Fotopedia, the photo encyclopedia app, is shutting down.
The company had everything going for it:
- Big name founders – The Founder/CEO was a former CTO at Apple’s Application Division. 4 other co-founders were also former Apple engineers
- Significant capital – Raised $12.7M in funding
- Industry partnership – Partnered with Expedia
- Great PR and visibility: Voted “Best tablet app” in the 2011 Crunchies
- Enormous distribution and an active user base – Launched in 2011, it had over 3 Billion image views by 2012 and 20 million downloads
They couldn’t have been in a better position to succeed. And yet, three years after its launch, the service is shutting down. This quote from the CEO in an interview with Techcrunch sums it up: “The product had great retention and passionate users, there was one missing piece: where does the money come from?”
The freemium approach most startups default to, is an extremely challenging one to execute on. By giving away your product for nothing, you are setting the wrong expectation with your consumers and anchoring them to that value. If you’re building a great product, but not charging for it, you are forcing yourself to focus on two tangential areas – growing your user base and figuring out how to monetize it. This takes the focus off developing a great product experience for your consumers and creating value for them by addressing their real needs.
Unfortunately for Fotopedia (and all the VC money poured into it) it falls into the 99.99% of mobile apps that Gartner considers will be financial failure.
Forget Freemium, Think Profits!