September 1, 2009
One Startup ( LoudTalks ) Story
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 https://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)
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What is Twitter?
Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Where did the idea for Twitter come from?
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
How is Twitter built?
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
How do you make money from Twitter?
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.
Loudtalks
Startup/Business
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Company History:
In 2007, before founding LoudTalks, our team worked together as offshore developers, creating applications that went on to serve tens of millions of users worldwide while developing our own applications.
One of the applications we built was a Push-To-Talk enterprise application that feaured efficient voice compressions (as low as 8 kbit/s speex voice codec) and dynamic adjustments that scale to achieve the best trade-off between latency and quality.
A fast, dead simple push to talk solution for business was attractive and although it generated great, happy customers, it never really challenged our technology.
A few months ago, we developed a BlackBerry version of the technology as a new venture focussed on consumers. We expected to learn from the BlackBerry application and ultimately apply that to our iPhone application. Instead, we actually found virality we didn't anticipate, with 100 users per minute not only downloading, but using LoudTalks Lite and loving it.
Naturally this caused demand on our registration servers that required more capacity (through hardware and software improvements). We started with software and came up with a solution that doubled server capacity in three days, allowing us to satisfy the feaverish demand for the application.
Today we are launching the Android version on our way to serving 10 billion group chat messages per month.
Liquid Scenarios
Startup/Business
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Since founding bpCentral, our focus has been on increasing each user's competitive advantage each and every time they interact with one of our applications. Naturally, this involves more than simply enabling complex calculations to be performed accurately. In fact, during the first 12 months of developing our new technologies and applications, we put an inordinate amount of resources into discovering how to transform the relationships between idiosyncratic decision-makers and financial information. Our premise was that if that human to data relationship could be elevated to a new standard, then the relationships of those professionals with the entities and individuals they interact with could be more efficient and therefore more valuable.
In response, we developed CIMPA, the Carver Import Algorithm, a system that allows any electronic financial information, data or reports to be interpreted by a receiving system without the need for XML, XBRL, tagging approaches or extensive manual data entry. As a result of this technology, the Company's systems for private equity and venture capital professionals are able to import data in a matter of seconds, instead of a matter of hours.
Similarly, the Company noted that when users attempted to calculate the outcomes of complex liquidation preferences, anti-dilution provisions and other complex terms that are common to VC/PE transactions, any output was virtually impossible to verify without a costly audit of the formulas. Since the formulas were generally based in excel, this meant that few if any partners or other key investment professionals could afford to expend the effort to verify how amounts were arrived at. Upon further consideration, the Company realized that, to a certain extent, this was true of all financial reports. For traditional financial statements, this point is evidenced in the fact that notes to financial statements typically occupy several times more pages than the actual financial reports do. This realization inspired the Company to develop a system it calls OferX, which presents all financial information in a manner that allows any user to audit and see how amounts were calculated (in an easy to understand, quantifiable manner) without the need for extensive textual descriptions.
Together these unique tools form the foundation for the Company's offerings, which are backed by over 29 patent pending technologies.
Lorenzo Carver
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Veronika Zaslavskaya
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