Fast Company

Path’s Business Model: Selling The Means Of Self-Expression

As Path launches its new API, CEO and cofounder Dave Morin explains why the company is eschewing advertising in favor of virtual goods.

In a press conference Thursday to announce the opening of Path's API, CEO and cofounder Dave Morin talked about Path's ultimate business model, saying it would likely focus on selling virtual goods, and possibly "experiences," rather than advertising.

Path, a smartphone-based journal that fosters a sense of intimacy by limiting the number of people with whom you can connect, already sells photo filters. Morin said Path didn't plan to stop there but, rather, had a larger plan that will allow people to buy virtual goods, and perhaps also specific "experiences," that enhance the value they feel like they're getting out of the app.

"We see our business being in goods related to self-expression," Morin said. 

Morin didn't offer specifics about what those goods or experiences would be. But he has talked about how Path is essentially a personal journal that you share with your closest family members and friends. (The limit is 150.) That, he says, creates a sense of safety and security that inspires users to share more personal moments, and more moments altogether, than they might in a more open system, like, presumably, Facebook.

Currently Path offers only a limited number of "update" types--text, photos, music you're listening to, location, and, now with a Nike integration announced on Thursday, the runs you take.

Morin said Path has seen users pushing against those categories, trying to share more of their lives, going so far as to take screenshots from other apps and posting them to Path as a means of conveying the various things they're up to.

Given that urge on the part of users to share more and more, Path believes that people will be willing to pay for ways to enhance the material they're sharing, the way Wordpress users, presumably, buy "themes" to enhance their websites.

The Path app currently has a little over one million monthly active users, Morin said. Over 100 million "moments," Path's nomenclature for "updates" or "posts," have been uploaded to the system.

The fact that Path is limiting the size of users' social networks was a point of contention when the app launched in late 2010. But it turns out they might have found the optimal size in 150 ("Dunbar's number"), at least for people who want to share their more personal moments.

Morin said he had previously expected that users would eventually chafe against the limit, but apparently that hasn't been the case. "People really love it," Morin said. "They beg us never to change it."

Because Path is a personal journal, Morin said, traditional forms of advertising would probably diminish users' experiences. But he remained open to move innovative kinds of advertising, those based on "some kind of content--something we haven't even thought of yet," he said. 

On Thursday, Morin announced that the company was opening up its API to begin integrating with third parties to allow users to more easily send information about their lives from other apps into Path.

But the company is also taking a much more conservative approach than other platforms, which tend to open their APIs up to all comers. Path, Morin said, is carefully curating which partners they take on in order to maintain the "quality" of the experience.

"We want to make sure the stories that show up in Path are both good stories and are a big part of people's lives," Morin said.

To that end, the only partner that Path announced on Thursday was Nike, saying that, because exercise is a big part of people's lives, it was something they'd likely want to share. He added, however, that the company would be adding more partners soon and was open to working with other interested parties.

[Image: Flickr user barbara-n]

E.B. Boyd is FastCompany.com's Silicon Valley reporter. Twitter | Google+ | Email

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