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© 2005 UMFK.

TELL ME NETWORK,INC

internet business models

text and cases

ANUP SHARMA

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TELLME INC.

• Overview

• Company History

• Management and business model

• Competition

• GBF

• What is it Today?

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Company Overview

• Tellme unites the Internet and telephone network underneath an elegant speech user interface to provide the world’s largest Voice Application Network.

• Offers web based directory service which could be accessed over the phone to get information such as stocks, sports, tickets etc.

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Mission and Vision

• Mission: take advantage of the Ubiquity and simplicity of the telephone to bring consumers the content and transactional capabilities of the internet.

• Vision : ultimate vision is to create DialTone 2.0, a personalized web of consumer and business services accessible from any telephone.

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History!!!

• Tellme Inc. was started in early 1999 as a audio based directory by Mike McCue, ex-vice president for Netscape communications.

• Offered voice directory services for consumers and network services for business to enhance their voice enabled applications.

• Enabled users to connect free of charge to a host of outside services. (taxi and airline} and gave users 2 minutes phone call to anyone is U.S.A. through its booth service.

• “One stop shopping” (high costs}

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Management

• Mike McCue, founder and CEO. Ex-vice president for technology; Netscape.

• Other founders were Angus Davis and John Giannandrea; also ex Netscapers!!

• Hadi Partovi; ex-group program manager’ Microsoft explorer team. He was also Mike’s major business rival before Tellme.

• Charles Moldow- sales. ex-employee match Logic, TCI and Merrill Lynch

• Andrew Volkmann- Finance. Ex Netscape financial planner

• David Weiden- Marketing. Ex employee- Morgan Stanley, Netscape and AOL.

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Financing

• $6 Mil. – Barksdale; Netscape and Silverberg; Microsoft executive

• December 99- $47 mil –Benchmark Capital and Kleiner Perkins Caufield &Byers.

• May 2OOO- AT&T investment of $6Omil, major achievement for Tellme. AT&T offered network access, call routing features etc.

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How it worked…

Users Call inTellme Network

Mapped to destination server

Information received was

formatted using voice extensible

mark up language

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The Launch!!

• Tellme did its BETA testing in may 2OOO and service was officially launched in June 2OOO.

• Concentration on major cities such as New York, L.A., San Francisco etc to capture major corporate clients.

• Reported one million calls in first month and growth expectations were 4 million/month

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Market conditions in 2OOO

• Speech recognition software had great potential due to technical advances

• 95 % accuracy was reported.

• Companies were attracted towards this technology to improve their client service methods and increase retention rates.

• Developers: Nuance communications etc.

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Some Challenges….

• Speech recognition required computers to have high level of processing power and memory.

• Impact of background noise could drive the accuracy below 7O%.

• Different voices, high pitched, children and various accents were hard to be captured accurately by the software.

• Tellme invested huge amounts to enhance its database with recorded voices, thus avoiding computer mistakes.

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Directories and Decisions.1-8OO-555-TELL

• Content: 16 different categories such as sports, weather, restaurant, movie listings.

• Plan- Driving directions (great demand} Problem- not enough revenues to cover extensive long

distance costs.

• Commerce : consumers to connect to retailers and place verbal orders.

problem- users will not be comfortable to give out their credit card no. or bank account on the phone.

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D&D Cont.

• Communications: phone booth offering 2 minutes free phone call bringing the user back to Tellme network.

• Plan: offer voice dialing to enable users to say the action. Such as “read my email”

• Problem :complex challenges in synchronizations, convergence accuracy was very low and misspellings made it worse.

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Strategies

• Aggregator strategies- trying to connect and users and businesses

• Bundling of voice enabled services and offer it to business as a package which otherwise would cost them huge investments.

• Exploit the opportunity that consumers cannot remember different numbers for different information, hence attracting companies towards them.

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Strategies Cont.

• Periodic reevaluation of success or failure of the company and keeping priorities at all times

• 3 stage prioritization criteria for business deals: effect on consumer experience {positive or

negative} effect on business partners {new or exixiting}Revenue generation ability for the company.

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Target Market

• “It takes a discipline to say that we don’t want to target the Palm VII or WAP phone users. We are targeting soccer mom-types.”

- Partovi “Average American”

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BUSINESS MODEL

Professional fees for developing company’s voice application

Per minutes charges for hosting company’s voice application

Sponsorship fees for promoting the company on Tellme directory

Promotion fees from non network partners who

wanted to advertise with Tellme.

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Competition!!!!

• Voice portals

• Voice application service providers

• WAP services

• Telecommunication carriers

• Internet portals.

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Characteristic of competition.

• Large number within each categories• Providing somewhat same services as Tellme. • Ranging from free of cost to minimal cost to the

consumer.• Partner competition such as Nuance

communications. • Low barrier of entry into the market • Demand of voice applications could be strong

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Internet portals as a threat.

• Executives did not consider them as threat because of difference from the core business and heavy investment.

• But.. Consumers wanted their information aggregated into a single location. Example. address and calendar information.

• Immediate decision was required regarding investment!!!!!!!

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GBF??

• Tellme Inc. had the characteristics to pursue Get Big Fast

Network effects: more users attracted more business and expanded the network

Significant scale of economies: increases client base would increase the scale of business in terms of categories and content.

Customer retention :customers who have spend their time in joining this network are less likely to go somewhere else.

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+/- of GBF for Tellme Inc.

• Merits: first mover advantage as compared to internet portals, plenty of opportunities as lot of companies were interested building voice channels, possible team up with portals to enhance the service, shortened the path to profitability.

• Demerits: death by own success, loosing the target market and priorities, jack of all- trades-master of none.

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Further Information.

• Network services emerged as a more profitable venture than directory service.

• Two new functionalities to their system with "Tellme Notifier" and "Tellme CTI Connect."

• In May 2001, Tellme announced a planned merger with MagicPhone, another provider of voice-activated telephone services.

• Change in business model focusing on selling more minutes to client companies.

• Teamed up with Skype in September 2OO5, thus increasing the Voice Services Program for third party content providers.

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Conclusions

• Tellme Inc. had an opportunity of pursuing GBF but there were a lot of loopholes towards failure.

• Mr. McCue did not want Tellme to die because of fast movement and getting digressed from its focus, target market and priorities

• Despite of so much competition in the market, Tellme Inc. focused on its customers and moved in the direction where market was going.

• Revised the business model and hence partnered up with some major rivals which is a smart strategic move.

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