3 ms·

How To Lose Your Users and Kill Your Web 2.0 Company (2/07)

10 points by teej 18y ago

pclark 18y ago
It's risky -- can they survive with a 3% conversion rate (free to paid)?
- zepolen 18y ago
  This happened 2 years ago. Considering they stopped updating their blog around the same time, it's safe to say the free -> paid only change killed their business.
  - dmix 18y ago
    Or failed to save their dieing business.
    - patio11 18y ago
      If dying means taking money from paying customers then may my business die every day for forever. The CEO's LinkedIn profile shows him as doing the photo company and being an evangelist for some company which apparently does search engines. http://www.linkedin.com/in/geekceo http://www.linkedin.com/in/geekceo So the principal carved himself out a lifestyle which he probably enjoys: he has a trusted position at one company, gets invited to speak at conferences, and makes some amount of money for keeping software from breaking. Software does a lot of things well: one is not decay after it has been written. Sure, he won't get bought out my Google next month, so that's not successful for one particular pattern of success. But, on the other hand, he has more paying users than Twitter and probably gets a stupidly high amount of money on a per-hour-invested basis. There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy.
jacquesm 18y ago
I think it's a little early to call them 'killed' just yet. We went through much the same, though we always kept a free basic service and I don't think I could count the number of times we'd been declared 'dead' when we rolled out our premium service. Money needs to come in, zoto has probably tried to get acquired or to get funding, and failing those two avenues they now have three options: - close the doors - roll out a premium offering on top of their free offering - roll out a premium offering and shut down the freebies Since their costs are probably very much bandwidth related they chose to do the latter, their conversion rates must have indicated that it is better to have a smaller number of users, a smaller bandwidth bill and be profitable than to be much larger and to be running at a possibly massive loss. The biggest factor is how many people have already converted to the new paying model, and how much of their revenue they are going to reinvest in marketing, which is another option if you don't have a free service. Their 60 day free trial is a smart alternative to free users, it will pull in enoughpeople to give it a shot if the can keep some traffic going. Time will tell if it worked for them, it will certainly be interesting to watch. At least now it is a business, instead of a money pit.
- zepolen 18y ago
  Time /did/ tell, this article is 2 years old, and the forgotten blog + traffic stats both show that the business is dead.
  - jacquesm 18y ago
    ah yes, I see :) here I was thinking this was news.ycombinator.com, I should check those submissions better I guess! The site does seem to be functional though, I just signed up for a trial account and that seems to have worked just fine. Any zoto.com users here ? Apparently the CEO is called 'Kord Campbell', http://www.blogger.com/profile/2622955 http://www.blogger.com/profile/2622955
  - axod 18y ago
    Wonder how much traffic they had at the time. There don't seem to be any public stats out there that go so far back.
delano 18y ago
Heroku gave us an example of how to do it right: http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku/ http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku... In short: keep both versions.

10 points by teej 18y ago

pclark 18y ago

It's risky -- can they survive with a 3% conversion rate (free to paid)?

zepolen 18y ago
This happened 2 years ago. Considering they stopped updating their blog around the same time, it's safe to say the free -> paid only change killed their business.
- dmix 18y ago
  Or failed to save their dieing business.
  - patio11 18y ago
    If dying means taking money from paying customers then may my business die every day for forever. The CEO's LinkedIn profile shows him as doing the photo company and being an evangelist for some company which apparently does search engines. http://www.linkedin.com/in/geekceo http://www.linkedin.com/in/geekceo So the principal carved himself out a lifestyle which he probably enjoys: he has a trusted position at one company, gets invited to speak at conferences, and makes some amount of money for keeping software from breaking. Software does a lot of things well: one is not decay after it has been written. Sure, he won't get bought out my Google next month, so that's not successful for one particular pattern of success. But, on the other hand, he has more paying users than Twitter and probably gets a stupidly high amount of money on a per-hour-invested basis. There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy.

jacquesm 18y ago

I think it's a little early to call them 'killed' just yet. We went through much the same, though we always kept a free basic service and I don't think I could count the number of times we'd been declared 'dead' when we rolled out our premium service. Money needs to come in, zoto has probably tried to get acquired or to get funding, and failing those two avenues they now have three options: - close the doors - roll out a premium offering on top of their free offering - roll out a premium offering and shut down the freebies Since their costs are probably very much bandwidth related they chose to do the latter, their conversion rates must have indicated that it is better to have a smaller number of users, a smaller bandwidth bill and be profitable than to be much larger and to be running at a possibly massive loss. The biggest factor is how many people have already converted to the new paying model, and how much of their revenue they are going to reinvest in marketing, which is another option if you don't have a free service. Their 60 day free trial is a smart alternative to free users, it will pull in enoughpeople to give it a shot if the can keep some traffic going. Time will tell if it worked for them, it will certainly be interesting to watch. At least now it is a business, instead of a money pit.

zepolen 18y ago
Time /did/ tell, this article is 2 years old, and the forgotten blog + traffic stats both show that the business is dead.
- jacquesm 18y ago
  ah yes, I see :) here I was thinking this was news.ycombinator.com, I should check those submissions better I guess! The site does seem to be functional though, I just signed up for a trial account and that seems to have worked just fine. Any zoto.com users here ? Apparently the CEO is called 'Kord Campbell', http://www.blogger.com/profile/2622955 http://www.blogger.com/profile/2622955
- axod 18y ago
  Wonder how much traffic they had at the time. There don't seem to be any public stats out there that go so far back.

delano 18y ago

Heroku gave us an example of how to do it right: http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku/ http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku... In short: keep both versions.