Being in the business for nearly 15 years — longer than the vast majority of Internet businesspeople — you get a good handle on good business models and bad ones. I’ve pitched to high-class suits on the West Coast and the East Coast, to VC firms, to angel investors, and I’ve pretty much seen every ridiculous business plan you can imagine in the process. In the late 1990s, for instance, I saw 3-page business plans that were funded purely on relationships, not on reality. Needless to say, most of those burned badly in the dot.com crash, including folks like drkoop.com. You have to build an Internet business on more than just hype and good intentions.
So it was with some interest to watch the ABC TV show “Shark Tank” the other night and come across a business called My Therapy Journal, which is little more than a blogging platform with some mood tracking thrown in. The cost? $14.95 per month. Incredibly, two of the “Internet-savvy” investors on the “Shark Tank” actually bought into this business for 51% of it:
Rodolfo and Alexis admit that they only made about $4,000 last year, and only 1,120 people have signed up so far. That said, there’s a free trial period, and they really only have about 120 paying users.
A 10% conversion rate is unheard of, so maybe that’s what made the investors salivate. Of course, maybe that also points to a warning sign as well…
But what should’ve made them wary is knowing that blogging (or journaling) is free (e.g., LiveJournal.com, Blogger.com, WordPress.com, PsychCentral.net) and if you want to track your mood online, well, that’s free too!. Why would anyone be paying $15/month to do these things which you could already do for free online?
The answer is, of course, very few people would. You would only join a site like My Therapy Journal if you weren’t aware that you could blog and track your moods for free elsewhere. Which means that once people get savvy to the fact that these services are available for free, they won’t likely renew their membership.
Look, I’m all for successful business models online. But please, at least try and do something original or something that isn’t repackaging readily available free services available elsewhere online. Otherwise, I’m going to call a spade a spade and call out how ridiculous those “poor” Shark Tank
suckers— I mean, investors — are when they get involved in fields they know little about. Being successful on the “Internet” doesn’t mean you can translate that success into every possible field online. Just because you know how to build some Internet tools or businesses, doesn’t mean you understand the mental health market (or any specialized market).
Shark Tank can be an entertaining show. But this particular episode also clearly demonstrates why those investors are likely not as savvy nor smart as they think (or would like you to think). After all, money isn’t the only key to success (and some would argue, the least important indicator of success).
Read the full episode summary: Shark Tank: Episode 105: Rodolfo and Alexis Saccoman – My Therapy Journal