We tried the typical SaaS startup freemium model for what we thought would be our Blackboard killer (hint: it wasn't).
We offered it for free to individual teachers with the strategy of enlisting an evangelist group of dedicated and passionate teachers at institutions. The plan went that once a critical mass of teachers from a given institution where onboard and using it, we would trigger the enterprise sales approach and sell the product to the institution.
We had some uptake from teachers, who universally loved the product. They raved about it in fact. We were super excited. We thought we were onto a winner.
They told their friends and colleagues who in turn signed up, and they too loved it. And raved about it. And told their friends about it.
Unfortunately the vast majority of them never actually delivered a course on it with live students. We were stunned.
After prodding and asking, and eventually getting to the bottom of it, we found that whilst the vast majority of teachers loved the product, and loved the idea of using it for their courses, they wouldn't use a product that wasn't centrally supported by the institution (or even in quite a few cases, couldn't use a product that was specifically prohibited by their institution - they were only allowed to use the prescribed LMS, which in most cases was Blackboard or Moodle).
So my tip for entrepreneurs trying to break into the enterprise LMS space is appreciate your an enterprise sales company. Your users are not your buyers, and even if they love your product, if you aren't selling it to the buyer you'll die.
I don't believe this is a market in which you can offer a freemium product to the individual with the intent of penetration reaching the masses through viral or other growth strategies. It might be worthwhile to do this to help get exposure, but don't expect to get actual sales, or actual usage, off the back of it. This isn't an industry in which a Yammer approach works (IMHO).