Continuing our series of looks into startups and their revenue, today we take a hard glance at Seesmic.
Seesmic is a company on the cutting edge of social media. Its tools for tracking and updating the status of your friends and yourself are available on nearly every platform that you can name. Even more, they are respected on each of those platforms.
Seemsic has the distribution of its products nailed. While its flagship product, Seesmic Desktop, lags behind the behemoth Tweetdeck in market share, Seesmic has a hand in nearly every mobile pie possible.
Which is more popular overall, Tweetdeck or Seesmic? Seesmic wins two of the three mobile markets, Android and Blackberry where Tweetdeck does not have applications. Tweetdeck and Tweetie win on the iPhone, where Seesmic is painfully absent.
All that is interesting, but everyone who has ever looked into Seesmic, or any social startup for that matter, has one question: just how are they going to make money? We talked to Seesmic, asking how they plan to monetize their users and products. We have the answers, and the timeline. Will it be enough? Let’s take a look.
Seesmic has three main monetization legs: free and premium versions of applications with ads on the free versions, business development deals to provide in-app access to its users, and channel deals with major companies for exposure inside of applications such as Seesmic look.
Seesmic CEO Loic Le Meur was not specific as to exactly which applications are going to be fully free, which were to be ad-supported, and which will be offered in a paid variety. However, looking at the market, it seems a fair guess that eventually Seesmic mobile applications will be offered in a freemium format. Users across the mobile platforms have showed willingness to purchase Twitter applications (Twitter is Seesmic’s core use), for up to a few dollars per application.
This raises on major issue, Seesmic is missing from the iPhone App store, the largest and most lucrative mobile application store. If they are intending on selling mobile applications, dodging the largest market is just foolish. When Tweetie 2 came out (the application that I use for iPhone), it was rumored to be doing $100,000 in revenue every day. This was never corroborated, but it gives you an idea as to the scale of the opportunity that Seesmic is missing out on. According to Loic “we have been working on an iPhone app that we believe is very different than anything available on the appstore and it is coming soon,” but they have said similar things before.
Total revenue impact from selling mobile applications in a year, probably a few hundred thousand assuming that Seesmic stays on just Blackberry and Android. This is of course is built on the assumption that Android and Twitter keep growing as they have been. That number could be perhaps double if they were also selling an iPhone application that was well received for a few dollars.
Ad supported applications that are given away could raise another hundred thousand over a year given Seesmic’s pervasive userbase. At the moment the ad networks that exist for mobile applications are not paying much per impression, but Twitter application users tend to rack up several pageviews daily. That across their full userbase over a year does add up.
What can Seesmic get from business development deals? That depends on the future of their four desktop and web applications. Assuming that Seesmic can hold on to its second place slot in desktop status market share, it can charge a pretty penny. Back in June of 2009, it would cost you $50,000 to get your application integrated into Tweetdeck. Seesmic is by now as big as Tweetdeck was then, so assuming four business deals in a year they could rack on another few hundred thousand in revenue. Assuming that Seesmic charges applications the same amount every year for continued support, this could turn into their best revenue stream.
Finally, channels. Loic called these “a good source of revenue.” Right now Seesmic appears to have channel deals with Red Bull, Kodak, Life, Huffington Post and several other companies that you recognize. While I would guess that these deals are of a smaller price per hit than the business development deals that we just discussed, Seesmic could sell more of them, providing another large revenue possibility.
So where does that put them at the end? According to our estimates around half a million dollars from mobile, around two hundred thousand from business development deals, and perhaps another two hundred from channels. Total? Just under a million yearly at their current size, assuming they get around to an iPhone application.
Assuming that they grow, a reasonable proposition, these numbers go up. Also, Seesmic could bring advertising and premium versions to its desktop applications, opening new revenue streams. They could even work with a company like 140proof to bring interstitial advertising. There are numerous other routes that they can walk down.
According to Crunchbase Seesmic has thirteen employees, and using the old-fashioned metric of $100,000 per employee in costs per year, and then adding in a few hundred thousand in other expenses, Seesmic needs to bring in around $1,500,000 a year just to break even. That seems quite possible if they turn on all the revenue taps at the same time. Loic said that all their monetization plans were “months away,” and were “not a priority at all.”
We’ll just have to wait and see. This does go to prove however, that you can monetize a social product, and also that there is no one silver bullet revenue method; you must use many together.
Good luck, Seesmic.