> We are going to build an infrastructure that will allow consumers to order food from their cell phones (via a text-interface, rather than voice), drive to the restaurant and pick up their order.
That sounds like a much more promising business than "a site where users submit news and sites, vote them up and write comments about them". I don't mean this is in a snarky way, I'm a reddit user too. Am I missing something?
This was like five years ago, before mobile internet was available to most consumers. Also, writing mobile apps before the App Store was a real pain, and involved dealing directly with carriers, I believe.
This was like five years ago, before mobile internet was available to most consumers. Also, writing mobile apps before the App Store was a real pain, and involved dealing directly with carriers, I believe.
J2ME apps involved no carrier participation (though often you had to target all of the profiles), and most devices, including standard Nokia feature phones, could run it. Windows Mobile apps...well that was always completely open and with little carrier control.
And of course...WAP. Largely forgotten now, but the Gopher-like WAP was usable on pretty much every feature phone, optimized for limited displays and input technologies. It was a giant dud for a variety of reasons, but it was always an option back to the turn of the century. And you didn't need a data plan, which remains the #1 impediment to the mobile revolution, though you did get charged usurious rates for the packets you did use.
But how many people really used these things? I consider myself pretty techy and I can count on one hand the number of J2ME apps I've used (heck, I can use my other hand to count the number of times I used them).
One requires significantly more overhead. Also, the whole thing about submitting, voting, and commenting came much later. Reddit didn't even have comments for the first 5 months or so.
Technical challenges integrating with existing restaraunt ordering systems; probable need for active field salespeople. They acknowledge possibly even needing hardware...
It might stand a chance of being a more profitable business than Reddit, but it's a tough and expensive route to market without experience or a large chain desperate to try the system. Probably pg had good reason to be more risk-averse about the types of business he invested in back in 2005.
But it seems like more of a risk to think a social news site (of all things) will be a successful business. Without Condé Nast to be the "greater fool" (in the sense of the "greater fool theory" http://en.wikipedia.org/wiki/Greater_fool_theory) it's really questionable even today whether Reddit could have been profitable.
Something that actual businesses can use to sell things to people? Sure, there are risks, but at least it can make money.
But still, the sales challenge is immense, especially for 3 guys with no sales experience and no money (remember that back then it was nowhere near as easy to raise a bunch of money after YC). Individually talking to every restaurant you sell to doesn't scale at all, and signing on big chains would have been very hard, especially before they had proven that it works and makes restaurants money.
Plus, the problem he mentioned about integrating with other restaurants' systems is a major one. I'd guess that there are many different order-tracking systems. They'd probably have to customize that hardware solution to each restaurant that already had an electronic order-tracking system.
Now, they could have started out with restaurants that were just using paper (with the hardware appliance just printing stuff out), but that would pretty much exclusively mean small non-chain restaurants, which, again, doesn't scale.
Here is what Alexis had to say answering this question in the comments section of his site:
alexis ohanian said...
I believe the biggest thing was the dangers of dealing with both cellphone carriers (this is pre "AppStore," remember) who are notoriously closed and slow-moving as well as restaurants, which aren't typically very tech-curious (all the ones I spoke with were taking online orders via fax).
That sounds like a much more promising business than "a site where users submit news and sites, vote them up and write comments about them". I don't mean this is in a snarky way, I'm a reddit user too. Am I missing something?