TipJoy: Twitter Startup Fails Despite Major Blessings
There's a seemingly infinite list of startup companies based on adding one form of value or another on top of Twitter. One called TipJoy closed its doors this week, despite a remarkable set of blessings that thousands of developers throughout the Twitter ecosystem would be wildly jealous of.
TipJoy offered a service that would let people pay small amounts of money as tips for online content, with the transaction being processed via messaging on Twitter. That wasn't the only way TipJoy worked, but the company was very closely tied to Twitter.
TipJoy had three big advantages that we can see. The company raised money from investors, something that few Twitter-related startups are able to do. Among those investors was BetaWorks, the funding incubator that backed search engine Summize and sold it to Twitter. BetaWorks has invested in a number of other related services, including popular Twitter client Tweetdeck. Backing from BetaWorks is a big advantage for a Twitter-related startup.
Also among TipJoy's investors was Chris Sacca, an early Google employee turned startup investor. Sacca also has money in Twitter. Twitter founder and CEO Ev Williams has more reciprocal @ conversations on Twitter with Sacca than with anyone else except his wife. Getting that guy's money and backing on your side sounds pretty great for a Twitter-related startup, right?
Finally, TipJoy got placement in the "definitions" section in the top-right corner of Twitter.com for millions of people for some period of time. Hardly anyone gets placement there.
And still it didn't work. What's the takeaway? Maybe that people really don't want to do micropayments. Maybe that close connections with Twitter investors and staff don't always impact a Twitter-related startup as much as you might think.
Update: The next day it was reported by TechCrunch that one of the founders of TipJoy has been hired by Facebook.
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Someone had to try the concept, but micropayments via Twitter just doesn't sound very attractive. Maybe a couple years too soon?
Posted by: drgath.myopenid.com
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August 21, 2009 4:25 PM
Anyone know what they are going to do with the code? Can think of some very focused social applications that could repurpose it.
@Michael Lewkowitz
Just an FYI, your avatar/profile picture makes you look like a complete psychopath.
The problem which I can see is that with so many free services around, nobody would actually want to fork out money unless it is something different. Probably the idea that could keep startups alive is to continue to offer free services but at the same time monetizes using other advertising channels. It's also quite a challenge because everywhere you go, there seems to be a lot of new sites created solely based on twitter to jump on the popularity, so you could say competitions are really tough out there.
Like most startup failures it probably has less to do with their place in the market than it does mismanagement of cash...
But one of the primary concepts of the business was to help monetize a consumer website by the idea of adding a widget that said "Leave a Tip" like you're tipping them for the service of being a good website. I tried their widgets and not one user (of a very loyal user base) left a "tip".
I just think the logic was flawed, users don't see websites as a service like a taxi driver or a waiter needing to be tipped.
If it had said "leave a donation" it would have been more effective, and towards the end they started position the product as such but this 'tip' idea was so ingrained in it there was no way out.
Regardless with $1 million in seed capital you'd think they'd be able to figure a way around this problem. As so often happens with startups when you have money you solve your problems with money instead of your head. My bet is they probably just kept solving their problem with cash until they had no more left. Thats how it usually happens...
Who knows why they got out and closed the doors. Perhaps they did not see the growth that they were expecting as well as having a designed company that could not develop more tools and expand their network off of the original brand. Maybe it was all the Direct messages =) LOL did you here about the StopAutoDM, A Movement to Stop Auto DM’s http://www.trigeia.com/article.php?id=86371
This sounds incredible,how can micro-payment on twitter fail?I am a bit confused,hornestly.
or maybe the reason is simply that twitter really isn't the centre of the world & that a platform for gossip and self promotion was the wrong place for mircopayments?
Hi
Nice Article as i am a big fan of Twitter
Like one of my friend said in comment i also think that Twitter start up is may be couple of years too soon!
I agree with SockYee there are so many things for free. You don't want to pay unless it is worth every penny...
This is really depressing. I hope other Twitter app developers can learn something from it...
I never used it because I couldn't understand the money trail.
Using paypal requires so much verification. This didn't seem to require much/any. The lack of accountability made me suspicious and I was unwilling to release potentially confidential financial information using Twitter's low threshold for security.
This was bound to happen, because any application that is not worth its cost is doomed to failure in cyberland. Not many people are willing to pay even small amounts of cash just to get information that they can easily google themselves.
I don't think that a lot of people can spend some money on this service besides there are the same free services.
I think, twitter will offer such functionality.
It will be included in twitter, so they closed this.
nice site with lot of informative information.thank you very much for sharing nice information.
This was bound to happen, because any application that is not worth its cost is doomed to failure in cyberland