t feel crippled, but not so good they see no reason to upgrade to the paid plan.

If you need to showcase your work, be sure to checkout Carbonmade.

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  • I’ll be monitoring the comments to answer any questions.

  • I would love to read about the impact was when the pricing plans changed. For example: What percentage of $9 customers migrated to the $12 price, and how many left? How did you handle any customer service inquires during that period? How did you arrive at $9 and $15 in the first place? Thanks! Great post!

    • Glad you liked reading it, Mike. We didn’t raise the prices on existing customers. We only changed the pricing for new customers that signed up for our paid plan. That’s the best way to handle changing prices: grandfathering people in that supported you from the beginning.

      • Ah, so simple, customer-friendly, and direct. I love it!

  • As someone who tried to make a “network effect” startup work for a year and a half before putting it on hold and bootstrapping a freemium based product which has value for the user without connecting with anyone, this really resonates. I’m glad I made that switch 6 months ago, because I’ve now reached enough revenues with Buffer to quit my freelance work and focus on it full-time.

    I also read your post a short while ago on marketing, and that’s been really handy so I’d like to say thanks for that Spencer.

    I have a question: you now have a solid product. Do you continue to add new features, and do you continue to improve the product? What is your split in effort/time between marketing, new features and improving existing features and how do you decide what to add when I am guessing you are very keen to keep the product simple?

    • Thanks for your kind words, Joel.

      We’re 8 people now, but up until a few days ago we were 6 and all 6 people worked on iterating the product. The two new people, however, are both working on marketing full-time, so that’ll be an interesting change for us. I’m excited to see how that goes.

      • Wow, that is great to hear, very interesting.

        Thanks again for this article, it triggered some interesting thoughts in my mind. I quoted you in a blog post I wrote yesterday about “social” ideas compared to “tools” 🙂 Here it is, I’d love your thoughts: http://joel.is/post/5961172449/beware-of-the-social-ideas

  • I find the “network effect” and the features that you can bring to an application very interesting and have been thinking and working in that space for a while, although nothing that has really taken off. But I’m also interested in building a sustainable, bootstrapped business that has a clear revenue model from the beginning, one that isn’t dependent on click through advertising and page visits.  The social aspects should enhance the experience but not be the core part of the experience. Github is probably a good example of this sort of model.

    Now that you have users, do you find that opportunities to explore the social aspects of your app become more apparent and maybe more useful to end users in a way that would draw in additional users?  Do you see a role for social features as perhaps more of a marketing tool rather than the core functionality of an app?

    • Online portfolios are by definition non-social so it’s been more difficult for us to find places for social features. We could slap on like buttons and comments, etc., but a portfolio isn’t really something that’s suppose to be social. So to answer your question: I don’t really see social features becoming a big part of Carbonmade. My hope is that that if we do add social features that they happen organically.

  • Sean T.

    Hi, Spencer. Thanks for doing this interview with TSF. 

    It’s really impressive to see your stats on the Carbonmade homepage (~370k portfolios). Do you mind sharing the breakdown of paid accounts vs free accounts (vs giveaway accounts)? 

    • Thanks, Sean. I can’t give that information out because we’re a private company with a lot of competitors. However, I can say we’ve given out about 500 free paid portfolios. I hand out on average about 1 a day.

      • Sean T.

        I figured as much, but thought I’d ask anyway since we’re talking shop here. I’m just curious about how you find the proper balance for a model like yours.

        Paying customers pay the cost of their portfolios as well as the cost of the free portfolios (along with everything else), right? I imagine that getting a good balance of paying and non-paying customers at a reasonable price point is crucial for long-term success in a bootstrapped company like yours.

        • That’s true, but the cost of hosting a portfolio is very inexpensive when it doesn’t include video (a paid feature). You can spare a lot of free upgrades in your marketing.

  • Matt

    Forcing them to pay on day one may have kept them from signing up in the first place. 
    then your product is not good enough 

    • Megan McGowan

      the reason I chose carbonmade is because all of the online folio services that I saw, cost. I am a student and I don’t mind paying for things but I want to know they are worth paying for. I plan to start paying for carbon made in the next few months not I know for sure it’s a good service. Some people need to play a demo before they commit to paying $80 for a game. I want to have a demo for a service that will cost me $120 per year.