Then, I took one of the best levitation shots of the entire series."

Marco Arment, the former CTO of the Tumblr blog platform, is best known these days for his time-shifting reading app Instapaper. But he could start a side-job as a financial advisor to start-ups. His motto: Get the money from your customers, not investors.

Arment’s more traditional take is built largely on the idea that if he puts out a good product, there’s no shame in asking customers to pay for it. And the more they pay, the less he needs to rely on outside investors. Arment said many developers are of the mindset that they need to amass a huge number of eyeballs through free services. But they don’t focus enough on building a solid product that can command loyalty and payment from consumers, and instead try to gain profitability through advertising and turning to outside venture capital.

By contrast, Arment says his efforts to monetize Instapaper have been successful because he was able to leverage the hard work he put into his paid versions and the good will he’s gotten back from consumers. And that has allowed him to avoid outside funding, something he plans on doing for the forseeable future.

Don’t Take Funding if You Don’t Need It

“If a service can be profitable and breakeven without VC money, you don’t need to take it,” Arment told me in an interview. “There’s no reason for developers to get a lot of users without charging. There’s another path. My goal is to spread that message: Charge for something and make more than you spend.”

Arment launched Instapaper as a free website in January 2008 and became profitable later that fall when he first began selling a paid iPhone app alongside a free version. He’s been profitable ever since. Arment won’t disclose his revenue, but he said he can cover his expenses and can afford to hire a couple more people if he needed. He left his Tumblr job in September to devote himself to Instapaper.

Though Arment maintains a free iPhone app, he said the focus of the company has been on the paid versions which are updated first (a new update is expected in the next month or so). He has yet to release a free iPad version and has only gotten three emails about the lack of it. Most seem happy to pay for the $5 iPad version. Between 25 and 33 percent of people pay for the $5 paid iPhone version. In fact, as an experiment, he pulled the free iPhone app from the app store for a week a little while back and found that only one person emailed. Sales of the paid version didn’t go up, but they didn’t go down either, he said.

“The free version isn’t really competing as much as I expected with the paid version; a lot of people go straight to the paid version,” he said. “It was only a week but the people who were going to the free version would not have gone to the paid version.”

Let Users Thank You by Paying You

That’s what’s allowed Arment to really focus on the paid segment. In fact, he still questions the value of the free version at times because it can leave a more negative impression for users with its limited set of features. Arment said his paying users have surprised him with their support. He started a $1 a month subscription plan in October that didn’t actually offer much in the way of extra features. It was more of a way to let users show their support for Instapaper. He said the response was overwhelmingly positive.

“That was a huge surprise to me how well it’s doing given there’s no real incentive to do it besides good will. But it ends up that good will is powerful,” Arment said. “It shows that people will pay for something they like because they want to ensure its future.”

Arment is testing the theory again with a new API that leverages his subscription plan. For developers who want to build apps with Instapaper integration, Arment said last month he will require their users to subscribe to Instapaper. Again, the response has been very positive, said Arment. Two hundred developers have applied to get access to the API. All this money-making has allowed Arment to sidestep venture capital money. He has had repeated offers, but Arment said accepting VC funding is akin to taking on a new boss, and the act of raising and maintaining money is a full-time job, he said.

Venture Capital Is Like Having Another Boss

“If you can go without funding, you can be a one- or two-person shop without a whole level of bosses,” he said. “You’re not worried about getting more money and getting diluted anymore.”

Arment’s approach doesn’t work for everyone. He was fortunate to be able to this as a side job and build it up while at Tumblr. And he acknowledges that the lack of funding could be a problem if he wanted to build a staff quickly. But he believes his experience shows that a more old-school approach to building a business and developing a following with consumers is a viable one for entrepreneurs that should be explored more. He may not the biggest company, but he can be a profitable one for a while.

“I don’t need the entire market,” Arment said. “I can get five percent of the market and be rich.”

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The Most Popular Phone In The World by John Herrman

   Nokia has problems. Smartphone problems. Software problems. American problems. But to fully understand what's wrong, we've got to understand what's been right, or to put in another way, what's distracted Nokia. Meet the most popular phone in the world.

It has been said that more of the world's population has access to a cellphone than to a sanitary toilet. But of the planet's estimated 5 billion cellphone users, a privileged minority have smartphones; a paltry few, iPhones.

If you spend hours thumbing through pages of apps, scoffing at less-than-perfect software upgrades and grousing about screen resolution and pixel density, it's easy to forget that the very concept of a mobile phone is a miracle. It's a device that shrinks your day to day world into a single point, making you simultaneously accessible to and able to access nearly everyone you know, instantly and everywhere.

One summer in 2005, a man in Nigeria wanted in. He found a shop, put his money down on the counter, and left with a cellphone: a Nokia 1100, nearly identical to the model discontinued by AT&T that same year. Statistically, this was likely his first handset. He'd probably used a similar one through family or friends. Personal milestone or not, the tiny Clarkian miracle of that day represented a cold milestone for Nokia. It was their billionth phone sold.

In buying that phone, this man was joining a slightly smaller club. He became a Nokia 1100 user. Along with a staggering 250,000,000 others, he had traded up in the communications world, from little or no phone access at all to this little brick of a phone.

***

The 1100 is not pleasant to use. The keypad is too narrow for two-thumbed texting; it's thin enough that curling a thumb for one-handed use is strenuous. Tiny pedestal buttons are concealed behind a squishy rubber shield, and configured in such a way that learning how to use the phone is a process of rote memorization and habit-building rather than intuition.

The phone wasn't exactly a technological marvel, even by the standards of the time. (For perspective, in 2003 Gizmodo was writing breathlessly about the promise of the Palm Treo 600—a real smartphone.) The screen is small and the pixels large and monochrome. The ringer is both tinny and piercing. The whole assemblage feels suspiciously light.

I say this all as someone coddled by smartphones, touchscreens, and the results of years upon years of careful and expensive interface research, but also as someone who has used a hell of a lot of phones. For a few years years I carried a Nokia 3595—a not-so-distant relative of the 1100—so the 1100 doesn't feel exotic to me, nor should it to most anyone.

But I was never really meant to buy a Nokia 1100, and its designers never meant to impress me. The phone's small size makes its extremely portable, and easy to carry or stow. That narrow, squishy keypad is dustproof and water resistant, so a splash of rain or a drop in the sand won't ruin it. The phone's plasticky shell and light weight make perfect sense the first time you see it bounce off your tile floor, skittering to a stop unscathed. The menu system and button configuration might clash with my design sensibilities, but I was raised on PCs and Nintendo. I have expectations of polish, and can mistake brutal simplicity for lack of design.

This phone was meant to survive and to do; its only jobs are to call and to text and to create convenience for as long as possible, as cheaply as possible. "The way we get to those features is by spending a lot of time with consumers, with teams in their homes, interviewing them, seeing how they live," says Alex Lambeek, who, prior to becoming Nokia's VP of Phone Marketing, worked extensively with hardware design for the developing world. "Take for example a feature like a torch (flashlight), and you might think: Who cares about a torch? Well, for a consumer who lives in an area, let's say, of India or Indonesia or Africa, where there is either no power supply or power is intermittent, having a torch is pretty important."

Likewise, accessories and services aren't cast-offs from the Western world, but specifically adapted for their environments. Alongside new cellphones you'll see chargers that draw power from bikes, and by sending an SMS to a specific, Nokia-operated number, you can get a listing of local crop prices, or a weather forecast.

A phone sold in an outdoor market can't exactly be brought back for a warranty claim. Software updates are mostly out of the question, so the phone you buy is the phone you'll be stuck with. Customer service is complicated by language differences, literacy issues and simple lack of awareness, so a short sort of troubleshooting guide has to be included in the phone's software.

The lesson, basically, is that a company won't do well in the developing world simply by hawking cheap, out-of-date hardware after it's become obsolete in places like America. Companies like Nokia, LG and Samsung spend a lot of time and money developing new phones that you and I might consider old-fashioned or odd, and with good reason: Emerging markets are huge. The 8th, 9th and 10th largest phone seller in the world, by volume, are companies you've never heard of—ZTE, G-Five and Huawei—which have made heaps of money selling millions of customers their first phones. Nokia is actually losing share in India, largely due to a burgeoning domestic phone industry, led by companies whose spectacular sales volumes belie their newness. They'd be stupid to try to sell their cast-off dregs to hyper-competitive exploding markets like this.

***

The hardware demands of the developing world are different. That much is obvious. Making things even more difficult is the way people sell phones outside of the US and Europe. Surprise! It's also different. "In North America and many parts of Europe, operators typically subsidize handsets," says Lambeek. It's a familiar, unwieldy system of blood contracts and extravagant hardware. It's why we tend to loathe our carriers, and also why you can get a Droid for $150. But it's by no means universal. "That is quite rare in places like Africa, for the simple reason that the economics of subsidizing don't make sense. Either the money doesn't come, or it takes far too long." This means that the price of the phone isn't distorted by subsidies, and that the operators are barely involved in phone distribution at all.

This makes things less complicated in a lot of ways, and more complicated in others. Phones have to be cheap enough that people can buy them outright, which basically renders all high-end smartphones like BlackBerrys or iPhones, which can cost well over $500 unsubsidized, almost comically inaccessible. It also means that phones need to be standardized and network-neutral, or unlocked, and that they have to work with whatever services are popular or available, be they voice or text or internet.

***

The developing world has no interest in the iPhone. It's impractically delicate and expensive, and its battery lasts a day, if you're lucky. But the concept of a smartphone is in some ways as attractive in rural Nigeria as it is anywhere else.

Companies like Huwei are already refiguring the Android phone equation to suit second-time phone buyers, and bringing prices for unsubsidized touchscreen smartphones well under $200, edging ever closer to $100. Nokia's C3 series has Wi-Fi, a 2.0MP camera, a full, metal-keyed QWERTY keyboard, microSD storage and an App Store. It comes with Facebook and Twitter access out of the box. Depending on tariffs, it sells for around $100 worldwide. It's coming to America, soon making an appearance on Wal-Mart's shelves. The price? $80. It's the anti-N8: Fairly simple, very cheap, and so far, wildly popular.

This is what the next generation of the mega-selling phone will look like. They'll be rough facsimiles of the high-end smartphones forged for well-heeled buyers, stripped of fat and excess—an embodiment of compromise. They'll be 90% of the phone for 20% of the price, with FM radios instead of digital music stores, and flashlights instead of LED flashes. This is how the other half will smartphone, if you want to be so generous as to call the developing world's users a half. We're not even close.

By Dave Winer on Monday, October 18, 2010 at 7:36 AM.

I've known Marc for many many years, and this isn't the first time I've realized how right he was, and how early. There's some glory in being too early, but not much money (unless you file a patent and it sticks and you're not more than 17 years too early). 

To his credit, a couple of times Marc hit the mark almost perfectly. VideoWorks (which became Director) and MazeWars, which was the Angry Birds of its day, when the net was Apple's LAN, built into every Mac. Marc realized that you could make a game that worked over the LAN. We spent endless hours chasing each other in the maze we had at Living Videotext. A perfect time-waster.  

The idea was this: Social network software should be a commodity.  

His product was called PeopleAggregator. A very accurate but slightly frightening name. The premise was this: Every virtual place should define a social network. It should be as easy to start a social network as it is to install an email server, or a web server. And someday it will be. Marc's someday is actually in the past. He had that product a number of years ago. He was able to extrapolate to a future that we're now right on the cusp of. Who knows when it will actually be realized? Sometimes thse things take an excruciating amount of time. 

Examples of virtual places that will be the start of social networks: NYU, Starbucks, BestBuy, my apartment building, Dunkin Donuts, Logan Airport, Verizon, Netflix, The Godfather, Five Easy Pieces, Dirty Harry, Casablanca, Fifth Avenue, Vail. 

In a university, the roles you can play are: student, teacher, administrator, security guard, teaching assistant. 

In the Godfather, you can play a consigliere, the youngest son, a farmer in Sicily. A spinoff, The Sopranos, has all the roles from the Godfather, with a few more, updated roles. In an object-oriented world, it inherits the properties of its parent class. 

You get the idea. Every place that defines a clear set of roles is a place that can host a social network that means something to some people. Facebook and Farmville hint at the beginnings of this idea.  

This is on my mind today because I just moved, and had to change my address at all the sites that I have accounts at. The two phone companies I use. My credit cards and banks. Etc. 

I'm not sure I want every one of them to define a social network, but certainly AT&T and Verizon, if they had the kind of vision that a Zuck or Ev had, would have started one by now. Of course they don't have the vision. But soon they will. And who will provide them the "off-the-shelf-solution" that makes installing a social network easy, predictable and reliable. 

Anyway, I just wanted to give the hat-tip to my under-appreciated friend.  

 

PS: Marc is a bona fide visionary, but he puts too much faith in Google. I predict they will break his heart, like a Cupertino-based fruit company did once, very long ago. :-( 

View the forum thread.

Sarah Vela's Birthday Wish

“I'm turning 43 on October 8th and I want to Help those who need medical attention because of natural disasters, war or disease in Pakistan, Haiti and all over the world.”

If you can spare $5, $10, or $43 (MY AGE, OHMYGOD) please consider giving to Doctors Without Borders. Or if you're feeling fancy, you can call them Medecins Sans Frontieres. They're amazingly good people doing amazingly important and difficult work. Thank you!

Two bloggers who co-owned a "sex-positive" URL shortener at vb.ly say the Libyan domain authority, which registers ".ly" domains, has shut them down for violating "Islamic morality."

Violet Blue and Ben Metcalfe founded vb.ly last year to offer a URL shortening service that wouldn't screen out sexual, adult, and generally NSFW links. Other shorteners, such as bit.ly, do.

But last month, according to Blue and Metcalfe, vb.ly was unceremoniously shut down. They got in touch with the official registry, known as NIC.ly, and were told their URL violated Libyan regulations.

"Our Country's Law and Morality do not allow any kind of pornography or its promotion," wrote a representative of Libya Telecom and Technology, in an email posted by Blue.

URL shortening services, like bit.ly and is.gd and vb.ly, offer a way to shorten long internet addresses to just a few characters, for use in services like Twitter that limit the number of characters one can use.

"While letters 'vb' are quite generic and bear no offensive meaning in themselves," he went on, "they're being used as a domain name for an openly admitted 'adult friendly URL shortener'. Now, had your domain merely been a URL shortener for general uses similar to bit.ly (as you claim) there would have been no problem with it. It is when you promote your site being solely for adult uses, or even state that you are 'adult friendly' to promote it that we as a Libyan Registry have an issue."

NIC.ly's posted regulations say that a domain name itself may contain nothing obscene or explicit. The terms of Libyan Spider, which sells domain names for NIC.ly, do, however, prohibit sexual content:

Any .LY domain name may be registered, except domains containing obscene and indecent names/phrases, including words of a sexual nature; furthermore domain names may not contain words/phrases or abbreviations insulting religion or politics, or be related to gambling and lottery industry or be contrary to Libyan law or Islamic morality, the same applies to the site content.

Sites like vb.ly don't actually host the content, but the LTT rep took special issue with a photo that was posted on vb.ly's site, of Blue in a sleeveless shirt holding a beer bottle. Photos like that, he said, are not "decent or family friendly."

Blue and Metcalfe argue on their blogs that they didn't violate any of the listed terms of service.

Neither the bloggers nor representatives of NIC.ly have responded to requests for comment.

Late update: Likely presidential contender Mitt Romney says he is dropping his Mitt.ly site for greener pastures.