June 26, 2020

Hey, this is my experience with you!

Marek Kříž, Partner

Business model, user experience; yay or nay?

Last year, I wrote a blog post about my experience with the Superhuman e-mail client, which is loved by the whole Silicon Valley. TL; DR in my opinion it is not a good tool neither a sustainable business.

In mid-June, after many months of waiting, a new e-mail app from Basecamp’s creators called Hey was released. Unlike Superhuman, this is not an e-mail client, but an e-mail service.

Numbers

The previous blog post started with a business model and a hypothesis about the company’s income. Hey costs $99 per year (this is a tax-free amount) and you can only subscribe for a full year (aka without the option of monthly payments). Which is $261 per year less, when compared to Superhuman (although it’s a different service, I’m intentionally comparing it), but $99 more than traditional e-mail services. Tools like Gmail or Yahoo mail are free. Or free. It depends. The creators of Hey state that you pay far more for Gmail and similar tools – with your personal data.

Back to the business model. I can’t find any data on how many Hey users there are, but if I remember correctly, they sent out 100,000 invite codes somewhere around the launch date. Each invite code had 3 uses (works also as a referral) and I noticed how fast were these requests distributed on social networks. 2 days ago, they opened the possibility of registration for everyone. My humble estimate is that the vast majority of the original subscribers will set up their inbox, say 95,000 users (let’s call them user A). Of the 200,000 codes sent out, two-thirds of users (132,000 – users B) will create a mailbox, and in the last two days when the tool is open to everyone, 10,000 users will create the mailbox each day (users C). So we have a total of 247,000 users who create an @hey.com

Users A are primarily a “true fans” of Jason Fried and DHH’s work, and I believe that while MVP will still not suit them, ~50% of them will pay for the service. An important reason to mention is the fact that once you pay for your @hey.com address, you will never lose it again!

Users B will logically have less ambition to pay for the tool and may just like to try it out because of the recommendation. Let’s say 15% of them will pay for the tool. I would estimate a similar percentage for C users.

In the first weeks of launch, Hey could have 70,300 users who paid for their mailbox for a year. So $7m in revenue. It would not be fair to compare this income with the $5.5m I predicted to Superhuman about a year ago. Considering that Superhuman has already raised $33m and has been running for 5 years vs. Hey is subsidized by $10m from the pockets of the founders. At the level of numbers, I see a clear winner.

Why the hype – what is Hey about?

Hey came into being as a tool that should change the way we use e-mails. We receive hundreds of e-mails a day, many of which are not solicited, so the importance we attach to e-mail is declining. At the same time, the format of e-mails is in many ways exceptional and absolutely great. Space for long messages, reflections, assignments, and conversations without constant bouncing here and there, which we are used to from today’s work (Slack) and personal (Messenger) tools.

Hey has a lot of innovative features, but I’ll start with the basic one and that’s Screener. This is a “mailbox” in which you will receive every e-mail from a sender that your inbox has not yet known. In Screener, you choose whether or not you want e-mails from a given sender in your inbox.

The second interesting feature is the subsequent sorting of e-mails from individual senders. You can specify whether the e-mail should fall into the inbox (default setting) or, for example, it is a bill and you want it to be aligned to the so-called Paper Trail.

Of course, apart from these functionalities, which I will not go into in more depth (they are well described directly on the Hey website), the most important thing is reading and writing e-mails. And this is where I see a lot of room for improvement. Why specifically?

Opening new threads and writing a brand new email looks something like I imagine this basic feature.

But the problem comes with subsequent reaction and further conversation. The background of the writing window is suddenly white, does not fit into anything at all, and simply looks awful.

The onboarding process into the application, which I praised at Superhuman, does not make a science out of things where there is no science. Personally, this approach suits me, but it is a far more conventional way of onboarding than the Superhuman.

Hey’s big plus is the name itself, the domain. You know the situation where you’re trying to set up a new personal e-mail on Gmail, and the vast majority of related names are already chosen, so you end up with something like kriz1304marek43mk@gmail.com (I don’t have a personal Gmail, but I’d probably end up with something like that). So this is not going to happen to Hey for a few more years.

Of course, the question remains, how many regular users outside the technology bubble will be willing to pay $99 for @hey.com, but I think millions of people certainly do at least once (for comparison, Gmail has 1 + bln of active e-mails). I did not hesitate for a long time and got a few addresses.

kriz@hey.com 👋

Marek Kříž

Marek KřížBIO

Co-CEO Zaloto, partner ve startupovém studiu Point FM. Marketing a new business. Mám rád kvalitu i tam, kam není vidět. Módu, hudbu, když se prolínají. Dobré jídlo ve společnosti chytrých lidí.