Akoha Inc., the social networking firm that asked “What if playing a game could make the world a better place?” is shutting its doors on Aug. 15 as a result of not being able to pull in revenue, according to its co-founder.
The Montreal-based startup launched its online community that encouraged real-world gameplay in September 2008. Players racked up points for completing good deeds – earning trophies for achievements such as “measure your carbon footprint” or “buy a stranger a cup of coffee.” Akoha at first issued collector’s playing cards to issue missions to players, but later went all virtual with an iPhone app in addition to its Web site.
Despite a $1.9 million initial round of fundraising in 2008 and cash infusions out of the co-founders’ own pockets, Akoha just couldn’t generate enough revenue to cover its expenses, according to co-founder Alexander Eberts.
“The revenue stream we anticipated and hoped for was virtual goods and that virtual goods revenue is a function of how many players you have,” he says. Typically, a site such as Akoha can expect that 99 per cent of its users will play for free, and one per cent will pay for premium features such as virtual goods. “When it became apparent we weren’t getting enough users, we tried to move to a business-to-business model.”
Akoha tried to sell its platform under a white label model to other companies that could use it to run a tech-enabled competition. Brands could promote real-world missions using an iPhone app, for example. But most companies Akoha approached were solely focused on using Facebook for their social media marketing efforts.
“We had a lot of interest, but in the end, no one put down the $75,000 we were asking for an installation,” Eberts says. “We had about six months to make it work, and some of these sales cycles can be 12 to 18 months. So it was a chicken and the egg problem.”
Akoha is the second Canadian social media startup to announce its closure in as many weeks, with Sprouter saying it would shut down Aug. 2. (At time of writing, the site still appears to be available.) Akoha garnered some attention in its early days, nabbing the title of runner-up to Canada’s most innovative company at the 2008 Canadian Innovation Exchange awards.
Eberts founded the Web-driven game with long-time friend and serial entrepreneur Austin Hill, who previously founded privacy and security solutions firm Zero-Knowledge Systems Inc. Inspired by a Monterey-based TED Conference and Utah’s Sundance Film Festival, the duo wanted to encourage social change with their online game.
“I felt very strongly we could use game mechanics to not necessarily sugar coat, but nudge people in the right direction. I believe people have a desire to contribute and get the positive feeling of what that’s like,” Eberts says. “I still believe that’s the case, that it’s still doable.”
Akoha’s shut down blog post
Akoha’s user community bemoaned the looming shut down of the service. “It’s always sad when something awesome has to end,” wrote hat blogger Caela Rue in a Twitter post. Another user with the handle “AnimaBlue” credited Akoha with inspiring her blog, and said she’d miss hanging out on Akoha.
Initial investors included David Chamandy, the co-founder of dating site Lavalife and Ron Demob, the founder of Zerofootprint.net.
The firm spent most of its initial angel investment money on paying developers, Eberts says. It relied on word-of-mouth and social media marketing to grow its user base.
What’s the one thing he might do differently, given the chance?
“I think the one thing I would do from a designer’s perspective and a production perspective is to make the goal precise,” he says. “To communicate more concisely what the utility was of the system.”
Even though the game is ending, Eberts still intends to play one of his favourite missions on occasion: the Navy Shower.
“It’s one of those that you can play every day. You shower like you would on a Navy submarine,” he explains. “You start the water, get yourself all wet, then you soap up and when you’re done, turn the shower back on and rinse yourself off.”
Brian Jackson is the Associate Editor at ITBusiness.ca. Follow him on Twitter, read his blog, and check out the IT Business Facebook Page. 
