Getting to a million users is a big milestone, even today. But getting hundreds of thousands of those users to engage with your application for more than two hours a day with no financing, no advertisements and no PR agency getting the word out for you is a major coup.
LoudTalks, a bootstrapped team of developers out of Russia, did just that one month ago, growing to 1MM users in 10 days and 2 million in three weeks on the smallest of the big three mobile platforms (BlackBerry).
By the third week the company’s push-to-talk mobile application, LoudTalks Lite, had facilitated over 140 million group voice chat messages, peaking at 15 million messages per day or around 100 million messages per week.
I asked LoudTalks’ Co-Founder Alexey Gavrilov to explain how over 400 million push-to-chat voice messages per month would ultimately translate into revenue. Beyond the obvious possibilities, such as in-app ads and premium upgrades, it seems like an application where users have to use their ears (similar to Pandora), their voice (like Skype) their eyes (like Twitter) and groups of friends (like Facebook) should have lots of possibilities.
“If we can avoid it we’d rather not simply paste an ad on the application from an ad network. We’d like to offer opportunities to groups using our system that enhance their lives, as opposed to taking away from the fun of LoudTalks”, Alexey said. “That’s not always an easy thing to do, since it’s costing us around $0.01 per user per month to serve the application to over 2 million users. With the launch of our Android solution this month, that number will likely increase to 10 million users in the next four to five months. At that level we have three clear business choices:”
- We utilize the least intrusive ad network we can deploy
- We successfully find a way that monetizes the 2 billion voice messages we’ll be delivering or
- We raise a round of financing and defer the monetization question until after we launch the iPhone version in Q4 of this year
LoudTalks just launched on the Android platform today (here’s the link http://bit.ly/LTalksDroid). With a BlackBerry only version that captured 3% of all BlackBerry users with a K factor to kill for (stronger than Twitter, FourSquare and even Skype), the Android launch is a key test.
If the Android version spreads as quickly and holds user attention as intensely as the BlackBerry version did, LoudTalks could easily be serving one billion voice messages by the end of August. Since you have to look at your phone more often to use push-to-chat voice functionality, and since all the content is user generated (no royalties), a number of interesting ways to monetize all those hours exist. It will be interesting to see which one LoudTalks, and their users, decide is most appropriate.
UPDATE: As of the end of August, LoudTalks has continued to grow, from the 2MM users they had when I wrote this piece to more than 3MM users. I sent an email to Alexey and asked what the biggest impact of the user growth was on their operations, cost structure and monetization plans. I was surprised by his answer.
“Our enterprise sales are doubling every month” he said. “We didn’t anticipate that kind of growth in the enterprise business, and while it’s certainly capable of funding the average consumer session lengths of as much as 6 hours, it also creates new challenges for deciding where and when to focus our efforts on new consumer offerings.”
It appears that giving away a consumer product may be a way to generate interest in an enterprise offering (if you have one), with the enterprise product paying the bills. I’ll check back with Alexey and Veronika a few months from now to see if that symbiotic relationship appears sustainable for the longer term.
Lorenzo Carver, MS, MBA, CVA, CPA is the Founder and CEO of Liquid Scenarios and author the John Wiley and Son’s book “Venture Capital Valuation.”
Graphic Source: LoudTalks – Android Launch Kit – Artist Susan Jarvis (Waterkopf)
