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For as long as theres been a Plaxo, the free service that promises to keep your contact list up-to-date, Ive been recommending that people avoid it. My fear has been that, lacking an obvious revenue model, Plaxo would eventually do something—such as adware—that would make people sorry they ever signed up. Imagine Gator, only worse.
Ive never liked being anti-Plaxo, as it is a very well-thought-out product with more than 3 million users. But Plaxo creeped me out on a few occasions and the circumstances of its birth werent impressive.
Today, because of changes at Plaxo and discussions with the companys remaining co-founders, I am happy that I can now start recommending Plaxo, as well as respond to the 106 Plaxo contact information requests Ive received recently.
Why was I down on Plaxo? And whats changed that now allows me to use and recommend it?
The big issue was that one of Plaxos co-founders, now departed, was also a co-founder of Napster. That company, of course, was basically about enabling people to steal other peoples intellectual property. My own opinion is that some Napster people should have ended up in jail.
After the Napster meltdown, Plaxo was positioned as the “next big thing” for this ex-Napster exec. That publicity helped Plaxo raise $20 million in venture money and gave the new company more credibility than it would otherwise have had.
Given that I consider Napster money and influence to be tainted, I was immediately concerned about Plaxo, especially when I couldnt imagine how they could turn the company into a huge moneymaker without doing something shady.
There were other things Plaxo did, such as keeping track of how many information requests Id received and using the number in e-mails to try to convince me to sign-up. That seemed a bit like stalking and, along with a few comments and rumors Id heard about the company, only intensified my concern.
After my recent column warning about the dangers of “free” products and services, I started an e-mail exchange with a Plaxo spokesperson. I was told the ex-Napster person had left Plaxo.
So last week I sat down with three of the companys co-founders and senior executives, and while they didnt agree with my concerns, they were gracious enough to see things from my perspective. More importantly, they also told me about their goals for the company and how they plan to achieve them.
Plaxos current mission is to reach 10 million users and $10 million in annual revenue as quickly as possible. Right now they are at more than 3 million users and essentially zero revenue.
The Plaxo execs asked that I not pre-announce their forthcoming products, but they discussed them in enough detail that I have great confidence that Plaxo wont abuse its customers. A key part of their plan is finding other services that Plaxo customers would be willing to pay for. There is no plan to discontinue the free service, only to add revenue-producing products to the offering.
There is no hocus-pocus in Plaxos revenue plan. The company still has $10 million of its original $20 million and has been conserving cash as much as possible. Over the next several months Plaxo will start spending on marketing to support the launch of its new products. If they are as well-implemented as Plaxo is generally, they should do well. But it will still take time to reach the subscriber and revenue goals.
Plaxo is not the get-rich-quick scheme that it once seemed to be. When I asked about when an IPO might be possible, the Plaxo execs just laughed. The impression I got was that if they cant reach their 10 million/$10 million goal fairly soon, there might never be an IPO.
After the meeting, I feel pretty certain that Plaxo is an honest company trying to do the right thing by its customers. They may occasionally stumble, but theyre mostly building a very nice product that I am now happy to recommend. I look forward to seeing how their forthcoming paid services pan out.
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