Zivity Downsizes, Rethinks Its Ambitions, And Will Almost Certainly Survive

Zivity has got more attention than most recent Silicon Valley startups, mainly because it’s full of naked folks – the site is a kind of cross between Flickr, Myspace, and the brain of that red-haired woman you work with who’s always making you squirm with her earnest tales of erotic adventuring. Social networking meets tasteful, arty porn, in other words. But after struggling to live up to its $8m venture capital, the company that’s developing the site is channelling its staff and capital into other, more successful projects, according to Daily Finance.

Zivity got its capital back in 2007, unsurprisingly considering its founders, married couple Scott and Cyan Bannister, have some entrepreneurial pedigree. Scott used to be a PayPal director and co-founded IronPort, an email security company sold to Cisco for $830m last year, and where he met Cyan. They deliberately avoided funding “from traditional adult media sources” in order to maintain a degree of autonomy and uniqueness to Zivity; their non-hardcore stance made them more palatable to investors who wouldn’t usually want to get involved with this sort of thing. The founders and the site’s top models became “big hits on the high-tech party circuit” according to the LA Times, presumably because they were the only naked girls that particular party circuit had experienced in the flesh before.

But the site ran into trouble, both upsetting some of the female tech community and finding its numbers unable to sustain its staff base, forcing them to cut eight employees earlier this year. And now there’s this latest news. The site absolutely isn’t dying out though, just “going to grow organically, at its own pace”. One wonders how many exhibitionists there are with an SLR camera, a broadband connection, Photoshop, and a bedroom with weird red drapes – there might only be so far this site can grow. But Cyan Bannister, who is now CEO of Zivity, is saying she knows all that, and that’s fine. “Zivity is going to be a sustainable business”, she told VentureBeat, saying that her 20,000 active users weren’t “fantabulous” numbers, but that by splitting off the VC means that investors won’t be demanding unrealistic returns or ”pressure to scale” up the company too fast.

She’s from the FT school of business – deploy a subscription model, and while investors might get anxious at your lower hit count, you’ll be nevertheless raking in a stable source of revenue. It could have been easy for Zivity to panic, start running adverts to placate investors demanding big returns, but poisoning its customer base, which would have inevitably dwindled. This is a site that knows its niche, and is well placed to fully monetise it. As the Web 2.0 bubble wobbles on, we’re likely to see a lot more of this sort of thing, particularly spurred by the recession: downgraded expectations, leading to more stable business plans. And in Zivity’s case, fully engaged and happy customers. Can we learn to just not have it all?

Posted by Ben Beaumont-Thomas in Creative Economy | July 28, 2009 12:11PM |