A trio of guys recently started to get into a space that I already have sites in. Their browser extension is called Babblr and it falls into the same realm as TumbleChat which is my chat site that uses Tumblr for the login (we also run one for Twitter called TwitChatter. Their product was different than mine as it was an Instant Messaging solution built into the Tumblr dashboard and TumbleChat is just a chat website that allows you to log in with your Tumblr account.
Another main difference is that they were hyped around the web for being the first of it’s kind (keep in mind my site as well as the XKit IM both predate Babblr) and had grown a hefty prelaunch mailing list. Their launch is where it gets interesting as within a day of going live their servers were crippled and the service pretty much came to a stand still. I get it that they were flooded with a ton of traffic but the fact remains that they didn’t have any foresight to their own success. Not every idea is a success, but to go in with such a blatant disregard for the potential is quite ignorant.
How could their launch have been different? Well for one, not rolling out the site to the masses on day one, segment your list and invite people in more slowly. I’m generally not a fan of the big launch announcement and subsequent flood of new users that will be finding all of your problems so another approach would be to send out a very limited number of invite codes. These invite codes can be shipped out as soon as you have an alpha product, ship early and often! I’m unsure of how large their mailing list was at launch but I have to assume it was a good indicator that they were in for a flood.
So after their false start, the developers started soliciting for donations to make their vaporware creation a reality. This was met with obvious backlash due to the fact that a ton of Tumblr users were already promised a free product. From my own observations, Tumblr is mostly frequented by high school and college age kids, not an ideal demographic to solicit from, albeit they often have disposible income because of their low expenses. Even still, the amount they were requesting was a bit on the high side for me, not factoring in the recurring nature of some of the expenses.
Their breakdown of expenses is as follows:
- $2,000 - $5,000 for developers to build a larger infrastructure
- Servers to handle 250 – 750K anticipated traffic
- $2,000/month for authentication servers
- $5,000/month for database servers
So right off the bat the red flag for me is the $2-5k for the developers. They’ve touted themselves for being bootstrapped, but now that there’s interest they want a salary? Perhaps they are referring to the cost for the servers to build the infrastructure, but that doesn’t explain the recurring server prices. The recurring server expense is what’s very baffling to me. It would have been nice to see a breakdown of what they needed or where they are hosting or something. As a devout Linode customer that is pushing 11mm+ page views a month on less than $350 worth of servers, I’m very confused. I’m unsure of what 250-750k traffic is actually referring to, maybe it’s the number of users they expect to be logged in at any given moment? It’s about as vague as their developer infrastructure overhead.
At the time of this writing, evidently the developers are paid for, putting the Babblr team at 40% towards their goal. I like how they paid for themselves first before covering servers! So let’s look at the monthly server overhead, $7,000 a month to cover their anticipated traffic. These are the same guys that didn’t anticipate their success, so immediately I’m skeptical that they are going to be prepared, especially considering the viral growth that they are likely to receive. So $84k a year for servers, let’s say the $5k for developers was a monthly thing, so realistically they need $144k per year. This doesn’t compensate for additional or larger servers to handle any usage growth (and as the developers decide that they are worth more than $666 to $1,666 each).
Don’t get me wrong, if you have a revenue model, $144k a year isn’t a ton of overhead, but it is when you want to be in a space frequented by a generation that is used to free. Free music, free streaming videos, free reblogging on Tumblr. I know a lot of folks that will be willing to pay for the service, but I’m unsure they’ll be able to find the 29,000 people willing to give them $5 a year to stay afloat. More realistically, at $5 a month only 2,400 subscribers would be needed, but how many free users would they be able to support? On top of that, I’ve been a web geek since Windows 3.1 and in all this time, I’ve never paid for an IM service (and I don’t plan on changing that, ever). The point to this? I’m still unsure that Babblr will ever be able to stay online with such high recurring server overhead and no revenue model. Perhaps their play is to get acquired by Tumblr and not have to worry about it.
So let’s say they hit their goal, they are collecting money via PayPal, very easy to pocket that money and run. There’s no guarantee that they’ll produce on the product they promised the Tumblr community. I don’t know the guys personally (feel free to reach out, Trevor!) and I’m not saying they will be taking the money and running, but there are a lot of folks on Tumblr that seem to have that perception. If you’re going to raise money like this, using a service like KickStarter would at least add some validity to your fundraising efforts.
Let’s talk about my chat sites for a minute. Because of all the negative press Babblr’s been getting in the Tumblr-sphere (is that a word?) I decided to put on my Guerrilla Marketing hat on (you know, like Che’s beret ;) and reblog some of the negative Babblr press with links to TumbleChat. I stressed that we’re still free (but ad driven) and that we wouldn’t be soliciting for donations. I even talked about the XKit IM which is more of a direct competitor to Babblr than my product. It got me some new traffic, couple of reviews of our service and all that good stuff. I felt pretty scummy doing it so I’ve been doing so sparingly.
I’m betting on Babblr not doing much of anything at this point (sorry guys, I do wish you all the luck in the world) and I’m not planning on integrating TumbleChat into the Tumblr dashboard either. Why not? Because of how Missing-e became a bit of a black sheep on Tumblr. Yes it worked, but Tumblr has since made changes that not only affect the plugin but they also flag you when you go to their support page as having Missing-e installed and urge you to disable it. I like Tumblr, I don’t want to have to battle with their platform.
Premature optimization may be the root of all evil but not planning for success can be way worse, especially when you’ve made promises and failed to deliver.