I think that pg was making a point...a company with only $15,000 investment was able to compete with a company with $10,000,000 in investment. Is the company with 650x the amount of resources going to have more traffic in the long run? Yes. And I don't think anyone is surprised.
The idea is that the overall funding environment has changed. Companies don't need to raise millions of dollars, because you can often get a similar result with far less capital. If you look at this compete graph, his point stands. 1/4 the traffic for 1/650 the investment.
The main thing this says to me is that someone should pump more money into ticketstumbler.
Is the company with 650x the amount of resources going to have more traffic in the long run? Yes.
I think that question should be: Is the company with 650x the amount of resources going to have a better chance at more traffic in the long run? The answer is probably yes but the more interesting question is 'by how much?'
If you spend enough on ads, you can make your traffic whatever you want. But that kind of traffic doesn't prove anything (except the initial premise: Fansnap has a lot of money). A more meaningful comparison would be organic traffic, which Compete doesn't break out.
The traffic might not prove anything, even if it were reliable, but the bottom line might. It may prove that sometimes its better to raise a bunch of money and spend it on ads.
At the end of the day it's all about profits. If they're spending $1m on ads that bring in $5m in revenue, and TicketStumbler is getting only a fraction of that organically, then Fansnap will come out way ahead in the end. And users you buy from ads frequently have a higher RPU than organic ones, and the difference is often more than enough to offset the increased acquisition costs.
Not saying that's the case in this particular instance, but I think it's a mistake to say organic traffic is necessarily a more meaningful metric than overall traffic when the end metric is money.
Organic traffic is not necessarily the best predictor of a mature company's revenues, but it is a more meaningful way to compare two newly launched companies.
The impression you get from the traffic graph is that Fansnap is leaving Ticketstumbler behind, while in fact it is entirely possible (indeed likely, under the circumstances) that it reflects mainly a gradual ramping up of ad spending. I.e. that what you're seeing is a graph of increasing losses rather than increasing profits.
I personally believe it's too early too tell, either 7 months ago or even now. Consumers will decide in the end who they prefer, even if it's not one of these two companies.
I would be incredibly surprised if Fansnap's advertisements were immediately ROI positive. Otherwise, the Ticketstumbler guys could use a credit card and do the same thing.
"revenue(traffic) does not equal profit. Without income
statements, it is impossible to know how much money they are actually bringing home. If I took out a $100,000 loan from the bank, I could buy
$100,000 worth of advertising for my website. I could then fill my
website up with advertisements, and make $60,000 from Google Adsense. I
could then post a picture of my $60,000 cheque on my blog (or 60K visitors) , and no one
would know I actually lost $40,000 to get that cheque. (or visitors) "
No it's not. As long as they're buying well qualified traffic, then there is no difference. I don't care who's paying more for their traffic. Organic traffic isn't 'better' in any sense except that it's free.
The devil, as it were, is in the conversion rate. If I have a $1M/year ad budget, and I'm successfully converting that budget into $10M in revenue. Well, then I'm a successful business.
If I spend $0/year in revenue, and convert my purely organic traffic into $1M... well I'm also a successful business, but (likely) less so than my more aggressive counterpart.
At the end of the day, it's about the bottom line. I have no idea which company is in better shape based on their traffic numbers. But to blithely say 'well, fansnap isn't successful because they gaspbuy/gasp their traffic' is lunacy. It's about making money... nothing else.
Well duh, Fansnap has a 1 million dollar per year ad budget :). And now it's 15k vs 15 million!
In seriousness though, Fansnap has done a kick ass job on many many fronts. Luckily the market is a $4 billion industry so I think there's room for a few companies to play. I believe PG's point was that a bootstrapped company can now compete with a venture-backed company. That wasn't always the case.
TicketStumbler might still be the better business; that's a lot of funding to earn back.
But really, I wonder what happened in February-March that gave FanSnap such a traffic boost.
Looking on the two companies' blogs for that period, the only thing that sticks out as a possible major traffic driver is a FanSnap partnership to list eBay tickets.
Or was it some promotion associated with the NCAA tournament that drove awareness and continuing use to a new level?
Or maybe FanSnap is just buying the traffic with advertising dollars -- ROI and longevity TBD?
They are actually busting ass on several fronts-- lots of bizdev effort going on there and that stuff DOES pay off. I know some guys on their team and from what I understand, they aren't spending money in an entirely stupid fashion. :-)
I wondered when somebody was going to bring this up.
For the record however, Fansnap has spent a significant amount of money purchasing traffic. There were ads on finance.yahoo.com at one point. The fact that they only amassed 94k uniques is almost laughable, poor retention/use of money--imo the whole ticketing business is a tough sell if you're just aggregating--
Tom and Dan have definitely put in a heart full effort--I think they probably understand the business just as well as fansnap (if not better) and spent much less money learning about it at the end of the day. Kudos to those guys bootstrapping an idea.
If Fansnap is pouring money and resources into business development (getting long-term partnerships and contracts in place), then this might not be reflected in their numbers for some time. It still makes them a very dangerous competitor.
A three-orders-of-magnitude difference in development resources might not be scary to people who believe smaller is better when it comes to programming, but it's hard to make up that kind of ground in other areas.
Startups are a lot of work. I'm guessing it's fairly indisputable that $15.7m funding can really help your growth. Case in point, employee count: FanSnap 21, TicketStumbler 2.
Given that tidbit, I'd say TicketStumbler is still doing a very respectable job by comparison.
I think it's pretty obvious that given the variation and low absolute numbers we are talking about that it's impossible to tell the two means apart given the data.
We don't know the conversion rates of each site, so the traffic metrics are useless. One could convert at 15% and the other only at 2% and be comparable in terms of revenue.
This is not a criticism of PG's submission OR of TicketStumbler, just an interesting observation that I hope will generate some debate.