Jingle Networks, the operator 1-800-Free-411, will announce tomorrow that they’ve become profitable on a per call basis - a huge milestone and proof of concept for a startup that is trying to destroy entrenched competition by offering free 411 calls.
This is a company we’ve been tracking since 2006 when call volume really began to ramp and the funding started rolling in. In October 2006 I interviewed then-CEO George Garrick and investor Josh Kopelman about the business model. At the time they weren’t profitable on a per call basis, but were confident that their direct response ads, which prompt customers be connected to a similar company that they requested along with a discount offer, would take off.
Apparently it has, as the company has taken a big chunk of the 411 market - about 5% of the 6 billion 411 calls per year in the U.S. go to them, they say. And each of those calls is generating around $0.10 in revenue. Apparently, a lot of people don’t mind listening to an advertisement or two to avoid per-call fees that average well over $1.
The company is also making staff changes. They are closing their California office and consolidating staff in Massachusetts. Garrick, who was based in California, is stepping down as CEO after leading the company to this milestone, but remains on the board of directors. Founder Scott Kliger is the new CEO. John Roswech, formerly the SVP Sales, is the new President and also joins the board of directors.
The service competes with Google (1-800-GOOG-411), AT&T (1-800-YELLOW-PAGES), Verizon (1-800-THE-INFO), and Microsoft (1-800-CALL-411). They reportedly answer for calls per month than all of those competitors combined.
The company has raised nearly $75 million in venture capital.
Sounds interesting.
brb calling them up, lol.
http://easysummermoney.blogspot.com/
Profitable on a per call basis? Tell us when they reach GAAP profitability.
As it stands now, $75 mil in funding has apparently put them in a position to capture $30 mil in revenue (5% of 6 billion calls = 300 mil calls * $0.10 = $30 mil in revenue) and they’re still not turning a profit. Sounds like a great business model.
Throw in another $1.425 bil in funding and they can capture the entire market!
How is 5% a “huge chunk”? Especially with such a limited number of competitors. And why are you comparing them so sharply to competitors (google and microsoft) who have relatively new products when Free 411 has been around for years. And where exactly is the “proof” that their business model works? All you list is a revenue per call, with no explanation of costs, and based on the financing they have taken on, it seems like they still have a while til they break even on that, much less become very successful.
sees42test
I use the free 411 service all the time! 1-800-free411! i did have trouble finding something last week once but usually it works fine.
Math Genius, you are unfortunately not. Think before you hate.
That’s 5% of 6B calls PER YEAR. That means $30M recurring revenue annually on a TOTAL of $75m raised.
If the company is marginally profitable on each call as they claim, and presuming they continue to gain market share without dramatically increasing burn, they could very possibly reach break even in the medium-term future.
“what” - take a breath, chill. And then listen to the podcast interview that I linked to if you want all the details on their cost structure.
@what - For example, Apple has about a 7% market share and for them even going to 10% is a “huge chunk” by most people’s perspective
This article needs a bit of copy editing:
- “which prompt customers be connected to a similar company ” is missing a word (”to be”, not just “be”).
- “They reportedly answer for calls per month than all of those competitors combined.” appears to be missing te word “more” (or is it “less”?).
Perhaps copy editing is just another casualty of “web publishing”? What next - dropping all vowels, leaving only the consonants?
To me, it is a pity that this mars an otherwise very good site. At least use a grammar checker, in addition to (I assume) the use of a spelling checker.
What is surprising here is that this model seems to be a bit behind times, even by Indian standards. In India, there is a popular service called Just Dial (funded by Tiger Global and SBAIF) which is similar to the US’ free-411 service. They were doing ads as a revenue model a few years back but there was quite a bit of user dissatisfaction and they have scuttled it. Now they are completely on a paid inclusion and pay on lead. It is surprising that in the US they are still running ads on the phone.
Fake Nick Gonzales: that’s $30m recurring revenue that they’re losing money on. I guess they’ll make it up in volume, right?
Haha another example of how Tech people don’t understand business. Just because you make $0.10 per call doesn’t “validate your business model”. That would be like saying that United and Delta’s business model is “validated” by the fact people pay $100 for an airline ticket.
You have to make a profit. Jingle is a failure.
Just to promote another service, which, by the way Micheal hates (he’ll come around though), is ChaCha.
You can text 242-242 or call 1.800.224.2242 (1.800.2.ChaCha) and ask ANY question you like.
They also offer super quick stock quotes. Text s plus the ticker name or company name (ex. “s appl” or “s goog”).
Theres weather. Text w and a city name or zip code (ex. w 95015 or w Chicago, IL)
And business info. Text bus businessName in cityName (ex. bus Apple in Cuppertino, CA)
And you can also call and ask these directly.
And is FREE!!
How can you not like this service?
Hi everyone,
Paul from 1-800-FREE411 here. I’m not going to get into the financial stuff, but would rather just add that it’s our range of services that’s put us out in front: our number offers business, gov’t, and residential listings (most of our competitors offer only business listings), you can search by name or by category, you can use the number via Skype, and you can get driving directions texted to you immediately following a call. Of course, our business model works well, but it’s also the high quality of the call experience that has led to success.
Thanks,
Paul
@ 14 PaulFromJingle
Again, that’s like saying “Delta flies to 200 cities! Yay! But we lost $2 billion! Yay! We fly to so many cities!”
Seriously guys, figure out a model that works and then try pulling a fast one on us.
Hey Paul,
Why’d you drop operator roll over?
Why’d George leave?
Like I said, guys, I’m not going to get into any of the financial stuff — you guys can discuss that. I just wanted to point out that it’s the good service as much as the business model that’s been key to our success.
Wait Paul, you don’t have a business model.
What
You are an idiot. 5% of 6 Billion is 300 million, that is a very significant number of calls per year. You come up with a way to get that many calls per year - then come back and share with us. The only thing the company needs to run the system is a server connected to the free411 line someone to market for them and someone to sell advertisements. Not much overhead if you ask me. They don’t even need an office space, everyone could work from home. I’ll bet you wished you could have a job like that.
LOL Michael (19). Volume != percentage. When someone says “big chunk” they are implying MARKET SHARE, not VOLUME. 5%, no matter how you describe it or how much emphasis you use it not a “big chunk” of a market with (relatively) few players, many of them pretty new.
You are using the flawed argument of “you go match that then we’ll see” - did I say I could do better? No. I’m simply analyzing their situation versus Arrington’s assessment of it.
It’s true, they do have a lot of volume, and they actually have me as a customer as well. This isn’t about the product, this is about exaggerating their place in the industry. They are a big company, and growing, but it’s clear that based on their financing they still have a ways to go, and perhaps new methods of monetization to develop to make it there.
And no, I don’t wish I had a job answering 411 calls. Plus, you are grossly minimizing the business expenditures they have (hint: $75 million in funding usually doesn’t go to companies with “not much overhead”). Maybe you should look into how much it costs to successfully sell ads and market a product on a national level.
“They reportedly answer for calls per month than all of those competitors combined.”
Is this a typo of “four” or “more”?
What a joke. First they are going to sell themselves for $175 million. Then they’re going to go IPO. Then their CEO quits? Announcing you finally have a positive gross margin says “we were giving it a way for less than cost and after $75 million in investment and three years, we finally figured out how to make 1/4 cent on what we sell, but we we still lose money on the bottom line and can’t pay the bills”. LOL
It’s a turd.
So let me see if I understand this. Garrick leaves because the company is “based in Boston.” They need a leader in Boston. So the new CEO is from Boston, right. Wrong Detroit, 1000 miles away.
So the President is in Boston, right. Wrong, he’s in New York. Something stinks in Denmark. This company expanded, brought in outside talent, that talent brought in money and now all the outsiders have left. HMMM?
Next announcment: It was sold, but they won’t tell you for how much.
This dog don’t hunt, it’s too obese.
I agree. Looking at the bios of the guys left, they never built a real company nor do they know how to run one. They sold the last thing as speculative tech. And this isn’t a tech company per se and it appears the tech area is the problem, not well managed since they need different senior people in Boston. Some people learned the wrong lessons in the last dot com boom.
No one is left that has any experience in running a company. This is already over. The “fat” man will sing, but it will be a nasal-toned scream of desperation.
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