It was November of 2007. Vlingo was about a year and a half old and we had a full day off site to discuss a strategy for our first Vlingo branded product. Like most companies with groundbreaking technology, we wanted to release a reference application to show the world what we could do. Most people had a bad impression of speech recognition and we wanted to get users to prove that this was not your father’s voice recognition — that people would adopt it. Also since our technology gets better the more people use it, we wanted to make it free to maximize adoption. We started off debating between building different types of voice enabled apps like SMS, IM and web search. It was at this point that I first heard our co-founder Mike Phillips ask the question that would lead to our company vision. “Why develop one type of voice enabled application? People should be able to say anything to their phone and Vlingo should understand their intent and take the appropriate action.” Instantly everyone in the room saw the light – you could feel the excitement.

Fast forward to today. This “reference app” has been available for almost a year and already millions of people have used it on their Blackberries, iPhones and Nokia smartphones to instantly connect with the people and information that is important to them. Amazingly the average user uses Vlingo around 5 times a day! Our goal is to continue to invest heavily in our products and technology to offer new functionality and make Vlingo available to more people around the world by offering more languages on more types of phones. The problem is finding a business model that fits these broad goals. The two standard options are to charge users or to advertise. If we charge, many less people would be able to use Vlingo and we’d be stunting the growth of our user base. If we advertise the user experience would surely suffer — plus current mobile advertising rates are ok for a couple guys building an iPhone app, but not for a team over 40 developing cutting edge technology. We believe the answer to this challenge is freemium.

The idea of the freemium business model, first articulated by venture capitalist Fred Wilson in 2006, is to offer significant functionality to customers for free with the option to pay for enhanced features. Two weeks ago we announced the release of Vlingo for Blackberry 3.0 with the following enhancements over 2.0:

  • More Hands Free support including Bluetooth
  • Faster — up to 30% faster on many devices
  • Full support for the Blackberry Storm
  • Easier, faster Web searching
  • Email from multiple accounts

With this new version we will continue to offer most functionality for free with the option of purchasing premium features in the form of Vlingo Plus. We know that the majority of people will continue to use the free product, since it has most of the features our customers use on a daily basis, but that is fine with us. We only want some of our users who find our premium functionality especially valuable to pay a onetime fee of $17.99. We think that’s a small price to pay for things like the ability to send emails without having to look at your screen. Of course we’re happy to continue to support our current 2.0 users if they chose not to upgrade to 3.0, although they’ll be missing out on 3.0’s enhancements.

As Mike said back in 2007, we will continue to work towards our vision that users should be able to say anything to their phone and we will understand their intent and take the appropriate action. As we do that, we will continue to make sure that most functionality remains free. Whether you purchase the Vlingo Plus or continue to use the free version, we will work tirelessly to make Vlingo the most useful application on your phone.

Hadley Harris, Head of Market and Business Strategy, Vlingo