Tipjoy: Why Didn't it Take Off? Pathology of a Floundering Web 2.0 Startup
jeffspost.wordpress.com
jeffspost.wordpress.com
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I’m co-Founder of Tipjoy. We’re very much alive and well, and about to release some very exciting new features. You will hear more about them soon. We’re hiring, raising money, getting new office space, and still working hard to make the service better.
The use of Tipjoy has been consistently growing, and we expect this to accelerate. Just as you said yourself, it takes more than a few months for a product to become huge. It’s an iterative process where we listen and learn from our users and continually add new features for them.
We too believe in the social side of tipping. We’ve made it easy to see who else has tipping something, and see everything they’ve tipped. This is all syndicated with RSS. You can see the tips I’ve given here: http://tipjoy.com/userstream/ivankirigin/
If you want to make your tipping public, change your settings here: http://tipjoy.com/settings/
The social side of the site is going to become much more interesting, especially as we add plugins to social networks so you can track what your friends are tipping on the sites you’re using most.
They are indeed off by quite a bit (on the very low side) on even measuring this.
The graph on compete does look pretty good though.
Quantcast being the exception as you can add some js to your site so they actually measure the figures.
Note: I don't know if TipJoy did launch too early; but I think it's at least a possibility worth considering.
I think they need to continue focusing on execution as they appear to be - and keep their burn rate low because they may be in for a long haul educating users and creating a new industry.
"Replicating that experience on-line is difficult. Tipjoy is notably lacking in that regard. The main page is made up of a bunch of (dry) statistics. Hello, this isn’t Microsoft Excel! What are they trying to sell—business analytics?? Where’s the sidebar advertising how your Tipjoy data can be added to your Facebook/Myspace site? Where’s the banner that says “Show your girlfriend you really like her latest Facebook post?”... it must market itself as a social service. It must integrate into life, or life will continue to pass by outside of it. ..."
Spot on comment. Require tools, samples and blog articles to do this. Make this task, easier than the best examples you find.
"... Lesson: To succeed in Web 2.0 your site can not be an optional layer added to people’s lives. It must be inserted directly into the lives of the consumer ..."
The author gets to what I think is a problem for most web businesses.
"... And one last thing. No credit cards? Hey dudes, it’s 2008, Web 2.0. Instead of “Coming Soon” it should say “transaction charge”. Leave the choice to the consumer. ..."
Author doesn't know what he's talking about here. Anything to do with money, transactions requires cash and likely regulation. One startup I worked for had to fork over $USD250K and deal with unsavoury characters in Vegas to do such credit processing back in '96. (how did Viaweb deal with this?) It's not Tipjoy does not want to do this. They simply cannot due to constraints. The legislation for taking money (Money Transfer Service under Patriot Act ~ http://tipjoy.com/faq/#q8 ) has a lot of hurdles. But maybe this is one message Tipjoy has to repeat over and over again until they find another way around it.
Chicken and egg problem?
But Tipjoy has another hurdle the author didn't cover. Something Tipjoy yet to exploit ... great places to Tip.
To get more users Tipjoy has to overcome many hurdles:
- get more blog users that want to be tipped.
- then get them to install Tipjoy.
Only then can readers tip. This is a real problem. How do you solve this? I've heard and read of many Startups and the techniques they used to convince people to use their product and service. Take flickr for example. Want to convert viewers to users? Well firstly they had to find the site, view photos. Conversion? All it takes is one user to either discover a photo, email a friend to take a look. They like it and sign up. Then they get some friends to take a look. Maybe there is a chance one of these people take up flickr. It helped Catrina,George blogged each day highlighting the new features ~ http://blog.flickr.net/en/2004/12/page/2/ then went and greeted users as they signed up. It has resulted in a strong viewer, user community.
Compare this with Tipjoy. To become a user you have to have a blog and install it. To make it worthwhile, third parties have to tip. The problem is the service is for blog owners and grateful readers. So acquiring new users is difficult. I wonder if Tipjoy considered this problem from other angles? One potential solution could be to create a list of top blogs to read, try to get these owners signed up with Tipjoy. The information both blog owners could get back (who read what when) might be useful? I can think of a lot of other strategies that focus just as much on the potential viewer who tips. The ability to find more readable sites might be useful to readers who want to discover new content. Who knows they might even tip?
Joel wrote clearly about strategy and highlighted the problems platform creators face when trying to build this type of ecosystem ~ http://www.joelonsoftware.com/articles/fog0000000054.html (read the bit about Microsoft, finance and money) I wonder if Tipjoy could benefit from tweaking their approach slightly to attack this problem head-on?
OK, so you've identified a problem to solve. And Tipjoy doesn't help solve it. Oops.
It seems like Tipjoy are just reselling PayPal services, who are really trying to solve these problems. There are already too many hands in the transaction, your bank, your credit card, PayPal, their bank, fighting over a 10¢ charge. Back in the real world, people make $10 tips in cash, without any middle men.
From their FAQ: We encourage you to try and convince the people you've tipped to sign up with Tipjoy to claim their money.
Ugh, pain. "Please give us your bank details so we can forward you this 10¢ tip". I think the Nigerians make a better sounding offer than that.
Tipjoy is a single click that leaves you where you are.
The difference is quite real. Not to mention that a macropayment is going to happen that much less often.
We encourage tippers to contact sites they support for the same reason I'd encourage people to engage the community of a site in comments. Bringing a closer connection between content creators and content consumers is one driving principle of Tipjoy.
There have been around 2000 sites tipped this way.
And it's not very logical to assume that infrequent blogging means the founders have given up. It might mean just the opposite.
It's humorous how he chastises them for not having much traction so quickly, while also chastising them for giving up so quickly.
TipJoy needs to evolve, but I feel the founder is a bit stuck in this idea. Let me give you a couple of ideas on how to evolve. If you need more ideas you'll need to hire me as a consultant:
1. Blogger puts up a picture of a book like "Programming in the C++ language" as part of his "want list". There is a label at the bottom saying "Contribute towards getting Max Klein this book". Then I can send him $2 and pretty soon he can buy that book. There is a progress bar at the bottom showing how much towards the book he got.
2. Conditional tips. Like a game, for example, if there is a football blog, the blogger puts out $2 saying Madrid will win next week. Readers can match his $2, and if he is right, he gets the money, otherwise the money goes back (with an option to tip anyways). This makes the process interactive and more fun instead of the dry tipping process.
I got more idea buns in my brain oven...
Your only piece of "analysis" was suggesting that they build in a magical way to let others show off their tips... which they already have.
Honestly, you should really feel ashamed of this poorly researched and completely off "work".
TipJoy hasn't taken off because:
-A: can't withdraw money
-B: can't respond to payments with software (also, see A)
The founders probably haven't blogged because they are raising capital to solve A so that they can solve B.
So no-one has received any money yet?
It would be in your interest to send some cheques immediately. See http://news.ycombinator.com/item?id=109017 for details. At the very least, people can blog about getting the first cheques.
We'll let you cash out to PayPal or a checking account as we complete the lengthy paperwork for the licensing.
Also, we're a layer above other payment processors, which means you won't need to use PayPal eventually if you don't want to. Lots of people actually hate PayPal.
Unfortunately, it never worked too well, and in my opinion the main reason is that Internet culture is based on free sharing of information. I wish this company success, but I wouldn't invest into them myself. I can't pinpoint why exactly, but the very concept seems faulty to me.
A lot of opensource developers will be happy to make it possible to generate some little earning per download (even 20 cents is enough sometimes). This is going to fix a huge problem, but how it is today tipjoy is not going to fix nothing.
Example, Visitors (http://hping.org/visitors) is an open source web log analyzer I wrote some time ago, it is free for Unix users, but the Windows binary costs 8 EUR, still people constantly purchased it in the latest two years. Now immagine that instead I could get 20 cents from everybody is downloading the latest version both for Unix or Windows while I take all the past versions free. This makes sense, you can try the product very well using past versions and 20 cents is very cheap still will probably be the same as a 8 EUR payment for the windows binary.
Also this forces developers to put something cool inside every new release.
Now if tipjoy don't want to introduce this form of payment somebody else should do this prodcut: take in mind that it is absolutely vital that the service will host the file and make available it for download automagically when the use pays. No work from the point of view of the developers, no APIs, it's not like paypal, it's a different thing.
My 20 cents ;)
But, I think this fails to help spread our service. Today, people expect to see something before they pay for it. The net effect of gating content is to remove at least an order of magnitude from your user base.
I do think Tipjoy will be used to help support free software though. I'm excited about that.
Google makes money when you click on the ads. It's the company being advertised that pays.
..............
As for tipjoy, I wonder if they haven't tried to get a deal going with wordpress or similar to allow bloggers to automatically attach tip jars.
Also, If a site gets a lot of click-throughs but no sales, I stop advertising there. So you might be helping in the short run and hurting in the long run.
Behaviour like that is going to kill 'ad supported' sites.
Regardless, a certain percentage of frivolous clicks won't kill ad supported sites. If conversion rates from content ads decrease advertisers should bid less and prices will correct themselves. In other words, if advertisers see their ROI on each click drop by 10%, they should bid 10% less per click. If you see a decrease in ROI and don't decrease your bid amount, that's no one's fault but your own. If you see a decrease in ROI and decrease your bid amount but lose placement to competing bidders, than for some reason you are seeing less ROI than them and it has got nothing to do with frivolous clicks. Unless of course one of your competitors is specifically targeting your ads, but I believe Google is pretty good about catching those things.
In general though, content ads are much, much less effective than search ads because when someone clicks a search ad they are in a different frame of mind(looking actively to find/buy something) than when they click on a content ad(mildly interested), so: A) I think you are making the right move not advertising on the content network. B) What's going to kill 'ad supported' sites is the much higher conversion rates from search ads and the fact that most ad supported sites are no more essential to humanity than most ad supported TV shows.
Click fraud isn't cool.
I really like the service and considered putting it up on my blog. I want to advertise for Tipjoy. On the other hand, I don't really want to ask for money. So it's not up.
What would partially solve my problem is for Tipjoy to become a default. It would be pretty neat if Tipjoy could work out a deal with a few of the major blogs such that Tipjoy became a default setting and to not have a button on the page or associated with each post you would have to opt out. Then you aren't begging, you're just going with the flow.
I'm sure Blogger and Wordpress would love any extra little source of revenue if Tipjoy were to share some of that 3%.
That would make it a technical default. It might gradually lead to the point where it is a social default as well.
Secondly I personally think a tip service should definitely be a very social enterprise, and I have the feel that Tipit is that a bit more, with their "pledging of tips", etc. I think you'd just have to go and see for yourself.
For me, there has been an emotional response. Perhaps you moved me, taught me, or led me down the path to another discovery. Or maybe you're so wrong I've just got to give you the benefit of my wisdom!
Why leave a tip where there is no social imperative? I suspect for many of the same reasons you'd comment.
Tipjoy benefits from the reach of Disqus who in turn benefit from an product greater than the sum of it's parts. Revenue share opportunity here.
As an aside: Perhaps a tip is a more meaningful digg; you've got some skin in the game. I wonder what the front page of hacker news would look like if you had to tip to up vote a submission.
(Garret Hardin's Tragedy of the Commons: http://en.wikipedia.org/wiki/Tragedy_of_the_commons)
If upvotes were micropayments, a lot of gaming would just stop. There would still be individual gaming of the system, but it would be a lot less. The problem would be PR flacks abusing the system. This could be fought with a well thought out Terms of Service and the right social pressures coming from the user community.
As to your general point, though, I think you should tip for provision of value. Sure, often the value provided is an argument which might merit discussion, but the thing that ties Disqus and Tipjoy together isn't actually the content itself but the blog format. If anything, Disqus is just a distribution channel that works well in the blogosphere, which I guess is reason that they should team up, but it doesn't add much value to Disqus, and Tipjoy would probably appreciate being thought of as more broad than a "tip your blogger" platform.
As a feedback mechanism the "blog format" is de rigueur. Fifteen years ago you would have sent an email.
Disagree that Tipjoy doesn't add value to Disqus simply because comments are so often a statement of appreciation - local customs aside, that's what a tip is too. Appreciation of the value provisioned, if you prefer.
What you get is distribution channel for Tipjoy and a product enhancement and revenue slice for Disqus.
Another aside: Tipping of high value comments would be possible. There are plenty of times the OP has been light on value but the comment stream is a gem - we see it on HN all the time.