GrandCentral: Revisited

My original posting on GrandCentral got a lot of comments with a number of folks thinking I hadn’t giving the service a chance. I’ll revisit it.

It’s not that the concept of GrandCentral isn’t neat enough to me as a techno geek. The issue is and remains – it’s a series of features masquerading as a company with no real business model. Previously GrandCentral tried to offer a free # of minutes each month and entice you to sign up. That looks like that failed (meaning nobody signed up), so now it’s basically free. As I’ve discussed before, free isn’t a business model.

I love free stuff. But am I going to publish a GrandCentral telephone number as my primary point of contact for either personal or professional and hope they remain in business? Probably not. Reading the 4,000+ testimonials on the GrandCentral website, I saw a lot of "we’re enjoying playing with the service". That’s nice. So let’s say all 4, 467 (as of this time of this posting) convert to a paying plan (a huge conversion ratio) say of $10 a month, that’s only $600k a year in revenue and that’s not a business (unless I’m running it out of my garage).

It’s not clear to me what GrandCentral’s exit strategy is. Offer a free service, get a bunch of users (of which only a small % actually use the service, I have 2 accounts and don’t use it at all) and then do what? They’re spending $0 on marketing and let’s figure their cost per telephone number is $0.50 a month and let’s say they have 10,000 users (a stretch, 2x the # of testimonials) and let’s get crazy and say each of them is using 100 minutes (on average, again a huge stretch) costing them $0.01 a minute for outbound calling so say $1. That’s $1.50 a customer or $15k a month. Say they have 15 employees at GrandCentral so that’s $150k a month in salaries (and other stuff) and add in another $50k a month for servers and data center space. So GrandCentral is burning $200-250k a month.

So they raise $4m in Venture funding, they’re good for 1 1/2 years. They can raise more money (stupid on stupid is common in this industry) if needed. But it gives them 16 months to run. OK. It’s still not a business from what I can see. But enjoy it while you can.