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Joel on Software

Wasting Money on Cats

by Joel Spolsky
Tuesday, September 12, 2000

Did you get this little box in the mail this week?

I did. I think it's because I'm a Wired subscriber. Inside the box was a free "cat", which is supposed to remind you of a mouse, and Jared says looks like a fox:

The little cat can be used to scan barcodes which appear in magazines like, um, Wired, for example.

 

And when you scan the cool barcode, presumably, your web browser goes to the Altoids web page.

Well.

The number of dumb things going on here exceeds my limited ability to grok all at once. I'm a bit overwhelmed with what a feeble business idea this is.

The cat is called Cue Cat, which I'm supposed to punctuate as so: :CueCat. That's right, the colon is a part of the name. The software that comes with this cutie says that it's made by DigitalConvergence.:Com. No, don't type the colon before the com, that's merely there to be cute.

The colonated company DigitalConvergence.:Com has, and I kid you not, 200 employees, according to their web page. That means that even on the most moderate estimate, they are burning about a million dollars a month just on salaries. Now, the auditors say that the paid circulation of Wired is around half a million, so mailing this dang thing out is going to cost about a million dollars in postage, if they're really sending it to everyone. Not to mention the cost of manufacturing the CD with the software; the cable that comes with the thing, and the :Cat itself: this is a company that is burning money at Iridium rates.

What kind of investors are willing to burn money at that rate? Don't they realize that it's a dumb idea?

I guess not. But it is. Here's why.

1. This thing is not solving a problem.

I've racked my brain, and I've tried to figure out why I would want their cat chasin' my mouse around the desk. I came up with two "problems" that it solves:

  1. typing URLs is hard. As if. Going to the Altoids web site is not a hard problem that I need solved. We're talking 7 characters to type, here.
  2. magazines can't prove to advertisers that people actually look at their ads and go to the URLs mentioned in the ad.

I think that #2 is really where the focus is, because that seems to be where the money is to be made (and that's who's going to pay for the cats, which users get for free). But #2 is a falsehood, too. People don't have cats and they won't use them. Just to direct mail a bunch of cats, free, to the subscribers of one magazine is going to cost millions, and if it's like any other direct mail, 99% of them are going straight in the trash. If 1% of Wired's subscribers install the thing, we're talking about an installed base of around 5000 cats. So if Wired thinks they are going to impress their advertisers by showing them how 13 people scanned the page and went to the web site, they're in for a rude awakening.

If you invent something that doesn't solve a problem, it better be entertaining. Is the :Cat entertaining? Let me entertain you with a quick quote from the instructions that came with this thing:

"TO CHANGE YOUR COMPUTER'S BIOS SETTINGS..."

That's where I stopped reading. Changing the BIOS settings is not my idea of entertainment. I don't think I want to install this. There is no possible benefit to the consumer, so no consumer in their right mind will use this.

2. The Cat Suffers from Chicken and Egg Syndrome

No advertiser will bother putting the Cat barcode in their ads unless a lot of people have cats installed on their computers, because, well, it's just a lot of bother and looks dumb.

Nobody will install a Cat on their computer unless they see Cat barcodes all over the place.

Conclusion: this thing will die an unhappy death of Chicken and Egg Syndrome. You can read all about this syndrome in my earlier article here. This might be a decent business if everybody had cats installed, and it would be a great business if every ad, everywhere, had barcodes, but, uh, they don't, and they don't, so it's not such a great business.

To get around the chicken/egg problem, DigitalConvergence.:Com is spending a fortune giving away the devices. If they send them to all of Wired's subscribers, well, that's half a million people. Out of 300 million people on the net, I'm not impressed. And their system lets you scan in UPC symbols, for some bizarre reason, so if you want to go to the Campbell's Tomato Soup web page, you can do that by scanning the actual can itself. Both of these are half-hearted attempts to solve the mother of all chicken and egg problems.

3. And anyway, what the heck happened to last month's dumb Wired idea?

About two months ago, Wired magazine had a different technology for going to a URL automatically from an ad. It was some kind of weird thing where you held up the page to your digital camera, took a digital picture, and ran this wacked out software that navigated your browser to the Altoids home page. So now instead of typing 7 letters I have to find my digital camera, turn it on, wait for it to boot up, take a picture of the page, turn off the camera, wait for it to flush its memory to flash, remove the flash card from the camera, take the network card out of the PCMCIA slot, put the compact flash into it's holder, plug it into the PCMCIA slot, find the picture, run the software which I previously installed, oh, don't get me started. It would be a half-hour trauma just to go to the damn Altoids web site, where you can't even buy an Altoids, for heaven's sake. Curious.

Of course, that idea died so quickly that here it is, two months later, and there's no sign of it in the pages of this month's Wired. A mere flash in the primordial soup. I can't even remember what the damn thing was called. (My readers inform me that it's called the Digimarc MediaBridge.)

Bottom line: if you're working for a company that's spending millions of dollars trying to get people to do something with absolutely no benefit to them, and which suffers from chicken and egg problems, don't be counting your stock options just yet.

[June 16, 2001: Digital Convergence lays off most employees.]


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