Last year the company, which has annual revenue of $13 million, launched an initiative called Launchpad, which set out to invest $100,000 to help commercialise a start-up’s mobile content idea. Two ideas received funding – a multi-player Facebook game My Level, and an app developer called Inscribe.
Today, Gibbs talks about the challenges of building and monetising online communities, staying connected from Australia and sorting good ideas from the bad.
We always think of the high Australian dollar hitting big manufacturers and miners, but it would also prove a big hurdle for you guys, wouldn’t it?
From a technical accounting perspective yes, it makes a big difference to us when we’re operating with a US75c dollar versus $US1.05. It’s similar with the European currencies. But equally, our cost base is relatively well distributed in that we’ve got a bunch of North American operations and we don’t have a huge amount of operations down here.
The exchange rate is annoying and it might make our results look a bit worse, but the exchange rate is not going to turn us into a billion dollar company or if it is, it will be currency trading not running mobile communities.
Can you take us through the refocusing of the business? Many of our readers were familiar with the Oztion auctions business that you bought a few years ago, but last year you sold that business and also sold the CarBuddy business.
Initially, Jumbuck was all about creating a chat product that generates lots of traffic at the point in time telcos wanted data traffic because they didn’t have any other recipes, and that is what drove the astounding rise in Jumbuck. Jumbuck then said on the back of that let’s actually go and acquire a bunch of pieces. So Jumbuck bought a number of foreign language kind of chat products and then said, “Let’s actually go and put a foot on a bunch of these Australian internet assets” of which Oztion was one.
It’s no secret that Jumbuck itself went through a few issues at the shareholder and board level and I think that distracted things for awhile and was unfortunate for Oztion, because I think there was a recipe that could make that sort of more successful.
When I was brought in at the beginning of 2010 the first thing we did was stepped back and said what really are the assets of Jumbuck globally, particularly that are truly scalable? We took the view that with relationships with 120 carriers globally and particularly well-integrated billing relationships, access to all those markets and what we understood around communities and how to monetise communities, while Oztion was a wonderful little business, there wasn’t a lot in it there that contributed to us being able to scale on a global scale.
And I think Oztion and CarBudd are a much more natural fit with CarSales in terms of what they were doing and what they’ll do with it.
What are the challenges of building mobile communities in a very hotly contested space?
We’ll start with the easy question shall we James? I’m actually not convinced that there are that many companies who run communities through mobile web globally and monetise them effectively.
Now that’s a big statement, but if we unpack it a little bit we see lots of activity around the specific iPhone development, so a lot of the FourSquares and those types of organisations, and a bunch of those moving into building communities within the kind of iPhone territory. There’s a lot of stuff that I think is very effective within that nice quarantined environment but then you bring that out into mobile web. We hear corporates talking about a bunch of areas around the world where dumbphones, as they seem to be called these days, are still an important part of what needs to happen.
So they’re still not truly global communities in our mind. We’re much more around where do we need to be in a couple of years time when we don’t want to be tied to either iPhone or Android, we want to be in mobile web and we want to be using the best of HTML5 and accessing devices that way. That’s where we want to be and making sure that we monetise effectively across subscription revenue where we still think there are still things people will pay subscriptions for, transaction revenue which is both virtual goods but also real transactions, and then looking at how do we make the advertising and sponsorship meaningful because that in its own right has proven to be a very fragmented marketplace. So when we put those three things together, we’re not convinced that there are very many people truly looking at how do I build a global community and how do I effectively monetise it?
I know you do have iPhone apps and Android apps, but you’re saying concentrating on mobile web keeps your options open?
We’ve actually been quite slow in the iPhone, Android space. Before we acquired Inscribe in December, we only really had one iPhone app and that was a version of Power Chat running in the US, getting fairly poor reviews because we didn’t support it very well. Part of the acquisition of Inscribe was to bring us some of those skills. We see it as a very important platform to innovate on, because it’s relatively closed and relatively quarantined in the development costs associated with it. So we’ll use it for that but with a view to taking what we learn out of that and as quickly as we can, bringing it back into the broader mobile web communities.
Is there a concern that monetising of the iPhone is harder because of the influence that Apple has on the marketplace?
Yes is the answer to that, but it’s got phenomenal following. Lots of the people we see in the US are innovating in that environment and then getting slightly frustrated around how we do in-app reoccurring billing. In fact, one of our challenges when we first launched the Power Chat app on the iPhone was that you couldn’t do reoccurring billing with that. People are working around that but the plus side is it’s a good quarantined, easy to innovate environment. The downside is it comes with an owner who believes you should do things his particular way.
On the monetising challenge, just how difficult is that proving to be?
I don’t think anybody has written the book on how you monetise in mobile yet, not at all. We still have some quite strong subscription based models where people will pay the five dollars a month or more in some cases. Certainly in lesser developed markets which we see in Asia Pacific and we see in Latin America, we still see a fair road to go.
But we always see a role if we can be good at helping people find others who are living the same or doing the same thing, engage with them, validate they’re real and connect with them then. We still see a lot of that going on and a lot of that being monetisable, but in a way beyond Facebook, because Facebook still tends to be a lot more around people in your network, whereas when we play in areas like pets and some of the dating and flirting stuff, people are more interested in people living in the same in moment anywhere in the world. So we still see value in connecting people globally with common interests which is what happens in a community.
So that’s one piece of the monetisation model, we still think that’s real and there aren’t that many people that focus on that. The challenge we’ve gone through is a lot of that where there isn’t real value, it’s been hollowed out by the social network being done for free. But I use the analogy that if you’ve just been diagnosed with a disease of type X and there are three or four courses of treatment, you want to go and find people globally who have had those three or four types of treatment. There’s value in us connecting you to those people.
The transactional piece I think we’ve seen on a bunch of businesses like Flirtomatic and others get a long way in how do we monetise the community through the whole ego driven gifting, that mechanism.
So this is where you can give a virtual gift?
So I can give a melting ice cube with a message saying, ‘Hey James chill out’ or I can send your dog or send your cat a best in show medal or something like that, a lot of that and in chatting and dating and ego driven things works very well. How well it works in more serious environments? Not sure. But it begins to get into that whole area that we see with Foursquare and Facebook with the rewards and the badges that make you feel better.
The other part of this is how the sponsors and the corporates participate in the community but in a way that the community is not seen to sell out to them and so they’re able to make relevant offers at the relevant time and close real transactions.