A new model for donations: tip now, pay later (tipjoy.com startup)

[urlwolf]

Here's the source:
http://www.techcrunch.com/2008/02/10/tipjoy-a-better-tip-jar-for-content/

If you leave a tip as a new user, you start to build up an account debit. You can eventually pay that off via PayPal (TipJoy keeps 2%), although no one comes after you if you choose to skip out on the bill. You can also start to ask for tips on your own site, and anything people leave for you offsets what you’ve given to others.

[mouser]

tipjoy announced today they were shutting down:

Tipjoy is shutting down.

...

We have decided against continuing to pursue additional funding. After a long and hard look at the market and the situation, we didn't feel it made sense.

When we evaluate why there's been so much hype about payments on Twitter, and yet so little traction for us (and even far less for our competitors) it is clear to us that the reason is that a 3rd party payment service doesn't add enough value. We strongly believe that social payments will work on a social network, provided that they're done within the platform and not as a 3rd party. "Simple, social payments" is *the* philosophy needed to do digital payments right, but once a service groks that, they need only to implement it on their own. We've been the thought leaders in this space, we see the hype and excitement, and yet we know very intimately the difficulties in gaining actual traction. The only way to get around this is for the platforms themselves to control payments - then all people wanting to operate on that platform would have to play along. We believe that a payments system directly and officially integrated into social networks such as Twitter and Facebook will be a huge success.

Thank you to everyone who has supported and helped us along the way.

If you have any questions, get in touch: help@tipjoy.com

Thanks,
Ivan & Abby - Team Tipjoy

See their blog entry for more: http://tipjoys2cents.blogspot.com/2009/08/so-long-and-thanks-for-all-fish.html

[urlwolf]

yep. I wonder how that leaves DC... "the only place in the world where microdonations work!"

Note that tipjoy was a Y combinator startup and followed the standards to the T: got angel funding, then VC funding (close to $1M), two founders (married, actually), tried to go for exponential growth (twitter app, etc), and still it failed, whereas DC is still here

[mouser]

whenever i hear about people getting a million dollars in funding it just blows my mind.. the cool things we could do with a million dollars in funding.. and yet people just throw it away like candy.

but i suppose one of the benefits of operating the way we do is that it's impossible for us to die

[mouser]

This actually reminds me i've been wanting to make a fun thought-experiment post about what we would actually do with such large funding/donations. I'm going to start a thread on it this coming week, and we'll see what we can come up with, could be interesting to see what people can dream up.

[app103]

The problem with VC funding is that it is an investment and the investor(s) are going to want a big return on their money within a certain period of time. If you can't do that, you end up having to shut down like TipJoy, or sell out like Friendfeed, iLike, and all the other startups that were bought up by bigger companies.

And if you think the founders get to keep the big wads of cash they get when they sell out, you are sadly mistaken, They only get a portion and the rest goes to the VC firms that invested in them.

The way DC does things isn't profit driven, looking to make investors or the founder into a millionaire.

DC was not founded on greed. That is the biggest difference between this site and one like TipJoy.

And that is why DC is still here.

[mouser]

yeah it's a good point and one that financial-idiots like me always seem to forget.  vc (venture capital) funding isn't a gift -- it's an investment by people who expect to either make the money back double or else own you like marbles for their playground games.

[J-Mac]

Don't worry - if ever I come into that kind of money, I'll fund you with no expectation of returns, mouse-man! Heck, what would I do with it, other than blow it anyway... 

Jim