Edward (Ted) Sullivan thinks he can do what plenty of technology entrepreneurs can't: make money writing mobile-phone software.
Demand for these downloadable programs--that do everything from finding restaurants to transferring bank funds--is exploding.
now offers a menu of 15,000 and claims 500 million downloads, 40% of those in the last month and a half. About a quarter are available for free as marketing gimmicks for other companies and Web sites; the rest sell for a $1-to-$10 one-time fee per download, of which Apple gets paid 30% and the coder gets 70%.
Sullivan's plan: Give away his software for free at Apple's online "app store" and collect revenue through monthly subscriptions and shared-advertising agreements, thus sidestepping Apple's cut. Apple tolerates this because, in theory, the more apps it makes available, the greater the demand for those $300 iPhones.
His first foray--a baseball-themed app called GameChanger--is aimed at overworked parents aching to keep track of their young sluggers, even when they can't attend their games. Hence the name of Sullivan's Manhattan startup, Fungo Media (a fungo is a thin bat used in fielding practice), launched in December.
A former Cleveland Indians minor-league pitcher, Sullivan, 32, has a soft spot for aspiring athletes. He helped his brother Brendan build Headfirst, now the largest youth sports camp in Washington, D.C., with 8,000 annual participants. He knows something about consumer technology, too, having spent two and a half years as head of marketing for Rave Wireless, a mobile-security software firm.
GameChanger--due to roll out Mar. 1 in New York, Washington, D.C., St. Louis and Orange County, Calif.--is working a sizable audience: An estimated 25 million kids ages 18 and younger play competitive baseball. "College and pro fans take for granted that they can get game information anytime," says Sullivan. "But there's huge demand for that real-time content for youth and high school sports, too."
Here's Sullivan's pitch. Each baseball squad has a scorekeeper who logs every at-bat, mainly on pen and paper. GameChanger's friendly interface uses straightforward language instead of baseball lingo. Example: Rather than describe a shortstop-to-second-baseman-to-first-baseman double play as a "6-4-3 DP," GameChanger lets users click on parts of the field where the ball traveled. It can also track customized statistics like "hustle points" or strong defensive plays.
Once logged in, the scoring data flows to Fungo's servers, which can beam it, in the form of text messages, to the phones of all those busy parents and relatives--as well as to the hundreds of Web sites, newspapers and TV affiliates looking to beef up their news coverage on the cheap. In the last two months newspapers like the
and the Boston Herald, as well as NBC network affiliates in San Francisco and New York, have partnered with Outside.in, a local-news aggregator, to deliver hyperlocal content to their audiences.
Yet for all that potential demand, turning a profit will be no walk to first base. There's a distribution bottleneck. While any phone that receives text messages (nearly all do now) can also accept GameChanger's data feed, at least one scorekeeper or coach per team must have an iPhone to input all the play-by-play action. Apple has shipped 13 million units thus far--and soon perhaps a whole lot more, thanks to a distribution deal with
started in December--but the probability that a random scorekeeper has an iPhone is maybe only one in 15.
Then there's pricing. Sullivan's research--including interviews with 125 parents and 25 news outlets, on which he says he spent $6,000--suggest that parents would gladly pay $2 a month for GameChanger. "My wife gets annoyed when I call her every five seconds for updates," says Sam Kiehl, 38, an associate banker at
, with two sons in Little League. "I can't imagine anyone who wouldn't pay two bucks for that type of service."
Sullivan thinks GameChanger can nab 1 million subscribers (3% of the youth ballplayer universe); assuming a four-month season, that's $8 million in sales a year. Eventually, he postulates, 30% of Fungo's sales will come from subs and 70% from ads--though that second stream won't kick in hard until he signs up enough baseball leagues.
All of this assumes that Sullivan won't run out of cash in the meantime. He paid only $99 for Apple's programming tools and quality-control inspection, and space on a server gobbles only $75 a month. Programming, however, is a big nut: Sullivan employs five to eight coders, each at $75 to $100 an hour. Those hours add up fast, and with only $250,000 raised from friends, family and eight angel investors, Sullivan has resorted to giving away Fungo equity (he won't say how much) to retain talent.
More worrisome, venture capitalists are shying away from mobile-tech startups. "It's so hard to work with the carriers," says Brian Ascher, partner at Venrock, a Palo Alto, Calif. venture firm. "They're not very generous in sharing the revenue." An all but dried-up new-issues market doesn't help much, either.
How long can Sullivan hang on? He admits that "it will very likely be before the end of 2009" that he'll need another shot of capital. If he doesn't take his best swing now, he probably won't get another turn at bat.
Woolsey, Matt. "New Ballgame.(Edward Sullivan and his GameChanger)." Forbes 2 Mar. 2009: 50. General OneFile. Web. 30 Oct. 2009.
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