

How To Lose Your Users and Kill Your Web 2.0 Company (2/07) - teej
http://mashable.com/2007/02/28/zoto/#

======
jacquesm
I think it's a little early to call them 'killed' just yet. We went through
much the same, though we always kept a free basic service and I don't think I
could count the number of times we'd been declared 'dead' when we rolled out
our premium service.

Money needs to come in, zoto has probably tried to get acquired or to get
funding, and failing those two avenues they now have three options:

\- close the doors

\- roll out a premium offering on top of their free offering

\- roll out a premium offering and shut down the freebies

Since their costs are probably very much bandwidth related they chose to do
the latter, their conversion rates must have indicated that it is better to
have a smaller number of users, a smaller bandwidth bill and be profitable
than to be much larger and to be running at a possibly massive loss.

The biggest factor is how many people have already converted to the new paying
model, and how much of their revenue they are going to reinvest in marketing,
which is another option if you don't have a free service. Their 60 day free
trial is a smart alternative to free users, it will pull in enoughpeople to
give it a shot if the can keep some traffic going.

Time will tell if it worked for them, it will certainly be interesting to
watch.

At least now it is a business, instead of a money pit.

~~~
zepolen
Time /did/ tell, this article is 2 years old, and the forgotten blog + traffic
stats both show that the business is dead.

~~~
jacquesm
ah yes, I see :)

here I was thinking this was _news_.ycombinator.com, I should check those
submissions better I guess!

The site does seem to be functional though, I just signed up for a trial
account and that seems to have worked just fine.

Any zoto.com users here ? Apparently the CEO is called 'Kord Campbell',
<http://www.blogger.com/profile/2622955>

------
delano
Heroku gave us an example of how to do it right:
[http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku...](http://blog.heroku.com/archives/2009/1/12/whats_up_at_heroku/)

In short: keep both versions.

------
pclark
It's risky -- can they survive with a 3% conversion rate (free to paid)?

~~~
zepolen
This happened 2 years ago.

Considering they stopped updating their blog around the same time, it's safe
to say the free -> paid only change killed their business.

~~~
dmix
Or failed to save their dieing business.

~~~
patio11
If dying means taking money from paying customers then may my business die
every day for forever.

The CEO's LinkedIn profile shows him as doing the photo company and being an
evangelist for some company which apparently does search engines.

<http://www.linkedin.com/in/geekceo>

So the principal carved himself out a lifestyle which he probably enjoys: he
has a trusted position at one company, gets invited to speak at conferences,
and makes some amount of money for keeping software from breaking. Software
does a lot of things well: one is not decay after it has been written.

Sure, he won't get bought out my Google next month, so that's not successful
for one particular pattern of success. But, on the other hand, he has more
paying users than Twitter and probably gets a stupidly high amount of money on
a per-hour-invested basis.

 _There are more things in heaven and earth, Horatio, Than are dreamt of in
your philosophy._

