For city guide app, GuidePal, 2013 has been a transition year.
Founder and current chief executive David Janson says the startup (TLabs here) has spent time reflecting on and adjusting the business model to find revenue streams to carry it forward.
The year has seen the departure of some of the original team including its CEO and business development director, which Janson says comes down to wanting to pursue different business models.
In an interview with Tnooz, he shares GuidePal's vision for the future as well as reflections on changes made:
On 2013:
"In companies such as GuidePal, you go through a process of trying to find a business model that works from a cashflow and an investor point of view (the company announced funding of $800,000 in March 2011).
In GuidePal's case we spent a lot of ammunition trying to achieve some viral spin early on in the model, trying to create a user base of umteen million to capitalise on sheer size but we were not successful in growing it fast enough."
The solution is to work with a smaller user base and provide them with more relevant content and 'value-added' travel services.
On funding:
To date, according to Janson, about $4m has been invested and the company is debt free and cash neutral.
"We're in the early days of that process. we're going to approach our existing base and we're also in discussions with new investors and with two/three companies that will either acquire or merge with - it should be done by Q1 of 2014 at the latest.
Questioned on his preferred outcome, Janson says getting funds from venture capitalists or business angels would currently be extremely unlikely because trip planning space is perceived as over-crowded.
"We would not be able to attract meaningful capital from investors. They cannot see how we will be able to produce significant returns for investors but my view is that it is not a crowded segment. We're still seeing around the same coming in as 18 months ago and not a lot making it different.
It's an extremely promising segment and I believe we will be able to generate significant income from the segment during Q3/Q4."
On charging for apps:
Despite starting to charge for its apps in January this year, the plan is to go back to a free, or rather freemium, model.
That said, according to Janson, the company has gained traction in terms of downloads of about six million and seeing off competition from other travel-related services including Lonely Planet and National Geographic in key regions.
"We were trying different earning models to see what we could make money on. We needed the income we were getting from Apple, it is a meaningful amount of money and relevant in the past six months but not nearly enough to drive an organisation like GuidePal forward.
"That's why we feel we will be able to make more money by having these in-app products that we think the user base will buy in more or less the same volumes that they are at the moment."
Janson believes the company has a loyal user base, not adverse to in-app purchases, which could include navigational tools, local radio, audio assisted tours, accommodation other than hotels and gamification elements.
"If we had not tried the payment track, we would not have known the earning levels or known how much competitors were making. Now, we have good data and also know the kind of conversion rates we can expect. More than 15% of traffic buys from us."
On sustainable revenue:
The hope is for in-app purchases to be GuidePal's core revenue generator but the company is also discussing the possibility of advertising within its apps.
Janson says it previously did not want to 'contaminate' the content and now it will only include very specific, hand-picked travel advertising.
Is it a pivot?
It's more of an evolution, he says. While companies are trying to achieve a huge user base with pure content but non-relevant data, GuidePal wants to become even more specific, specialised and focused, providing information that is not readily available on the web.
"No one has yet nailed this and there is still more out there for a player that delivers to customers what they want. Perhaps we have been poor in giving our customers exactly the information they require in the format they require but the city app segment is in its infancy."