Thursday, January 13, 2011

Penises For Sale: The Russian Mafia Is On It

Fast Company: Chatroulette Founder Andrey Ternovskiy Raises New Funding: "50,000 Naked Men": Only months earlier, the 18-year-old had entertained drooling interest from the likes of Digital Sky Technologies and Fred Wilson, turning down million-dollar offers for his popular video-chatting service. The site was rocketing in popularity. Nearly every major media outlet wrote about Chatroulette. ....... Ternovskiy now shares a one-bedroom apartment with two engineers that doubles as Chatroulette's headquarters. They all sleep and work there ..... Ternovskiy still believes he can reclaim Chatroulette's prominence and VC interest. ..... Of the roughly 500,000 visitors Chatroulette receives daily, about 10% are males itching to show their business. So Ternovskiy parlays that business into profit. ...... "Everyday, about 50,000 new men are trying to get naked," he says. "What we're doing is selling the naked men to a couple of websites--it's an investment for us." ....... Chatroulette is earning cash hand over fist from the referral traffic. ....... Chatroulette is now earning $100,000 per month due to its refined business model and content-control system--all from "naked men." That's triple the site's monthly "mainstream" or "normal" revenue, as Ternovskiy refers to it. ...... It's also Ternovskiy's answer to whether he'd finally accepted outside investments. "50,000 naked men" has become "our investment," he says. ....... "I just didn't want to take investments--I feared that if I did the deals, my ideas would get pushed away. ........ After I declined the offers, I realized it was very difficult to execute something myself. I think I would accept the offers now, because I'm much more educated about it. But I'm not sure things would be better if I took the offers back then--I think traffic would've gone down anyway after the investment." ...... Moscow-born, high-school dropout isn't dwelling on the millions of dollars he might've lost. Living with his two coworkers in their one-bedroom, Ternovskiy is on a steady schedule: eat, sleep, and develop Chatroulette. ........ Last week, his team introduced a new feature called "skins," which provides alternating themes to the site's background. The blogosphere immediately lambasted the feature--as if the site needed more "skin," many joked--and criticized Ternovskiy for introducing such a basic upgrade. ....... "We are not desperate for investments," he wrote. "We are enjoying independence."
I instantly took a liking to Chatroulette when it came out. Though I never used it. Einstein conducted his thought experiments. I am no Einstein, but I do my own thought experiments. You need a certain detachment that comes from non use to be able to conduct good thought experiments.

(Another revelation, I have never myself used FoodSpotting, a company that I think I was the first to call the next FourSquare: I don't think a second person or publication has emerged yet; I am sticking to my gun, I am right on. I am going to be celebrating January 15 two times in two separate cities: Philly at noon, and NYC at 7 PM at an eatup Amy is expected to attend in spirit; she will be in San Fran for the celebration. Amy is going to like me more than she already does. So it is not like my enthusiasm has waned. FoodSpotting is a potential IPO company if it can carve out the social graph around food. I make IPO talk about extremely few companies. It could do it in five plus years, the IPO part, the graph part has to happen much sooner. It will get offers to get bought along the way. If it believes it is a potential IPO company, it will stay independent. 100 million dollars is not cool. You know what's cool? Five billion dollars. Facebook itself might make a bid. The trick would be to turn that bid into a solid integration between the two properties.)

Okay, so Chatroulette. I got excited. I am like, this could be a contribution to world peace. I want Israelis and Palestinians to get on Chatroulette.

Flickr did not start out a photo sharing site, Twitter started out as a podcasting company, the Instagram that Marc Andreessen funded had nothing to do with photo sharing: pivots happen. Well, looks like for now Chatroulette has also had its pivot moment. It pivoted around the penis.

Instead of inspiring world peace, Chatroulette inspired the urge of a few hundred thousand men across the world to flash their penises. Women have had Mardi Gras forever. Men now have Chatroulette. The reason men did not have Mardi Gras yet was because, well, online no one knows you are a dog, or such was the case before Facebook.

Instead of sanitizing the site and putting it to the service of world peace, the Chatroulette people decided they had hit the pivot point with the penis. Now they are cashing on it. As soon as an enthusiastic dude flashes, the site promptly sends them over to where they perhaps belong. And gives Chatroulette money for those referrals.

It is not all men. It is not most men. But looks like the number one thing Chatroulette has unearthed is this tribe of men on the planet, a few hundred thousand strong, who feel this strong urge to flash their goodie anonymously. They fit the profile of people who make money for sites like

Chatroulette apparently makes $100,000 a month selling out on these penises. And is happy about it.

Ugh. So much for world peace. I guess we will have to go back to organizing summits. Dig Arafat out of the grave, will you?

Jokes aside though, I do feel like Chatroulette missed the boat. It did not know how to ride the wave it created. They pivoted and are apparently a profit making outfit, but this is not a pivot I'd recommend. They could have done much, much better. Granted Andrey is young, but Bill Gates was 19 when he started out with Microsoft, as was our own Zuckerberg.

Chatroulette perhaps is like one of those early search engines. Who wants to be the Google of the random connections space? Could Chatroulette get back its mojo? Not if its primary revenue source is

I am in disbelief. Chatroulette had the option not long back to raise millions in venture capital money. It did not go for that. Now it is happy about getting 100K a month from Wow. Andrey could use a good mentor.

For now the undertaking feels like a missed opportunity. It is possible all the limelight early last year prevented Andrey from thinking through some of the offers he got.

New York Times: February 2010: Chatroulette's Creator, 17, Introduces Himself
One on One: Andrey Ternovskiy, Creator of Chatroulette
New Yorker: Andrey Ternovskiy's Web site, Chatroulette

And to think Chatroulette could have had a dream launch. But the random connections space continues to be a space to watch.
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