So long, and thanks for all the fish • Hacker News Board

Re: So long, and thanks for all the fish

#21

Post by zhyder » Fri, Aug 21, 2009, 5:32 AM UTC

patio11 wrote: post #16

zhyder wrote: post #7

Earlier quoted context omitted.

Sorry to hear about the shutdown. FWIW, I'm impressed how open you're being, about profitability as well as money-raised ( http://news.ycombinator.com/item?id=777010 ). Btw, apparently you have a decent amount of traffic ( http://siteanalytics.compete.com/tipjoy.com/ ). Is the problem that very few of your visitors convert to tippers?

Is the problem that very few of your visitors convert to tippers? Assume, for the sake of argument, that the highest number on that graph is accurate and sustainable. Even if it were, it is well below the level the business needs, because you need truly massive scale to make a living solely on transaction costs. 350k visitors * 1% conversion (+) * + Where a conversion actually means cash money exchanged hands. I reme…

Agreed. I was just hoping to get actual info on:

- Conversions from 'visitors' to pledgers

- Conversions from pledgers to payers

- Avg monthly payment (volume of tips) per payer

(Btw, doesn't Compete often underestimate by a factor of 2 or so?)

Re: So long, and thanks for all the fish

#22

Post by ivankirigin » Fri, Aug 21, 2009, 5:34 AM UTC

patio11 wrote: post #16

zhyder wrote: post #7

Earlier quoted context omitted.

Sorry to hear about the shutdown. FWIW, I'm impressed how open you're being, about profitability as well as money-raised ( http://news.ycombinator.com/item?id=777010 ). Btw, apparently you have a decent amount of traffic ( http://siteanalytics.compete.com/tipjoy.com/ ). Is the problem that very few of your visitors convert to tippers?

Is the problem that very few of your visitors convert to tippers? Assume, for the sake of argument, that the highest number on that graph is accurate and sustainable. Even if it were, it is well below the level the business needs, because you need truly massive scale to make a living solely on transaction costs. 350k visitors * 1% conversion (+) * + Where a conversion actually means cash money exchanged hands. I reme…

We took 3% on top of any fees. The business model is pretty easy. If you need $N K per month, you need N/0.03 monthly transaction volume to break even.

I wish we had more time to make things like http://tatatweet.com, but better. We'd take 100% of the transaction volume, and help the twitter app market grow. I'll certainly build things in my spare time for that market.

Re: So long, and thanks for all the fish

#23

Post by ivankirigin » Fri, Aug 21, 2009, 5:36 AM UTC

[deleted] wrote: post #19

[deleted]

In this case, it is because payments is a regulated industry. It's a bad idea to casually hold money for people.

Re: So long, and thanks for all the fish

#24

Post by ivankirigin » Fri, Aug 21, 2009, 5:38 AM UTC

zackattack wrote: post #20

ivankirigin wrote: post #14

Earlier quoted context omitted.

take a cut

how did the math work out, taking a cut of tips (presumably small, and even smaller after payment processing fees?) how many users would you have needed to reach profitability? i actually tried doing the back-of-envelope math for your site a while back, and was perplexed. i'm curious as to your answer..

Tips don't really work. You need to sell stuff. Branding in the name sucked when we were pushing long and hard* to become a general purpose payments company. Our twitter API could power a full freemium model, subscriptions, etc. - but not enough apps on twitter used it.

*twss

Re: So long, and thanks for all the fish

#25

Post by sho » Fri, Aug 21, 2009, 5:39 AM UTC

ojbyrne wrote: post #3

Sad. The thing about "ramen" profitability is there's another level to be achieved after that, which I refer to as "opportunity cost" profitability. It's often much more challenging, and I sense it being an issue in this article.

Actually that's an excellent point that I don't see mentioned enough. Profitability enough to offset opportunity cost - ie, how much you'd be making if you were working in a "real job" - is indeed very hard to reach.

Anyone can be "ramen profitable", defining that as say, under $1k a month. In fact, in actual good countries, you don't need to do anything at all to be able to eat. Australia will pay you $1k/month just to not be a criminal; in other countries it's higher. People can and do live off that their whole lives!

Your average HN reader/startup founder is generally highly capable, multi-skilled, and, probably, a very valuable employee. To start a business capable of matching or exceeding their likely "normal" salary is indeed a far harder proposition than just making enough to eat.

Re: So long, and thanks for all the fish

#26

Post by michaelneale » Fri, Aug 21, 2009, 5:44 AM UTC

ivankirigin wrote: post #11

drusenko wrote: post #9

Sorry to hear the news -- wish you both the best of luck going forward!

Thanks!

And thanks for taking the time to answer the questions here !

Re: So long, and thanks for all the fish

#27

Post by angusgr » Fri, Aug 21, 2009, 5:44 AM UTC

sho wrote: post #25

ojbyrne wrote: post #3

Sad. The thing about "ramen" profitability is there's another level to be achieved after that, which I refer to as "opportunity cost" profitability. It's often much more challenging, and I sense it being an issue in this article.

Actually that's an excellent point that I don't see mentioned enough. Profitability enough to offset opportunity cost - ie, how much you'd be making if you were working in a "real job" - is indeed very hard to reach. Anyone can be "ramen profitable", defining that as say, under $1k a month. In fact, in actual good countries, you don't need to do anything at all to be able to eat. Australia will pay you $1k/month just…

>Australia will pay you $1k/month just to not be a criminal

FWIW, this isn't strictly true, at least not in the last 10 years. Provided you are not disabled or retired, Australia will only really pay you ~$1k/month while you demonstrably look for work, or while you are an undergraduate student doing your first degree.

Re: So long, and thanks for all the fish

#28

Post by jack7890 » Fri, Aug 21, 2009, 5:47 AM UTC

Props to Ivan for getting on here and giving frank responses to nearly all of the questions and comments.

Re: So long, and thanks for all the fish

#29

Post by vaksel » Fri, Aug 21, 2009, 5:48 AM UTC

ivankirigin wrote: post #6

auston wrote: post #5

Earlier quoted context omitted.

I've been following you guys for a bit and wonder did you guys really spend over $1m since inception? ( http://www.techcrunch.com/2008/09/24/tipjoy-raises-1-million... )

We were advised (in retrospect incorrectly) to be ambiguous and say "raised under $1M" when the amount we raised was actually much less. Our burn rate was slightly higher than most poor grad students, but not _that_ high.

   The company hasn’t disclosed the exact amount of the funding, but says that it is just shy of $1 million.

that doesn't exactly say under $1 million, its written more like 800-900K

Re: So long, and thanks for all the fish

#30

Post by jack7890 » Fri, Aug 21, 2009, 5:49 AM UTC

Was the shutdown at all related to the need to get licensed as a money transfer agent? I know that's a very expensive process (since you have to go state by state) and I know you guys were thinking about doing it. How did that end up playing out?