Nitzan Shaer gave us a talk about the Freemium business model in the mobile and Internet industries (offer basic services for free to acquire a lot of customers very efficiently, while charging a premium for advanced services that only a very small percentage of customers use).
Nitzan has recently been an Entrepreneur in Residence at IDG Ventures and also COO at Mobivox, a VoIP service accessed from the mobile phone which I have started using very often. He is also an HBS graduate and previously he led teams at Microsoft and Skype. He is now starting a new venture.
Some of the interesting things he mentioned:
- Voice recognition is taking off very fast (he talked about Wildfire and Mobivox).
- He only believes in 2D advertising. For instance, in a video or browser you can have a banner parallel to the rest of the image (e.g., banners on top or Google sponsored adds on the right of the screen). Therefore, watching the add is optional. However, with voice or SMS, everything is sequential (i.e., 1D) and very intrusive. In order to see your information of interest, you are forced to listen/see the advertising.
- He does not believe in advertising on mobile. People do not use the mobile to search information.
- Good entrepreneurship is about reducing risk
- It is not the big who beats the small. It is the fast who beats the slow
About mobile:
- It is a very fragmented business
- It is difficult to download applications on the phone
- The average person only knows how to dial and how to talk
About Skype:
- Despite the previous success stories of its founders, Skype pitched to over 100 VCs. Part of the reason is that there was already too much competition: AOL, Messenger, etc.
- Three things contributed to the success: It started by technology (P2P), it used viral marketing ($0 in marketing budget), it was really focus (in free talk).
- It uses the freemium model. Only 10% of the call are to non skype people
About Mobivox:
- Everybody knows how to dial numbers on a mobile phone but people do not know how to install SW or use browsers. With Mobivox, you get access to an automated attendance. You say the name of the person you want to call and you connect (it uses voice recognition). If she is a Mobivox user it is a free call. If not, you pay as much as with Skype (1.7cents/minute).
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