On this week's Vator Box, we look at Nimbuzz, one of the top 20 free social networking apps on the iPhone. Netherlands-based Nimbuzz allows consumers to access their social networks and instant messaging communities from one place. Nimbuzz supports Skype, Yahoo Messenger, ICQ, GoogleTalk, AIM, and 23 social networks, such as Facebook and MySpace.
To help analyze Nimbuzz, which was founded in 2006 and has $25 million in venture financing, we brought in Jeff Smith, co-founder and CEO of Smule, a leading app developer on the iPhone. Given Smule's success with the Ocarina - ranked in the top 20 All-time Top Apps - and Leaf Trombone on the iPhone, and Smith's success as an entrepreneur - having founded and brought Tumbleweed public - we thought he'd be an excellent guest host to give Nimbuzz advice about building a business and a popular iPhone app.
Smith joined Ezra Roizen (digital media investment banker and VB regular) and me for this segment.
Here are some highlights:
1- The application is novel and useful and clearly on an impressive growth path. Tobias Kemper told me Nimbuzz was adding 25,000 new users a day.
2- Tobias Kemper is a solid pitch man. He does a nice job articulating the Nimbuzz value proposition.
3- The big question is the business model. "I see challenges in monetization and exit," said Smith, who questions the value of the Nimbuzz IP and brand, since it sits on top of other services that have well-known brands and IP backing them. The only thing Nimbuzz really has is customers, he said. The question is whether Nimbuzz can raise the switching costs for customers, because at the moment they appear pretty low.
4- Roizen suggests Nimbuzz create a content layer on top of the aggregated services to allow customers to experience something unique to the Nimbuzz service, thereby raising its value and utility.
5- Nimbuzz should stay away from selling to carriers, like AT&T and T-Mobile, said Smith. "Those days are numbered. The carriers have taken a second-row seat to the hardware vendor," he said, referring to the plethora of app stores opening up. "You can squeeze some money from the carriers, but in the end, will that give you long-term customers or short-term revenue for the carriers?"
6- Roizen said focus on the core group of users. Find out what the core group is doing. Find out what that is, and put that on steroids.