A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

If you doubt those words, just take a look at the difference between Egnyte, and Box and Dropbox.

Founded in 2007, Egnyte never offered free anything, has taken only $62.5 million (nearly half of that in 2013) in funding and says it will be profitable by year-end.

Box and Dropbox are not even close, with their millions of over-hyped, flavor-of-the-last-few-years hypergrowth users who pay nothing.

Nada.

Consumers used to pay, too, when the service was viable enough.

Angie’s List started in 1995 as a paid subscription service and boasted a 73% renewal rate in 2015.

In 2008 the mantra of hypergrowth exploded, driven by the the fremium model, but converting free users to paid turned out not be all that easy.

Many companies are now trying to sell their multi-million consumer products to corporations and are learning, to their chagrin, that corporations don’t care about freemium, let alone the media hype that drives consumer adoption.

Matt Weeks spelled it out perfectly in a guest post on NTR’s blog that’s well worth your time.

…hypergrowth without a hope of unit economics that lead to profitability has always been a fool’s errand (…) at some point there must be a path to profitable and repeatable unit economics.

Put more simply, the real goal of your startup is sustainable profit.

And there’s always Marc Andreessen’s advice, which really rules out the ‘free’ in freemium.

Marc Andreessen has two words of advice for startups: Raise prices. (…) “The No. 1 thing — just the theme and we see it everywhere — the No. 1 theme with our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible under the theory that if it’s low-priced everybody can buy it and that’s how you get the volume.”

Don’t bemoan it; own it.

Image credit: HikingArtist

Do you use or are you familiar with HireAthena? It provides professional services, such as HR, benefits, payroll, FSA and 401k management, accounting, bookkeeping, monthly financials, and taxes, using a subscription model priced according to size and needs, dominantly for startups, non-profits and other small biz.

However, unlike most on-demand providers HireAthena is not using 1099 contract professionals.

In a unique twist in the on-demand labor market, HireAthena offers its professional workforce the best of both worlds: they receive a competitive salary, 401(k), and medical/dental/vision insurance, but they can also work from home. (…) “We’re committed to the idea that employees are loyal if we’re loyal to employees, even if you’re part-time,” said Kristen Koh Goldstein, founder and CEO of HireAthena.

What’s more, HireAthena is specifically targeting professional stay-at-home moms and dads, which gives them a significantly under-utilized source of candidates.

And in case you think that HireAthena’s model only applies to higher-end professional, you have a short memory.

Last year on-demand cleaning service Managed by Q did the same with their staff.

Managed by Q hires its “operators,” as it calls them, as employees, offering full-time and part-time employment with benefits and stock options. The work is flexible, and Managed by Q works with operators’ schedules.

While HireAthena is a spinoff of Backops and Scalus, which have raised $12 million, it hasn’t taken any funding directly and expects to be profitable later this year.

“Our mission wouldn’t be taken seriously unless we were profitable. This is not a charitable organization. We’re employing moms and dads in order to provide a very affordable service to small businesses.”

No funding. Profitable. Employees, with benefits.

How old fashioned.

Image credit: HireAthena