Tipjoy: Why Didn't it Take Off? Pathology of a Floundering Web 2.0 Startup

http://jeffspost.wordpress.com/2008/05/25/why-didnt-it-take-off-pathology-of-a-floundering-web-20-startup/

by nickb • 18 years ago

33 59 18 years ago

jeffspost.wordpress.com

cperciva• 18 years ago

I know the traditional mantra is "launch early", but I wonder if this is an example of where the words "but not too early" should be added. I don't know anything about the internal workings at TipJoy, but from commentary here a bit over two months ago it sounds like there is more to come (http://news.ycombinator.com/item?id=137283) -- but at what point does "release early so that people can become aware that you exist" turn into "if you release early, you'll get a reputation for being a complete flop"?

Note: I don't know if TipJoy did launch too early; but I think it's at least a possibility worth considering.

mrtron• 18 years ago

I don't think TipJoy launched too early. They have a good product and it works.

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.

ivankirigin11• 18 years ago

I don't think we launched too early at all. We launched with enough to get something that blogs could use to get support directly and easily from their readers. We've been building out features since then.

aston3• 18 years ago

A word geek aside: The distinction between the verb forms of "flounder" and "founder" is kinda interesting, as the former implies you're struggling against the water, and the latter says you're already sunk. Not to mention the homonyms that make it possible for startup founders to founder.

breck5• 18 years ago

I wish them luck, but when I want to tip a blogger I click an ad and let nice Uncle Google pay.

mynameishere• 18 years ago

let nice Uncle Google pay

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.

brlewis• 18 years ago

Replying to the second part of your comment, tipjoy has a platform API. I think OurDoings was the first to use it. You can attach a tip jar by checking one box.

breck5• 18 years ago

Sorry, I guess I should have said "let Uncle Google pay [the blogger]". But you're right, it's the advertiser that ultimately pays.

jbenz2• 18 years ago

Wow, that is not very cool. I advertise on content networks online, and I'd love to pay for your click if you're interested in the ad, but not so much to "tip the blogger".

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.

tom_rath• 18 years ago

Yes, folks like breck are why we stopped advertising on the content network. It provided us with nothing but a way to indirectly fund bloggers or buy someone sushi at the Google cafeteria.

Behaviour like that is going to kill 'ad supported' sites.

axod6• 18 years ago

I'm not sure click fraud is quite as good a way to tip. If it happens too much Google may actually close their google account.

Click fraud isn't cool.

ryan• 18 years ago

These guys launched less than 4 months ago... how can we possibly be talking about 'failure'?? It can take months, if not years, of iteration and course correction for a startup to find its groove. These guys are working hard.

ivankirigin11• 18 years ago

Thank you! I'm actually a bit surprised the the main argument is about the amount we've earned from our very real and operational business model. Lots of companies don't even have that :)

jbenz2• 18 years ago

Ha, that's a good point. How many startups exist without a revenue model at all? I think we can give your company, with a nice and clear revenue model, a bit more time before judging.

axod6• 18 years ago

I agree, although I think some companies play that to their advantage. Once you are earning money from a stream, you know how much you're earning. If a company hasn't even tried to monetize something, they can pick any figures out of the air for projected revenues. "Unlimited potential!".

astrec3• 18 years ago

Can't help but think Tipjoy and Disqus should do a deal.

aston3• 18 years ago

Explicate, por favor?

astrec3• 18 years ago

Why do you take the time to comment?

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.

a-priori• 18 years ago

C'mon, give the guys a chance before you declare them dead.

motoko• 18 years ago

Summary: blah blah blah $2,519.01 since February.

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.

ivankirigin11• 18 years ago

Withdrawing money is a very top priority of ours. You'll see more here about this very soon.

xirium• 18 years ago

> Withdrawing money is a very top priority of ours.

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.

bootload• 18 years ago

Firstly anyone commenting on this post should also take a look at the current article on "HelpSpot’s First 6 Months of Sales" ~ http://news.ycombinator.com/item?id=199688 to get an idea of real numbers.

"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?

ivankirigin11• 18 years ago

Actually, a user can tip any site with our bookmarklet. The site doesn't need to have Tipjoy in order to get a tip. We contact the site owners to tell them about the tip, and show them how to sign up: http://tipjoy.com/bookmarklet/

There have been around 2000 sites tipped this way.

DougBTX2• 18 years ago

They simply cannot due to constraints.

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.

ivankirigin11• 18 years ago

Giving a donation with PayPal is a 7 or 8 click process that takes you away from the page you're on.

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.

ivankirigin11• 18 years ago

I wrote this on the blog post a good while ago, but it is still "awaiting moderation"

-------------

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.

breck5• 18 years ago

I'm not sure what "taking off" means, but if I launched a site a few months ago and already had 80k+ visitors a month in the US(compete.com--so I'm sure it's higher), I'd be feeling pretty good :).

ivankirigin11• 18 years ago

We do feel very good about where we are. But in the spirit of openness, compete is probably measuring the Tipjoy button embedded in other sites -- not all visits to tipjoy.com

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.

axod6• 18 years ago

I'm not sure compete figures are very useful at all to be honest. I know everyone bashes alexa, but their numbers are actually usually closer to the truth than compete. Quantcast seem reasonable also.

jwstaddo• 18 years ago

Yes, sorry about that. I just realized it. My bad. My host didn't like the embedded links... (Thanks all you Viagra sellers out there...) Anyhow, sounds like ya'll are on the right track. Best of luck! I'm excited to see where this will go. --Jeff

pg• 18 years ago

I think with a startup that launched only a few months ago the worst you can ask is "why hasn't it taken off?" not "why didn't it take off?" Any startup at this stage is still iterating.

mattmaroon2• 18 years ago

It's now May. I don't think a failure to find traction in 3 months is really a strong indicator of whether or not the product has long term potential. And whether or not that particular product has long term potential is not a solid indicator of whether or not the startup does.

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.

dhbradshaw• 18 years ago

It would be interesting to see statistics on Tipjoy tips as a function of time. What does the curve look like? That may matter more at this point than any absolute amounts.

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.

rokhayakebe• 18 years ago

Some people need a "chill pill". What made Paypal? Distribution. Wait and see what sort of monies this guys will collect when they have a distribution deal with hosted blog/site/wiki services (wordpress, sixapart, weebly.....) Go on Ivan and team.

maxklein• 18 years ago

TipJoy is doomed. I have a blog. My blog is where I write things, and my family and friends read it. I make no income from this blog. Why would I want to cheapen what I write by putting a big ol button on it, saying I want people to give me $2? That's chicken change, and the effect is that I look desperate for money. Like a guy playing guitar in the train.

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...

axod6• 18 years ago

Nice ideas, but I'll bet (2) falls under gambling and in some less than free countries that's illegal.

mattmaroon2• 18 years ago

The US is a less than free country, and I promise you that is illegal in more than one state. I'd guess six.

bluelu3• 18 years ago

I think 2 is a great idea! ( allthough hardly doable as another person already explained)

thingsilearned• 18 years ago

Wow. This whole article stank worse than that unrelated dead deer reference. It's a textbook example of knocking others down (with almost no constructive advice) to promote yourself. I can't believe you use this as your example for your newly started $500/pop analysis consultancy.

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".

antirez• 18 years ago

The fix for tipjoy IMHO: Instead to tip contents you can already see turn this into "you can download after this minimal tip amount" for free software, ebooks, ...

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 ;)

ivankirigin11• 18 years ago

We call this "gated" content. I'm sure as we generalize a micropayments API, we'll support this.

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.

greyman• 18 years ago

As far as I remember, this have been called "micropayments dream"...At the early stage of the internet, publishing houses wanted to make profit from publishing content on the web. At first, they were hesitant to put it on for free, but when they realized that not enough people will pay for the access, they put their hope into micropayments.

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.

slimslash• 18 years ago

It is a good service but it is complex in my imho

cbetta• 18 years ago

Nice discussion. I personally use http://tipit.to because I can actually get money out of that service, making it much more interesting as an alternative to an advertisement revenue stream. Tipjoy is not free and doesn't allow you to get any money out of the service, which make it a harder sell for me.

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.

Tipjoy: Why Didn't it Take Off? Pathology of a Floundering Web 2.0 Startup

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