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Dragons’ Den is back on our tellies. Beta Bunny recently tested the new youth-aimed mobile product Hotxt, so it seemed pertinent to post our review. Because Hotxt is owned by original dragon Doug Richard, the no-nonsense Californian tech entrepreneur.

Hotxt has been dubbed – initially by Richard himself – as the ‘Skype of texting’. It allows users to send unlimited texts to other Hotxt users for free. Other features include group messaging, larger character allowances than regular SMS, and PC to mobile capability. It was launched last March with the backing of over £4 million investment.

Beta Bunny is a more modest proposition. It’s a community of UK university students who enjoy testing new technologies, web innovations and ideas. I run it on a not-for-profit basis partly because I too enjoy looking at new web stuff, but also because I want to stay in touch with the prevailing student mindset and chew the cud. There are 650 Beta Bunny members, though typically about half take part in each project.

I say typically. Our call for participants to test Hotxt, and specifically test some new features rolled out in November, was disappointingly received. Just a hundred of our testers wanted to get involved, despite Hotxt offering some generous incentives for those that gave the most useful feedback, including a PSP and ten iPod Nanos.

Those that explained their disinterest hinted at the problem. They either didn’t like the idea of an ‘intrusion’ on their handsets or they ‘couldn’t be bothered’ – perhaps over-estimating the time involved to install. Using Hotxt as intended involves downloading a Java application. If your handset and network is compatible with Hotxt, and everything goes smoothly, it’s a quick and painless procedure.

Our community said they would download an application they had sought out themselves and fully understood the effects of but, as volunteers in a take-it-or-leave-it trial, they felt either it was an unessential risk or they just didn’t need the potential hassle. Still, we had a hundred game volunteers to set to work – enough for a decent thrashing at the Hotxt pedals. Or so we thought.

At this point it’s worth referencing some of Russell Buckley’s insights into the world of mobile marketing over at Mobhappy. Buckley, an experienced mobile marketer, has written about Hotxt a few times, most recently after an interview with its founders:

“A business like Hotxt has 3 main challenges (if we ignore that porting Java applications across many handsets is, and will remain, a nightmare):

1. Get people to want to download in the first place - what I call, putting your product in danger of being sold.

2. Getting them to download the product once they’ve expressed that interest. I’ve written about this before on a widely commented post about how difficult this is. Maybe 50% - 75% of requested WAP Push messages are never responded to. Don’t forget, at that point, the user has requested details of how to download and then, for whatever reason, simply doesn’t click on the link to complete the install process.

3. Getting them to use the product once it’s downloaded. You’d have assumed that if users had jumped nimbly and knowledgeably through the first two hoops, they’d gracefully dive through the final one, wouldn’t you? Well, my friends, “never assume” is the lesson here.

Doug and David [Hotxt MDs] weren’t prepared to discuss numbers at each of these stages and understandably. But if they’re following anything near industry averages, there is a significant and intensely frustrating drop off at each stage.” Read more

Beta Bunny was able to observe this drop-off phenomenon in action. Of the hundred-odd students that signed-up to take part, less than 20 made it through to the other side to actually test Hotxt. Not just because of the three reasons Buckley details, but also tech, compatibility or usability issues…including perhaps the Java porting nightmares mentioned.

However, of the small group that did get to look at Hotxt, most delivered an impressively thorough assessment. Feedback primarily took place in the Hotxt forum, which before we started was a ghost-town of occasional Viagra spammers and random text geeks. It’s now 1000 posts richer, though the spambots are still partying hard.

If you’re interested in the techy perspective, you can trawl through the forum at your leisure and examine the feedback. There were some significant problems and a number of the target audience remains excluded - no-one on the 3 network, for example, can use Hotxt on their mobile.

My interest as a student marketer was primarily in the students’ response to the product’s innovation, its potential use in their lives and the way Hotxt spoke to them as a brand.

On innovation: for the pedants, I should mention that Hotxt is not the first to offer such as service. Others have been doing something similar for a few years. But that’s not important: as far as the student testers and their friends care, Hotxt is the first, since Hotxt is the first to trumpet it. Obviously having a £4 million budget and a business-celebrity frontman helps you get heard.

Hotxt engaged Beta Bunny testers as something reasonably innovative and new, though some were quick to point out they were already enjoying many of its benefits elsewhere: already using MSN messaging through their phones (or able to if they wished); already being able to group message on their phones; already blocking numbers; already happy with other channels for chat and discussion, such as online social networks.

As I predicted to Hotxt before the test, the students loved the fact the start-up was founded by one of Dragons’ Den. The programme has popular student appeal – take the top student site Facebook where there are nine fan groups and appreciation societies. Dragon Peter Jones, whose Facebook group is subtitled ‘Good c**t or Total c**t?’, recently guested on Jo Whiley’s Radio One show. The show has cult status.

The answer to the big question about how vital Hotxt was, or could be, in our testers’ lives was not a positive one. The majority were already satisfied with the volume of free texts bundled in with their mobile contracts. They said they and their friends rarely went over monthly quotas, some of them receiving as many as 1000 free texts a month. Some commented that their use of text had decreased when they reached university and that they now preferred more detailed conversations online. Free texting through the Internet just didn’t turn them on.

This somewhat scuppers the Hotxt headline proposal. Without free texts, it’s left with a bag of assorted supplementary functions that students quite like but don’t have great need for. It’s interesting that when you track the interviews and comments from Hotxt HQ over the course of a year, the talk becomes less of the ‘Skype of texting’ and moves towards social networking. The MySpace or Bebo of text, clearly.

Looking at the future and the bigger picture, I would assume there probably IS a massive opportunity in mobile for someone facilitating sophisticated social networking, especially as technology improves and what we can do on our phones gets closer to what we can do on our computers. But there is going to be an almighty race to be that someone. Hotxt’s impressive capital backing may suddenly look a bit weedy alongside the obvious giants who will, and do, compete.

That’s the future though. What, exactly, is Hotxt today - and who is going to use it?

I sense Hotxt is desperately reassessing and reconsidering what it is offering, as it assembles a large team and buys in experience from all corners of the internet.

One bright note from the Beta Bunny test was on the branding front. Students loved the way Hotxt pitched itself, with visual and written language that was just right (not too street, not too techie, cool - but not trying to be cool). Overwhelmingly the most positive comments were attributed to the aesthetic experience. It felt good to be a Hotxt user, even though the product wasn’t giving them much (though it didn’t feel good enough to keep using – I don’t believe any of the testers have continued to use Hotxt post-test…a worrying sign for Hotxt surely?).

Hotxt will need to get their marketing approach straightened out. Clearly they have their eye on the wider youth audience, not just students, and they have global, not domestic, ambitions. But in terms of the UK student audience, partnerships with sites such as pplparty – a ‘pecs and poseurs’ flirt site a la Faceparty – will do them no favours with undergraduates. University students are pretty snobby; the aroma of synthetic materials and Burberry perfume emanating from such sites will be off-putting. Similarly a partnership with the Barbie-esque wickedcolors.com does nothing to tell university students that Hotxt is a place they should hang out. [No offence to those respective sites, which I’m sure serve their communities well].

Hotxt may say it doesn’t matter, that the service is generic to the broader youth market. Yet in its new coat as a social media channel it’s pretty important who forms the community, and in the early days the community demographic defines reputation. The aforementioned Facebook is still known to some students in UK as “for posh students” and “American” - because of its early roots - despite achieving 80 per cent penetration on most campuses.

I don’t believe Hotxt has any kind of intelligent marketing strategy in place yet - it recently looked to appoint a senior marketing person – so it’s early days, but they should take a look at how they deal with this issue of communicating across the market.

Right now Hotxt is failing to attract enough appeal; its future success depends on it being something more useful than it is today, which is a nervy situation to be in.

If Beta Bunny was sat in the Dragons’ Den chair with a wad of cash, it would have to invoke Doug Richard’s favourite line: “I will not be investing in your company today. I’m out.”

That said, there is a very talented team at Hotxt. It will be fascinating to see if they can come up with a ‘big product’ that justifies the big money invested.