

Tipjoy: Why Didn't it Take Off? Pathology of a Floundering Web 2.0 Startup - nickb
http://jeffspost.wordpress.com/2008/05/25/why-didnt-it-take-off-pathology-of-a-floundering-web-20-startup/

======
ivankirigin
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.

~~~
breck
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 :).

~~~
axod
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.

~~~
abstractbill
They're all wrong, in different ways for different sites. I wouldn't trust any
of them for more than an order-of-magnitude estimate.

~~~
axod
I find alexa most acurate for trends, but I agree, all pretty useless.

Quantcast being the exception as you can add some js to your site so they
actually measure the figures.

------
ryan
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.

~~~
ivankirigin
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 :)

~~~
axod
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!".

~~~
ivankirigin
You're probably right. There is a similar dynamic with a pre-launch and post-
launch company. Pre-launch, you can sell the hell out of it. Post-launch,
investors might want traction before they touch it.

------
pg
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.

------
cperciva
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
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.

~~~
ivankirigin
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.

------
aston
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.

------
bootload
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?

~~~
DougBTX
_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.

~~~
ivankirigin
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.

------
mattmaroon
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.

------
maxklein
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...

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

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

~~~
axod
Yes, that is what I was subtly getting at :)

------
thingsilearned
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".

------
motoko
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.

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

~~~
xirium
> 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.

~~~
ivankirigin
The issue is the regulation around being a money transfer agent. Earnings in
Tipjoy can be dedicated to a charity or cashed out with an Amazon gift card.
This has happened a bunch.

We'll let you cash out to PayPal or a checking account as we complete the
lengthy paperwork for the licensing.

~~~
bluelu
So what's the difference to paypal then? If you ahve to cashout to paypal, why
not add a donate paypal button at your website instead of te tipjoy button.

~~~
ivankirigin
Because the PayPal donate button is a macropayment that takes a lot of thought
and effort compared to Tipjoy.

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.

~~~
bluelu
It's true that it's easier to donate something with one click. It's also not
new to me taht some people don't like them. But money business is a hard
business with all the illegal money laundring going on around the world. I
wish you the best of luck, but I think it will be very hard competing with
paypal

------
greyman
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.

------
antirez
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 ;)

~~~
ivankirigin
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.

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

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

~~~
mynameishere
_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.

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

------
dhbradshaw
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.

------
cbetta
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.

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

~~~
aston
Explicate, por favor?

~~~
astrec
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.

~~~
aston
The tip-for-tat idea for the front page of news.yc is a pretty cute one.

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.

~~~
astrec
I was very careful not to mention blogs specifically. All sorts of content
stimulates emotional responses and thus comment - photos, comics, software,
articles, and yes, blog posts.

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.

------
rokhayakebe
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.

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

