I'm a big fan and modest (but above-average! :D ) supporter of these Humble Bundles, but it's hard for me to imagine that the potential upside on this is big enough to warrant a YC investment.
I suppose time will tell; either way I'll be happy to see the next bundle.
There must be more than "release Humble Bundle n+1" in their gameplan. I can think of three long-term strategies:
1. Sell the platform. They have a pretty slick payment/delivery system that could be expanded into selling other digital assets -- ebooks, music, videos. A small number of successful customers could generate profit if they're taking a cut from each sale. Nonprofits might be a good niche to sell to, since they're already associated with the charity angle.
2. Expand types of bundles. As noted in #1, games aren't the only digital asset that would work with this model.
3. The team has put together a nice product, so a few more high-profile bundles might be enough to convince a medium-sized player to make a talent acquisition.
If you can sell more than a million dollars of digital goods twice, I like your chances at finding a scalable model. The solution space is multidimensional but I think lots of the options in it win. (e.g. Dump the tip, charge developers 30%, do it weekly, optimize aggressively, etc.)
I disagree, this is more milliondollarhomepage than anything else. Sure, they could make money like the way Steam do (http://store.steampowered.com) but not with this specific model. There is legs in the bundle model, but I don't think it requires any investment... it's a 0 capital start up, they've made their name so when they approach other indie developers they can work based on their name alone.
I would however seriously hope they don't do what you're suggesting (weekly) the idea has very limited usage, there are a finite number of games out there and a finite amount of interest, this works based on the publicity ("Viral marketing") and not just the idea. Take a look at appsumo for an idea, their bundles are crap now (compared to what I as an "early adopter" got accustomed to) and most lost interest.
Time will tell either way. I suspect the end result of this will be different then either of you have envisioned. All that can be said today is that the experiment is by any measure reasonably successful and there is potential there to go bigger in some capacity.
I share the same perspective. So far, my only guess is that their plan is to turn the 'indie bundle' into a repeatable business model, where they either get paid to run bundles for individual developers, or they turn a profit solely on the 'tip to the bundle operator' that's included as one of the sliders when you make a purchase. For obvious reasons, relying on the tip seems like a risky model, but it's possible that they could find success by charging a flat fee to developers and then collecting the tip as extra upside. Valve certainly hasn't been doing badly through turning Steam into a distribution platform for indies, so there's probably still room in that market.
"potential upside on this is big enough to warrant a YC investment"
You make it sound like YC is like a traditional VC that requires a 10x return on a $20m investment to make their model work. Disregarding for now any 'grand plan' for further monetization beyond simple replication of this model that the company has, a YC-style (~10k for 6%) investment in a company that has already does $1.8M in sales isn't exactly bad.
I think they'll do something great. What ends up becoming the big vision/winner for the company is usually an extrapolation out from something that wouldn't be repeatable+scaleable in its first form. It's kind of like normalization of business processes instead of databases.
could it be that YC invests mostly in people, not ideas? I mean humblebundle team is obviously very talented, they know how to capture interest of masses and they might eventually come up with other ideas in future, start other companies etc. $5k isn't such a high price for YC to maintain some sort of relationship with founders.
I'm kinda surprised to see that $5,555.55 anonymous contribution. 4chan comments aside, I guess it's just someone feeling generous? I know that the purchaser can indicate the amount to go to charity, but I'm under the impression that this is not tax deductible. Can anyone confirm this?
Edit (added): Thinking more on this, I wonder if the Humble Bundle folks actually get the tax benefit of the donations.
Edit (added): Thinking more on this, I wonder if the Humble Bundle folks actually get the tax benefit of the donations.
I think you nailed an important part there. Clearly customers can't write anything off (since they aren't giving money to a 501(c)(3) directly, but obviously someone is. I can't remember what the default split was exactly, but if you figure it was 5% tip, 5% eff 5% child's play,the operator would be seeing more like 8.33% by default when the tax advantage came into play. If you assume a lot of people went mostly or totally for charity (especially for the large amounts) their margins would actually be rising.
They have/had a 'top donators' box on the donation page. I saw one entry that was #1 for at least a little while of $1,000, and it was advertisement. I thought that was pretty clever, and generally beneficial for everyone.
why does it matter? tax deductible donations still cost you. you get some tax credit on your expense but not 100% (depends on your income tax rate which can be anywhere between 0-50%)
I was thinking more in terms of that $5k anonymous buyer. The value of the apps aren't even close to that amount. The buyer is not getting any advertising benefit since they are anonymous. So the one benefit would be a tax credit due to the donation, but in this case there is no benefit there either.
BTW, I'm not trying to criticize the Humble Bundle folks in any way. I was really just considering the aspects of that large contribution.
Maybe the buyer wasn't looking to gain anything (gasp! someone that does something selflessly), and just wanted to support the website, concept, and/or developers to continue on.
Cool to see Riot Games dev team as a top contributor. We built some multiplayer technology for their League of Legends game back in 06-07 when it was called something else and deep in pre-alpha development. Our company went bankrupt but it was a great learning experience and our influence remains in the production release.
Um, what? Since when was Wolfire games, the guys behind the humble indie bundle, backed by Y-combinator? This is the first time I've ever heard of this association.
I suppose time will tell; either way I'll be happy to see the next bundle.