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  • Hello you. I'm a 38-year old MSc student, studying Advanced Computer Science at Sussex University. I'm especially interested in Internet and mobile software, sensors and pervasive computing, user interfaces, and the process of developing great software.

    Before that I spent 11 years running Future Platforms, a software company I co-founded which makes lovely things for mobile phones, and which I sold in 2011.

    I read a lot, write here, and practice Aikido and airsoft. I live in Brighton, a seaside town on the south coast of the UK, with two cats and a clown.


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« What me, fragmented? | Main | Mobile Monday »

December 07, 2008




Valid points, and I appreciate your professional defence of a piece of software, which you are clearly passionate about. I agree about the advantages of applications (and not mobile web) etc. XXXX REDACTED BY REQUEST OF THE COMMENT AUTHOR XXXX

But for all the balanced and considered comments about the Trutap application itself, don't you agree that the main point here is:

*$14.5 Million*


Tom Hume

Wolf - yep, that's a lot of money.

But the "$14m == 250k users, therefore COA = $56 which is expensive" argument is unhelpfully simplistic, unless you presume that either this was the *target* for the business, that they had stopped growing their customer-base or they planned to carry on gaining them at the same COA. Whilst I'm not privy to the inner workings of TT strategy, I think it's safe to assume none of these are the case.

If funding had been available (as it had been previously - their backers, Tudor, were a safe bet until not long ago), audience growth had continued (it is, btw - I know the rate but can't publish here without permission) and COA therefore fell, then perhaps in a years time TT would have been the "big-thinking vision we always knew would pay off" instead of the "business we always knew would fail - but err forgot to say so until it did".


Totally agree about the 'wisdom of hindsight' argument. Very easy to hype up a product (I think Trutap got it's fair share of the mobile media limelight), and then have a good old go at them when they're down.

Not sure about the bigger picture here though. I may be looking at this simplistically as a small business owner, or 'serial entrepreneur' as it's fashionably called, but I find burning through that amount of money in 2 years obscene. If producing more or less one mobile application, although very good, costs this much, we're all doomed. And you know best that it doesn't.

From that perspective it's futile discussing the COA, or how many or how few 250,000 users are. Because if you still rely on a second round of £2-4m to keep 80% your staff, your business model is broken. At least in my book.


Excuse the bad grammar in my first sentence. It should be 'its fair share' of course. Doh!


But Tom, Ajit says:

"many other companies have started profitable ventures and built large communities - so the sector itself is sound"

- this is quite a positive prediction.

I for one am safe knowing that none of the others are set to go out of business despite hard times.

(And if any do, my confidence in the quality of this punditry will be *truly* shaken to the core!)

Tom Hume

Wolf: as a small business owner myself, I get where you're coming from: this isn't a kind of business I could see myself running. But there are precedents for it working elsewhere as well as failing.

Seeing this as "14.5m for a mobile application" is a bit like seeing Kleiner Perkins investing $8m in Amazon and thinking that it's a lot to pay for a web site, no?


Safe in the knowledge that we predicted close to day 1 that Trutap would go under, I have to say the one thing that stands ou in the whole debacle - apart from the quality of the app itself, which was very high and certainly a quantum leap up from the original Hotxt app - is


Obviously it's not all Cost Of Acquisition. But what the hell else was it?

- It shouldn't all be development (I wouldn't imagine dev would account for much more than 10-15% of that, but feel free to enlighten ;)

- It probably wasn't Biz Dev, with only SE and a handful of operators to show as partners;

- As I am sure you know, but most early competitors failed to grasp, Amazon was never "just a website" - it was an enormous back-end capable of operating a successful nationwide online retailer leveraging increased profitiability from wafer thin stock levels and excellent distribution. This probably took a fair chunk of that first $8m - correct me if I'm wrong but Trutap does not appear to have IP and infrastructure of this order? (OK, Trutap did have nearly twice the budget and a vastly larger pool of free software to leverage so maybe it's an unfair comparison, but you hopefully can see the point).

It does bring to mind the implosion of Riot-E, though I'm sure we would have heard if Future Platforms had attempted to buy up half a restaurant then run naked through the middle of Brighton.

Future did great work and no doubt benefited greatly from the long-term business, and you're justifiablyu proud of the client and proud of the growth your baby was achieving.
Trutap certainly weren't the only company to assume that money would always be cheap and available and it was more important to get to the end then to worry about how much it cost to get there.
However in many people's minds, that still doesn't explain tor justify the obscene waste inherent in a business that took that much money to achieve what it did. But rest assured there's probably some jealousy from all the people who would have loved to have got to spank through it all!


Sorry Tom, the answer is 'no'. I hear what you're saying, but comparing a social networking aggregator mobile app with a stock-carrying online superstore is, with all due respect, an indicator of how this industry is going down the pan so rapidly.

It's like the first dotcom boom all over again: Huge startup funding + plenty of registered users = Revenue, and lots of it. That didn't work then, and the obsession about all things to do with the 'social web' shows that the thinking - at least among VCs - has not changed. Business models relying purely on registration numbers are not sustainable when you can't convert those into revenue. And the paying user doesn't NEED any of this stuff, especially in tough times. They obviously did need a good retailer like Amazon, back then.

From what I've heard, the people at TT are good, and it's a shame for them (had an email from one of them recently, looking for work). It just makes me really angry when those mobile rich kids with pots of funding applaud a guy for 'taking risks', at the expense of people's jobs. Credit crunch or not.

I'll stop using your lovely blog as a ranting platform now... Fancy discussing this over lunch some time before the silly season?


Tom Hume

Raddedas: I don't know how Trutap's money was spent, beyond what was spent with us.

I'm quite familiar with Riot-E, having met them (briefly) when they were around and looking for mobile gaming content in 2000/1, and I'm the proud owner of the film about them, which is extremely entertaining :) and a million miles away from anything at Trutap.

Comparisons there are *way* off mark. Trutap built a Java client for 340 phones (3 versions), web site (2 versions), significant back-end infrastructure to support all this, and plumbed into 30+ third party services - plus the stuff that hasn't launched.

I think Riot-E made rebranded SMS versions of "scissors paper stone" and spunked the remainder on office saunas, flights and ludicrous parties, spending about double what Trutap ever received (Riot-E had $27.7m+ at todays exchange rates) in a shorter period of time.

The most extravagant thing I saw TT do was buy some on-brand green cocktails for their launch party last year. And not that many ;)

I've posted a comment under the piece on your blog dissecting the publicly-available figures about TT in more detail, but their cost per staff member runs at about £120k (using exchange rates of when they received funding) which is *slightly* more than A Large Corporate Telecomms Business - and includes all sorts of costs like infrastructure, marketing, PR, office space, etc., which would be deducted before anyone saw a salary... and doesn't include any costs for running the biz pre-2006.

Riot-E this wasn't.

Tom Hume

Wolf: the comparison is simply to make the point that there's more to the TT biz than the visible bit that we did (the MIDlet)... in the same way that, as you rightly point out, there's more to Amazon than a web site. Clearly they're not in the same league success-wise!

We needed mail-order delivery of books to the extent that we'd pay for it. We need Google search, to the extent that it can be supported by advertising. Neither businesses grew organically, both took investment and supported themselves for a time before being profitable. There will undoubtedly be other businesses which build themselves in a similar way; some of them may even be businesses that you, I, or others look at and can't see a future in.

Returning to the point of my post: this stuff is easy to knock with the benefit of hindsight.

Or to put it another way: let's get some predictions going. Who's next? ;)

William D. Volk

The big issue for me is the money. I've been producing mobile apps on everything from WAP to the iPhone during this decade and in the video game industry since the dawn of time (my first published title shipped on cassette tape, so that dates me).

I just don't see how they spent all of this unless they handed each member a $50 check. I don't know the background, but having lived through the worst of the dot-com excesses (I was a CTO at a 4-letter dot-com in 1999) I suspect that much of the $$$ was devoted to creating the appearance of value for the next round of funding or acquisition.

When some of us struggle to bootstrap our companies into existence (we have NINE iPhone titles in iTunes now, 20 Google Android web apps) yes ... it's partly sour grapes. I could do SO MUCH with that sort of funding as I suspect many of the harshest critics on Forum Oxford believe they could do too.

Reality has changed (see Sequoia "Good Times, RIP" presentation) so unless you have a workable business model that next round isn't going to happen.

Tom Hume

William: Trutap employed a team of server-side developers building out infrastructure, product managers, web developers, marketing, data analyst, management, biz dev, QA and so forth. I know most of the individuals who filled these roles; they were busy.

My own experience is on bootstrapping a company (FP), so I'm personally more familiar with your way of doing things. It's true that Trutap were one of our larger clients. Many people create businesses with a smaller team, but if you're looking at the mobile app and wondering where the money went, you're not seeing the effort put in behind the scenes (mainly by the team at Trutap themselves).

I think we can all see that the impact of the credit crunch on venture markets - which is what's referred to by Sequoia, and a factor here.

Luke Brynley-Jones

Interesting discussion fellas. I head up the product team at Trutap (so Tom and I know each other well).

I'm not going to get into the detail of the issues we're facing at Trutap, but I would make a couple of key points. Firstly, in point of fact, the funding we received was £6.5 million (in pounds). With the exchange rate we got it at, it was a LOT less than $14.5 million. It's still a lot of money though.

Secondly, the product we built was based on the understanding that our funding base was solid and substantial. We built a large and, by all accounts, impressive application only because we had solid backing from cast-iron investors - i.e. we knew we had the time and resources to deliver something special. Had we known that the worst economic crisis of our time - one that would threaten not only our business, but also our investors - was around the corner, we would certainly have scaled back our plans.

It’s been interesting reading the comments about our problems. Most have been really positive, but it’s a shame to read the more cynical ones. As Tom says, everyone at Trutap has put 100% into the business. We’ve done the late nights and weekends – as you’d expect of a startup – and nobody ever wasted a single penny of investment. In the final analysis, our problem is purely financial. That’s the sum of it.



Your input is very much appreciated, and I for one don't question the genuine effort and impressive thinking that has gone into your product. Plenty of people will disagree with me, but I have a problem with the concept of capital funding at that level, which I still find somewhat frivolous, when most 'normal' small businesses struggle to get a startup loan of £5K to open their shop. I'm simplifying this, but I feel astounded that entrepreneurs in this industry get applauded for being 'cash-flow positive' - welcome to the real world!

I take your point about exchange rates, but we can only go by what the press releases said (which was in fact $13 million in 2007).

Luke Brynley-Jones

In principle I would agree. The issue is that in our industry companies are valued on 'rapidly achievable potential', which encourages VC speculation. VCs typically have one success for every 10 fails - so that single success has to be massive to cover their losses elsehere. The 'cottage industry' business model, based on steady growth and profits, is of no interest because there is no chance of delivering a big enough return within a 1-3 year cycle.

As a result most entrepreneurs choose to take VC cash and expect to succeed (i.e. demonstrate rapidly achieveable potential) or fail within 1-3 years. You're right, it leads to waste, but you also end up with the odd Google and the occasional Facebook.

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