The Grant Becomes the Customer

This summer I was reviewing a product vision deck a client had put together, and it was a good one. Across the slides were the various products and features the team planned on building, sequenced by risk and by how ready the data was. The first phase was even the part of their vision that was easiest to ship. So while everything looked organized on paper, somewhere around the middle of the deck, an alarm bell went off for me: the whole vision rests on there being enough traction to grow into it, and at the deck stage, nobody has evidence for that yet. No one who crafts a vision or writes a deck is at fault for that. A deck is where things look tidy, and tidy is tempting.

When I notice a vision getting ahead of its evidence, I often go back to a first principle of product development: finding the true exchange of value in the version that already exists. What is a person giving up right now to use the thing (or perhaps some analog of the thing if the thing doesn’t exist yet)? What do they get back? Sometimes this exchange can be measured in dollars, but more often in impact-focused products, it’s twenty minutes of someone’s afternoon, a phone number they’d rather not hand over, a weekly check-in that a partner agrees to show up for, or a dataset a partner has been sitting on. Once you can name what’s being exchanged, you can tell two very different products apart: one that’s growing because people keep deciding it’s worth what it asks of them, and one that only looks like it’s growing because someone else is subsidizing it to keep it alive. From the outside and on a slide however, they look the same.

Earlier this year I wrote about what job you’re hiring AI to do, and that post ended on what you do with the time AI hands back to you. I’ve been thinking since then about the other side of that exchange. Every product takes something from the person using it. What about the time you take?

Free Is an Unnamed Price

The client’s plan was to build a chatbot and to embed it on partner organizations’ websites for free. The idea was that the chatbot would serve as a channel for other products and features in the vision deck to benefit from. The reasoning was sound - a free tool reduces friction and skips the cost analysis on the partner’s side, as well as the RFP where somebody else might win. When you’re trying to prove something works, getting it into people’s hands quickly matters more than the invoice.

But something I’ve seen happen many times over is what the free part does to the rest of the vision. The chatbot’s job was to drive people toward the deeper parts of the platform, and those parts weren’t built yet. The paid model was going to come later, once adoption made the case for it. Which meant nothing along the way was charging anyone anything, and the whole plan needed the next grant to keep the lights on. True traction boils down to delivering more value than a user expects and/or spends to access your solution. In the impact space, that bar is higher than it sounds. Transactional traction, a signup or a click, doesn’t count for much on its own. What counts is outcomes that scale up to impact. And if nobody spends anything, you can’t measure the difference either way.

This is the trap that’s specific to the non-profit and impact sectors. Free is affordable because often a grant is paying for it. As a friend of mine who spent years writing grants put it to me recently: restricted money comes with what the funder wants to see you do. If a grant is aimed at keeping young people in school, every dollar has to relate to keeping young people in school. Fair enough, that’s the deal. But it means the product never learns what it’s worth to the people using it. It learns what it’s worth to the people funding it. The grant becomes the customer. And a product that serves its customer well, in that case, gets very good at producing the report.

Units of Validation

A few weeks later, I found myself having a different conversation with the same client, and now things were getting real. They were deciding whether to give a regional partner the chatbot for free, and I found myself arguing for always reaching for some exchange of value. My suggestion was to stop thinking of dollars as something that goes on your P&L, and to think of them instead as units of validation. If someone’s willing to swipe a credit card for something, it probably means they’ve made an informed decision about how that something is actually going to help them.

That reframing opened a second question, which turned out to be more interesting than the first. If the team wasn’t going to charge the partner dollars, what were they going to charge? Because “free” wasn’t on the table either. Where the team landed was a structured pilot. The partner couldn’t just say yes and consider the job done. The partner would need to name a point of contact, check in every week, share data on results and traffic, and actively engage in the pilot. The team wasn’t giving the chatbot away for free. They were giving it away to validate the vision, so they could scale up the impact they wanted to have.

That’s the price. It’s just denominated in staff time and data instead of dollars. And I’d argue it bought more validation than a modest invoice would have. A partner who shows up every week is telling you something that a partner who paid once and vanished never could.

In This Sector, the Currency Is Often Time

Some of the products I work on don’t take anyone’s money. What they take is time, and they take it from the person the organization exists to serve.

Think about someone filling out a common application for affordable housing. The whole promise of a common application is that you fill it out once instead of nine times, but even still, it’s still a long form, filled out by someone who probably has a job, kids, and very little time left over after both. Every field you add is a charge. Or think about someone staying in a conversation with a paid-leave chatbot. Every follow-up question the bot asks costs a few more minutes from a person who’s about to have a baby, or is caring for someone who’s sick. That’s the currency they have the least of.

When building products like this, friction is the price you’re charging, and what someone is willing to pay is your signal. If people abandon the form on field twelve, it’s because they consciously or subconsciously decided the bill was too high. Which means every field you keep has to be worth its cost to the person on the other side, and you should be able to say why.

Somebody on the team has to own that call: what you’re allowed to charge a person, in minutes and attention, and what you owe them back for it. In my experience it’s the decision that goes unowned the longest, because nothing in the build breaks when nobody makes it.

Who Is Paying?

If you run a mission-driven organization and you have a product in the world, I’d sit with two questions:

1. How are you determining currency? You already charge. The question is what, and from whom, and whether you’d be comfortable telling them the price.
2. And how are you breaking out of grant funding as the only sustainable way to innovate? As long as the grant is the only customer being satisfied, the product will keep learning what the funder wants. The people you’re serving are paying too. They just don’t get a receipt.