There is no value in plain vanilla communication services
Once in a while we see a post on the WebRTC social groups calling us to check out a great new cool WebRTC video calling service. Many of these are just WebRTC talking heads. Big disappointment.
The trigger to this post was such an announcement I ran into earlier this month. I decided not to mention the name here because what I’m about to say is not nice and is not specifically about this service, it is a general comment.
Let’s be clear. If all you are launching is yet another WebRTC based calling service it is a waste of your time and squander of your investor’s money (and if you have no investors it is a waste of your money because time=money).
Why talking heads have no value
There is no way to make money from a plain vanilla calling service. Period. Even if you have one or two cool features others don’t have.
Consumers can get the same experience using Google Hangouts, Facebook and many other services. You have no chance to compete with them on market attention, quality and features and they have other ways to make money, not by charging premium on the calling service.
Business customers will not drive significant revenue as well. Many use the same consumer free services also for business calls. Others use the traditional UC services (e.g. Skype for Business) and the more current businesses use team collaboration services such as HipChat and Slack.
If you plan on making money from PSTN termination that is also a long shot. The prices of PSTN calling are so cheap today that you need real high volume in order to move the revenue needle.
Advertising – I hope you didn’t plan on that, read above comment on volume.
Oh… and there is no point in writing on your website that this is a service that uses WebRTC. It’s just like saying you are using node.js in the backend or any other technical detail. If your service is for end users, tell them about the functionality and benefits, not the technology.
Creating value with WebRTC calling services
There is a flip side to my whining above. It is possible to create value from these services. The starting point would be some initial planning and understanding the target audience.
Building video calling service into another service that has a valid business model is a great way to go. There are many such examples: eLearning, TeleHealth, Dating…. The magic word is COMMUNITY. If you have a community you can serve and give them something they need, they will be willing to pay for it. This is called Asymmetric Business Models, you don’t charge for making the call, you charge for the other service because the value of communication is determined by the service in which it is embedded. This moves you away from the low PSTN/Advertisement revenue models.
The buy me strategy is problematic because very soon you discover money is running out and investors are not standing in line, you need a sustainable business model that will keep you going.
I had this discussion with a small WebRTC startup that got acquired some time ago. The discussion was before they were acquired and they changed their strategy to be able to pick their customers and focus only on those who can pay some monthly fee. They managed to reach a sustainable model where they had small profit. This gave them time.
Even if buy me is the goal there is still one of these 2 things you will need to have:
A large enough, well segmented community (assuming you are not going to reach hundreds of millions of users). This brings us back to my points above about end users.
A technological twist that will be hard for others to implement. This can be something special in your backend like scalability, unique capabilities in session manipulation, unique quality (WebRTC is pretty good so that’s going to be a challenge)… Without that, you will have a hard time making your company attractive for acquirers; there are many WebRTC fish in the ocean.
Why is this important?
If you care about your time and money, plan your business model ahead of time. Don’t think you will figure it out once you have enough users. This is one of the common and strongest lessons learned I hear from entrepreneurs as post mortem of their company. Not specific to WebRTC.