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Netflix style porn DVD rental biz
Though they've traded in cubicle life for flirting with sex kittens, Ting and Tran are still geeks at heart. Walking through the warehouse, Ting explains the numeric cataloging system he developed to speed the sorting and mailing process, scoffing at one company they acquired that organized its warehouse alphabetically. "It took them twice as long to sort half as many movies," he says. Tran's duties include working with the firm's $300-an-hour lawyer, trying to minimize the risk they'll be sued for breaking obscenity laws. (On advice of counsel, they don't ship to Alabama, Tennessee, or parts of Utah, Texas, and Pennsylvania.) They apply the same attention to detail to the site itself, which is considered by the industry to be the best of its kind. That's not too tough, Tran says. "These aren't the most tech-savvy people in the world," he observes. "When you ask them about backend systems, they're thinking anal." For all the diligence and expertise of its founders, WantedList has yet to turn a profit. According to Tran, that's only because it's spending heavily on marketing. Indeed, WantedList's competitors say that a niche DVD-by-mail service could break even with just 10,000 subscribers. At 25,000 subs, WantedList has annual revenue of nearly $7 million. Buying new DVDs eats up $1.2 million, and mailing them consumes another $1.8 million. Rent, labor, and marketing costs suck down the rest. "At any point in time, we could make money by cutting expenses," Tran says, though that would slow their growth. That could be healthy bravado - or it could be delusion. Even on the all-you-can-eat pricing model, customers watch less porn than Ting and Tran expected. WantedList subscribers average six DVDs per month, compared with eight or nine from Netflix. Why? "You watch porn in spurts," says Ting. "You don't watch the whole movie in one sitting."
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The current issue of Wired has a feature article about the