Following up on my post on Airtime yesterday, I have received a lot of feedback from other entrepreneurs, investors, and industry players in the space. They had lots of thought of Airtime, so I sent a few questions out for people to respond to about the future of Airtime, “social discovery,” gaming, k-factor, mobile, and more. The only rule was that they had to come down on one side of the question or the other: fact or fiction.
In no particular order, our experts are: Tagged founder and CEO Greg Tseng, Mindshapes co-founder & CCO Christian Dorffer, plyfe co-founder and CMO Jeff Arbour, and Montgomery & Co. Managing Director and Head of Media and Mobile Investment Banking James Min.
1. Is Airtime is just a souped-up version of ChatRoulette?
Greg Tseng – Fact: But that may be enough. Airtime is by far the best implementation of the idea pioneered by ChatRoulette to do 1-1 video chat with strangers. The UI is seamless, and there is better matching and security. ChatRoulette had problems that prevented the idea from reaching its full potential. Airtime is a very well-executed product and thus we’ll know if this idea really works or not.
Christian Dorffer – Fiction: ChatRoulette was a deeply flawed product, whereas Airtime could become the video-answer to Instagram and Facebook
Jeff Arbour – Fact: I don’t think that’s necessarily a bad thing. A great company is based on the execution of an idea. ChatRoulette had a great idea and concept, but it fell over in the execution.
James Min – Fact: But that’s of no consequence. I’ve always said that Facebook is just Flickr with a news feed but their genius was to be able to use this as their Trojan horse and become the standard for online identity on the Web.
2. Does Airtime use Facebook chat and messaging for virality and k-factor in ways that other companies would be banned for, if they weren’t Parker or Fanning?
Greg Tseng – Fact: I don’t think others could get away with replicating the “Friends” sidebar and intermingling Airtime calls with Facebook chats. It’s also a bit much to post people you’ve met on Airtime to your Facebook timeline via Open Graph, since the product is for private chats.
Christian Dorffer – Fiction: I think Parker and Fanning, more than anyone, will avoid pushing legal boundaries without having done their homework. I am also sure they have few favours to collect in the legal community.
Jeff Arbour – Fact: Having inside connections has proved extremely beneficial for Parker and Spotify, it’s like the old saying goes; “It’s more about who you know then what you know”.
James Min – Fact: The inside baseball here is obvious to everyone. However, being the former president of Facebook has its advantages.
3. Will Airtime hit 1 million Daily Active Users (DAUs) in 1 month from launch?
Greg Tseng – Fiction: AppData only shows 50,000 DAUs after the glitzy launch — I would have expected more.
Christian Dorffer – Fiction: Airtime is a great product, but changing people’s behaviour and driving mass adoption will take a bit of time, even for Parker and Fanning.
Jeff Arbour – Fiction: I think their initial growth will be rapid, with the hype and celebrity participation around the launch there will definitely be a big pop. But getting 1 million DAUs will take some time. They are changing user habits, and users need to spend time on Airtime, which means braking existing routines. And that takes time.
James Min – Fiction: They didn’t start off with a lot of momentum even with their celebrity-laden launch. (The product not functioning properly didn’t help). Getting to 1 million DAUs is tough without a lot of initial momentum.
4. Will Airtime be profitable or purchased before all the naysayers say otherwise?
Greg Tseng – Fiction: A glitzy launch always invites naysayers who I believe will be “saying otherwise” before Airtime really has to chance to prove its value proposition, acquire a large audience, and monetize.
Christian Dorffer – Fiction: Investors today don’t like risk, and they like to invest in companies with a clear and relatively certain route to monetization. In my view it is still unclear how effective Airtime will be in making money.
Jeff Arbour – Fiction: There is no denying that video is a hot subject in mobile and digital but I expect that Parker and Fanning are looking to build a big company vs a pump and dump, it will be interesting to watch the site evolve in the coming years.
James Min – Fiction: They most likely raised money at a very large valuation which prices them out of the M&a market for the short term. This will probably look more like Color before it gets to look like Instagram.
5. Should a new start-up focus on building out a mobile app before they make a website?
Greg Tseng – Fiction: It really depends what the product is, e.g. Instagram vs. Pinterest
Christian Dorffer – Fact: Customers willing to spend cash on new “experiments” are heavy users of mobile. Further, cost of acquisition is lower on mobile. Finally, mobile devices are already outselling PCs. Smart entrepreneurs build the mobile product very early.
Jeff Arbour – Fiction: Mobile development is way more expensive than developing for the traditional Web. I think multiple iterations are key to building a sticky application, and that’s expensive to do in mobile. Also a mobile user is way less forgiving than a Web user, meaning you have way less room for error when you go straight to mobile. Most of today’s US consumers are cross-platform, and companies need to look at digital as thus, and not in the current three silo perspective of mobile, Web, and social. It’s all just digital to the end user.
James Min – Fiction: Depends on what type of startup. if you’re ecommerce, the mobile experience supplements, but is not a substitute to the Web experience. If you’re modality is inherently mobile (i.e., Uber), then you should prob think mobile first.
6. Is social discovery is the next big trend?
Greg Tseng – Fact: Social networking has grown to serve over a billion active users to connect you with people you already know. I believe social discovery is the next phase of social and will also grow to serve over a billion active users to connect you with people you don’t yet know.
Christian Dorffer – Fiction: Social discovery isn’t new, nor is it a process that a marketer can easily control. To grow your business aggressively, you need to spend your money wisely on channels that guarantee ROI.
Jeff Arbour – Fact: Let’s be honest, search is a time waster for discovery, and recommendation engines still aren’t there. Social discovery, passive or active, is key to cut through the clutter of everything that’s out there. Today’s consumers have tons of choice/distractions. Social allows for word of mouth without the effort of actual conversations. Social = word of mouth at scale-ish.
James Min – Fact: There’s too much noise out there, and there is a growing need to separate signal from noise. This is where social discovery and curation come into play. Shout-out to Undrip, which I think has come up with an elegant solution. (Disclosure: I’m an angel investor in Undrip.)
7. Is it true that the viral growth of services like Airtime, Pinterest, and any others using Facebook Connect wouldn’t have been possible five years ago?
Greg Tseng – Fact: Because Facebook Connect didn’t exist five years ago! It’s hard to build a people network from scratch, so Facebook, LinkedIn, Twitter, Tagged, etc. all had to spend years just building the network. Nowadays, you can grow much faster by taking advantage of these pre-built networks, but then you may become beholden to them.
Christian Dorffer – Fact: Five years ago people were still choosing whether to be in one social network or the other. Facebook Connect is literally the Swiss army knife of social media, simplifying everyone’s life and allowing everyone to enhance their media consumption with a single click.
Jeff Arbour – Fact: This directly aligns with the social discovery question, peoples’ “Friends circles” are larger today, because Facebook made it way easier to be connected to people and see what they are doing in the physical and digtial world.
James Min – Fact: Partly because 15-20 percent of an average online user’s time is spent on Facebook in any given month. This allows for discovery of these companies/services. In addition, Facebook Connect reduces friction of user adoption similar to how reducing the steps to purchase increases conversion in ecommerce.
8. Will bored people open Airtime (or another social discovery service) before they check Facebook or Twitter?
Greg Tseng – Fiction: It really depends on the user’s state of mind, so it’s hard to make such a sweeping statement. Would a user like to relieve boredom by reading news, playing a game, keeping up with friends, or meeting new people? All of the above.
Christian Dorffer – Fiction: Old habits die hard, and Facebook and Twitter are the highlight of most people’s day. It will take a long time to put Airtime at the front of the queue.
Jeff Arbour – Fiction: You have to be an active user for Airtime, and only 10 percent of any social network are actual contributors. Airtime takes more time to engage vs. the quick and easy snacking of content that Facebook and Twitter offer.
James Min – Fiction: Depends on the context of the user. If I’m in line waiting at Starbucks, I’m probably checking out Twitter for news, Facebook for updates, or playing a game. Airtime seems to be competing with appointment leisure time (i.e., watching TV).
9. Is gamification (i.e. points, badges, rewards) a core competitive advantage for any service?
Greg Tseng – Fiction: The best services provide lots of value so people keep coming back to get more value. Gamification done right can certainly amplify it, but done wrong it can cheapen the brand and value proposition. Imagine earning points, badges, rewards for Web searches — Google doesn’t need that to keep users engaged, and I bet such gamification would hurt more than help.
Christian Dorffer – Fact: Tech and media must be simple and fun. Most tech companies today are struggling to offer a simple and fun experience at the same time. Gamification done right can provide a competitive advantage, but gamification done badly creates a confusing and annoying user experience.
Jeff Arbour – Fact: Gamification is another form of loyalty or CRM. I like to think of it as the digital equivalent to saying “Thank you.” Companies are thanking you for your interaction. and my mother always taught me to have good manners. I think that holds true for both the physical and digital world.
James Min – Fiction: If your service sucks, you can gamify all you want, but it won’t do anything. The core value proposition of the service has to provide utility and be greater than substitutes competing for your time/attention.
10. Are the results of the Facebook’s IPO bad in the long-run for the tech community?
Greg Tseng – Fiction: It’s bad in the short-run but won’t have any effect for the long-run. I don’t even really remember the Google IPO eight years ago, and that event certainly doesn’t have any effect on the tech community today. I don’t think we’ll be talking about the Facebook IPO a year from now.
Christian Dorffer – Fiction: Facebook’s IPO wasn’t handled very well at all, which is a big pity. The tech community is one of the most innovative sectors today, and a sector that is transforming society and facilitating productivity growth around the world. If the Facebook IPO had been handled better, many private investors would feel more confident investing in the companies they love.
Jeff Arbour – Fiction: I think a lot of startup companies were getting over-inflated valuations, and the IPO was the reality check that many in the industry needed. Great products, revenue strategies, strong teams, and truly disruptive companies will continue to get the respect and valuations they deserve.
James Min – Fact: It could have a ripple effect on the entire ecosystem. Data has shown that outsized investor returns come from companies that IPO. VCs need to make money for them to continue to fund future generations of disruptive companies. If you were an institutional investor in Pandora, Groupon, Zynga, and Facebook, your returns are significantly negative. As a result, you are less bullish on the next “once in a generation” IPO and less willing to lean forward with valuations. This compresses investment returns, which can make VCs tighter with the purse strings.