devstator82/gist:3158326

## gistfile1.txt
# On the business of e-mail clients

I have been following the whole debate around this e-mail client ([Sparrow](http://sparrowmailapp.com/)) getting bought by Google. E-mail clients and the e-mail business are something close to my heart as I have once spent considerable amount of time on my own [e-mail client](http://www.inbox2.com).

People seem to be pretty upset about this acquisition because one of their favourite apps apparantly wont be updated anymore in the future, which is understandable. But lets look at this discussion from the other side: e-mail clients as a business.

Now I don't know the facts, nor do I know the good people at Sparrow. But I do know this space very well and know the facts about the space. My own Inbox2 desktop (for Windows) had about 500.000 downloads and is still being downloaded today (I stopped working on that about 2 years ago). I am assuming Sparrow did much better then this but still the essentials would remain the same.

## The facts based on my own experience

In essenial during my own adventure here is what I learnt:

### Technology

Getting the technologoy behind an e-mail client right is really really hard. Hats off to the Sparrow guys for getting this right (I use Sparrow myself on the Mac).

With Inbox2 people kept e-mailing us with an issues that only occured on a specific combination of chinese Windows Vista with Aero disabled, good luck reproducing that. Things such as this make the process of developing web apps soo much easier.

The amount of money and time you need to spend to cover all these issues is quite big. Sparrow guys did a good job covering 80% of the most important things (thus users tend to not care that much since it mostly works).

As an entrepreneur this backlog keeps nagging at you simply because it exists, you want to do new & cool stuff but this stuff keeps bogging you down.

### Switching costs

Getting average Joe to switch to your software is painful, you know why? Because they simply are not aware of the fact that they have a e-mail management problem. They know they have a hard time keeping up with their e-mails, but they are using the GMail web interface or mail.app (or Outlook) and simply do not care about any other software that could do the job better because this thing has been dragging around for the last 10-15 years.

It is stupid, but true. We are not talking about you and me, we are early adopters. We will try any new software that can make our life better in a tiny way. We are talking about the regular information workers that use e-mail for their job or to stay in touch with their family. These people will never switch to Sparrow, or Inbox2, or any other great e-mail client, period.

As an entrepreneur this makes your outlook on a healthy business around e-mail kind of look sad. You suddenly realize that your business will probably never grow above 500K/year or whatever. This might not be what you signed up for.

### Recurring revenue

Here is a catch 22. If you sell a piece of software for 8 dollars in the mac app store and you make money once on the sale that is great. But how to sustain your team? Hmm sell more copies. But now it becomes tricky because there is this group of productivity enthousiasts that love this thing and this group of average users that you have to spend a lot of time explaining why your product is better. Unfortunately group 1 gets exhausted reasonably quick so your cashflow becomes interesting.

In the end having a recuring revenue business (say 2 dollars a month for using Sparrow, or even a premium service on top of the 8 dollars) would be the better thing to do. But nobody will want to pay for this as people are already paying for their premium Gmail accounts. I am sure the Sparrow guys have done their homework, as we had, this is tough.

As a entrepreneur cashflow is king, but one off sales unfortnately dont help and you dont have much choice otherwise.

## Why this acquisition makes sense for the team

In short, being in the business of building e-mail clients can be a great lifestyle business. But it is almost notpossible to keep this a lifestyle business as you need a reasonably sized team to keep this going.

When I started Inbox2 together with my co-founders we thought this to be a 100 million dollar business. But it is NOT. I personally talk to many of the players in this space and they are all strugling to keep their head above water. Even the big guys are having a hard time monetizing their e-mail platforms. If it wasnt for their other revenue sources (search, portals, games, whatever) they might not even be offering a free/paid e-mail solution.

I believe this acquisition to be a good exit strategy for the founders personally even if we as users are left behind.

So to the Sparrow team I say: good luck and thanks for all the fish!
	# On the business of e-mail clients

	I have been following the whole debate around this e-mail client ([Sparrow](http://sparrowmailapp.com/)) getting bought by Google. E-mail clients and the e-mail business are something close to my heart as I have once spent considerable amount of time on my own [e-mail client](http://www.inbox2.com).

	People seem to be pretty upset about this acquisition because one of their favourite apps apparantly wont be updated anymore in the future, which is understandable. But lets look at this discussion from the other side: e-mail clients as a business.

	Now I don't know the facts, nor do I know the good people at Sparrow. But I do know this space very well and know the facts about the space. My own Inbox2 desktop (for Windows) had about 500.000 downloads and is still being downloaded today (I stopped working on that about 2 years ago). I am assuming Sparrow did much better then this but still the essentials would remain the same.

	## The facts based on my own experience

	In essenial during my own adventure here is what I learnt:

	### Technology

	Getting the technologoy behind an e-mail client right is really really hard. Hats off to the Sparrow guys for getting this right (I use Sparrow myself on the Mac).

	With Inbox2 people kept e-mailing us with an issues that only occured on a specific combination of chinese Windows Vista with Aero disabled, good luck reproducing that. Things such as this make the process of developing web apps soo much easier.

	The amount of money and time you need to spend to cover all these issues is quite big. Sparrow guys did a good job covering 80% of the most important things (thus users tend to not care that much since it mostly works).

	As an entrepreneur this backlog keeps nagging at you simply because it exists, you want to do new & cool stuff but this stuff keeps bogging you down.

	### Switching costs

	Getting average Joe to switch to your software is painful, you know why? Because they simply are not aware of the fact that they have a e-mail management problem. They know they have a hard time keeping up with their e-mails, but they are using the GMail web interface or mail.app (or Outlook) and simply do not care about any other software that could do the job better because this thing has been dragging around for the last 10-15 years.

	It is stupid, but true. We are not talking about you and me, we are early adopters. We will try any new software that can make our life better in a tiny way. We are talking about the regular information workers that use e-mail for their job or to stay in touch with their family. These people will never switch to Sparrow, or Inbox2, or any other great e-mail client, period.

	As an entrepreneur this makes your outlook on a healthy business around e-mail kind of look sad. You suddenly realize that your business will probably never grow above 500K/year or whatever. This might not be what you signed up for.

	### Recurring revenue

	Here is a catch 22. If you sell a piece of software for 8 dollars in the mac app store and you make money once on the sale that is great. But how to sustain your team? Hmm sell more copies. But now it becomes tricky because there is this group of productivity enthousiasts that love this thing and this group of average users that you have to spend a lot of time explaining why your product is better. Unfortunately group 1 gets exhausted reasonably quick so your cashflow becomes interesting.

	In the end having a recuring revenue business (say 2 dollars a month for using Sparrow, or even a premium service on top of the 8 dollars) would be the better thing to do. But nobody will want to pay for this as people are already paying for their premium Gmail accounts. I am sure the Sparrow guys have done their homework, as we had, this is tough.

	As a entrepreneur cashflow is king, but one off sales unfortnately dont help and you dont have much choice otherwise.

	## Why this acquisition makes sense for the team

	In short, being in the business of building e-mail clients can be a great lifestyle business. But it is almost notpossible to keep this a lifestyle business as you need a reasonably sized team to keep this going.

	When I started Inbox2 together with my co-founders we thought this to be a 100 million dollar business. But it is NOT. I personally talk to many of the players in this space and they are all strugling to keep their head above water. Even the big guys are having a hard time monetizing their e-mail platforms. If it wasnt for their other revenue sources (search, portals, games, whatever) they might not even be offering a free/paid e-mail solution.

	I believe this acquisition to be a good exit strategy for the founders personally even if we as users are left behind.

	So to the Sparrow team I say: good luck and thanks for all the fish!