Dear Locket users,
For those of you that signed up to earn cash, I’m regretful that we had to discontinue the pay-per-swipe service as of January 1st, 2014. We are now offering gift card options to redeem your remaining balance. The option is available inside the Locket app.
Below is an in-depth account of why we had to change and how you can cash out your balances.
The New Locket
Last fall, we did a poor job explaining why we stopped our pay-per-swipe service. I thought I’d take some time to explain our decision, and lay out our vision for the new Locket.
Inspiration & Inception
In March 2013, my cofounders and I started Locket because we were inspired by how often people check their phone (over 100 times per day). Your lock screen is boring, and we believe it deserves better than a static picture of a flower.
We quit our jobs, moved into a small apartment, slept on Ikea bunk beds, ate ramen for four months, and worked around the clock to make the idea real.
In July 2013, we launched a beta version of Locket that displayed beautiful, print quality ads on your lock screen and paid you to unlock your phone. People loved it. The beta version got more attention than we ever could have imagined. Hundreds of thousands of users installed our app, consuming millions of ad impressions every day. Brand advertisers were calling us!
However, we realized quickly that the economics of the business model weren’t working as planned. We were unable to generate enough advertising revenue fast enough to cover our user payout. At one point, we were paying out of our own pockets to sustain the model. We were bleeding cash.
Four Basic Problems with our Model
1. Chicken-and-eggonomics problems: Although we enjoyed early success building an audience, we struggled to bring in high profile advertisers quickly enough (to pay our audience). Our ad unit was unique and required a lot of evangelism. And since the lock screen is a personal and sacred space, we were very selective of our advertisers - which slowed us down even more. From dawn to dusk, we raced to sell ads, but the future wasn’t any brighter.
2. Cash Flow: Sales cycles took at least 2-3 months and advertisers would pay us another 2-3 months after we delivered on their campaigns. Since we pay users first and get paid from advertisers later, we were burning through a lot of cash quickly.
3. Adverse Selection: In order to sustain the business, we had to either lower the user payouts or the quality of ads, both of which would attract the kind of users that repelled advertisers.
4. Low user loyalty: We also learned that users would leave immediately if a competitor were to offer a bigger payout. Yet, they were costly to keep, as they were the most vocal and angry with any change we had to make to the model.
What We Did
Given these lessons, we finally made the very difficult decision to stop our own pay-per-swipe service and admit that this business model did not work for us.
The transition has been challenging: We disappointed a lot of our users and subsequently our app ratings in the Google Play Store plummeted. Perhaps most painfully, we had to downsize our team by half and part ways with some of our beloved team members.
Despite the challenges, we are more passionate and committed to the idea of creating value on your lock screen than ever. These days, we’re experimenting with contextual content you care about based on your personal interests, swiping habits, and time of the day.
Since we made the shift, we’ve signed on content providers like HuffPost, TechCrunch and TMZ. I learned about the missing Malaysian Airplane through my lock screen and daily tips delivered to my lock screen continue to inspire me every day. Our user engagement and retention rates are higher than ever. We are excited to find value in contextual content on your lock screen.
Thanks to all of you for your support. If you would like to continue this journey with us and support our vision, please try out the latest Locket.
-Yunha Kim, Locket CEO