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Hackernoon logoZoom, and the Rise of the Freeterprise Business Model by@gcuofano

Zoom, and the Rise of the Freeterprise Business Model

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Gennaro is the founder of FourWeekMBA, a leading source on business model innovation.

A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

“Zooming” into the freeterprise model

Zoom is a video communication platform, which mission is to “make video communications frictionless.” Leveraging on the viral growth from its freemium model, Zoom then uses its direct sales force to identify the opportunity and channel those in B2B and enterprise accounts. 

As consumer brands showed the freemium model could be both a great go-to-market strategy and generate a continuous flow of qualified leads (however, only after the whole organization would be organized around identifying those opportunities), other B2B/Enterprise companies (those primarily selling to other companies or larger corporations) also mastered the freemium model but on a B2B scale.

That is why I like to call that “Freeterprise.” Companies like Slack and Zoom are great examples of how you can build a valuable business with a Freeterprise model.

This sort of looks like magic, as you can start from a single free professional account, and pull a whole organization into that, to transform it into an enterprise

As I explained in Zoom business model though, the whole organization needs to be structured around the freeterprise model, where on the one end the company seamlessly uses the fee product as entry point within companies.

And on the other end, sales people with the ability to built strong relationship with the account can get the whole company onboard, thus transforming a free professional account into a potential enterprise customer.

Of course, this leads the organization to skew its resources toward building an army of qualified salespeople to handle the volume of leads generated by the free offering (in 2019 Zoom spent 54% of its revenues primarily in salespeople headcounts).

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