Over the past few days, a lot of people have asked: "Why doesn't Indinero.com follow the freemium model?" I wrote about my understanding of freemium a few months ago here on my blog, but ultimately chose not to go that route for several reasons:

1) When users pay, they're more serious about using your product. Instead of just going in to take a look, they'll take a more proactive stance on applying your product to everyday life. As a paying customer, they're also more likely to offer you valuable feedback that will change the way they use your product.

2) The cost per user is high - it costs us money to download data from bank accounts and credit cards. Charging our users immediately addresses this problem.

3) When you charge money upfront, people are more likely to convert and pay for your service. We talked to a few companies that switched from "no credit card upfront" to requiring that you enter your credit card from day 1. They recommend that we charge upfront to increase our conversion rate.

4) We're not sure if freemium is the right way to go. By charging money now, we can always implement a free plan later. If we started off as being a free service, it would turn people off if we ultimately changed our minds and went back to the premium-only model.

5) When raising angel/VC money, it helps to say that our company is earning money. Not having a freemium model got us closer to being able to make that claim. :)

But to be clear, these are just our preliminary thoughts. We may eventually have a freemium offering, but we'll be focused on building our paying user base for the time being. Many businesses prosper on the freemium model, and we're just not convinced that it's fit for what Indinero wants to achieve.

It's almost sad that I'm proud of this, but my internet company Indinero.com is finally post-revenue. In other words, people are using the product, people are paying to use it, and this marks the beginning of a long and beautiful relationship between me and the company I helped start. I've been rather discreet about my entrepreneurial progress, but I'll bring you up to date with my progress:

For a little background, I founded Indinero back in March with co-founder Andy Su. In a nutshell, it's software that helps entrepreneurs manage their finances easily. (Indinero is the Mint.com for Businesses) Our original mission was to make it easy for entrepreneurs to not only keep tabs on their expenses, but also to help them intuitively understand their finances. We got our first big break in April, when Lightspeed Venture Partners wrote us our first check. Getting the money wasn't as "lucky" as I enjoy making it seem... it was a planned process, and we spent many hours trying to convince Lightspeed Venture Partners that we were worth funding for the summer. This included building a product, sending them our first screenshots, and having my connections reach out to lightspeed partners to give recommendations. I'll repeat the most important thing again - they gave us money because we had built a functional prototype.

Fast forward a few months. In July, Indinero was chugging along with many alpha testers and promising feedback. Building a product for small businesses isn't easy, and we knew that raising more money would help us grow. With the goal of more funding in mind, we decided that the smartest thing we could do to convince people of our worth was to sign up of our first paying users, with the goal of relaunching a paid product on August 1st. We missed the deadline by a few days (programming's a bitch), but today we finally signed up several paying customers.

Having paid customers does way more than just prove investors that you're onto something: It forces you to think about building a product that people will actually pay for. As a programmer, you're forced to leave the confines of your comfy office to talk to prospective customers. You figure out what they want, what their pain points are, and you make it work. Something else changed, too: When we told people that we were planning on charging for our service (and that "free" wasn't on the menu), we were taken more seriously. People treated us like a legitimate business, and it further pushed us to make something useful.

Working towards building an internet service with revenue is like an endless spiral of goodness: it makes you build a good product, which makes you money, which makes people treat you more seriously, which makes you want to work harder, which makes you build a better product. I highly recommend that more people try it.

In my selfish ploy to get your feedback on Indinero, I'm giving out 50% discounts to the first 100 entrepreneurs who are willing to be guinea pigs for new ideas and features. More info here.

In building my latest company, many people have asked me "how will this make money?" And even when it was still in its idea stage, I'd quickly say "with a freemium business model, of course." I needed an easy, efficient, and trustworthy way to attract users into paying for a service, and most people assume that a freemium business model works best.

But I think there's a lot more to this thing called "freemium" than meets the eye. It's distinctly different from offering a free trial or a free sample. The biggest problem with freemium is that the conversion rate from free to premium is utterly low -- some say that the average conversion rate is 3%. But in the companies that implement freemium business models well, I see that they attack one thing that customers can't argue with: an actual, urgent need. By doing this, they'll assuredly increase their conversion rate and customer satisfaction. In case you forget, here's a checklist that you can post on your wall:

The key is in acquiring users who are looking for a potential solution to a problem, and may or may not pay depending on what they need. But when they have that urgent need for your upsell, they'll gladly pay. Here are two examples of companies that understand freemium:

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VistaPrint.com is best known for "selling" free business cards. I first heard about them when someone gave me a business card that said "Made by VistaPrint.com" on the back of it. I ordered my first batch of free cards, paid for $5 shipping, and I was a happy camper. The poor souls from VistaPrint made practically nothing off my purchase.

Two years later, and the week before my first TED Conference, I knew that I had an urgent need for business cards. So surely enough, I went back to VistaPrint to get my "free" cards. But fortunately for them (and unfortunately for me), they understood that freemium models work best when the customer has an urgent need, and they showed that in their shipping prices. I got free cards from them before, so I knew they were good. But I needed a new batch within 72 hours, and VistaPrint made a nice profit from the rushed shipping costs that I paid them. Take a look at their pricing breakdown for free business cards:

I think the key here is that VistaPrint spent less time worrying about features that would be "nice to have", and more time on selling me something that I absolutely needed to have, and something I'd obviously be willing to pay for. Props to them!

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Another company that's done a great job at freemium is PBworks.com. (formerly known as PBwiki). I worked there last summer, so I had a lot of time to think about why their model works so well. Firstly, the company targets so many different demographics: individuals, students, teachers, companies, conferences, engaged couples, people trying to lose weight, among others. But most of these users will never pay for PBworks, because they don't have a need to. And even if there were "cooler" features that PBworks could offer, these users probably wouldn't pay. As a student using the product for personal use, I remember ignoring the upgrade button on the top right of the screen, and using PBworks as far as free would take me. In fact, I still have a personal wiki I use for taking notes in class, and I see myself as the type of user who'd never want to pay for premium features.

But now I run a company, and we love our PBworkspace. In fact, I think I'm addicted. But my colleagues and interns are too. And while I'd still do anything possible not to pay for "cool-to-have" premium features, PBworks is smart enough to make me pay for its service because I need it. There were two things that they could do: cut me off after I made too many edits to my wiki, or heavily encourage me to pay when I'd have a clear need. They chose the latter route.

This is precisely why the "per user" model is so powerful. You get the benefits of a full-fledged product, but you only pay for what you need. For the first 3 users, PBworks is free, but when I bring in more people, I have to pay $8/user. Which is a relatively small cost to pay for something that I'll probably need to have. Take a look at their pricing structure. Note that I omitted the free plan.

What's interesting about this is that the difference between the "Professional" and "Professional Plus" plans is trivial. We normally expect the most expensive plan to have 20 baller features that the others don't have, just to convince you to pay for the more expensive plan. But PBworks isn't that naive: they realize that as long as you have a need for more than 3 people to collaborate on a wiki, (which is pretty much every organization out there), you'll pay for the product out of sheer need. And the difference between their "Professional" and "Professional Plus" plans shows their understanding of this too: Some organizations need to have 24/7 live support, and they're willing to pay for that.

But at the end of the day, when the organization's decision maker needs to figure out which PBworks plan to purchase, it isn't comparing featuresets between plans. It's about selecting the one plan that solves the needs you have, and PBworks and other enterprise software companies such as Freshbooks and Salesforce do this well.

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So ask yourself, "where is the actual need?" With VistaPrint, the need comes down to getting business cards in a timely manner. With PBworks, the need is when an organization has more than 3 users on a wiki. For Indinero, my current company, the need is when a company has more than 2 bank/credit card accounts that they need to keep track of. By thinking about "what the user needs" rather than thinking about "what a user sees as cool features to have", you'll be taking full-advantage of the beautiful thing called freemium.

Speaking of smart marketing, VistaPrint decided to give you guys a 25% discount on all products, and an 80% discount on premium business cards. For a product that I've actually paid full-price for, I highly recommend them. If you run into another company with a unique business model, please send me a tip at jessicamah (at) jessicamah.com.

Most of you have only met the superficial version of me. I've been thinking a lot about my personal brand in the recent weeks, and I've come to a few major decisions as to how I want people to perceive me. Through my blog, I have complete discrepancy as to how and what I write about myself. Until lately, it's been completely overdone. For some silly reason, half the people who have heard of me perceive me as a child prodigy. The other half either think I'm arrogant or don't care. The purpose of this blog post is to tell you that I'm more of the normal teenage girl than you probably think.

Firstly, I don't deserve the credibility that I have. I'm out there in the tech world and I'm sometimes mentioned on people's blogs. Big deal! I haven't sold a successful startup and I don't have a product that I've launched this year. Yet somehow, I get invited to speaking engagements and other fancy elitist groups. Instead, you should see me for and only for my enthusiasm and potential. I'm off to an early start, but in a few years, that won't matter. Nobody will care in 10 years that I went to college early and failed at a few startups when I was 16 years old. I guess I'm slightly worried that I've been spending too much time talking to you guys and not enough time doing something great. Until I find amazing success, none of you should have the right to call me smart.

Next, I much rather you guys view me as a child prodigy than as a whore. Sure, my personal branding has been overdone, but at least it was overdone in a somewhat positive direction. Unlike Paris Hilton, people have a slight clue as to what I want to do with my life. Smarts are sustainable, looks are not. As one of my friends said, "if you're going to be famous, at least have a business model." People associate my name to business and technology. As for Paris Hilton, well, people look at her as a hot girl with an empty brain. No matter how hard she tries to change her personal brand, people will be stuck in their old ways of thinking. So, if you overdo your personal branding, "do it with a business model" :)

Internet celebrity Julia Allison wrote on her Tumblr yesterday:

I’m in the midst of a transformation right now. Actually, it’s not so much an internal transformation (although there’s that, too) but a realignment - so my outside matches my inside, so the perception matches the reality.

The quote just comes to show that people don't understand who she is. They read about her in Valleywag, but they don't know how fun, enthusiastic, and smart she is in real life. I've been told so many times by my blog readers that I'm different from how they thought I'd be. Some thought that I'd be formal, proper, intelligent and well-spoken, whereas others thought I'd be a snotty-arrogant-uptight-child-prodigy-bitch. One reader suggested that I overdid my professional brand, whereas Julia blurred her personal and professional brands together.

In real life, I'm just an adventurous teenager. I like to do something called having fun. I have something called friends. I go to class, I do my homework, I play instruments, I play sports, and do all the things you'd expect a normal 17 year old kid to do. (minus the many fun business/tech trips I've been on). Sure, I'm in college, but that doesn't mean much about my personality. Instead, try to see through the fog: all of the random bloggers you stalk are real human beings and have lives outside of the internet. Their personal brand may be completely deceiving for all you know.

Like many girls, I've had that desire to have the spotlight on me. And I've gotten quite a lot of spotlight for a girl my age, but I've come to realize that it's nothing more than a distraction. I'm dedicating too much effort to building up my personal brand and not enough in a) leading a normal teenage life and b) working on doing something amazing, whether it be save the world or build a hot startup. As one of my friends Charlie mentioned, the most brilliant people he knows prefer to keep in the shadows. They don't have much of a personal brand, but their smarts and successes create the true credibility one needs to be known. I guess as of late, this idea has been much more appealing to me.

So what does all of this mean for you, me, and my future in blogging?

1) The blog lives on. I'll always continue to blog because I love you guys so much!

2) I've decided to cut wayy back on my conference going. I have many connections as it stands and I don't need to waste more time networking with 50 year olds.

3) You hopefully won't have to see me on Valleywag again. As I've mentioned in other posts, the influx of press gives you a temporary high.

4) It's soo easy to get drawn into the fun culture of Silicon Valley. It's so easy that you sometimes forget to create something of value.

So for now, I'll try to stay in the shadows. I have no problem speaking at conferences or doing interviews or whatever, but I'll remain honest and true to myself: I'm a kid who's yet to succeed in business.

Jessica Mah is a 17 year old entrepreneur, blogger, and sophomore in college. She's currently the founder of a startup and the managing editor at Startupism.com, and Jessicamah.com. Big thanks to my friends Jacob Locke, Patricia Handschiegel, and Charlie O'Donnell for having helped me gather my thoughts on this.