Entrepreneurs love their friends and their new businesses need customers and word-of-mouth. Given that most founders are nice people who like to help out their pals, and their friends are cool folks who are happy to talk and tweet about their awesome experience at a new establishment, it makes perfect sense for friends to get a deal when they come in to a buddy's business, right?
To most entrepreneurs and their close friends, a freebie or discount is incredibly natural, but it's an impulse the nearest and dearest of entrepreneurs need to learn to ignore, according to HubSpot founder and CTO Dharmesh Shah. Recently on LinkedIn he risked coming across as the world's grumpiest entrepreneur in order to make the case that the next time a founder friend offers you a cut price deal, you should politely turn her down.
Shah isn't a total killjoy. As a friend of the business owner "I should get some special treatment for being a friend--and for being an 'early customer' that believes in what you're doing and wants to support you," he concedes, "but that 'special treatment' shouldn't be in the form of discounts and freebies." Why not? He offers two reasons.
Your Founder Friend Needs the Vote of Confidence
It's not that your friend the entrepreneur necessarily needs the money she'd lose giving you that 50 percent mark down or bottle of wine on the house. What she does need is the confidence boost of seeing those closest to her truly valuing her product or service.
"Paying full price doesn't mean that much to you, it's not going to change your life all that much. But it means a lot to your friend. It really does. And, it's not about the money. It's about validation," Shah explains. "Even though you're a friend, it's always a magical moment for an entrepreneur to have someone pay them for creating value. It's like when you got your first job and received your first paycheck. It has high emotional value."
You're More Likely to Give Honest Feedback
No one looks a gift horse in the mouth, and no one with a scrap of manners criticizes something they got for free or at a steep discount. Which means once you say yes to your generous founder friend, you're almost certainly going to unreservedly rave about their business. That's not really serving them, Shah feels.
"If you paid full-price for the product, you might be slightly more likely to give honest feedback to your friend," he writes, explaining that "by being a fully paying customer, it... feels right that I should get the experience a fully paying customer should get," including offering helpful pointers on aspects of the experience that didn't go as well as they could have.
Should You Offer?
Shah concludes with this suggestion for friends of entrepreneurs: "The next time a friend offers a discount, don't take it. Pay full price. Be gracious, though. Say, 'I appreciate the offer, but I can't take you up on it. I know I'm happy to pay. In fact, I insist.'"
But here's the question: As the entrepreneur, should you offer 'mates' rates'?
What's your policy on giving a discount to close connections?