Bronte Media

When a startup sells out of something you should be worried not elated. Case in point: Jingle announced they have sold out of their sponsorship inventory.

Greg says that the company is processing around 20 million calls a month, a meaningful amount. The only problem? In September of 2006, they were reporting around 15 millions calls per month, which is a 25% increase in 16 months.

The economics of 411 are brutal. I was fascinated by the industry a few years back. See part I, part II and part III.

It might be cool to call this a disruptive market but the reality is that, more than other markets, free 411 companies are jumping off a steep cliff and building a parachute on the way down.

PEHub reported a few weeks back they had raised another $13m which the company has thus far neglected to announce (after raising a $30m C Round before that to much celebration and raising over $75m thus far).

Assuming the $30m round lasted them 14 months, the $13m round will last 6 months at the same burn rate. The trouble with the company’s burn rate, as I mentioned above, is that it is not so much in fixed costs but rather marginal costs to service the call. So they have less control. Firing dozens of people, for instance, would have less of an effect than in other types of businesses. They literally would have to hang up on their customers. The moderate call growth in the past 16 months and the curious $13m size (versus $30m each they were able to raise in B and C rounds) doesn’t smell right. Stay tuned.