The business model question is increasingly top of mind, particularly in a post-Facebook IPO world where founders realize how unattractive the most popular consumer Internet business models are to public market investors.
That’s why people reacted strongly to the idea that New York Tech Meetup is thinking about ways to adapt its rule of banning questions about business models at its demos. And that’s why it is always refreshing to meet companies with a smart revenue model, good momentum, and a strong chance of pulling it off. OnSwipe is one such company.
Sometimes founders can toil for years before hitting that lightbulb moment — the idea, product, or strategy they knew would change the game for them. For Buddy Media, it was the introduction of Facebook Pages. For Songza, it was an experiment with handpicked playlists that led to the creation of the site’s core concierge product.
The founders of OnSwipe knew they wanted to start a company, but hadn’t struck that lightbulb idea. That is, until they found out about the iPad. The minute they laid eyes on the device, they knew it was a game-changer.
“It was the most profound thing I’ve ever experienced,” says co-founder Jason Baptiste. “I thought, this device will change everything.”
And for Baptiste, it did. He promptly moved to New York and set to work building his iPad publishing platform. Now more than 5,000 publishers use his free software to make their sites beautiful and touch-screen friendly for tablets.
He purposely made it free — charging publishers to use the software would build him a small business, and he was looking to build a huge one. “As soon as you become a cost center versus a revenue generator, its a much different story,” he says. If the iPad is the TV of our generation, OnSwipe wants to reinvent the Web for this new device, he says.
And that’s all great, until you realize $6 million in venture backing won’t support a 48-person team building free software forever.
Baptiste’s solution to that? Hire more people. Specifically, Jared Hand and Rich Bloom. They recently came on board earlier this month to turn on the revenue spigot. Hand specifically will be focused on that side. Previously at mobile ad company Jumptap, he’ll be tasked with building an ad team to directly sell their own magazine-like ads.
The touchable ad units make encountering an ad similar to flipping through a magazine. You swipe onto ads, and you swipe past them. But you definitely see them, which is more than banner ads can say. Hand will be looking for those precious, top-of-funnel branding dollars that have yet to make their way over to the Internet.
Ad networks have been in a race to the bottom on pricing. “How low can CPMs go?” Baptiste asks. Further, most mobile ad solutions focus on shrinking a banner into a phone. Since OnSwipe takes over the entire iPad site for the publisher, it will be able to serve high quality ads that don’t get arbitraged, he says.
The business model is similar to that of neighboring NYC company Outbrain – provide helpful tools publishers want for little to no cost, and split the spoils. Outbrain now serves around 6 billion pageviews a month to the tune of triple digit revenue growth since it started making money in 2010.
If all goes as planned, OnSwipe will be in a similar position in a few years.