Burner App – Privacy and Flexibility in Mobile Telecommunication

Even though I was only going to be in Chicago for another seven days, I was nervous about giving him my phone number. I expected to find deals on craigslist, but $1,000 for 12 Montblanc pens was too good to be true. Was he setting me up to rob me?

Is this really the kind of person with whom I should be sharing my personal number? But if I don’t share a number, he’ll likely be thinking the same about me. I opted to share my number and despite my suspicions, he turned out to be harmless. He was a retired head of a private equity firm that was shedding some of his material things. I should be more trusting – or maybe I shouldn’t have to be.

Greg Cohn set out to address this problem back in 2012 with the Burner app (available on iOS and Android).

Burner provides a “privacy layer for your mobile phone that helps users take control of their identity in communications,” according to Greg Cohn, CEO of Burner, in a October 2015 interview with CNBC. His mission was to replicate the same flexibility people enjoy on the web on their phone. Just as people stand up and shut down email addresses for different purposes, he saw the same opportunity for phones.

With the burner app, you have the ability to create limitless new phone numbers for multiple purposes all for small fees. It’s a world where if you’re looking to keep various aspects of your life separate you can easily do so with different phone numbers, but without being encumbered by multiple phones. It might have been assumed that the true market for such a technology is limited to drug dealers, but three years into operations he has proven a sizeable market demand for this product.

In the early stages of mobilization, Mr. Cohn had a variety of strategies to consider. Should they focus on market penetration by giving away the app for free and allowing for free use of the app to accelerate market adoption? Such a strategy could prove effective if Mr. Cohn was looking for a quick exit from Burner, but he had other things in mind.

By 2015, Mr. Cohn was convinced sufficient demand existed for the product and opted to provide a seven-day free trial that would include 20 minutes of call time or 60 text messages to entice new users. After the short free trial, users would be charged tiered fees from $4.99 a month for a line that automatically renews each month to a variety of packages from around $2 to $5 a month for a variety of features.

But this wasn’t always the case, it’s unclear what may have been going on with Burner from 2012 to 2014, but in 2014, Burner announced they’d be providing one year free trials of the Burner app possibly due to an influx of funding and competition.

My own assessment of what was happened just prior to 2014 is Burner was reacting to fears of new market entrants and potentially looking at an exit. Such is based on Burner’s encounter with Hushed, a similar product that launched in 2013 threatening Burner’s market share with comparable pricing and mobilization strategies. In this encounter, Burner learned about the importance of protecting it’s intellectual property the hard way.

Hushed provides similar features with slightly varying back end functionality. Hushed utilizes data whereas Burner utilizes cell phone minutes for calls. The similarities are so striking that Mr. Cohn directly called out Hushed as a clone of Burner. In response, Hushed highlighted minor differences and stated firmly, “Burner does not have intellectual property rights in this area.” Battles ensued, but as evident by the current market penetration of both Hushed and Burner, there is plenty of market space for both.

And if there is one thing learned from the CEO of Big Skinny Wallets, you don’t have to be first to market to prove profitable. In 2015, there are so many competitors in this space on the app store, it’s surprising Burner was able to maintain a fairly dominant market share. In October 2015, Burner was the number one utility app in the iOS app store and in the top ten of utility apps in the Android play store.

Greg Cohn is featured in a variety of articles and was recently featured on CNBC where he “app developers recipe for success.” With multiple reports citing earnings in the seven figures annually, Mr. Cohn knows how to turn a profit. By focusing his launch strategy on creating a sustainable transactional business model, he’s established a profitable platform that he can continue to scale. With a strong mobilization strategy to gain market share, addressing people’s demands for privacy and greater options for telecommunication, Mr. Cohn has, indeed, found the recipe for success.

Thank you Greg Cohn, my craigslist ventures can continue unencumbered by my fears about giving out my phone number, but wait dangerous people have phones too. They could still be looking to rob me, what would they need my phone for anyway. Maybe I need to be more careful – but maybe I shouldn’t have to be – is there an app for that?

More data on Burner:

Burner is available on iOS and Android, and comes with a free trial that lasts seven days, 20 minutes, or 60 messages.

Pricing is as follows;

Premium line for 4.99 a month, unlimited texts, minutes, and pictures. Automatically renews every month. Buy Credits

3 Credits 1.99

8 credits 4.99

15 credits 7.99

25 credits 11.99

Packages :

Picture burner, Cost: 8 credits, includes 100 texts, ability to send pics, 50 minutes of call time, and auto burns in 30 days.

Mini burner, Cost: 3 credits, includes 60 texts, no pics, 20 minutes of call time, and auto-burns in 14 days.

Text-only burner, Cost 5 credits, includes 250 texts, no pics or call time, and auto burns in 30 days.

Standard Burner, Cost: 5 credits, includes 150 texts, no pics, 50 minutes of call time, and auto burns in 30 days.

Unlimited burner, Cost: 8 credits, unlimited texts, no pics, unlimited minutes, and auto burns in 30 days.

 References:

Watch small video featuring CEO Burner Greg Cohn

http://www.cnbc.com/2015/10/19/an-app-developers-recipe-for-success.html

Burner Website

http://www.burnerapp.com/about/

Is Hushed app a clone of Burner – a column

http://techcrunch.com/2013/03/13/when-is-it-more-than-inspiration-burner-ceo-calls-out-hushed-as-an-obvious-clone/

About Burner Column

http://www.theverge.com/2014/12/18/7414869/burner-phone-theres-an-app-for-that

Trial and Free for 1 year announcement in 2014.

http://www.burnerapp.com/press-release-november-20-2104/

By: Randall Trani


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Uber’s Dead End – Germany

The global expansion of Uber’s transportation services is unparalleled. Within few years, Uber entered multiple markets across continents and today, serves customers in 63 countries[1]. However, conflicts with national transportation regulations have caused Uber headaches in several cities. One particularly difficult market for Uber is Germany. Multiple court cases have first slowed down the German market entry before on March 18 of this year, a nationwide ban[2] on UberPop was imposed. With fines as high as 250,000 EUR (approx. 272,000 USD) per violation, did Uber reach a dead end with its expansion in Germany – a key market in Europe?

[3]Key Challenges for Uber in the German Market

1

Germany’s taxi market is well known for its luxury cars. Indeed, most of German taxis are comfortable Mercedes. Not an easy environment for a taxi service business model that builds on the idea, that private drivers with their own cars provide taxi services. Nonetheless, the attractiveness of the German taxi market is high with yearly revenues of over 4.4bn EUR. Above that, an annual growth of over 4.3%[4] over the last decade underpins the potential for new players in the passenger transportation service market. Therefore, a successful expansion in the German market is quintessential for Uber to grow in Europe. However, there are three main challenges Uber is facing in the German market.

 

  1. Regulatory challenges:

The basis for transportation services is the ‘PBefG’ law in Germany. It regulates the taxi market and requires multiple safety and quality standards from taxi drivers. In the final court ruling (Frankfurt district court) in March 2015, the presiding judge declared[5] Uber violates the passenger transport law, and thus distorts competition. The main argument is that Uber drivers operate without necessary licenses as well as insurance levels to cover Uber’s services are not sufficient. As a consequence, Uber had to cease its UberPop service in the following weeks after the court ruling.

 

  1. Competition from Uber clones[6]2

Regulatory hurdles are not the only challenge for Uber in the German market. In fact, there exists a very strong competitor, mytaxi, which allows customers to call and pay taxis via an app. Mytaxi positions itself as the worldwide first taxi-app. They work only together with licensed taxi drivers and thus, circumvent the regulatory dead end Uber faces. Mytaxi claims to have 10m registered users and a network of 45,000[7] taxis. Thereby, they have a strong focus on business customers and also have partnerships with loyalty programs such as Miles & More. The functionality is quite alike Uber’s: one can see the available drivers in the neighborhood, book a trip, see the rote, and pay with the app. However, a distinctive difference – there is no surge pricing. German’s appear to prefer reliability and no surprises. A nice add-on of mytaxi is the option to request specific drivers.

 

  1. Traditional competitors beefing up:

3

Also the traditional taxi players become aware of the opportunities digitalization offers. Meanwhile, many larger regional taxi companies have launched their own apps. Apparently, the network effects of these apps are limited as they are bound to drivers of the same network. Thus, they are at a disadvantage compared to a mytaxi, who has taxis in every major city and across different taxi companies in the network. As the prices are the same, there is no real incentive for customers to choose a company specific app vs. apps that connect different taxi networks.

 

 

 

Key Learnings for Uber: Learn How Germans Think

First of all, Uber’s dogma ‘rather ask for forgiveness than for permission’ did not work out at all and heavily damaged the image / branding of Uber in Germany. My advice: ‘rather ask for permission than for forgiveness’, because Germans simply not good at forgiving mistakes. Secondly, proactively regulate oneself. Uber can offer an adjusted service that complies with German regulation. Similarly to mytaxi, Uber needs to partner up with licensed taxi drivers. The challenge will be to be more attractive for drivers than mytaxi. Uber could leverage its size to offer special services to drivers (e.g. better rates at car dealers, repair shops, or car washes) and aggressively offer bonuses when joining Uber as a driver (similarly to the 500 USD bonus in the US). Finally, Uber needs to step up to the high expectations of the German market. Linking Uber with Miles & More, the leading loyalty program in Germany, is quintessential (not only SPG as in the US). Moreover, Germans are accustomed to the option to request regular drivers as well as order taxis in advance. The latter option is particularly important for business travelers.

[1] https://www.uber.com/cities

[2] http://fortune.com/2015/03/18/german-court-ban-uber/

[3] http://www.autobild.de/bilder/taxis-aus-aller-welt-3500104.html

[4] Own calculation, based on numbers from: Deutscher Taxi- und Mietwagenverband; BMVI; Deutscher Taxi- und Mietwagenverband – Geschäftsbericht 2014/2015, Seite 113

[5] http://www.bbc.com/news/technology-31942997

[6] http://upload-magazin.de/blog/7859-mobilitaet/mytaxi/

[7] https://de.mytaxi.com/index.html

By: Frederic Rupprecht


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Why Jon Stewart should take the Online Economy course

Jon Stewart, the king of late night comedy, is back.  HBO announced a 4-year deal under which Stewart will produce short digital content targeted at the Millennials. That makes sense given that many advertisers want to sell to this segment. What doesn’t make sense to me is his need for HBO.

Stewart started 16 years ago when cable TV was the key player that connected content creators, audience and the advertiser. Today that’s no longer the case. The audience viewership patterns have changed and today cable TV is just one of the many content distribution channels.

TV viewing pattern

Source:  http://www.nielsen.com/us/en/insights/news/2015/age-of-technology-generational-video-viewing-preferences-vary-by-device-and-activity.html

 Jon Stewart couldn’t have possibly started his own cable channel earlier but he sure can launch his own app now. This class repeatedly emphasizes that success in the digital world is all about identifying a need and catering to it by creating something of value. In his post Dominique discussed the emerging demand for condensed communication. This new trend fits well with Stewart’s strategy to produce short digital content that is better suited to gain viral traction. Given the low entry barriers to having his own distribution channel, it is surprising that he chose to hitch his wagon to HBO.

It is true that many of those who are consuming content on mobile devices may be doing so on official channel apps or via streaming services. But, they are doing it because the content they want isn’t available anywhere else. Plus, they already pay a high enough bundled monthly fee that their cable company can allow access via apps at no additional cost. if I am paying for 100 things bundled together but I am interested in only a dozen, isn’t it better for me to pay for them individually? If those 12 content creators offered their own apps for $0.99 a month, it is highly likely that I will spend less per month to watch the content I enjoy.

A look at the numbers (assuming the app is free) shows such a move may be financially rewarding as well. Stewart’s show averaged about 1.5 million viewers per week and a 30-second spot fetched $40,000-$50,000. That translates to ad revenues of $640,000- $800,000 per show or  $122 million- $153 million in annual ad revenue. That’s less than 0.2% of the total TV ad revenue, a category that’s declining. Stewart was reportedly earning $25- $30 million per year from the show.  0.2% share of mobile display ad revenue alone works out to about $50-$63 million by 2019, the year Stewart’s 4-year contract ends.

 Digital ad spend

Source: http://www.emarketer.com/Article/Mobile-Account-More-than-Half-of-Digital-Ad-Spending-2015/1012930

Unless Stewart negotiated a killer deal that doubled his earnings in exchange for lesser work, I think an exclusively digital Jon Stewart would have been better not just for him but also for the audience which may have been entertained by a showman without any management shackles. Jon Stewart  should consider taking this course next year.

By: Muralidhar Selvamani


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Raise.com’s Companion App Make Sense by Helping You Save More Than Cents

Roughly 10% of all gift cards end up unusedand the secondary market for gift cards is estimated to be $66B [1]. There exist some big players in this field: Craigslist.com, Ebay.com, Amazon.com, and smaller boutique sites that specialize in gift card transactions (e.g. swapgift.com and cardavenue.com) [2]. Sellers often try to cash out their gift cards by selling them at a discount to face value (e.g. face value = $100, sell on secondary market for $95 (5% discount). For buyers, this can be a great deal depending on the size of the discount and the selection of brand/store choices.

Yet, with gift cards on the secondary market, there exist some major problems for both buyers and sellers: 1) Existing online platforms are clumsy. Imagine using Amazon.com or Ebay.com and having to flip through pages and pages because you’re not quite sure if there’s a better discounted deal on the next click. Both sellers and buyers have to wait for an auction to end, or resort to a “buy me now” solution, which can cost sellers more. Then they have to ship it or email the digital code. 2) Trust issues and fraud often lead to disputes, which require investigations. Worse, consider the pain of buying a gift card from a Craigslist.com seller, and only later to discover – when you’re already at the check-out aisle of a retail location – that the face value is less than what you paid for. 3) When you’re making an on-the-spot purchase, but you don’t have a gift card available, it’s too much effort to bumble through websites, identify a good deal, pay for it, and hope that you receive an email confirmation with the usable code (or worse, have to wait for a physical delivery in the mail) on your mobile device. 4) Sellers who often have a one-off gift card lying around must go through the pain of creating profiles, understanding posting/transaction fees, refreshing posts, writing descriptions, etc.

Enter Raise.com, a web platform dedicated to the sale and purchase of gift cards – new or used – at a price determined by the seller. Sellers who want to cash out their cards can list them at any self-determined discount of the face value. Raise.com charges sellers a flat 15% on any completed transaction [3].  There’s no convoluted fee structure (e.g. Ebay.com) or annoying tasks of refreshing old posts that drop to the bottom of a list (Craigslist.com). Sellers also don’t need to suffer from low ratings that often plague a new profile. Posting is elegant: just create a simple profile associated with your phone number and then enter the brand and price of the gift card – done. All gift cards are listed based on what brand/store they pertain to and organized by price (or discount). By anonymizing sellers, Raise.com effectively acts a guarantor of quality by serving as a trusted aggregator.

Selling via Raise's App

Already the largest and most liquid gift-card marketplace [4], Raise.com further locks in users with its recent release of the companion app (iOS only). While multi-homing costs and switching costs are low for buyers, the effort to unload gift cards on other platforms for sellers is higher than by using Raise. Therefore, because sellers are supplying on Raise, it attracts buyers as well through the large assortment of gift card brands. The app’s UI/UX is fluid, polished, and transactions are instantaneous. Management of purchased cards is easy with the virtual wallet system. Moreover, before purchasing, buyers can see whether a card is eligible by use type: in-store, online, or both. Raise.com offers a vast assortment (3,000+) to select from and provides E-delivery of the gift card code/serial through the app so you can use it immediately [4]. Just load the card of your choice and apply at the checkout aisle or in the code entry form online. No waiting for shipping or lagging email confirmations. Raise is projected to save shoppers over $10M during the 2014 holiday season and has posted 500% revenue growth on the year so far [4].

What is most interesting is that Raise seems to have overcome the issues of mobility right from the get go. There already exist buyers and sellers, and Raise came into a two-sided market to grease the wheels of transaction. It unlocks value for both parties, literally by encouraging you to dig between your couches for that gift card that was once relegated to the depth of uselessness. Like any transaction platform, trust is a central issue, and Raise overcomes this elegantly with the implementation of monetary guarantees that operate like insurance. Different from AirBNB, whose insurance coverage can be quite large on each individual property, Raise insures against numerous smaller valued transactions by comparison. And although on aggregate, the protection might be large, the nature of high transaction velocity at the “per card” level is an advantage that frees up capital and speeds up resolution. On the back-end, sellers and buyers are tied to unique PIN numbers and phone numbers, which mean that while fraudsters can create new accounts, it is quite inconvenient to acquire another cell phone number to do so.

For retailers, the rise or Raise.com may be a two-way street. On one hand, use of gift cards usually translates to additional purchases by shoppers. Between 21% and 55% of gift-card users spend more than the face value of the cards, which drives up overall sales for retailers [5]. On average, customers who did spend more, did so on an additional amount equivalent to 89% of a gift card’s initial value [5]. On the other hand, the accounting for gift-cards sales can be quite damaging, as revenues can’t officially be booked until users redeem the cards. This means a misalignment between financial reporting and actual cash inflows, which can be detrimental to some big retailers’ stock prices. With the U.S. gift card market overall growing at 30% year on year, Raise looks poised to unlock 20% of the already pre-paid $400B primary gift card market [4]. If Raise’s dominance in the secondary market drives up demand in the primary market, retailers may ultimately recoil if the benefits of gift card sales shift out of their favor, and ultimately offer fewer gift cards for sale. The chances of this happening aren’t exactly slim. If gift cards aren’t redeemed in time, the state can lay claim to the associated cash. When gift card holders come in eventually, the retailers have to take a loss and satisfy customers (since gift cards don’t expire). And this would be all too ironic, because it translates to Raise choking its own market.

1.http://www.bankrate.com/finance/credit-cards/gift-card-trading-the-secondary-market-1.aspx

2. http://online.wsj.com/articles/SB110600780156328340

3. http://www.raise.com

4. http://www.cnbc.com/id/102172877#.

5. http://online.wsj.com/articles/SB110600780156328340

6. http://www.businessinsider.com/buy-and-sell-gift-cards-with-raises-app-2014-11


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ONE

TWO

(Intel ad from the mid 90’s and an image of the recently announced Samsung Gear VR)

For those following trends in Silicon Valley, one might experience a sense of déjà vu recalling the mid-1990’s when Virtual Reality first captured the zeitgeist for its promise as an immersive portal into the nascent world of cyberspace. Twenty years later, the amorphous medium has transformed from a “not too distant future” captured in the low-resolution computer graphics and millenarianism of 90’s Sci-Fi films into a commercial reality. The the 2.4 billion dollar acquisition of the Kickstarter funded Oculus VR by Facebook and the recently announced $542 Million dollar Series B financing round for the VR/Augmented Reality start-up, Magic Leap (led by Google with Qualcomm, Legendary Entertainment, KKR, Vulcan Capital, Kleiner Perkins, Andreessen Horowitz and Obvious Ventures) suggests that large tech companies are committed to developing virtual reality platforms. The big question is how will companies like Oculus / Facebook and competitors like Google mobilize development of their virtual reality platforms?

The Oculus Platform

In his explanation of the acquisition of Oculus VR to investors and the public, Mark Zuckerberg characterized the virtual reality startup as pioneering a “new communication platform” that was part of “a long term bet on the future of computing”. In the same way that mobile phones have created a new form of ubiquitous computing, virtual reality may similarly add qualitatively higher levels of immersion in computing, enabling a new ecosystem of applications to develop. Whereas mobile applications make novel use technologies like embedded cameras, GPS and accelerometers, virtual reality apps can use technologies like positional head tracking and three-dimensional high-resolution, wide field view screens to create new online products and businesses.

THREE

Rather than building a business around selling hardware, Oculus VR and Facebook have focused on developing their “Oculus Platform” – a store for new virtual reality applications. Oculus VR / Facebook has partnered with Samsung to build virtual reality devices on top of existing mobile devices – which are rapidly increasing in screen resolution and processing power – and have expressly said that they will be pricing their virtual reality headsets at or below cost in order to grow the VR ecosystem. In other words, Oculus will subsidize virtual reality hardware in order to build a large developer and user base needed for a software ecosystem and app marketplace to develop.

To assist in the development of the virtual reality ecosystem Oculus is investing in developers subsidizing headsets as well as providing the tools to create new VR Apps. These include developer support forums, developer “best practice” manuals with clear guidance on the technical standards, and finally free software for updating apps as virtual reality hardware changes. Additionally, in its September “Connect” conference, Oculus announced an expanded strategic partnership with the game development platform Unity, providing free Oculus add ons for Unity Developers to further build a developer ecosystem. Although Oculus is assisting and subsidizing the development of third party apps, the company is also creating sponsored Oculus Apps that will raise the quality level of early consumer virtual reality experiences.

FOUR

In addition to building its developer base, Oculus VR / Facebook has decided to wait and let the virtual reality ecosystem to develop before releasing mass commercial products. The company has already released three different Developer Kit headsets (DK1, 2 & 3) with a consumer version yet to be officially announced. Oculus’ stated intention is to first develop a marketplace of high-quality virtual reality experiences before releasing mass consumer products, as they are concerned that the platform can be undermined by a lack of compelling content.

As the virtual reality app marketplace is growing, Oculus is also providing its own ratings of apps on its platform. Additionally, while the company is allowing the development of third party accessories, they are also building sponsored Oculus accessories. These moves allow Oculus to control the quality of the platform, creating a high quality experience for consumers that they describe as “good for everyone.” This discretion to control the platform can be a powerful tool for Oculus, allowing the company to define the parameters of its app marketplace leading to higher quality and potentially inreased market power.

In contrast to Facebook / Oculus, Google’s strategy for developing a virtual reality platform is less clear, and perhaps at an earlier stage of development. Although the company did launch Google Cardboard, a cheap cardboard adapter and mobile app turning all mobile phones into virtual reality devices, they have yet to be as public about their intentions in virtual reality. However, the company’s investment in exotic stealth technologies like Magic Leap’s digital lightfield displays, may signal broader ambitions in the virtual reality market. Currently, Google appears to be offering compatibility with Facebook, Oculus and Samsung products alongside its suite of products, suggesting that there is currently collaboration in virtual reality.

As virtual reality ecosystems develop, there are questions about whether this initial collaboration across will be replaced by competition once the market becomes lucrative enough. For example, although the Oculus Platform is compatible with multiple mobile phone based operating systems, it is not yet clear whether the Apple store will allow the Oculus Platform app to run on iOS phones. Additionally, it is unclear exactly how Facebook / Oculus will monetize their virtual reality platforms once they attract a large enough user base to make it economically viable for developers to continue committing large resources towards developing virtual reality applications. Finally, it is unclear whether formal standards will emerge for developing virtual reality applications or whether there will be competition between different standards.

We may be seeing the rise of new computing and entertainment platforms that will create remarkable new collaborative possibilities as well as competitive challenges for the largest media and technology companies – stay tuned!

Links:

On Mark Zuckerberg’s statements regarding the acquisition of Oculus VR:

https://www.facebook.com/zuck/posts/10101319050523971

http://www.technologyreview.com/news/525881/what-zuckerberg-sees-in-oculus-rift/

http://arstechnica.com/gaming/2014/08/why-oculus-sees-virtual-reality-as-the-final-compute-platform/

Articles on the Oculus Platform and Developer Support

http://techcrunch.com/2014/09/20/oculus-platform/

http://www.roadtovr.com/oculus-rift-best-practices-guide-virtual-reality-recommended-age/

http://unity3d.com/company/public-relations/news/unity-technologies-and-oculus-expand-strategic-partnership

Links about Magic Leap:

http://www.technologyreview.com/news/532001/how-magic-leaps-augmented-reality-works/#

http://recode.net/2014/10/20/look-who-else-is-joining-google-to-back-magic-leap-the-secret-augmented-reality-startup

Recommended Virtual Reality 90’s Movies: eXistenZ and Strange Days


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