Being in the business for nearly 15 years — longer than the vast majority of Internet businesspeople — you get a good handle on good business models and bad ones. I’ve pitched to high-class suits on the West Coast and the East Coast, to VC firms, to angel investors, and I’ve pretty much seen every ridiculous business plan you can imagine in the process. In the late 1990s, for instance, I saw 3-page business plans that were funded purely on relationships, not on reality. Needless to say, most of those burned badly in the dot.com crash, including folks like drkoop.com. You have to build an Internet business on more than just hype and good intentions.
So it was with some interest to watch the ABC TV show “Shark Tank” the other night and come across a business called My Therapy Journal, which is little more than a blogging platform with some mood tracking thrown in. The cost? $14.95 per month. Incredibly, two of the “Internet-savvy” investors on the “Shark Tank” actually bought into this business for 51% of it:
Rodolfo and Alexis admit that they only made about $4,000 last year, and only 1,120 people have signed up so far. That said, there’s a free trial period, and they really only have about 120 paying users.
A 10% conversion rate is unheard of, so maybe that’s what made the investors salivate. Of course, maybe that also points to a warning sign as well…
But what should’ve made them wary is knowing that blogging (or journaling) is free (e.g., LiveJournal.com, Blogger.com, WordPress.com, PsychCentral.net) and if you want to track your mood online, well, that’s free too!. Why would anyone be paying $15/month to do these things which you could already do for free online?
The answer is, of course, very few people would. You would only join a site like My Therapy Journal if you weren’t aware that you could blog and track your moods for free elsewhere. Which means that once people get savvy to the fact that these services are available for free, they won’t likely renew their membership.
Look, I’m all for successful business models online. But please, at least try and do something original or something that isn’t repackaging readily available free services available elsewhere online. Otherwise, I’m going to call a spade a spade and call out how ridiculous those “poor” Shark Tank suckers— I mean, investors — are when they get involved in fields they know little about. Being successful on the “Internet” doesn’t mean you can translate that success into every possible field online. Just because you know how to build some Internet tools or businesses, doesn’t mean you understand the mental health market (or any specialized market).
Shark Tank can be an entertaining show. But this particular episode also clearly demonstrates why those investors are likely not as savvy nor smart as they think (or would like you to think). After all, money isn’t the only key to success (and some would argue, the least important indicator of success).
Read the full episode summary: Shark Tank: Episode 105: Rodolfo and Alexis Saccoman – My Therapy Journal
18 comments
The turning point in the episode was when the Sharks learned that they were in discussions with Aetna to offer the service as a part of well-being packages to its clients. That’s the only thing that made them perk.
I agree that in this case the sharks we’re more like suckers. At least suckers clean fish tanks…
-E
John,
Don’t you think the distinct difference with MyTherapyJournal.com is that the journal is kept private, secure AND encrypted? That is certainly not the case with blogs on wordpress and blogger. In fact, there are many places that offer free journaling but not with the privacy features. Of course, people can also keep a journal on their own hard drive or data stick and encrypted either for free.
CarePages offers a similar but well-established and stable service and has been promoting its services to hospitals and other care provider groups for years.
DeeAnna, most blogging services — including WordPress.com, LiveJournal.com and Blogger.com — allow the author to keep their blog private and/or password protected. Again, I’m not sure what added value My Therapy Journal brings to the table.
BTW, encryption hasn’t stopped hackers from stealing hundreds of thousands of people’s credit card numbers over the years through the Internet — what makes anyone think it’s some sort of magic bullet when it comes to security?
I agree with this article, big deal they have a site where people can keep an encrypted journal. Give me less then a week and i’ll build it. I think the sharks were interested in the “talks with Aetna”, I wonder how the site is doing now?
John,
Maybe what it brings to the table is what I’ve been trying to achieve for a good few years now with my work with the BACP over here in the UK… the notion that ALL therapeutic work done on the Net should be encrypted *as standard*, whether blogs or journals or email or chat or…. I think it is our duty to clients to allow them the assumption that encryption is being used, so that they can get on with the therapeutic work without technicalities getting in the way.
I guess your Shark Tank is the same as our Dragon’s Den?!
Kate
i don’t watch the show you are writing about so feel free to call me out.
i pay for many services that are offered for ‘free’ on the net and elsewhere.
because free services have many hidden costs and some of them are dangerous especially when these are controlled by multi-nationals that have a business model which can certainly exploit the vulnerable among us.
but charging the mentally ill 15usd a month for an added web feature is akin to squeezing blood out of a turnip.
i have helped a lot of people some of the quite old to get on the net and learn computers over the past 25 years. i tend to steer them away from services like free gmail where their mail is read by machines and they are saturated with ads targeted to their vulnerabilities. that can be a more expensive and less convenient process than paying for use of a mail server. i try to avoid webmail and use pop servers for these people. another reason to avoid free services for such types is their limited memory capacity for passwords in spite of one’s admonishments to them. when individuals use the same identities and passes redundantly they invite serious unintended problems also.
so using a paid service fixes some costs which are actually quite inevitable for most people except the best and sharpest among us. and even when the best fall they fall the farthest, make the worst online stock investments etc.
John, I think you overrate the consumer. Lets take me for an example. I am pretty smart, right? I have post college graduate education, and if nothing else, I do know the difference between ‘good’ and ‘bad’.
I can almost always
predict, when a business opens in my town, if it will succeed or not, and I just marvel at how stupid people are. Like, when they open just another little ‘Nick-knack’ store, when the last three already went out of business.
Well, the point here is not about how smart I am but about how incredibly stupid I am, also. It’s almost unbelievable.
A few years ago, I accidentally came across this offer that I thought sold really nice stamps, not the type that people collect but ones you actually use?
So, I guess I payed the $14.95, but never received the stamps.
I also have close to a phobia about opening all my bank and other statements. It seems like a full time job and most bills of mine are deducted automatically from my checking account.
I have learned that you need to check these visa statements careful and I don’t even want to think about all I have paid for over the years that I never ordered or wanted.
To make a long story short, I went to my bank last week and told them that it seems I am being billed for this stamp thing all the time, $14.95, and I don’t even know what it is for.
It turns out that I have been billed $14.95 by this stamp place every single month for four years and it’s been placed on the visa card, and I paid for it, hoping it would just go away. (really smart)
The bank told me I have to call them, they provide me with the number, and we agree that maybe I should cancel my card as well since it seems the stamp thing is not the only problem.
I call them and they explain that I authorized this thing, and it has nothing to do with a one time purchase of beautiful stamps which I never received.
It’s a service where I can print out stamps somewhere on the Internet for free, I guess, and by that I mean that maybe the stamps are cheaper in the end than the $14.95 I am paying for every month?
No, they tell me, I have never used this service in the four years I have been paying for it!
I am a total idiot!
Also, I think people may sometimes think that something you pay for is better than free, and that includes therapy?
And no, I don’t have a case!
You could use a lot of English lessons. Unfortunately, you are not alone. Colllege graduates, top school grads and even professionals use horrible non-standard English.
PS: The $14.95 was deducted automatically from my debit card.
Dear Dr. Grohol,
Good evening. My name is Rodolfo Saccoman, CEO and Co-founder of My Therapy Journal.com. I read your blog with interest as you provide your opinion about our product and our appearance on ABC’s “Shark Tank”. I value everyone’s opinion about our product and the beautiful mission of our company. I have been following your significant contributions to Psychology for several years now and honestly thought you would embrace our efforts to provide a great product to thousands of people that are benefiting from our tools. Interestingly enough, a lot of visitors from your website are visiting ours and becoming full-time members.
You bring an valid point about the fact that our members pay a subscription to use our well-being tools. You are accurate, as there are a couple of free journaling services available but none of them are half as good or truly focus on self-improvement such as My Therapy Journal; which is based on years of research on cognitive behavior therapy. Furthermore, all those other free services push advertising from other companies and drug companies in order to provide the service for free. We don’t believe in the advertising business model as the members of a website are at the mercy of the advertisers. We do things a bit different; our members are our top priority and we continuously improve to help them.
It took our very talented team and co-founders years of research, investment, and dedication to create MyTherapyJournal.com. I would truly enjoy speaking with you personally about how we can potentially work together as I believe both of our companies are trying to help people lead better and healthier lives. Additionally, I admire your contributions to Psychology.
You and anyone reading your blog can contact me directly by e-mailing me at [email protected].
Wishing you a good evening.
Respectfully,
Rodolfo Saccoman
CEO & Co-founder
MyTherapyJournal .com
Thanks for writing Mr. Saccoman. It’s a pleasure to provide your service with some free marketing, even if that was not my intent. Nor was it my intent to suggest your service didn’t have any value.
While I’m certain your service is worth *something*, I just wanted to point out to my frugal and insightful readers the fact that similar services have been available online for free. And contrary to your assertion, not all the services rely on advertising to make money (they offer far less expensive “premium” versions that remove the ads, e.g. $2/month).
I’m also not sure what being “at the mercy of advertisers” means, as it’s the business model that drives virtually every consumer website on the Internet since the 1990s. Apparently most individuals don’t seem to mind the ads, rather than having to pay $X/month to numerous websites to access their content and services.
As for being CBT-based, that’s fantastic! The more empirically-based interventions online, the better.
I wish you much luck with your business.
I’d have invested in their business if and only if the deal with the insurance company has been signed. Before that, I dont think ti’s a good business and probably offered for free already.
This is quite like the similarly named MyTherapy.com. At least I hope it is, because at a rate of $170 a year it’s a hefty price when MyTherapy.com is about $90 for a year’s subscription. I’ve not used this service, but it sounds good – online diagnosis, suggested courses of treatment, journaling, feedback from a mental health professional, forums, etc.
These two are apparently suckers for internet business in general. In episode 10 they put $600,000 down on jumpforward.com in return for 50%. God forbid they see any competition in that space in the next 5 years.
Notwithstanding this craziness, at least they are buying into websites with a business model that isn’t advertising.
It’s not just hype and good intentions that are insufficient for an Internet business: it’s a revenue stream.
Dragon’s Den, which is a show featuring two of the Sharks (Robert & Kevin) plays in Canada and is the exact same concept as Shark Tank. On Dragon’s Den there seems to be a lot more ‘behind the scenes’ footage on the show’s website.
I have learned from watching this footage that things that happen during the televised show are just a small stepping stone into ‘due diligence’ where the dragons/sharks based on the deal made on TV will research the crap out of the business plan before actually signing legal documents. Most of the deals actually fall apart at this stage.
So I would not count Robert/Kevin as idiots but just guys who make these provisional internet deals so that they have the opportunity to continue on to the next stage of negotiations.
Ecurb makes the most valid point here. I have no doubt that this deal probably fell through.
I couldn’t help but detect however a sense of bitterness in the original blog, given that the Saccoman brothers clearly generated a lot of attention after the show aired for a concept that seemed to be pretty basic. Fair play I would say, I would imagine they achieved what they set out to… Having said all of that I can’t say this is something I would support. As a practicing therapist in the UK my ears pricked the minute I heard him say something along the lines of “this is the most effective therapeutic tool…â€, clearly an outlandish and immeasurable statement.
To be honest, I couldn’t actually care less whether it had an affective business model, my interest in this came from their claims that it is innovative and had genuine therapeutic benefits. So my question is, does it? And if not, why are we even talking about it?
I saw Shark tank w/ these 2 Brazilian dopes/charlatans w/ no psychological credentials & was crying w/ laughter at their scheme. Then when the sharks actually thought to invest I was just laughing at their pure idiocy & ignorance. I have to believe 99% of this type of moronic internet company fails. I guarantee this company has gone belly up by now.
Funnily enough, a quick internet search proves otherwise. For all the armchair quarterback wisdom in this article and the comments, the company seems to be doing just fine. Guess the Sharks weren’t suckered after all.