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Comment by franciscop | Hacker News Reader

> For every new customer they can sign up that converts, I credit their account with a few free months. It totally won’t scale [...]

I don't know the market/business, but why not? isn't that what Dropbox does at scale?

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I would go one step further and say referral promotion/advantage is one of the easiest and most common scalable "cheap marketing" tool. My bank does it, my dropbox does it, my hosting company does it, even the place where I buy my jeans does it.

The other interpretation of this, if you have millions of paid users, that are getting 5 months free.. that's 5 months of you paying the bill and not getting any revenue. That wont scale in terms of maintainability. At least that is what I assumed when I read that.

That totally scales if the new user long term value is sufficient to recoup these 5 months. These 5 months free are an investment, that may or may not pay off, but if it reliably pays off, then yes, it is a very healthy customer acquisition strategy.

To scale it probably needs to provide $ incentives, since power affiliates would rack up thousands of free months which they could never use.

Yes and no, you just need to offer credits. The point is not about re-sellers (that don't have the need to spend what they earn on your service), for those you need $, it's about referral, and if you're selling FOOs, you're probably fine selling a FOO with a 15% discount if it also guarantees you another FOO bought at full price, or even if both FOO are at discount.

People accumulating so much credit to the point that they can't spend it is a non issue in that referral (like Dropbox) is meant to be scaling wide, for scaling tall you need a re-sellers system (like say what Amazon or OVH are offering).

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