Not Found
Oh no! You're looking for something which just isn't here! Fear not however, errors are to be expected, and luckily there are tools on the sidebar for you to use in your search for what you need.
Comments to “Previous Post”
-
Jonathan Wegener is a technology & marketing enthusiast living in Brooklyn. Jonathan was once told in an interview that he "thinks too much." He didn't get the job. But it was the greatest compliment he's ever received.
This blog focuses on technology, business/marketing strategy, and startups. Number crunching and back of the envelope calculations are emphasized.
Jonathan spends his time writing about technology, consulting for startups and small local businesses, and working on his own entrepreneurial endeavors. He is the co-creator of Exit Strategy NYC and is currently looking to get involved with early stage startups and talk to people with big ideas.
Feel free to reach out via gmail: jwegener
and follow on twitter. Also visit www.jwegener.com And subscribe to my feed:
testing.
Surprisingly not far off from the real numbers!
Do you think regular Target customers are the type to walk 20 minutes anywhere? Ever heard of a car?
It was actually founded as NatPal; not NetPal.
Oops, my bad! Good catch, Yodler.
NatPal..Nat is in Nathaniel presumably?
Jonathan,
That's correct.
I see what you mean! That left chick's skin was deathly.
I think it will be interesting to see how Yodle positions itself against comapnies like Idearc, Yellowpages.com, Yellowbook, and other local SEM companies like Reachlocal. All of them have their strengths, but they also all have their weaknesses as well. With advertising budgets being scrutinized like never before, Yodle and Reachlocal should be able to thrive because they can provide solid, accurate, and measurable results.
Thanks for sharing
PC Games news
The rumor I've heard is that they're moving all of their salespeople inside. So….a glorified telemarketing firm? Yuck……
So glad you're enjoying the site and NYC community, great post!
Thanks for reading, Jeremy! The 'review snapshot' is a great feature addition btw. Keep up the good work with Yelp.
P.S. I've got another blog entry planned about the business side of Yelp, Yelp's advertising model, and the local online advertising market — keep a look out for that!
nice read, jdub =)
The Deal is they have to build the customer a website that the customer does not own, this second site is indexed by Google, so if a customer searches for the name of the business on Google this other site shows up. They also submit the site to Google maps (or it gets indexed by google maps). The major problem being that the tracking number associated with the site gets credit for calls that are supposed to be associated with PPC giving the customer a false sense of ROI. When the customer cancels these google maps listings are left behind with non working phone numbers. Most times they try and charge for this second website, but they will give it away for free in order to get the deal. They are rumored to have a 50% cancelation rate and yes they have pulled their reps off the street in some major markets.
The big advertising conglomerates (WPP, Omnicom, Publicis, Interpublic) certainly would be interested in Yodle, but Yodle’s focus on local small business advertising doesn’t match the ad conglomerate’s focus on bigger nationwide clients.
Approve.
very well written article!
i find replicating a new clients website before launching the campaign quite risky, since it involves a lot of work (a) in reproducing the content and (b) in coordinating content release with client. from what i have read reachlocal doesn't create a new site, but they proxy the existing one, which allows them to make small changes like adding the unique, trackable phone nr. it would be really interesting to get conversion rates of “custom made landing pages” vs. “proxy landing pages”.
You should check out Gist (http://www.gist.com). It does work with Gmail as well as Outlook bringing together news and information with your messaging activity in one place.
Robert
Gist, Inc.
I lack a Twitter account, so instead I will respond to your “tweets” here.
If I had known that you would be visiting SF, I would have warned you about the science museum.
W.R.T “Had Dim sum in the Richmond neighborhood. http://twitpic.com/r1nl. Now at the science museum http://twitpic.com/r2ut about 5 hours ago from twitterrific”
The duplicate site thing should be a non issue. They block it via robots.txt, I had asked them specifically about this.
I do agree with the duplicate site strategy being extremely work intensive. Why not just load the tracking phone number on the main site for PPC visitors?
Ha! “I can’t help but wonder if first class got their own exclusive chat room, with rich text formatting and emoticons enabled.” Hilarious post. Flying Virgin is a bit of a surreal experience — its a few glow sticks and techno beats away from being a flying club.
On KLM I actually played trivia against other passengers. Airline multiplayer was wildly satisfying – plus, it gave me an excuse to talk to the people (IDed by seat) I demolished.
But if they block the duplicate site from search engines, how do they use SEO to improve site traffic?
For recurring revenue, why not combine lead generation with CPM ads? They could also add other services – maybe portfolio management tools/recommendations, which are more fluid than choosing a bank account or credit card.
The costs to aggregate the data are about $10 per annum, per user, then you have all the costs for the security technology.
So it's certainly not all net!
Interesting figures, Numbers — thanks for sharing!
It's my understanding that Mint (and probably Thrive as well) uses Yodlee to connect to the financial institutions. From http://www.techcrunch.com/2007/10/07/mint-rakes... — “Yodlee is the back-end piping that connects all the banks, credit cards, and brokerages together. They’ve been around for about a decade, and are used by Bank of America”
Security technology costs are definitely something to consider. Numbers — do you have a source for that $10/user/year figure? Would love to learn more.
After we had successful launched an unrelated startup, my partners and I were looking for another venture. With the early success of mint, this was 2007, we seriously looked into it.
The reason we decided not to do it was a lack of a reliable ongoing revenue stream. Yet you still incurred the aggregation costs per user billed as a monthly minimum in the tens of thousands, which also included a license fee on top, and ongoing fee for additional maintenance.
The problem arises when you sign up, say 50,000 users. Some of them will click on everything, as you've shown, most will never read the emails or log back in. But you still have to pay all the third parties for keeping the account active.
Add to that the team of developers and support staff you need to develop this system and you've quickly blown through a few million without earning a dime.
In my view mint will probably be bought by a publisher like Yahoo, or by a bank that wants to get serious about boosting their online banking capability, current economic conditions not withstanding. Geezeo have had an investment from thestreet.com, and therefore are more insulated. Wesabe has done some great things with integrating their technology into mass media newspapers.
The rest of the pack (rudder, green sherpa, thrive) will not survive. The cost of doing business will kill them, and none of them have achieved enough momentum early on to push them over the hill.
Remember that affiliates is a notoriously tough business to deal in: bankrate may be web 1.0 but its a simple model: get a high page rank, buy your competitors, and get the tens of thousands of people who type 'credit card' into G every second of the day to your site and then when they're there get them to click on as many links as possible.
No fancy aggregation sign up, or the costs, just delivering what people want and taking their money. They will beat the pants off these web 2.0 guys every day of the week, even if they customers coming from bankrate arent the quality of a mint/rudder I'm yet to see evidence that any bank is being too picky for new customers/or if they are willing to pay a premium for it.
Ultimately, it will be banking institutions that will be the real winners of this space: they already have the customers, they already have a technology spend in the tens of millions of dollars per annum, which makes mint all that more attractive.
I think there'd be some smart smaller banks who will be watching many of these startups currently flush money down the toilet, with a view to picking over the carcass in a few months/a years time to integrate the technology into their business.
Just my two bobs worth.
Numbers.
Cool — really nice analysis. Can you shoot me a quick email perhaps to identify yourself? I'd love to know who you are…numbers!
Gmail: jwegener
Thanks!
Interesting!
@jonathan: just to clarify, did Thrive claim 15% conversion or 15% click through on offers?
Hey Ron,
Thanks for the comment. I'm pretty sure that the numbers mentioned by thrive (and also the mint numbers in the techcrunch article) refer to the conversion rate on the offers. I walked the thrive ceo through some number crunching / guesstimates to gauge whether my logic was correct and he didn't raise any red flags..
Do you have reason to think otherwise?
@ Ron
I think they'd be talking 15% click through on the offers. Anyone who has played in the affiliate space knows that they are polls a part — both in terms of volumes, and the fees that financial institutions will pay for a lead versus an actual customer.
I'm with numbers on this one, I think that it's the big boys like Bankrate.com who win in the affiliate space. The PFM market spend most of their budget paying third party technology providers, without a reliable revenue strategy.
Dove advertisements are sexist. They only apply to woman and NEVER mention men. I have never seen a bathroom product only used by one sex.
As a male, my household will never use Dove products.
@Jonathan: No, no reason to think otherwise. Although… it does raise the question in my mind: How does Thrive (or Mint.com) know for sure that an account was opened (or loan/card applied for, etc.)?
@ Ron
Probably by the size of the affiliate check!
I've tried Yodle, Reach, and now I'm doing yellowbooks version called WebReach and I like it better for a few reasons. More support, same and better tracking, and etc…. Look into thier WebReach program. you wont be disappointed promise.
Easy now, Jonathan. *grins* I'm not so sure we'll ever be publishing too much of our revenue numbers, as it isn't the core focus of what we do around here. You have to remember that Thrive was founded with helping people in mind (a very different founding story than Mint's, you'll notice) and the focus for us is on generating the revenue we need to keep doing that.
One content I'd note with your Mint math: their “registered users” numbers most likely don't line up with their “active users” numbers, which is probably what they are basing their offer uptake rate on. So their revenue numbers are probably far, far lower than you think.
One big difference between Thrive and Mint is that Mint is essentially churn & burn; they haven't shown much effort in building product that is meant to keep people around in any long-term way, since there is no aspirational or goal-setting part of their site. So if you were trying to look at revenue models, they are most likely thinking about first-time action, rather than lifetime value (which is how Thrive's revenue is constructed).
Why does this matter? For one, Mint has done very little to establish trust with their users, because they are interested mostly in initial profit. Thrive, on the other hand, invests a lot in communicating a brand of trust to our users, and we see that in how often they take our recommendations over time. And I don't just meant monetized recommendations – we give plenty of advice that has nothing to do with generating revenue. The goal is to establish a partnership that lasts by creating real value and help for the people that use Thrive.
Academic models of trust vary, but two important factors in almost all of them are predictability and dependability.
Predictability: this is a measure of how much people have expectations that are met. This is everything from knowing what is going to happen when you press a button and have that expectation fulfilled, to a larger sense of what Thrive does and how it works in your life. I think both Mint and Thrive do this relatively well, although I do always feel like Mint over promises a tad, since their outside-the-wall content seems to imply that they will fix your entire life, not just do a little tracking.
Dependability: this is related, but a little different, and is an area in which Thrive strives to shine. The idea here is that this is how much people believe that actions are initiated in their best interest. So not only do i know what Thrive is going to do, I also know that those actions are based in their desire to interact with me in a positive way. I know that it isn't going to try to sell me something, that the recommendations will be designed to do right by me, and that all the things they do are designed with me in mind.
As for marketing, you are absolutely right that word of our mouth has been by far the best marketing technique for us, as has major press. I do a bunch of press interviews each week, commenting about the psychology of money, and that helps us both in demonstrating to the public that we're dedicated to this issue (raising our trust factor), as well as spreading the word about Thrive itself.
I don't know what airline I was on, maybe JetBlue or maybe Delta, but I was on a flight where the woman in the row in front me played some trivia game against other passengers–during the entire flight. Based on what I could see of the graphs after each question, it seemed like a lot of people were playing. It's not as deeply “social” as starting a line of communication between people, but it still was definitely a sign of the times in my eyes. I wonder if they display who is gets the most questions right… “Dammit, bitch in 25D HAS to be a bot!!”
Great analysis, Jonathan. We've decided to not enroll in Open Table's service the first few months that Contigo is open. We will then reevaluate whether OT would be a worthwhile investment. I'm sure we will return to your incredibly thorough analysis at that time!
I do want to make one point. My estimate of 1,000 OT reservations/$1,000 per month is based on my experience at other comparable-sized restaurants in the San Francisco Bay Area. While OT fills just 14 seats per day on average nationwide, in SF I imagine the averages are much, much higher. We are very tech savvy here and making reservations online is extremely common, much more so than in other markets I am guessing. If my restaurant were open 7 days, $1,000 per month translates to just 33 seats per day, about 28% of the 120 diners. (Granted, that doesn't account for the reservations made through the restaurant's website. I'll let you do the math for that one!). My guess based on experience would be that 40% or more of the typical SF restaurant's reservations come through OT's system. I would be interested to see a breakdown of the numbers for various markets where OT is used.
Our final decision? Not only have we decided not to open with OT, we've decided to open without taking reservations unless your party includes 6 or more people. We can always add OT at a later date if we feel that it will make sense to pay $2.61 per head for new customers.
Thank you, Jonathan, for providing us restaurateurs with a thorough analysis to help us make financially prudent decisions.
Please take a look at http://www.livebookings.net the leading solution for Restaurants in Europe and maybe the answer to why OT has found a success in Europe.
They during January 2009 started to provide their solution in the US via http://www.Fishbowl.com. Already hundreds of restaurants that have joined. For an example look at http://www.montebellonyc.com in New York (that also uses OT).
Jonathan – great information but your trusty TI-83 calculator must use correct input to bring us the real facts.
The problem is that a lot of the traffic that originate from the restaurants own websites may be counted as bookings from OpenTable.com.
It would be interesting to see what the conversion and source of traffic to OpenTable.com is.
As a restaurant your help OT to build their brand instead of your own.
“The problem is that a lot of the traffic that originate from the restaurants own websites may be counted as bookings from OpenTable.com.”
To clarify, OpenTable bookings can originate with a web visitor going to opentable.com looking for a restaurant, or a web visitor going to a specific restaurant website and making an OpenTable booking there (which still goes through the OpenTable system and is counted as a booking). The point of my calculation was to tease out and quantify these two separate streams of customers. Am I not understanding what you're saying..
“As a restaurant your help OT to build their brand instead of your own.”
Yes, yes, yes — good point. This is a more general issue of competitive dynamics that I will write a future blog post on. Here's a quick summary of my thoughts:
Tension always exists between 'aggregators' (like OpenTable) and their 'constituents' (in this case, restaurants). Let's consider Google News, which is increasingly the starting point for people looking for news on the internet. Newspapers hate that Google News is scraping their content and eroding their brand value — but at the same time, Google News drives a significant proportion of their web traffic and they'd be stupid not to want that traffic. But as part of Google News service, they're helping build the Google News brand and shooting themselves in the foot.
The same is true of ad networks — web publishers want to monetize their unsold ad inventory so they push it out to ad networks. They're working to maximize their own profits. But the more publishers that do this, the less incentive there is for advertisers to buy premium ad space. Increasingly, ad networks are cannibalizing the premium ad inventory.
There's a thousand types of aggregators like this both for content and customers (Digg.com, Lendingtree, Servicemagic, Zocdoc, GymTicket, Expedia, Meetup.com, even the Google search engine itself). In general the aggregator (in this case OpenTable) has the upper hand because all the individual entities are acting in their own self-interest and remain part of the network. It's unlikely that all the restaurants are going to band together and start their own version of OpenTable, or that all the newspapers in the world are going to mutiny against google news and ruin it.
It's a classic case of the tragedy of the commons and the aggregator usually benefits handsomely.
jweg, you have too much time on your hands.
but then, so do i.
News is a commodity business whereas restaurants aren't (shouldn't) be. The whole point of branding is in it's ability to differentiate a business. OT defeats that for operators. A smart and savy operator can garner just as many if not more reservations by building a branded system that relies on building personal relationships. You can't get that with OT.
Jeffrey Summers, President
Restaurant Coaching Solutions
Hey Jeffrey,
Thanks for the comments. What do you mean by 'building a branded system that relies on building personal relationships'? Are you talking about building a branded online reservation system? Or building relationships with your customers to get word of mouth referrals? Or neither of these things..
Ideally, news isn't a commodity business (certainly the NYTimes has a strong brand..) but aggregators are increasingly making it one.
Hey Brett,
Glad you liked the analysis. You're definitely right that San Francisco restaurants might get significantly more volume through OpenTable than other locations but open table responsible for 40+% of reservations in the restaurant? Wow! Never would have guessed..
For a new restaurant that expects to be crowded, not taking reservations does seem like the best decision (at least from a business perspective) so there's no wasted time between tables or risk of a party not showing up.
Best of luck with Contigo!
You're welcome.
I mean the systems used by a restaurant's branding efforts to create relationships so good that guests wouldn't think of using OT to get a reservation because they wouldn't dream of either being disloyal or forgoing the personalized service they would get by choosing to contact the restaurant to begin with. All systems are a branding effort.
Ideally, news would be news but oh well. Lots of “strong” brands going broke these days. Which begs the question of them being strong brands don't you think?
Mark seems to have an issue with OT. His comments read like he might be a Fishbowl employee.
They are very vague about it. They claim they they block it but the sites do get indexed and get some traffic organically.
Also @Peter all the SEM resellers use reverse proxy/dynamic mirror technology to swap out the phone number and host a “doppleganger” of a website. There's no actual site building and the process can usually be done in else than 2-3 hours.
Development of digital technologies occurs prompt rates. Does not lag behind progress and digital TV. Speaking about digital TV, we first of all mean satellite TV. The digital satellite TV becomes more and more accessible to simple users. The market paid satellite tv also is not necessary on a place. The new digital standard of TV of high clearness HDTV actively develops and takes root. The satellite TV becomes more and more directed on the spectator. Besides digital quality of the image, advantage of satellite systems also is also the extensive cover zone of the companion.
I like the updated sidebar. You certainly thought (too) much on this one.
So here's the question… If you were (are?) in the IPO-investing market, would you invest in OpenTable? Personally, I don't like the sound of a company that needs to raise money in this economy to support a consumer luxury industry product and, specifically, one that's planning to use those funds to expand a money-bleeding international segment.
Some thoughts
If you are a restaurateur and have a strong offer and strong demand it may be best to spend your marketing dollars to drive traffic to your own web site / reservation team and use your own reservation solution – there are several ASP solutions available now – with in built table management, restaurant yield management, CRM and e-marketing and they usually provide a free hyperlink for the operator's own web site.
There are Guestbridge, ReservationGenie, Efficient Frontiers, TableBoss and many others,
Build your own brand!
If you use Opentable you will find that if you are full then reservation enquiries are being switched to your nearest competitor and you might even find Opentable marketing your biggest competitor on a mail shot.
Despite what Opentable would like you to think their system is distinctly local as opposed to global – to sell it requires traditional selling skills and routes to market are traditional. Overheads that come on two legs are very expensive and Opentable needs lots of them.
Every new market could be a battlefield with the only outcome a Pyrrhic victory.
It cannot be assumed Opentable will ever return a 17% margin in Europe as they have done in the US (they have lost $57m since start up). In Europe, there are different dining and reservation habits, as Opentable has found out in France and Spain and there are strong comeptitors in Livebookings, Toptable and restaurantdiary.com.
hahaha. I'm glad I got to actually see the responses. Though mechanical turk might require a modicum of intelligence like you said, it's pretty clear that doesn't require much more…
the Paula Scher video was interesting as well. I never picked up any of that stuff about the lincoln jazz center logo, but I'm glad now that I know what she was going for.
Hello Jonathan,
I work in support at Backblaze.com
We tried sending you support emails, but they kept bouncing backing with Mail Delivery Errors to your @columbia.edu address.
So hopefully you will read this message.
As to your question about how to uninstall Backblaze there are several methods.
• You can download the Backblaze Uninstaller at:
https://www.backblaze.com/files/UninstallBackbl...
• There is a link to the uninstaller on the Backblaze help page at:
https://www.backblaze.com/help.html#install
• You may also re-download the Mac version. We added an uninstaller icon in the DMG image.
I hope that helps,
-Casey
Backblaze Team
Excellent post! It wound up cheering us up as well.
As an experiment, we've created a duplicate crowdsourcing experiment on our new brainstorming website, BountyStorms.com. Come check it out — in 24 hours we should see the results:
http://www.bountystorms.com/brainstorm/show/341
It will be interesting to see how your results (and your user base) compare to the amazon turkers. So the top three compliments will get $5 each? Or the bounty is spread three ways?
I'll check out your site in detail later, but at first glance it looks cool — like a similar idea to Yahoo Answers, but more focused on creativity. Or maybe a simpler version of Cambrian House focused on smaller and more discrete tasks rather than forming an end goal of using crowdsourcing to start entire companies.
Mechanical turk experiments crack me up. It's always fun when you get such an odd cross section of people from around the globe to complete seemingly silly tasks! I love it. I wonder how they would fare with using turk for user testing.
There are plenty of bathroom products that tend to be used exclusively by one or another gender. Granted, there are metros and tomboys, and people who are really creative and use certain items outside of the normal use.
For example, I'm going to guess those binkini razors (they're small and titled) are used mostly by women, as are the women's soapy razors for their legs. Exfoliation, as a type of hair remover, is used most by women, as men's root systems in their beards are much different and men generally don't remove hair elsewhere. Same with wax; something women generally do more than men. Any nail/skin products are most often used by women as well. Shaving creams can often be used by both genders, as can deodorants – however, the acceptable scents differ dramatically. Women tend to have the baby powder/floral scents and men often have a more sharp scent. Also, aftershave is used almost exclusively by men. Women have their own moisturisers if they've sensitive skin. Most hair products are “bathroom” products as well. Women use curlers, straighteners, various type of hair products like hair spray, detanglers, and mousses, various types of makeup, including, for some people, glittery powders, sprays, and gels. Women are more likely to use oil treatments and intense conditioners.
Women's products, such as tampons, insteads and pads are another big example and those are considered “bathroom products” and are used exclusively by one gender. (Unless the guys are getting really creative…)
“As a male, my household will never use Dove products.”
Thats sort of calling the kettle black, isn't it? Would you use Dove products if you were female? By throwing in what gender you are, you're essentially saying, “Unless the product is sexiest towards me, I won't ever use it.” It shouldn't matter what gender you are if the sole reason you refuse a product is because it favors one gender or another.
Another thing to point out in your language here, is the “my household” bit. Your household won't use Dove. Do you own your household? Is your word law at home? Will you deny your wife/daughter (if you have them) dove products if they want to try it? Again, your “as a male” statement emphasises your superiority over everything that follows. You're essentially saying, “Because I am male, I own my household.”
Granted, the commerials for dove are targeted towards women, just as axe body spray is targeted towards men. I wouldn't go so far as to say they're really sexist, as they're not saying that men are not as good as women. Just as some tv commerials for different foods, like cereals, are targeted not towards the parents who buy it, but the children who want it. That isn't age discrimination; its just targeting a particular group of people.
I think what you meant to convey was, “I will never use Dove products myself and will never buy Dove products for my household”
I am also very big fan of yelp. The community is so real.
Great post. The thoughtful analysis is appreciated.
How do you know about GymTicket? Do you know Howard Lerman? I ask simply because I met him a couple years back but have not seen anything written about the company until your mention of it in the comment above.
Good post – I haven't seen this discussed before. Maybe if you write sex a few more times, your blog will come up higher on SERPs, too.
Nice discovery Jonathan! Looks like Apple may need to borrow a Google algo or 3.
nicely done. jwegga. Anyway to find out what the most trafficked searches are?
Good observation- and a good way to sneak those keywords into your blog (and you think I didn't notice!)
yeahhh, that really funny ads
spam.
Delete.
This is one my favorite ads! I am really very happy to know that it appeared on the Inc magazine's back cover.
I will never ever use soaps that can make me look like a ghost.. LOL
Delete.
(message sent from phone)
It indeed is a funny advertisement!
Great post. I think you underplay the convenience factor a bit. When OpenTable provides 197 new customers, that's clearly valuable for the restaurant. On the other hand, making it easier for me, the customer who already eats there has value too. It's like ordering food from delivery.com vs. calling. For me, delivery.com is more convenient.
Thanks for the comment. Yes, you are correct: there are definitely some other factors (like convenience) that may play into a diner's decision to use opentable or a restaurant's decision to enlist. As Danny Meyer wrote in a NYT article last year about OpenTable: “In the old days, the question was ‘Where should we eat?’ Now it’s ‘Where can we eat?'” (http://www.nytimes.com/2007/06/18/business/18op...)
Opentable (and seamlessweb) offer a combination of marketing and added convenience that makes them very attractive to restaurants. On the original Contigo post, a sales rep from OpenTable left a great comment detailing all the cost-savings and intangible benefits that OT offers restaurants. It's really interesting: http://www.inpraiseofsardines.com/blogs/2008/09...
I've been talking to a few restaurant owner the last few months trying to see the viability of a new marketing tool for the restaurant industry. I made an interesting data point – every restaurant that had not tried openTable was very interested in it and every restaurant that had tried opentable had cancelled their service!
Might be worthwhile understanding why they only have 9000 restaurants in 10 years of being in business!
great jweg – I'm going to use the stats as I browse from now on!
That particular article by Watts bases its theoretical framework principally on the ideas of another famous Columbia sociologist, Robert K. Merton (although Watts never cares to mention Merton)–specifically, this is the “Matthew effect”, or the phenomenon that the 'rich' (or popular) get 'richer' (more popular). Merton refers to the tendency of well-known scientists to obtain more accolades for the same level and kind of research conducted by lesser-known scientists. Know your heritage!
You used my msie.com example!
Also, at my last company we used the seobook on a daily basis in order to determine how legitimate companies are, as well as how much web traffic they get. Of course, as time goes on, these factors become all the more difficult to distinguish.
Thanks for spreading the word around, I was actually not aware of it earlier, now that I know it, will definitely use it to a great extent!
I've never considered inbound links for site legitamacy but it def makes sense. Nice post.
Also, I've used and recommend the seoquake toolbar for firefox. And couldn't function without the web developar toolbar.
I use delicious.com when researching certain things. e.g. “mac ftp client” or “socks”. This is my quick way of finding a solution that will probably make me happy.
Hey Marisa,
Yeah, I first started to realize the power of the seo tool for distinguishing real sites from fake ones when you sent me that site.
Jonathan
Good point, dan. Thanks for commenting.
Ahh, very good point — I had forgotten that ppl use delicious for that purpose! Interesting that you got different results too.
Cool, i'll check out seoquake. Thanks Fred!
good post dude, but do you think theres a big enough market for these packages if blackberry's customer base is more business focused? If so, then yeah we'll see $3 packages of “dumb” apps, but if not then maybe we wont?
Jonathan, Many of the issues you've mentioned are naturally common questions/complaints we get, here at Pinch. The app store certainly does leave a bit left to be desired, from a promotion standpoint. We're fortunate in that we've been able to perform the analysis, and get a sense of the App store's dynamics from a broad perspective.
The crucial thing to note is that, despite ranking methodologies, the intrinsic nature of an application is still of foremost importance, in executing a successful business model. For example, we've talked to developers who have released high-priced, “premium” apps that rely on a niche, and hence *more easily-targeted*, target audience (in some cases, b2b apps). Broad ranking is not necessarily as relevant in such a case.
On the whole, developers are coming out with all kinds of interesting business models, and we've seen many succeed, despite the App store's structure. That being said, it is still tough; depending on the app, ranking does have a substantial effect, and the pressure to price downward after release is there.
I'm personally very excited to see how things develop with OS 3.0. Totally agree with you on subs model; it's time is long past due, and a ton of developers I have spoken with over the past few months have been clamoring for it. This is especially relevant for larger brands/content-providers that have traditionally relied on a subs model for content (magazines, etc.). Very excited to get a pulse on the in-app purchases market as well, once it starts to take form. It'll be fun to track and watch, given its potential.
Great article Jonathan!
Azeem
Pinch Media
I have just got to say that's the best quote I have ever seen on Opentable – I am in the UK and am sure their “churn” rate is very high – “…….every restaurant that had not tried openTable was very interested in it and every restaurant that had tried opentable had cancelled their service!”
Opentable as a brand and a marketing exercise is outstanding – still the company has lost $57m since start up and I have heard some other intersting quotes but do not think it would be wise to put them in writing.
Why would smart operators (and not every restaurant owner or operator is smart) willingly pay commission on bookings from their own web site and why would smart operators allow email marketing material about their competitors to be sent to their customers?
In the UK opentable are actually not charging for setup, training or install when coming up against competition – and their last argument against being removed from an account is “we regularly bring you XX customers per month and that's £xx operating profit you will lose on annual basis if you stop using Opentable” – it's a facile and purely subjective argument.
Opentable are also great at producing pretty pdf's showing extravagant and ludicrous ROI and financial cost analyses based on the above assumption.
I have got to admit I am not a fan and, having had a recent first hand experience of their marketing and sales techniques, I have no respect for Opentable as a company either.
How much money do you think Livebookings will “burn” in America?
Can they afford the cost of entering the US market?
Are they even returning a profit in Europe (they are doing a “Gordon Ramsay” with their accounts in the UK – 5 months late and counting)?
They have decided to attack the American market at the height of the recession – I am at a loss to see the business logic in this.
Hey Azeem,
I really appreciate the interesting insights — thanks.
>>The crucial thing to note is that, despite ranking methodologies, the intrinsic nature of an application is still of foremost importance.”
I definitely see your point here: ideally an app has a unique and valuable function and the user buys it for that functionality. IMHO the ranking methodology is more of an issue with games which exist in overwhelming numbers. Games all essentially serve the same purpose: to entertain and pass the time. They're all kind of interchangeable. None have a real unique selling point that helps them stand out from the crowd. Would you agree?
But even for unique apps like Airsharing or Ocarina, they have to rise above the noise (and the games) to even be noticed in the first place. A great product is one thing, but it needs marketing to go along with it. And the most effective form of marketing right now is getting to the bestseller list..which is accomplished by dropping the price.
It is very interesting to hear you talk about other traditional marketing methods — and hear that these are best for apps targeted at a niche or certain demographic. Would you say that the apps targeted at niches are under less pricing pressure as a result?
Jonathan
Hey Matt,
Thanks for the thoughtful response to my blog entry. Sorry i'm only now getting around to responding…two months late ;-p
You make a good point about “registered users” numbers being very different than “active users” numbers. Generally the majority of any site's userbase is inactive, no? That's one of those 90/10 things? So yes, it's possibly that I overshot my calculations for Mint's revenue.
Regarding your point about Mint.com not establishing trust with its users..I disagree with you. The users that have signed up for mint.com have given their bank account information to the company. Obviously they trust mint!! And if you check mint's TwitterPulse, there's no lack of happy users: http://search.twitter.com/search?q=mint.com
I can see your point about Thrive attempting to communicate a brand of trust to the users. But I think you're talking about something slightly different than trust: objectivity. Thrive users know that you have their best interests at heart, not the business' best interests. That's awesome. But i don't think Mint suffers from the reverse of that problem — i don't think its users distrust it or think that it's recommendations are ill-advised.
Thanks,
Jonathan
Oh, and I too am excited for the subscription model. I hear it's going to save the newspaper industry
I think it'll be interesting to see how apple deals with making developers play fair in terms of in app purchasing. With the ability to charge for access to parts of an app, consumers will no longer be able to trust that they're buying a fully functioning app — instead they might be buying an app that hits them up for more money as soon as it launches!
Jonathan
Interesting idea. Would require a considerable catalogue of such free-standing joke apps before viability (not to mention considerable risk – what if Blackberry backs off its $3 price point rule?).
I like your blog, dude. Gonna subscribe.
-Dan
You can save money on online shopping by taking advantage of printable coupons, deals, discounts, promotions, and special codes at http://www.clickmycoupon.com
Hey Jonathan et. al.
Speaking as a registered (and active) user on both Mint and Thrive, I'll offer my opinion – it may be one data point, but I have personally invested in excess of 100 hours tracking my finances through Mint since the start of 2009, and as of approximately 3 weeks prior, I now do the same in parallel with Thrive.
I think Matt @ Thrive's explanation of Thrive's model relative to Mints comes from a biased POV, but still rang true to me 100%. The recommendations I have received from Thrive speak to my desire to develop my personal financial security, and long-term growth. The recommendations I receive from Mint feel much more calculated, and oriented toward encouraging my opening of a new credit card or savings account. Now that I understand the potential “$15″ gain, everything about the way the site operates seems to make more sense to me.
To provide some color, I have no credit card debt, and not an extensive amount of savings, as I'm in my low 20s. At this point, I'm not interested in a CC with a low APR and high rewards, because I spend less than 5% of my monthly transactions on credit. Having been bombarded by credit card suggestions by Mint for over 5 months now, I admit I have been tempted to concede and open a new card that will yield me “$235 in savings in the first year”. As I thought about doing this, I figured I would cancel my other card, because I don't need more than one.
The first helpful tip I noticed on Thrive was its estimation of my credit, and recommendations it has to keep a strong credit score. I quote: “Keep your oldest credit card account open. Even if you don't regularly use the card, this will continue to improve your score the longer you have it. Try to use it at least five times per year to keep it active on your credit report.” This jostled my memory and reminded me of some advice my Dad gave me when we opened the card my last year of high school, and it really engendered a real sense of trust in Thrive. Not to drive the point to hard, but ever since then I've only viewed Mint as a place where I can enjoy a beautiful Web 2.0 interface – not a location where I can rely on planning my financial goals, and considering my long-run security.
I think Matt said it best by highlighting that Mint has “no aspirational or goal-setting part of their site.” I noticed this within 1 week of using Mint, and I was delighted to find Thrive, because it does have that. While at this point the goal setting and tracking remains fairly basic, I am hoping they will be updating the site soon, because I know they have their goals in the right location.
Speaking as a corporate consultant though, I also feel that Numbers gave a great analysis of the competitive landscape, and I worry about the long-run viability of any PFM web app. Matt – did Thrive ever consider operating as a tax-exempt org, given it seems the mission of your organization is more important than the bottom line?
Jonathan – any thoughts?
Eric
Please post comments or thoughts on part two of the blog post. Thanks!
Great article, Jon! I would be curious to hear Bug Lab's reaction to the iPhone being a threat. What type of customers are they seeing now? Can their needs be met by the iPhone's hardware/software platform?
no question that iphone/itouch has taken a lot of opportunity away from Bug Labs. but i think that their focus on helping enteprise customers with the development of “long tail” devices is a smart strategy. they can create any module that the enterprise customer might want and not all devices work with part of it hanging off a 30 pin connector.
Jon – thanks very much for the analysis. Apple's achievement in this space is inarguable. As much for their marketing as their technical achievement. But embedded in this discussion is the assumption that the long tail of devices is based on applications that work well on the iPhone! I think this is a false choice. We have all been trained to believe that WE should be at the center of the network. And in many ways we should be. But we will now have to start sharing the stage with machines.
Cisco has called it the “Internet of Everything” and it's becoming a reality. For example, we're working with companies doing interesting things getting automobiles and trucks (basically anything that moves) on the net. Applications that have NO user interface. Users interact with the system via a web browser located somewhere else. Maybe even on an iPhone
Others are working on getting their energy systems on the net. Accenture calls this trend “trivergence” which points to an emerging information architecture that separates the content from the application from the interface. We're seeing evidence of this in many places. The point is, there are hundreds if not thousands of applications for markets that are not suitable for the iPhone. Nor is Apple interested in them. Individually they are too small. But collectively they all make up this long tail. Bug Labs approach allows innovators to explore and profitably enter these markets quickly and at lower cost.
Ultimately, we're not trying to make people do things “our way” vs. Apple's “way”. We're much more interested in just making it easier for everyone to innovate with hardware. I think there's plenty of room in the market for all sorts of players right now.
Eric-
We actually did, and were originally incorporated in such a way that we could have gone either way (I don't understand the actual legalities of exactly how that all works, so I can't actually provide more details). As a team, however, I can say that we would have loved to go work for someone like the Pew Foundation or even the government, had we been given the opportunity. We all got in this to help consumers and we work hard at that every day.
That having been said, I should note that I actually think the LendingTree acquisition is very much on target with our mission. This is a company that was started by a guy who got frustrated when he tried to get a mortgage and couldn't get terms that made any sense between vendors. We've got a ton of opportunities that LT can help us take on, and though I can't say more until we get them nailed down, I think we'll be able to build a bunch of new features that will make it even easier for people to accomplish their goals, by facilitating partnerships for every financial action that people want to take. I think the real challenge and next step is making sure that once we have the right advice in place, we make it as easy as humanly possible to follow it, so that it what I'm noodling on these days.
-Matt
Jonathan-
It is hard to know how much of Mint's userbase is active, as they haven't published that I know of – during the Intuit debacle, they posted numbers, but they weren't about actives versus inactives.
One thing that has changed in the two months since this conversation started is the lead generation market. As I think some people predicted, companies are reevaluating how they pay out lead generation for things like accounts, so it is unclear that that is even a long-term viable channel. If it isn't, what other revenue options are out there for the PFM's of the world seems to be to the operative question.
I'm not sure that I think TwitterPulse is the best measure of the success of a site, but I suppose that depends on what demographic you are going after. I think Mint appeals highly to the tech affluent, the sort of people who read Crunchbase and comment on blogs. But that isn't actually the whole US population.
Let me give you an example. A woman called today for support at Thrive, and in between fixing her problem, she was gushing about how we are “the bomb” and how she does HR for new hires at a construction company. And every time people get hired and she does orientation, she says “we don't offer financial advice, but here are some great guys that do” and she talks about Thrive.
That woman will never Twitter about us. She'll never post on a blog. But somewhere in the US, there are a bunch of construction workers who hear about Thrive because it offers advice that matters to them. And that matters to us.
Your point about trust is an entirely valid one, and I think the important thing is what we trust sites to advise us on. I don't take personal finance advice from my mechanic because it isn't his expertise, and I don't take it from my bank manager because he is generally looking only for profit; the whole reason services like Thrive got created is because you couldn't trust the people taking your money to give you good advice about it. So the operative question about trust is this: what advice will we take from Mint and Thrive and other PFM's? Do we trust Mint to offer us account recommendations with our best interest in mind? Thrive? Wesabe/Rudder/etc.?
I can tell you my philosophy: the way to get people to trust you is to be trustworthy. This isn't about marketing or branding, creating “the illusion of trust”. This is about actual trust. Because all the marketing and hype and such sets us up for the problem we just had: people using our money not in our best interests, but in the interest of their bottom line. And so Thrive doesn't just appear to act in your best interest – we actually do.
-Matt
Peter and Fred,
Thanks so much for your comments.
Peter — You make a really interesting point (and one I overlooked) about the hardware market not being limited to devices requiring a user interface. Your examples of energy systems and automobiles getting online are interesting ones too. Congratulations by the way on Bug Labs' launch of the new prototyping and app services — i look forward to hearing more about those.
Does anyone know what software is used to setup a mirror / doppleganger site the way that yodle does?
I guess no one ever accused restaurant owners of being smart business people!
Restaurant margins are more like 30-50% so spending $1.00 to bring in an incremental diner is a steal.
“if you are full then reservation enquiries are being switched to your nearest competitor”
And vice versa. Diners are also being much more effectively pushed to your least busy hours.
This is a great analysis, although you're missing one piece of what OpenTable does.
They are not just a “lead generator”, they are also an inventory management system. If a restaurant didn't use OpenTable, they would have to purchase some other system. So some of that monthly fee has to be counted not towards each customer they bring in, but towards the system as a whole which they provide.
Question is … at Opentable.com what % of vistors put a specific restaurant into the text field and what % use opentable to search for a resturant. From my experience and others I have spoken to, most people know what restaurant they are looking to make the reservation for (opentable.com is no Zagat when it comes to reviews). Seem to me that 90% of users paying 1 dollars are overpaying by 75 cents. Thoughts?
JD, thanks for the comment. I was reading this thinking I'm going crazy – a CPA of $2.61 per customer. Come on, that is ridiculously low. Restaurant owners unwilling to pay that for a new customer should think about firing the bar tender stealing from him. They're the ones stealing, not OT.
Every Valentine's day tens of thousands of dudes drop the ball and go to google. What to they type? 'restaurant reservations' What comes up? OpenTable. What do they do? They search for whatever seat they can find…they don't type in a restaurant name – they just search for whatever they can get. Then they surprise the special lady friend with a table at some cute Greek place half way across town neither of them has ever heard of. Who saves bacon? OpenTable saves bacon and creates loyal users for life.
Margin is 30%-50%? If you consider just the mark-up on food & booze, sure (booze margin is usually about 50%, food ideally at 20%-30%, but that's gross margin and doesn't include any of the overhead.
The typical restaurant margin is microscopic. Something south of 5% in most cases.
Good analysis indeed. Here's something not being considered: OpenTable is also an integrative reservation management system which all restaurants need whether it's a person with a notebook or a different computer program. OpenTable eliminates, in most cases, the need for a reservationist (or at least a full-time one), saving on labor costs, and also provides many different ways to manage customer databases and retain customers.
So a user who completely utilizes all the features of OpenTable will see the real cost of OpenTable be much much less in terms of money saved in time, labor, and lost business.
I appreciate this analysis; as a heavy user of OpenTable for some years, it's nice to see what's under the covers, especially after today's IPO. My feelings are bearish overall, not just on the stock but the business as a whole. For a few reasons:
The OpenTable business by its nature doesn't scale well. Aside from the fact that it relies on a sales force and “high touch” relationship management with thin margin clients, the business model is inherently self-defeating. Really great restaurants thrive on their regulars, not the aspirational folks who dine out occasionally. OpenTable increases the cost not only of first time visitors but of savvy regulars who use the system to accumulate points at places they would dine at anyway.
Moreover, and I think this is a real killer — the places that likely generate the most revenue for OpenTable, are by their nature the most desperate and vulnerable. Consider the “1000 point curse.” A lot of restaurants that have seen their business decline will list lots of 1000 point reservation slots at peak times. Now, keep in mind, only two of these reservations means a $20 check for the diner; it's effectively a $10 discount on a meal. Of course OpenTable doesn't give away free money, so one assumes that the 1000 point slot is a real revenue (i.e. margins) generator for them.
Furthermore, consider their target market and current revenue base. Let's face it, OpenTable is a SF company for a reason. SF has (I believe) the most restaurants per capita in the nation. Therefore by owning this local market and NYC as well (and other major U.S. cities), they perhaps have created a solid base, but hardly an assurance of avoiding market saturation. 10,000 restaurants is great; but consider that SF alone has over 3,000.
What is the other 94% of reservation taking? Chain restaurants perhaps? That is to say, businesses with enough marketing power and internal proprietary systems knowledge that they would not outsource to OpenTable, or if they did, would have immense pricing power.
OpenTable may very well be near market saturation _in the niche they serve well_, which I believe is moderate to high end restaurants in affluent urban settings.
And in the final analysis, to reiterate a previous point somewhat — I am surprised at how expensive OpenTable really is. Great restaurants don't rely on leads generation or bringing in new customers, they rely on word of mouth and regulars. Literally, regulars who come back for years and years. While OpenTable costs $2.61 per head, a single satisfied customer “pays” the restaurant back many times over by growing the base that has heard of them. This is a slow process. And yet, it works, and has worked for many years. It leads me to believe that, again, the restaurants most dependent upon OpenTable are the ones least successful at word of mouth marketing, and therefore the most likely to fail. That does not bode well for their business model.
I would be curious to know which methods Vark will use to monetize– it's really interesting to think about. Have you heard anything about this?
Thanks for the invite Jonathan, looks like a great site!
Your 3rd key to Aardvark's success is an old concept known as 'generalized exchange' to folks in sociology and anthropology. Look it up! Bronislaw Malinowski, bitch!
delete.
Jonathan – Thanks for the great article.
Love seeing users who are as excited as we are.
- Alison @ Aardvark
http://blog.vark.vom
Get big Discounts on your next dining, Do not waste your money, save it! Use restaurant coupons at http://www.clickmycoupon.com.
Hey Jonathan – Thanks for the intro to Aardvark. It looks very cool – I've signed up and will start trying it out. I'm sorry we didn't have a chance to talk at the NY Tech Meetup Tech Showcase – hopefully we'll have another chance soon.
Open Table is a valuable service, but the commitment and expenses involved with retaining this service is less than favorable. While Open Table features great tools that the restaurant can benefit from, they mean nothing if the restaurant does not utilize these tools. I feel that that although the tool can be beneficial, the money for the service could be spent more efficiently.
We hear Opentable is running scared in the UK, desperately offering free hardware, installs and training to gain very expensive, non profitable market share. Opentable is scared witless by Livebookings and Toptable and to worry them even further there are rumours of a strategic alliance between Toptable and Livebookings erstwhile reservation back office partner, Quadranet. This could be a big worry for Livebookings as their own back office solution, Loghos, is not exactly fantastic and their small restaurant solution, Console, is less than intuitive.
The prize they are all fighting for is the right to supply an online reservation solution to D&D, formerly Conran, in London but there are rumours D&D has decided to specify and build its own reservation and marketing solution.
I was recently thinking about this same idea with a friend of mine. We also got stuck at the email <-> SMS issue. The issue being that if you were only provided a phone number, there was no way to identify the carrier. I suggested he send an email to <the number>@<every carrier> and then track the bounce backs and use process of elimination to determine that number's carrier. Was this the main issue you hit? I suppose not every carrier will bounce back as expected. Also, if you rely on user feedback via SMS, they may not be able to send messages to an email address. I've never seen a situation where either of these issues would be a problem, but I haven't ruled them out completely.
Your conclusions about Mobile Spinach seem sound. I'm not sure that you could ever build a sound model, though. Even while focusing on a particular niche might get your foot in the door, I'm not convinced that you could ever scale enough to be significantly profitable. To me the main limiting factors are the cost of SMS messages, and the cost of paying staff to scout out deals.
I suspect if a person was working full time to find deals in a given city, you'd only need one person per city. It's open to discussion exactly what kind of workload a single person would have and what kind of compensation they would receive for their work. $50k may be an unreasonably high assumption. Afterall, you could probably convince a college student to do a lot of this in exchange for a Spring Break trip, or summer abroad in Europe (both of this would be less than $50k).
As far as the cost of messages in concerned, 3 cents is just too much to allow for really profitable advertising. That being said, it's also the reason why we don't get large amounts of SMS SPAM to our phones.
Anyway, interesting post. Hopefully I have time to check our your future ones.
why did you find that Email<–>SMS is technologically infeasible? I've found that it works quite well! Is there some upper limit on emails per domain? Seems unlikely. There might be an upper limit from one email address – but that's quite easy to get around with custom email addresses (think: userid@domain.com).
Ah, I had the benefit of being able to ask my users who their provider was.
But actually, that's not even necessary: http://www.seabreezecomputers.com/tips/phone.htm
Thanks for the comment Ramsey. I didn't have any issues with figuring out the carrier because I just used teleflip. Ie you can email any number at teleflip.com and it routes it correctly (not sure if they're still in business: http://gigaom.com/2008/08/12/teleflip-has-flipp... ). There was an issue the other way though — emails from users would have rather random email addresses that often didn't contain their phone numbers in them. So it was hard to match up with the existing users in the database.
Interesting idea of using college students/interns. In-person sales is one of the few things that can't be offshored cheaply. But using interns…now we're onto something!
Ah, so the way you solve that problem is to only email your users from an email address that is traceable. By this I mean, say you need to SMS a user with user ID 10535. You SMS them from user-10535@yourdomain.com. When they SMS or email you back, the email will go to user-10535@yourdomain.com and you can see exactly who the user was.
Hey Ron,
I found that the SMS <-> Email worked well the first time you send an email. But that's it. A second email attempt would be delayed for hours or days. So if there was an upper limit, it seemed to be about, well, one.
Either way, we're talking about a hack, not a true scalable solution. You can't build a VC-backed company on a technology hack like this.
One thing I find really interesting is companies using push notification on the iPhone as a way of getting around SMS fees: http://www.businessinsider.com/aols-aim-iphone-...
Interesting. I wasn't running into any limits on AT&T and Verizon on my (albeit limited) reminders sent from http://www.proddr.com (not currently working – I've stopped developing it).
Why not use TextMarks.com? The user experience is a tad clunkier than email or using your own shortcode, but it's free.
But could you build a scalable business on the back of it?
Interesting reflection. Would you pay then $2.61 per head for new customers if they came on party that includes 6 or more people?
Sounds like a great app. Wish we thought of it
Good Luck!
Every app developer who is giving up their day job to work on mobile apps needs to read this before they make the jump. I think they should make the jump anyway, but they should be informed with this information.
With that said, everyone loves free apps. Thus, more developers should consider the freemium model: Lite and Pro versions. I bought the PingPong app by Skyworks after playing with the Lite version. It's a classic case of monetizing your high volume users.
Are the penetration figures for other platforms (Blackberry, Android, Windows Mobile, Palm, etc.) consistent with the iPhone? Would you happen to have their respective market sizes as well?
Exit Strategy is great – plans to offer it on the Blackberry? Would be interesting to see what the numbers look like on that device.
The comScore numbers in this article don't add up.
In the comScore article (from April 09) linked to next to “The most frequently downloaded free apps reach approximately 30% of devices”, they claim that Tap Tap Revenge is installed on approx 32% of all iPhones.
VentureBeat took this information and using an approx U.S. user base from Admob of 15 million, estimated that Tap Tap's 32% equalled 4.8 million users. http://venturebeat.com/2009/04/06/behold-market...
Thing is, here we are four months later with Apple's earnings reports showing sales of 45 million iPhone and iPod Touch devices at the end of the past quarter.
Let's assume that Tap Tap did have 4.8 million installs in April 09. I actually think that is a fair number, considering that they passed 1 million in August 08. I might even put them somewhere in the 6 million range. At 4.8, that would mean that the most installed app in the app store has only been installed by just over 10% of the total number of iPhone / iPod Touch owners. 6 million is still under 14%.
What you have to keep in mind as well, is that even in comScores top 25 overall, the drop off between their estimated #1 and #25 was already almost 20%.
What about a service that connects businesses (couponers) and couponees. You provide an interface for both couponers and couponees to sign up. Couponers send their coupon to their couponees through your site and pay per sms?
I'm sure there is someone doing this – basically aweber for sms. Surely seems like it scales.
What am I missing? Thanks.
I hope you all have your own Exit Strategy. I think your app has many flaws.
1) There are already a handful of GOOD subway apps for NYC – you will have to switch them
2) Nobody really cares where to enter/exit the train. YOU might, but it's trivial anyways. Nobody cares if they have to walk 20 extra feet and sometimes trains are too crowded anyways.
3) People who aren't familiar with the subway will know someone who does and probably won't initially think to look at the iPhone. If they do, they'll quickly be disgruntled by how poor ATT service is in NY
4) half the regulars already know the trains. They only need the apps for maintenance (which existing apps already do a good job of as well)
Have fun though. However, I'd suspect as insanely niche as your app is, you can guess all the numbers you want but the results will be meaningless for general purpose apps for the iPhone/iPod Touch userbase.
Sounds good. Follow let's follow each other.
Twitter: joelchabot
I wanna know more!
Take care
Can you really base all of this off of one companies sales. For me to actually accept your results, I'd like to know that you looked at more than just flight control. A game like that is only interesting to a very small subset of people in general. It would be better to see a wider range of applications issued as well. Such as applications that hit on different consumer wants/needs. Also you havn't considered applications which are free and generate revenue via advertising. Overall I don't think this is a very robust assessment of potential revenue for developers.
You're a dick, guy.
Maybe he is, but he makes some pretty good points. There's a lot of developers with a dream…and a lousy idea.
What a useless statement, this is a back of the envelope discussion, and his mentions several times that he is using this as an upper limit because it is the best. Why doesn't he just go out and ASK everybody with an iphone who will but his app?? That would be much more accurate.
I would love to see how the different platforms compare.
I guess the moral of the story here is charge .99 a download vs relying on advertising to support your app.
Hi Dsylva — Yes, i have this information and it will be the subject of a later blog post. Stay tuned!
Hey Seek, yes, the VentureBeat/comScore article is a tad dated. But i'm not sure how you're estimating that the install base of tap tap would have grown to only 6M. VB took 15 million US devices and multiplied it by the 32 percent penetration rate to get 4.8 million american users. Not sure if the app is limited to the us or something, but if the total # of devices now numbers 45M, you wouldn't expect the install number to be 10-15M rather than 6?
Cakit — thanks for the suggestion. We did in fact ask everybody we knew (as well as random strangers on the subway) whether they'd buy our app. And guess what? Over 50% said “Yes”.
Well, we certainly haven't achieved a 50% penetration rate. Basing a calculation on a survey can be dangerous — what people say they'll do and what they actually do is quite different. Thus the reason for looking at the real sales data of a best selling paid app — it's a good estimate of what can realistically be expected.
Chris — Do you feel that 3% figure is too high or two low? I did check to make sure other best selling apps were within the same approximate range. They are. For example, Pocket God has sold about 1.2M copies: http://www.pocketgamer.biz/r/PG.Biz/Pocket+God/...
Flight Control and Pocket God have both been sitting on the best selling paid app list seemingly forever, so they're pretty good bearings of the upper sales limits and therefore the upper penetration rate. Getting a million downloads of course is by no means typical — consider that when the 1 billion download mark was hit, there were about 35,000 apps. That means the average app (among both free and paid) had about 28,500 downloads.
There's a few more scattered numbers here: http://cavalcadegames.com/blog/iphone/epic-ipho...
There's a great website that I used to get an iPhone app made for me. They have a lot of developers that are pretty cheap and you just tell them what you want, and they make it for you. It's called iPhone Freelancer http://www.iphonefreelancer.net
Chris — Do you feel that 3% figure is too high or two low? I did check to make sure other best selling apps were within the same approximate range. They are. For example, Pocket God has sold about 1.2M copies: http://www.pocketgamer.biz/r/PG.Biz/Pocket+God/...
Flight Control and Pocket God have both been sitting on the best selling paid app list seemingly forever, so they're pretty good bearings of the upper sales limits and therefore the upper penetration rate. Getting a million downloads of course is by no means typical — consider that when the 1 billion download mark was hit, there were about 35,000 apps. That means the average app (among both free and paid) had about 28,500 downloads.
There's a few more scattered numbers here: http://cavalcadegames.com/blog/iphone/epic-ipho...
Cakit — thanks for the suggestion. We did in fact ask everybody we knew (as well as random strangers on the subway) whether they'd buy our app. And guess what? Over 50% said “Yes”.
Well, we certainly haven't achieved a 50% penetration rate. Basing a calculation on a survey can be dangerous — what people say they'll do and what they actually do is quite different. Thus the reason for looking at the real sales data of a best selling paid app — it's a good estimate of what can realistically be expected.
I know quite a few people who will only download free apps and I find the authors 3% figure fairly accurate but I'd say most people have a better chance of winning the lottery than making any serious money on this platform. I applaud your dev efforts but all that work and sweat for what..? 30k-40k..? After opportunity costs and credit cards are figured in (assuming you went that route as a lot do) and after Apple takes a nice bite what have you got left..??
I released an app last year and it met some initial success but quickly fell by the wayside as 90% of them do.
So Apple here's to you making money off of our toil and sweat – To your wonderful and open approval process reminiscent of Germany during the third reich – and To your oh so cozy relationship with your new best friend AT&T, a shining beacon of hope and innovation in these trying times.
Oh yeah and one more thing: Objective-C sucks.
Good stuff Jonathan. I'm personally a big fan of back-of-the-envelope calculations to sanity-check and direct my thinking.
Regarding other platforms: although there might be a lot of Blackberries out there, it isn't necessary easy to support them all, and penetration rates can be way lower than for iPhone. I have given a couple of presentations with back-of-the-envelope calculations that discusses this. They are from S60/Symbian vs. iPhone viewpoint, though, but I think it's somewhat applicable to Blackberry too.
http://dirtyaura.org/blog/2009/03/10/mobiledevc...
I explain the numbers in the comments:
http://dirtyaura.org/blog/2009/03/10/mobiledevc...
I agree with nessence about niche apps such as Exit Strategy, however if there is a model to take it to other markets or other transit related apps in the NY market they have a shot at a decent business. At trainlogic.net we took the former approach (but are not ruling out the 2nd!)
Good
Spam.
Looked over your presentation — Interesting numbers, thanks!
Hey Jonathan, I was really pulling a number out of thin air, but this TechCrunch article about the Tap Tap Revenge 2 launch which came out in March mentions total installs of 6 million. http://www.techcrunch.com/2009/03/02/tap-tap-re...
I did a little further digging, and Tapulous CEO Bart Decrem stated 11 million installs in a phone call with TheAppleBlog in June. http://theappleblog.com/2009/06/10/tap-tap-reve...
My guess is that Decrem is referring to total installs for all seven available versions of Tap Tap Revenge. I'm pretty sure Tap Tap Revenge 2 was a new install instead of an upgrade from Tap Tap Revenge, so all of its install numbers are probably just being added to the pile. My guess is that the total install numbers for the original Tap Tap Revenge game to date are around 7.5 to 8 million and the numbers on Tap Tap Revenge 2 are much less. 3 or 4 million would be a fair guess.
None of this really matters much other than to say that obviously Admob's device estimation in April was way off, and I'm fairly certain that comScores numbers were as well. I think if we had actual top 100 overall free install numbers, apps at the bottom of that list would be at 2 million installs or less. 2 million is still nothing to sneeze at, but it is far off from the numbers quoted. And as you mentioned in one of your comments, if you take the total number of apps in the store and compare it to installs, average installs per app are in the 20-30k range.
Bottom line for free apps is that you either have to be willing to give it away, or you have to have a business plan that focuses on not just getting lots of installs, but keeping those people using the application regularly. That is the only way the ad or in-app purchase models really work.
There's definitely a mental barrier to purchasing apps for a lot of people. The same goes with paying to download music I think. That said, I think there is serious money to be made, but for most developers it's exactly like playing the lottery. The 'serious' money comes from getting atop the best selling app list and for a game or utility, it's a complete toss up whether anyone will notice it or whether it will get lost in the noise. Getting the marketing/press angle right is key.
One of the best speeches I've ever seen is David Heinemeier Hansson's “The Secret to Making Money Online”. He talks about people shooting for the stars with a 0.01% chance of succeeding (trying to build the next facebook) and then more modest 'lifestyle' business ventures that fill a small need and have a very good chance of being steadily profitable. An app like Exit Strategy isn't 'the next facebook' — it's a lifestyle business. We knew it would be pressworthy and get buzz and therefore would do sales approx in this range. I wasn't expecting to make a million.
Exit Strategy NYC was built by a very small and scrappy team working on a shoestring budget, putting in only a few thousand dollars and a few months of time to develop the app across four different mobile platforms. It paid back its costs on our first two days of sales and has sold steadily since then — it fills a need for new yorkers, and will likely continue to sell steadily. It's been a great experience.
Objective-C does indeed suck.
I will recommend using Email Charger for all bulk email marketing needs. Its the best email marketing software I have used so far.
This analysis of ad networks is true whether you're talking about iPhone ad rates or general ad networks for your website. Everyone quotes the “white whale” $30 CPM while delivering the more measly remnant, $1.00 or $0.50 CPM ads.
When you're getting into all of this for the first time, there's one other thing to remember — never, NEVER sign an exclusivity contract with an ad network provider. There's absolutely no way for you to know how well they'll deliver for you. At best, they'll deliver premium rates for the first month or two to keep you happy, but then you're stuck in the remnant basement for the rest of your contract.
Just saw this via Twitter. Interesting post.
I used to work at a company called PRWeb, which a few years back “revolutionized PR” too with an iteration of digital news release that truly utilized SEO, among other filtering technologies.
In that breath, MatchPoint makes a lot of sense. As you said, journalists are totally overwhelmed by information so a filter like MatchPoint could be useful.
MuckRack seems like more of a stretch. A one-line press release? Isn't that just an email subject or headline without the body?
The point of the news release is to get the news out. (Take a step back and a news release may not be the right means at all, but that another issue.) The tough part is finding journalists and influencers who want your information, and that's where I see MatchPoint offering value. If you're able to find the right people in the first place then a service like MuckRack isn't necessary because those people will want much more than a single line of your news.
If journalists really wanted single-line sources of news, they'd avoid the PR pros entirely and run a search on Twitter to get straight to the source.
The Wall Street folks generally don't own thier Blackberries and do not have access to install apps…
There are three kinds of lies right? Lies… damn lies… and statistics. I think that the 3% estimate may be way too optimistic here. Flight control is a game, and as such, does not have the same kind of competition that your application would have. While you may have four airplane games, the likelihood of someone having more then one subway application is slim. While your app has better features, you still have to compete with things like Gotham Wave's free NYC Subway maps, which has over 6000 reviews. (Id love to see someone post about reviews vs number of downloads).
I think there is also a major logic flaw in your addressable market… like you said, the MTA numbers do not represent uniques. You have to imagine at least half of the trips on a weekday are round trip – people who go to work, and then back home later in the day. You also cannot assume the Saterday people did not travel during the week as well. If there are 5.2MM rides on the week days, and half of them are round trips, then youve got about 3.9M riders. Ill give you 4MM for people who only ride the subway during the weekends and never during the week.
10% of your 4MM would be 400,000. 3% of that would be 12,000.
Going back to the first point – lets imagine anyone who already has a subway app and has rated it 3 stars or better is going to stick with the program they already have. Looking at your competition, there are 7,057 ratings of 3* or above for other peoples NYC subway applications.
Leaves your plateau point at about 5,000 downloads. Not saying you wont get more downloads then that, but at that point I would guess your daily sales would flatten out.
At $2.99, with Apple taking 30%, looks like revenue totaling about $9,000.
Of course… thats only iPhones. Good luck!
Thanks for the comment, Aaron. First of all, the 3% figure is meant as an upper bound, not as a reasonable sales figure estimate for an unnoteworthy app or an app in a crowded category. It's intended for people serve a market with a unique app which solves an unsolved problem. Predicting game sales or copy cat app sales (ifart et al) is a very different and more difficult task.
A quick note about Exit Strategy NYC – it's not a subway map app. It doesn't compete with the other subway map apps, but instead has functionality which compliments the other map apps and it's the only app with this information.
As far as I can tell, reviews and numbers of downloads don't correlate very well.
Thanks for the comment, Aaron. First of all, the 3% figure is meant
as an upper bound, not as a reasonable sales figure estimate for an
unnoteworthy app or an app in a crowded category. It's intended for
people serve a market with a unique app which solves an unsolved
problem. Predicting game sales or copy cat app sales (ifart et al) is
a very different and more difficult task.
A quick note about Exit Strategy NYC – it's not a subway map app. It
doesn't compete with the other subway map apps, but instead has
functionality which compliments the other map apps and it's the only
app with this information.
As far as I can tell, reviews and numbers of downloads don't correlate
very well.
How is that creepy?
As a buyer, you provide that information for every web-based order you place. The only “creepy” part is that Google provides you with what the user stored previously, rather than letting the user enter it over and over again for each purchase.
Incidentally, eBay does the same. So does Amazon. It's what sellers require to ship a product to a buyer, so both systems try to help the buyer by storing the information for them.
The only difference is that in the case of buying via Google, you're shipping bits via an electronic medium and don't strictly speaking need that information.
You can accuse Google of not updating business processes in a situation where a new process would work just as well. I'm not sure that's their place, though – and there might actually be laws involved that would prevent that.
But creepy it ain't – those are just old-fashioned business transactions for you.
Nothing creepy here – just proper provision of data to an independent seller. If you sold your app separately outside an App Store, you would have had the same data. If Apple refuses to share that data with you for their own benefit, at least Google does.
Bugger, I type in “Bikini Girls wanted for wobble sex fun” and this rubbish came up, whats going on
Even when charging people for digital purposes, you generally want a billing address. I don't think there's anything creepy here.
Shame on you for choosing a sensationalist heading, currying fear in hapless readers, and in the last paragraph, you balance your ethical check book by calling this for what it is – required data for an e-commerce transaction.
Can you connect a full name and location? That's where it gets creepy.
If you can correlate the location of an app user and a full name, I think that might create a dangerous situation if the information fell into the wrong person's hands.
what a trash article!
Fully seconded.
Physical products don't send back geographic locational data.
Very true indeed. FUD — nothing else. Except, of course, the sensational headline and submission to Hacker News to pull in readers… This sucks and I will never visit this blog again.
You are being ridiculous. The people who buy your application are your customers. You need this information just as any service needs it – To provide support to the people who have given you money if they have issues, and to protect yourself if they attempt to do a charge back or whatever.
agree with other folks here, if you're charging for an app, you would expect the full name of the persona purchasing. just standard ecommerce. nothing big brother.
Thanks for all the comments folks — interesting to see that most people don't see the unexpected transmission of personal information surprising when purchasing an app.
The point of this post was to make people think about the current fear mongering around spyware on mobile phones. The media makes it out to be like the developers are watching you and know everything about you based on analytics. But on iPhone and Palm, they know very little about their users — just vague anonymous information. But on Android, they DO KNOW everything about — developers are given the names and practically the addresses of all its users and combined with the location data that's passed back, has some scary privacy implications.
I don't think most app purchasers on android realize that their personal information is being sent to the developer. That fact certainly surprised me and led to this post.
On a totally separate privacy note: its one thing to blur out the last name when someone has a common first name (”David” or “John”), but what exactly do you think yr accomplishing by blurring out Baratunde's last name?
I've never heard of Yodle. I will have to head over and check that site out. I have been into video marketing sites like Adwido, but I don't do a whole lot of local targeting. That may be something to try.
In this analysis, one important factor to note is that OpenTable users only receive points for a reservation IF THE RESERVATION ORIGINATES FROM OPENTABLE. I got burned by this once, where I made a reservation by linking to OpenTable from a restaurant's website. From now on, if I see that a restaurant's reservations are powered by OpenTable, I will open a new browser and initiate the reservation through OpenTable.com. This will distort the perceived value of OpenTable in generating new business. I do not use OpenTable to find new places to eat, only to gain a marginal benefit from making an online reservation at a restaurant I have already chosen.
Jonathan
I guess you might already know but while researching this topic I came across another article that was almost identical to yours except a few words and phrases were altered. A blatant plagiary if there ever was one. I am assuming they copied you (and not the other way around) based on the dates.
Anyway goes to show how we all are falling prey to the “I saw it on the internet”-and-so-it-must-be-true phenomenon. Cant trust anything or anyone online unless one verifies the information for oneself. Who is telling the truth (definitely not the ad networks) and who is writing to push what agenda and who is original and who is a fake is all up in the air in this day and age.
Sorry, the copycat article is at
http://www.moveyourweb.net/blog/2009/09/
Exit Strategy is a really great idea, with a great name also. (I thought of the same theme myself, and visited the MTA map room at 2 Broadway to see if putting together all the info could be done without going to every station, both sides and sometimes several line platforms. Actually it can.) Also, the idea of this was written up several years ago in the New Yorker magazine where it was described, with the word “prewalking” which is a unique term for the concept, but they had no execution. I like the name Exist Strategy better. Could you put the the approach on a website though ? I'm 60, not money rich, and have decided, a simple prepaid cell phone is enough for me. I think the same is true for many “seniors” who won't keep up with each new technology. Do you show where the elevators are for “invalids” or people with baby carriages ? That's also a serious concern. But all in all, the graphic interface is super, and the idea is well-considered. Good luck with it (in $'s). H. E. Nass (PS Please contact me. Thanks.)
I'm so love this blog, already bookmarked it! Thanks.
I've just released my first ad-backed app onto iTunes, and I'm blogging about the experience here: http://biketool.tumblr.com/
A summary: it sucks!
Lol I was just authoring a very similar post about my MTA-related app when I found yours while looking for figures.
I have gotten pretty tired of people asking “do people make a lot of money selling iPhone apps?” when the answer to that question is restricted to the same per-product marketing variables of just about any other product.
I like writing my app and supporting passengers – I wrote the app for myself first. I far make less per hour on iPhone App sales than any other development job I have had in 15 years, but I'm ok with that.
However, it has held me back from jumping into similar products as StationStops with very limited potential market (Regular Metro-North commuters with iPhones), and a regular maintenance requirement.
Do you think that maybe the companies who are being aggregated are lazy?
Take opentable, most restaurants have poor websites. No real information, they don't do much to advertise specials. I never go directly to opentable to find a place to eat, instead I'm plodding around trying to find a website that's poorly built.
If you've got something superior you might be able to short circuit the aggregator.
What you're missing is how to get anyone to care. How do you get couponees to your site? How do you get couponers to your site? Without a significant number of both there's no value to the site — getting over that critical mass hump would be brutal and take significant upfront investment in marketing efforts.
I don't think the constituent companies are lazy, there's simply economies of scale to being the aggregator rather than the constituent. Those economies of scale are partly marketing related and partially technology cost related.
No restaurant is going to go build their own seamlessweb online ordering system. It would take a ton of money and time and that's simply not their core competency. Seamless has the solution already. But more importantly, seamlessweb has the brand. It's easier to advertise an aggregator and establish a brand like seamlessweb than a restaurant advertising itself. This efficiency difference = Seamlessweb's value and profit.
I don't really need open table to book a reservation. I need to see menus, times, parking information, ingredients (I'm celiac and allergic to gluten). Some of the best restaurants aren't on those systems.
There is definitely value from an aggregator standpoint, but I feel most restaurants fall down on the basics. Sure there is scale in advertising, but differentiation is tough.
Insightful read. I have stumbled and twittered this for my friends. Others no doubt will like it like I did.
excellent post. over the course of your research, did you ever hear how much open table pays for affiliate referrals? again, great post.
Do no evil is sometimes not so easy.
All the more reason why not to make an app solely focused on purchase price or advertising to make money.
Online restaurant reservations company OpenTable filed for an IPO on Friday, revealing their finances for the world to see. The SEC filing contains all the financial figures you would expect it is very good..
NYC Hotels
Jonathan, your earlier post about OpenTable and this follow-on are fascinating topics. I represent Livebookings and our business model strongly disagrees with your assertion that aggregators always seem to get the upper hand and that constituents eventually lose. Unlike our main competitor, we do not use Livebookings as a consumer brand but instead focus on helping the restaurant build its own brand. We offer a reservation engine that goes directly on a restaurant's own home page (see http://www.acquavit.com as a great example) allowing the diner to book a table without leaving the site. In addition, we syndicate our restaurant inventory through many partner sites that are consumer focused (e.g. http://www.bookatable.com or http://www.restaurant-guide.com) and therefore offer added exposure for the restaurant. We believe we offer the best of both worlds to the industry – aggregation without taking away from the restaurants own brand.
I would be interested in any further thoughts about this approach of solving the issue. We are just in the early stages in the US market right now, but the model is well proven in Europe.
Andris
Hey Andris,
Thanks for the comments. I'd be curious to know whether you consider Livebookings to be an aggregator? Or simply a software solutions provider? If you partner with affiliate aggregators like bookatable and restauraunt-guide, do you pay them a per-customer referral fee? Have you also considered starting your own portal?
Jonathan
Jonathan,
Yes, we are an aggregator and our affiliates share in the fee per diner seated that we charge. The difference is we are an aggregator that does not compete with a restaurant's own brand, and we make the process of signing up and installing much easier. We still offer similar reservation management and table management features to restaurants and in that sense we are a software provider (Software as a service in our case, very scalable, think salesforce.com). Further, we can offer the leading restaurant guides and review sites such as urbanspoon.com, yelp.com and others the ability to add the online reservation feature on their sites without stealing from their traffic either. A win-win on all sides we believe
Nice to hear
Had a similar experience today. My 12 year old cousin in 7th grade has the same Spanish teacher I had when I went. She was even there when my brother was in middle school. This sort of stuff blows my mind!
Please leave any comments at the end of part 2.
well said
great post. I love the concept of rates–and this is a great reason why everyone should know a bit about calculus. (Integrating your rate curve for total profit FTW).
A wrinkle to this would be products that have highly variable and or infrequent rates (or worse, both).
Your iphone app probably sells at a fairly constant rate (when you're not spiking on press releases due to initial launches and upgrades). So if we take your assumption on rates (and your $100/day bench), and say you sell ~25 apps per day, I'd imagine that rate to be fairly constant. i.e., day to day flex of say 0 min to 25 max, with weekly variances of +/- 5 or 10% week/week. So you've got a product that sells frequently and consistently, and can think in pretty clear terms of daily rates.
However, I know the Atlantic Avenue section you're speaking of well, and you can take a look at some of the dress shops there that have like 10 dresses on display in the whole store. These guys probably sell 5-6 dresses a month for $1000 each. Clearly trying to think of this rate on a daily basis will do you no good (I'm selling .2 dresses/day!). You're limited in using the rate to plan cash flow, because a bad month could mean you're operating in the red, while a good month means you're way, way in the black. To cope with one extreme, you've got to keep a lot of cash on hand to cover dry spells–hurting your ability to invest in new products. On the other, you're faced with an inventory issue–if you do sell 500% more dresses in a month, will you be able to find supply for that demand?
The math makes sense. As always, your granular analysis merits praise. However, the biggest risk to a startup is to assume it will be very easy to sell 10 per day. While just 10 per day sounds conservative, often times it is optimistic. In my VC days I never saw a company hit its projections as first presented to me, regardless of how conservative the entrepreneur claimed those projections to be. If instead of 10 widgets they only sell 7, they run out of money pretty quickly or do not see an uptick in valuation next round.
Otherwise, why not start a soda company in China? Just 1% of that market is 12 million people.
Actually, your numbers on living in NYC don't make sense. The $100/day number is probably reasonable, having lived in NYC for 5 years, I can attest to that. However, a $35K/year salary won't cover it. With city/state/federal/sales/etc taxes, in NYC you probably pay around 50% of your income in taxes. That makes the math easy, to afford $100/day, you need to make $70K.
Of course, that's just basic living expenses. You don't live in NY to sit in an apartment and look at 2 square inches of sky every day. There's $50 binges at the bar, Hampton's or Jersey Shore weekends or skiing holidays. Additionally, New Yorkers are pretty social and sexual, so there's going to be plenty of dates. Keeping a date under $100 is a battle.
That is one of the real downsides of living in NYC, it almost doesn't matter how much money you make, you're being sucked into bankruptcy.
If a customer purchased this from you directly you'd have the same information. I don't see it as being creepy either.
> I don't think most app purchasers on android realize that their personal information is being sent to the developer.
Yes, we do. This is COMPLETELY normal. It allows us as customers to get things like customer support, upgrades, and benefits. In fact, I more surprised to learn that iPHone app developers do NOT get this information.
Seriously, wtf?
I try to approach costs in terms of unit costs rather than the lump sums…
For flights – how much per hour of flying am I paying? It makes a 23 hour flight to Bali that costs $950 right now look pretty good!
For utility items – a cup of coffee, takeout rather than cooking. What is my time worth and the cost to make it myself. Sometimes if I'm busy it's worth it. On the weekends when I'm not earning with my time, it isn't.
I think it's great to look at businesses in the same way. You avoid getting yourself into a situation like paying $54,000 a month for rent to sell hot dogs! http://www.huffingtonpost.com/2009/08/08/hot-do...
Wonderful embracing of web 2.0 for travel. I have to try this next time! is this travel 2.0?!
Sorry for the delay, I was starting my soda company in China.
But seriously, you make a very good point. Sales projections are tough and they almost always fall short. And the first sale can often be the hardest since the product is unrefined and you have no brand or previous happy customers to point to. Thanks for the comment.
Thanks for the comment. You're right, there are a lot of taxes to layer on top of anything (although many entrepreneurs can consider their rent/metrocards etc as a business expense). And you're right, $100 a day isn't a glamorous lifestyle. It certainly doesn't leave much room for Jersey Shore weekends, skiing holidays, bar binges, and lots of expensive dates. But if you're bootstrapping a startup, this probably isn't the lifestyle you're living. Maybe you've even moved abroad… http://spreadsong.com/bootstrapping_abroad_why_... (fantastic article)