Explaining FNAC: Feature, Not A Company

FNAC. I first heard the term from Chris Fralic at First Round Capital. Feature, not a company.

It has always stood out in my mind. Whether something is a feature or a company is clearly subjective. And sometimes features (say, Twitter) turn into companies.

For me it is a useful shorthand for a very clever set of product features that in my mind would be hard to remain a stand-alone business or themselves to generate enough revenue to justify the company’s existence. I sometimes use it as a mental shorthand for teams that really have given no thought to how they might make money some day.

It’s really not as pejorative as it sounds. Sure, it’s intended to shock. It’s intended in a discussion with an entrepreneur to get them to question whether there is really amazing underlying value in the product or service they’re offering. I’m not so arrogant as to say that I’m always right. But in each discussion if I’ve caused the founders to think, to test their resolve – then I think I’ve added value from our encounter.

A few months ago I did a short interview with Dan Frommer who was then at Business Insider (and has since started SplatF, which is well-written and worth your reading). It’s about 10 minutes long. We spoke about my interest in cloud computing, digital media and mobile. I talked in specifics about a bunch of my investments including Factual, MongoLab, Maker Studios and Gogii (maker of TextPlus). It’s a fun 10-minute interview that you might enjoy watching.

At minute eight I spoke about group messaging companies as “features, not companies.” This was 20 seconds of a 10-minute interview yet the article title was, “Mark Suster: Group Texting Companies are Doomed.” Actually, I never said that. I never said anything like that. Here’s what I did say,

“Group Messaging is a feature, not a company … there’s a lot of good companies that do it, but they’re going to have to evolve into broader product sets. I have nothing against anybody in group texting.” 

“Just sending messages is a utility product and Apple killed that, not me.” 

But of course tens of thousands of people saw the headline while probably 10% of them or less watched the video.

I guess that’s why people like my pal Trevor Owens felt vindicated by the sale of GroupMe as evidenced by his Tweet to me

GroupMe Tweet


What do I think now? I responded with something like “Great product. Well marketed. Group messaging is still a feature.” It’s a market commentary, not a company commentary. I have always been impressed with GroupMe as anybody at TextPlus will tell you. I’ve spoken positively about their design simplicity, their UX flow and their marketing prowess.

I have always been equally impressed with Brew PR who represented them and would hire them for any company in which I had invested. Brooke & Dena are simply amazing at what they do and very selective in which companies they will work with.

So …

Beluga sold to Facebook. GroupMe to Skype. In a word, awesome. Awesome for these talented young entrepreneurs and awesome for their investors. And awesome for NYC that GroupMe will be based there. I love seeing non Silicon Valley markets boom as it broadens our country’s innovation hubs.

Either company had the potential to try and broaden their businesses to turn them into something monetizable whether it be a social network, a telecom company, a gaming company, a media company – whatever. And I believed both teams were talented enough to pull something spectacular off.

But that doesn’t make group messaging a company.


1. The overwhelming majority of text messages sent are point-to-point, not group. How do I know? I invested in what I believe is the largest free & group texting platform in the country – TextPlus. I see the data. Huge volume is driving our monetization which is approaching a $10 million run rate. (I reveal a lot of TextPlus’s data in the video)

2. Even if group texting can be a really useful feature set, it’s hard for that to remain an independent, financially viable business because Facebook, Google, Apple and Skype see it as an important feature of their broader businesses. And I highly doubt they would charge for it. How do you compete with free if group texting is your only product?)

So two choices, broaden the offering or sell to a bigger player. There is no right or wrong answer. They are personal choices. If I’m in GroupMe’s shoes (and I’ve never met the founders) I think I’d be a seller at the price reportedly paid by Skype.

At TextPlus the management team believes we can continue to build a monster business. They sold their last company for $680 million so the goal post for them is a bit further. If our business in 2 years is predominantly free & group texting then we’ve failed. It has never been our goal or our end game.

Yes, the competition going forward will be strong. Beluga was an amazing product and now has Facebook scale. GroupMe was an amazing product and now has Skype scale. iMessage from Apple will be formidable. Google has Google Voice. As ever, our plan is to skate where we believe the puck is going. It will be an interesting couple of years to watch.

Read more posts on Both Sides of the Table »