App Boom

We’re doomed to repeat history. Wait…what? Isn’t that the point of history to study it so we DON’T make the same boneheaded mistakes. Yes, that’s exactly why you read history books.

Yet, we are in another round of the IT glory days. Read TechCrunch for 5 minutes and you’ll just be shaking your head. What was the .com boom of the late 90s has become the new app explosion of today. Money is flying at companies that have a cool new app with a bunch of users but NO REVENUE!!!

The latest example is an app that I really like. Its being reported that Instagram is raising 40 million dollars with a 500M company valuation. While its great that they can keep the lights on and servers running, but how are they going to make money? Maybe giving away the app wasn’t your best plan. I would have paid $0.99 for the full version with maybe a free version with only a few filters. 27 millions users you say, It would have been rough having 18.9 million (27M * 70% after Apple’s cut) coming in the door if you charged for the app.

I’ve bitched before about FlipBoard doing some of the same shit.

Ladies and Gentlemen…if you want to run a successful company, you need to have money coming in the door. And I’m not talking about VC money. It may help you out in the short term, but guess what, those VC guys and gals expect to get paid at some point. Stop bullshitting us with the “oh we’ll figure out a way to make money in the future, we have X million users now”. If you haven’t figured it out by now, you’re not going to asshole. And the VC that invest in you deserve every bit of loss that they get. Just don’t got public with it, screw up my 401K, and the rest of the stock market in the process.

Square

I finally had a chance to use Square in a real world checkout scenario a few weekends ago. My friend and local Ankeny Iowa artist Luke Hubbard held his 2nd Annual Garage Gala. My wife and I stepped in to take care of the check out so Luke and his lovely wife Jen could handle entertaining, talking to guests and mingling with people that wanted to know more about the art.

The one big change for the Gala this year was the acceptance of credit cards. Luke had taken cash, check, and Dwolla in the years past though really, it was just check and cash. I was a bit disappointed, but not completely shocked, that no one used Dwolla, sorry guys. Adding credit this year was a huge step forward and I was quite pleased with the results.

First and foremost, if you’re not aware of what Square is, check out their web site and it will quickly become obvious. With a little reader, they turn your phone into a credit card scanning station. Slick!

The main difference between Square and your traditional credit card machine is in order to take credit cards, you need a merchant account and gateway service to send the secure transactions to have money moved into your account from the customers credit card issuing bank. These are fairly easy to setup but there are fees involved and they typically want you to charge a certain number of transactions. With Square, there is no commitment. They simply take a little more off the top in order to provide a convenience of being able to take credit cards as often or little as you need. Perfect for those farmers markets, concert merchandise stands, and Garage Galas.

So what’s the catch?

If I had to say anything about the service, it would be this. Swiping the cards the first couple of times takes some practice. And Square realizes this so if you have several misses in a row, they will pop up a tutorial to give you some tips and allow you to practice. This helped get us up and rolling and I think it also helps loosen up the scanner a bit so it works better.

After my practice session, I was rocking and rolling. Typically swipes were 1 or 2 swipes max. And if that fails, you can always type in the number.

Customer Experience

Most customers thought it was really cool that we could take credit cards this way. They were very happy with how slick it was. Enter the amount, swipe the card, have them sign the phone and either email a receipt or we had paper receipts with the various payments we were taking.

The one bad thing about this experience is that customers aren’t used to signing their name with their finger. One customer actually called it “creepy”. For next year, I think its worth purchasing one of the stylist that works with the iPhone and remove that from the equation.

Conclusion

The ease of taking the cards and the relatively low overhead costs make this a solid product. I’d recommend anyone that is a small business owner that doesn’t have a credit card system today to look into this product. Its ridiculously easy!

If you’d like to help support this blog, be sure to pick up the Square app by clicking on the button below.
Square - Square, Inc.

FlipBoard Revisited

I’ve talked about FlipBoard before. But I’d like to point out that its been reported that FlipBoard has been downloaded 3.5 million times. For those keeping track, I think they have left 3.5 – 10.5 million dollars on the table.

What could your company do with an extra 3.5 million in the bank?

More VC Money for FlipBoard

If you own an iPad and haven’t downloaded FlipBoard yet, what the heck are you waiting for?!?! Seriously, this is one of the first apps that I felt truly took advantage of the large real estate that the iPad brought. I’ve written about this one before and I’m going to do it again.

And no, this isn’t all sunshine and freaking rainbows.

The reason that I’m writing this is that recently FlipBoard raised another round of funding with a 200 million dollar valuation.

Excuse me? 200 million?!?!?!

Based on what? Seriously, I’ve gotta know. Do they have a unicorn in their office. Because I could generate some serious fucking cash from a unicorn. Just think of the number of people you could pack into a stadium to see a unicorn. At $5 bucks a pop just to see me parade out the unicorn for 15 minutes would do it. A US tour alone could raise 200 million let alone going international. Its a unicorn after all.

Surely they have major revenue streams pouring in right? Wrong. In the article you will see that at the recent SXSW, the CEO admitting that they have ZERO dollars in revenue so far! You’re supposedly worth 200 million bucks and you’ve made dick so far, seriously, there better be a unicorn in your office.

So what’s the solution? Surely its a solid business plan. The model is basically this:

Right now, the Flipboard app is free and the business plan is advertising and some possible subscription scenarios.

Some ads might get you some money coming in, I won’t deny you that. But seeing as you have been out since July and have made a fat goose egg in 9 months, I wouldn’t hold my breath on that being the ticket to profits. But let’s examine the most important line of that business plan, Right now you can download Flipboard for free. Free as in beer. Free as in air, free as in freedom.

Whiskey, Tango, Foxtrot! This is EASILY a $2.99 app.

Let’s have some fun with math shall we. There are 15 million iPads out there to date and that’s before the big iPad2 announcement. So let’s say for arguments sake that since you are a popular app that you are getting 5% of those 15 million users. Just a mere 5%. That’s 750,000 downloads and if you charged $3 would be $2.25 million. After Apple’s 30%, you still have $1.58 million in your pocket. Wow, good thing its free! I’d hate to have that kind of money in my company.

So FlipBoard, let’s see where you get with ads and subscriptions for your app. I really hope you guys make it and can turn this thing into a profitable, sustainable company. You might prove me wrong yet but I’m not holding my breath on this one. Clearly I could be wrong, but I’m not the asshole that left a couple million bucks on the table.

FlipBoard

Recently, I have found FlipBoard for the iPad. If you haven’t seen this product, where have you been. Seriously, they’re even in Newsweek and I just saw them in an iPad ad this evening.

Here’s a demo of the app:

Pretty freaking sweet isn’t it.

And its free! Yes, FREE!

I still don’t get this. Its getting such great buzz around the web, why not charge some money for the app. I get wanting to get a bunch of people using your app and generating growth. But relying on advertisement revenue isn’t always the best plan. Why not get some of that cash in the door now.

Here’s the one problem that I have with FlipBoard (from the newsweek article):

Flipboard hasn’t worked out a business model yet, but plans to put ads next to articles and then share some advertising revenue with publishers. McCue believes that Flipboard on the iPad can deliver better-quality ads than the cheapo ones you see on the Web. And there’s no big rush to make money: Flipboard has raised $10.5 million from venture-capital firm Kleiner Perkins Caufield & Byers and other investors. “The first thing you have to do is create an experience that people are excited about and using a lot,” McCue says. That part, it seems, Flipboard has already accomplished.

How in the fuck did these guys get funding? Seriously? Can someone tell me who would invest in a company that hasn’t figured out the business model of how they are going to make money?

This is why we had a dot-bomb back in the early part of the century folks.

I would argue that they do have the model figured out, they just haven’t figured out how to execute on it yet. The app is simply a method of getting ads in front of users and it is only a matter of time until the advertisers come a running. So my argument is, why not make a few bucks along the way selling the great looking by product of your ad platform…the app itself!