Is there a future for social browser startup RockMelt? Despite attracting only a few hundred thousand active users since its much-hyped launch, the company filled with ex-Netscape rockstars and backed by former Netscape founder Marc Andreessen just managed to raise another $30 million in a B round led by Accel Partners and Khosla Ventures, with Andreessen Horowitz, Ron Conway, Bill Campbell and Josh Kopelman also participating. Jim Breyer of Accel and Vinod Khosla will be joining the board as observers. That’s some pretty serious money.
What do these investors see in RockMelt that most users don’t? Could it have anything to do with the special interest Facebook is showing towards the social browser? After all, both Marc Andreessen and Jim Breyer are now board members of both RockMelt and Facebook. Seems like an interesting coincidence.
There are a few possibilities here. One is that Facebook will end up buying RockMelt if it feels it needs to get into the browser game. But if that was the case, why not just buy them right now before this round, when RockMelt was still cheap? Maybe Facebook is ambivalent about having its own browser. In the meantime, it is helping RockMelt with engineering resources. But that is not enough.
And that brings us to the second possibility. RockMelt needs to start getting users, lost of them, millions. It needs to prove that it is not just another Flock flop. And that millions of people want a social browser with Facebook chat and sharing built in everywhere they go across the Web (no wonder Mark Zuckerberg likes it).
But getting millions of users costs money. You either have built-in distribution like Google, Microsoft, and Apple or you have to pay money in online marketing and distribution deals to acquire new users. That’s where the $30 million comes in.
During an interview with CEO Eric Vishria this spring, I asked him why RockMelt had so few users. “Our focus has been engagement,” he told me. “In the next couple of months we will shift to grow the number of users in a serious way.” I think we are going to see that now. How many users will $30 million get RockMelt?
Up until now, RockMelt has depended on viral distribution. But Vishria broke down those numbers for me as well, and they don’t look that good. While about half of all people who have tried RockMelt invite an average of 4.8 friends to also try it, only 18 percent of those actually converts, or one out of those five. So what you end up with is that each user recruits one new user, on average. That translates into slow and steady growth, but not the hockey-stick curves RockMelt needs to be taken seriously.
And even if RockMelt can become an independent player in the browser market—which means taking share from Firefox, IE, Chrome, and Safari—its a tough market to be in. All the other browsers are essentially subsidized by bigger companies (even Firefox is dependent on Google search dollars). So not only does RockMelt have to figure out a way to get a lot more users, it also has to figure out how to make money from them. Or else just get big enough that Facebook has to buy them.