Hot iPhone app Tapulous eyes profitability

Bambi Francisco Roizen · August 20, 2008 · Short URL:

Tapulous CEO Bart Decrem on why ads will get him to breakeven

It's about 3 pm and Bart Decrem, the energized CEO and co-founder of Tapulous, comes whirling through the Vator offices in San Francisco. I introduce him to Rajeev Goel, co-founder of PubMatic, who's just finished his interview.  This is the first time I meet Bart, and from my first impression, he's not the type who likes to sit. We both noticed it. Yet Bart walked into my office and slumped down into a chair. "Phew," he said. Turns out, it's not that Bart is hyper and over caffeinated. Apparently, he's had a bit of an adrenaline rush from running a few blocks to get to our interview on time.

This is just a picture of, I imagine, what Bart's life is like - Popping in from one meeting to another, evangelizing the iPhone/Tapulous story, and oh, taking the time to play a game or two of Tap Tap Revenge – which is the highlight of Bart's life, at the moment.
Tap Tap Revenge, the game Bart and I played head on in this interview, is the hit game released by Tapulous, which was founded by Bart and two other founders, Andrew Lacy and Mike Lee. In a month, anyone will be able to play Tap Tap Revenge with others, much like massively multiplayer online games.

As someone who follows startups closely, the Tapulous story is a gem. This young startup surged to past one million users in one month and operates on a monthly budget under $100,000, the company, which employs eight full-timers, projects to break even within six months of officially launching. "By the end of the year, we'll be self-sufficient," said Bart, in this interview.
This may not come as a surprise. Steve Jobs told the Wall Street Journal that Apple sold an average of $1 million in applications a day since the App Store launched in mid-July. All told, 60 million programs were downloaded in one month since the store debuted. Apple believes the App Store will bring in $360 million in annual revenue. Apple takes 30% of the sales its developers make on apps.
Counting on mobile advertising
Surprisingly, Tapulous doesn't expect to make the bulk of its near-term revenue from selling apps. Rather, Bart is eyeing advertising to bring this company to profitability, at least in the short term. And, it's not years out, but six months from now.
In the near term, what's going to drive your revenue? I asked. "Advertising is going to be the biggest one for the next six months," he said. "Having free ads that monetize is a fantastic model."

Now making money on advertising online isn't easy these days. In my interview with Rajeev, he said that online advertising was down 20% in July from June. So the thought that marketers will pour money into mobile advertising in a big way seems tough to imagine. But when you're showcasing usage like Tapulous is, it's not hard to see why they would.

Bart believes advertisers will be all over his apps. Already, Tapulous has 1.3 million installs of its products, including Tap Tap Revenge (at more than 1 million), Twinkle, which is a Twitter app and alternative, at 100,000, and FriendBook. Users are booting up Tap Tap Revenge 250,000 times a day.
The ads you'll start seeing will come after the game. At the end, you'll begin to see an ad, said Bart. Now, at that quarter of a million level and one ad per session, if an advertiser paid a $1 CPM, then Tapulous isn't going to break even with Tap Tap Revenge. But Bart doesn't expect $1 CPM, he's expecting $30 CPM. 

"The CPMs are really high because you're able to reach and personalize the ads," said Bart. "They may be consistently higher than the Web, because you don't have cookie issues and you are able to target based on location," he added. (Bart wouldn't share which mobile ad network Tapulous is launching with. But given that AdMob says it can sell ads on iPhones for $30 CPM, I'm guessing it could be them.)

Moreover, users of iPhones have a tendency to click 10 times more on links than those on regular phones, said Bart.
Subscription services, like ringtones
Now advertising aside, there is clearly room for charging a fee, which the Tapulous team is definitely set to do.

"People are willing to pay for stuff on mobile. There's a tradition to valuing convenience. You can sell stuff much more easily than the Web," he said.

"The key to making the game fun and addictive is to keep improving the game play, make it social, and have great music in there," he said. Tapulous is working with labels and artists to feature songs, and coming soon, Tapulous plans to charge $4.99 flat fee to play the game with the ability to access 20 top hit songs. The model is not unlike ringtones, Bart said. Additionally, Tapulous plans to sell virtual goods and skins, or sell a branded experience to marketers. Note to Bart. Don't forget my idea of branded balls in the Tap Tap Revenge game.

Additionally, Tapulous plans to put ads in its Twinkle app. Twinkle is a Twitter app, but can also be used like Twitter if you don't have a Twitter account. In due time, watch for ads from Starbucks. On Twinkle, the neat thing about the app is that you can find people Twinkling or Twittering in a particular vicinity. So, if you only care to see the people in a ½ mile radius, then that's who you'll see. You can see how the location-based services can work effectively here. 

Final thoughts

If Tapulous rings up $30 CPM's that'll be impressive and encouraging. But even if it doesn't do so, or it doesn't break even by yearend, it will still have accomplished a stunning milestone. Moreover, Tapulous plans to ride on the iPhone coattails, hoping one day to be the social graph on the mobile browser. Based on analyst predictions, there could be a market of 90 million devices by next year, said Bart. "In a year and a half from now, you're looking at a Facebook opportunity," he added.
That's an opportunity indeed. Which is why my bet is Tapulous probably raises money between now and then and Bart comes back for an interview and tells me he's in growth mode.  
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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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Tapulous, Inc.


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Tapulous is a Palo Alto, CA based startup building a family of fun and social apps for the iPhone.  We are angel funded and have released two apps for the iPhone (as of early August, 2008): Tap Tap Revenge (a music game) and Twinkle (the app that lets you connect with people nearby and your friends on Twitter).


Bart Decrem

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