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jducoeurInteresting article today in TechCrunch -- in particular, note the comment that Twitter seems to be seeking a new round of financing, less than a year after taking over $5 million. While it's possible to blow through that much money that fast (my bubble company, Trenza, had a burn rate somewhere in that ballpark), it's kind of challenging.
It specifically leads me to wonder whether they actually dealt with the fundamental insanity of trying to run a business based on SMS. The thing is, you know how expensive text messages are for the end user? How they cost five cents a line, or something like that, once you go past the limit on your package? Well, it costs pretty much the same amount for the applications as well, unless they manage to cut a really good deal with the phone companies.
I had *assumed* that Twitter had, in fact, cut such a deal. Certainly that's always been my long-run hope for CommYou: to basically tell the phone companies, "Look -- I'm going to drive SMS traffic for you, but I need you to let me send messages for free." But now I'm wondering if they actually got that deal. I'm sure they arranged a discount, but if Twitter is paying *anything* per line, it's too expensive to make any sense at all from a business perspective. I mean, even one penny per line is a fortune if that's what your business is built on. (I will be very distressed if CommYou's expenses work out to a thousandth that much.)
For the average user of Twitter, the lesson is this: don't get *too* attached to the service. They're a classic bubble company in their own way, with an interesting idea but no business plan at all. They might survive by selling the company to someone who considers them a loss leader, but their odds are only so-so...
It specifically leads me to wonder whether they actually dealt with the fundamental insanity of trying to run a business based on SMS. The thing is, you know how expensive text messages are for the end user? How they cost five cents a line, or something like that, once you go past the limit on your package? Well, it costs pretty much the same amount for the applications as well, unless they manage to cut a really good deal with the phone companies.
I had *assumed* that Twitter had, in fact, cut such a deal. Certainly that's always been my long-run hope for CommYou: to basically tell the phone companies, "Look -- I'm going to drive SMS traffic for you, but I need you to let me send messages for free." But now I'm wondering if they actually got that deal. I'm sure they arranged a discount, but if Twitter is paying *anything* per line, it's too expensive to make any sense at all from a business perspective. I mean, even one penny per line is a fortune if that's what your business is built on. (I will be very distressed if CommYou's expenses work out to a thousandth that much.)
For the average user of Twitter, the lesson is this: don't get *too* attached to the service. They're a classic bubble company in their own way, with an interesting idea but no business plan at all. They might survive by selling the company to someone who considers them a loss leader, but their odds are only so-so...
(no subject)
Date: 2008-04-24 10:27 pm (UTC)During this time, numerous companies sprang up, characterized by slightly cool (occasionally slightly insane) ideas, nonsensical business plans, venture capitalists hanging out like dying animals at an oasis, zillions of stock options, paper millionaires, and lots of Aeron chairs. These companies started to go out of business when reality finally set in around 2000, and most of them finished dying when things hit bottom in 2002. (The summer of 2002 was the nadir of the computer industry.)
Now, with "Web 2.0" fever at its peak, we're seeing a lot of companies that have recognizably the same traits (albeit with fewer Aeron chairs). The general expectation is that a bunch of them will go out of business once the social-network mania collapses, although (as in the original bubble) some of the companies that actually have useful products and sensible business plans will survive. I hope for CommYou to be one of the latter...