Since I rarely read TechCrunch these days I missed the announcement last week that Outright, a US based book-keeping and tax service obtained $2 million in funding and rebranded itself from GoBootstrap.com. Given the company has no announced business model, is in beta and is not charging during the beta period I am both surprised and intrigued.
I’ve long held the view that data collected by saas/on-demand providers will be a lot more valuable to customers than the application itself. VentureBeat provides some colour on numbers along with an insight into traffic flow through Outright:
The company isn’t giving many specific numbers on user growth, but Reeth says customers have entered data about around $100 million in transactions so far. Meanwhile, Compete shows that traffic to the original GoBootstrap.com site made a huge jump in January. Reeth attributes the jump to the tax season, as well as the New Year spurring businesses to want to get their act together.
Outright’s numbers indicate it hit one heck of a hockey stick to 30,000 unique visitors in January and that $100 million number is juicy. However if you go down the road of not charging for too long, then at what point can you charge for a service and at what level?
Twitter has struggled to find a business model, despite its phenomenal success and an apparent willingness among at least some users to pay for the service. There are however signs Twitter might well go for the data analysis model I’ve proposed. Accounting apps are somewhat different. While many people want as low a cost as they can get, there seems to be little long term appetite for wholly free services. That’s an indication of the importance these products ahev to business where you can kick a vendor when you’re paying though it’s much harder when you’re not.
Outright is providing a service that is similar to FreeAgentCentral [disclosure: I have a tiny stake in FAC] in that it not only does accounts but includes estimated tax calculations. This secondary component is what allows FreeAgentCentral to charge for its services. Where Outright is weak is that it offers no sales invoicing capability or time/project tracking, which it partially makes up through Freshbooks integration. In one sense this is a natural pairing for the US market and will allow it to piggy back off Freshbooks’ 6o0,000+ registered users. If and when it does start charging though, users will face the same dilemma I’ve discussed in the past and which Phil Hodgen identifies in comments to the TechCrunch post:
Cloud solutions which take a slice of the problem and sell a solution forget one thing. Cost. Cost and simplicity. Two things. (Sorry Monty Python).
Imagine a small company (such as mine) that needs Freshbooks plus Outright. Tote up the monthly fees for all of them. Whatcha got? Big number.
Part of that problem will go away as service providers flesh out their offerings. They’ll have to because as Phil correctly points out – such issues keep him wedded to QuickBooks (for the UK, read Sage) and it is inconceivable that book-keeping alone can provide a compellingvalue proposition for the long term.
It is however an indication this market is really hotting up when I notice that a significant proportion of the comments at TechCrunch are pimping other services. It will be even more interesting watching to see how Outright chooses a business model and the impact that has on customer acquisition.
UPDATE: I note that Jeff Clavier is among the investors who stumped $2 million. I know Jeff well and in December 2007 I talked with him about FreeAgentCentral. At the time, he wasn’t interested in B2B plays though he acknowledged the ideas FAC was putting forward at the time had considerable merit. How 15 months and a changing economy can alter investor positions.
UPDATE 2: Ben Kepes has done a product run through and offers his perspective.