jonathan. tumbling.

Search engines, RollYo, Davenetics and more.

Entrenched competition is tough to beat. You saw it happen with CLEC’s vs ILEC’s in the late 90’s and early 2000’s, and then watched the collapse of the CLEC’s in the mid 2000’s.

… which is exactly why Google is going to be tough to beat for anyone out there. I’m probably not alone in this, but anytime I hear about a different search engine I just don’t really care. Whatever they are offering, chances are, is just an incremental improvement (if even that) over what we already use everyday.

Which makes it tough. Very tough, for anyone trying anything innovative in the space. It’s not that your product isn’t great, it’s just that people don’t care. Google is “good enough” for them and they aren’t going to be looking elsewhere unless there is a seriously compelling reason.

With that in mind, I remembered reading about RollYo a long time ago (a year?). I’ve probably heard of it a few more times since it launched, but again - never really cared to find out anything more.

So this afternoon while browsing through Davenetics (Dave Pell’s personal blog, the guy behind RollYo) I decided to take it for a spin.

In short, it’s an interesting take on search. By limiting your search results to sites you “trust”, you’re in effect filtering the web. It has it’s pros and cons, but in say, high school computer labs or other places where current filtering software falls well short of the mark, it’s a good option.

But what does it offer “normal users” (read: tech users) like me? Not much of anything off the top of my head. That may change, but who knows. But it would be perfect for my grandparents. For my mom.

That’s the lesson we have to takeaway from this post. What isn’t right for “us”, may certainly be right for people that use the web for much less basic things that we do. We are not mainstream. Your parents probably are. There is a lot more money to be made in applications that provide value to the mainstream vs. applications that provide value to people like you and I. The ideal scenario is of course when you can serve both masters effectively, but sometimes you just have to choose between one or the other.

It’s easy to choose to build it for us, after all, that’s what we know best. It may even be better to start out that way. One of my own personal litmus tests for products has always been a simple one:

Can I easily explain it to someone here in Kansas, and will they “get it”? (with wikis, this was nearly impossible)

Being outside of the valley has its advantages. You’re removed from the echochamber of FriendFeed (will someone get it here? Doubtful. If they did, they’d say: “Why would I ever use that?”). When you can explain your product to your mother in law, and she “gets it”, you know you have the potential for mainstream appeal.

What about other products? I could easily explain Mahalo. RollYo is another one. Twitter is getting there, if it’d ever stay up long enough for people to try it (sorry, had to throw that one in ;) Clickpass? No way. :)

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2 months ago

Bootstrapping your subscription based consumer application.

I had a great discussion over dinner about subscription based consumer applications with my lovely wife. We don’t normally talk about deep interesting things like this, but hey, why not? ;) It gave me a chance to solidify some thoughts that have been floating around in my head for the last week or so. Maybe I’ll end up talking about this at BarcampKC.

First, let’s define what a consumer application is. Consumer in this context means your product is providing value to someone that is not a company or business. Got it?

Making money with subscription based consumer apps is tough. Here’s a few of the problems you’re up against:

1. Consumers expect web apps to be free. (they’re cheap.)
2. Consumers, if willing to pay, expect to pay a very small amount. (they’re cheap.)
3. Inertia of “yet another recurring monthly fee”. (most don’t budget well.)
4. Historically consumer apps have a high turnover rate.

Ok, now that we have those issues out in the open, let’s talk about how to overcome them.

Freetards

Your consumer app *must* have a free plan. Deal with it. Entice your customers to upgrade with value added features, but leave enough the core functionality to let them get done whatever it is they’re wanting to accomplish.

Cheaptards and Budgetlesstards

Ah, an age old problem. Cash flow. If your customer acquisition costs are say $15 per customer, but your most expensive plan is $14.95/mo, it’s going to take you a few months for each customer to pay itself off before you’re turning a profit from that one customer. By that time, chances are, the customer is gone. Turnover is high, remember? And you damn well better know how much it costs you to acquire a new customer.

Tell me, which would you rather have:

$4.95 * 100 customers /mo

or

$49.50 * 100 customers in 1 month

One puts $4950.00 towards your advertising campaign, the other puts $495.00.

Let me highlight the point I’m trying to make here: charge more up front, have more capital to work with, reinvest it into your advertising campaign. Grow. Grow. Grow.

But wait a second, people won’t pay that!

Great, let’s talk about the price point. $24.95 seems to be popular. Flickr has charged that for awhile now. Weebly (I think) charges $24.95/year for their domain registration (they have a fixed cost with that domain registration too, so that $24.95 is actually reduced to something like $14.95/year per customer that they can use.)

In my past experience, anything under $50 was a sweet spot. If I were launching something soon (hehe), I’d do an a la carte plan with a sweet spot (2 or 3 upgrades, but not the whole enchilada) that added up to somewhere around $45/year. You’ll always have a few people willing to max things out ($100/year), and a few that will only take the lower amount (say $20/year), but regardless most would end up hitting you for around $50. Make sure you price your features so that they add up to be close to those numbers so you maximize what your customers are actually willing to put out their wallet for.

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2 months ago