This is a post I’ve been dying to write for 18 months. I invested in LA-based Gogii, one of the fastest growing, most exciting mobile social networking companies you’ve never heard of and maker of a product called textPlus.
I know this because you’re not a young teenager. And if you are – what on earth are you reading such a boring blog as this?!?
I only recently invested and I only got here through persistence. See, I originally lost this deal. But I never gave up. I quietly watched their success from the sidelines and kept spending time with and telling the CEO, Scott Lahman, that I wanted to invest in his next company. The opportunity came up to invest in this one and I pounced. More on that later.
But who exactly is Gogii, what is textPlus and why are they so exciting if I’ve never heard of them?
Gogii is the creator of the 36th most downloaded application in the history of the iPhone app store – a product called textPlus. To put things into perspective, the company has 7.7 million monthly active users who are creating more than 32 million text messages per day! The overwhelming majority of these users are under 25 and spend hours per day text messaging. Why are they doing it on textPlus?
Well, we started out a free text messaging platform. Duh. People like free. If you download the app on your iPhone or Android phone you can save more than $200 / year on text messaging. That’s something teenagers love.
More importantly, you can use it on your iPod Touch. This means that a whole youth generation of “would be” texters suddenly had a way to text message and drive their parents crazy. Sorry, mums. Oh, and while we’re at it we give them a free phone number. They can either be texted by name (this is brilliant if you don’t want to give people your mobile number but want to text with them) or you can give them a number to text.
You can also use the app even if you don’t have a smartphone. So Susie with her iPod touch can text anybody for free.
OK, that sounds like an interesting business, but nothing to write a freakin’ blog post about?
But the product is called textPlus, not textFree. Silicon Valley (and Alley) has been super excited about the new category of “group text messaging” and for valid reasons. The “plus” includes features like setting up & texting to groups. We just happen to have significantly more users than most of the group texting platforms you typically read about. Gogii spent way more effort marketing to what I call “The USA Today market” rather than the tech blog market. You fish where your customers are.
The textPlus group product means that soccer mums can coordinate practice schedules, bands can schedule practices, work groups can quickly ping each other when their website is having performance problems or whatever.
I know this category has gotten a lot of press. And I’ve personally played with all of the major applications in this space. Some of them are beautifully designed and have exciting teams so I know why investors are pumped up about the teams they’ve backed. But I have different reasons for being excited about Gogii.
My excitement really starts with the Gogii team!
I’m on record all over place saying that 70% of my investment decision is the team & 30% is the market. I have to love both – but it’s in that proportion. Gogii came in my office in 2009 with three of the most talented founders I had seen. Scott Lahman, Zack Norman & Austin Murray were the three co-founders of JAMDAT, the most successful mobile 1.0 games company that sold to EA for $680 million. Yes, with a “6 and an m.”
So aside from the fact that they had all worked together previously for years and had had a very successful exit, they were each talented in their own rights. Scott was one of the first employees at Activision and was VP of their Studio Business. So creating and launching hundred million dollar+ video game titles was part of Scott’s DNA. Add that to mobile and you’re talking about one talented executive.
Zack is the creative talent. He also was an executive talent at Activision having designed & managed two products (Mechwarrior 2 and Interstate ’76) that each grossed more than $250 million. At JAMDAT he designed the most successful mobile games – (Bowling, Bejeweled Multiplayer & Solitaire) and knows what drives engagement on “the small screen.” Zack is one of those guys that when a tech product weenie like myself meets I can’t help but walking away feeling like an uncreative nerd every time.
And Austin Murray runs sales & marketing – a role he also held at JAMDAT. He not only has experience in dealing with the carriers where at JAMDAT he established all the carrier relationships but he also led the international expansion of JAMDAT in Europe, Asia & South America giving them a footprint in 40 countries.
As you can see – they bring both executive & domain knowledge – which I’m on record as saying gives entrepreneurs “an unfair advantage.”
But wait, there’s more! Normally when we see the management team, we’re used to saying, “Ok, what roles do you need to plug beneath you? Who are the key hires we need to make?” And normally the rest of the team are young & inexperienced because that’s all the startup could afford to bring on.
Gogii’s “rest of team” included people like Tricia Bertero as CMO of Gogii who at Activision held roles such as VP Global Brand Management, SVP North American Sales and SVP European Publishing. And Michael Kirby as EVP of Corp Dev was formerly an EVP at Fox Interactive Media, VP at Fox Sports, director of biz dev at ESPN not to mention a Yale undergrad, Wharton MBA.
I could go on & on. The “team beneath the team” was as talented as any top team that pitches me startups. If you’re interested the rest of the management team is listed here.
And now you understand “where the puck is going”
You don’t stack an amazing mobile + games team like this to build a free text messaging platform. This is a team that from day one knew where the puck was going.
In 2009 when they came in my offices they presented a plan that had 3 phases: acquire customers cheaply (free + group texting), build meaningful social features (we will announce these at SXSW this year where I’ll be part of the team meeting people with Scott Lahman to make some exciting announcements) & then migrate this community into social, mobile games.
I knew this from day one. What you see is not what you get. “What you see” is a brilliant marketing & strategy initiative that has gotten some of the hardest to acquire customers on to our platform and not just downloading but using our application every day for hours on end. We have massively engaged youth using our product. “What you get” is one of the most mature, seasoned & experienced mobile games developers that has existed.
They have no interest in an early exit. They want to build one of LA’s premier technology & games businesses – what I call “a patron company.”
Will we get there? Obviously the tough work is ahead. But I’m super excited to work with the team.
I’m excited to serve on a stacked board with Kleiner Perkins iFund head Matt Murphy (Gogii was one of the iFund’s first investments), Dana Stalder at Matrix Partnrs (formerly of Netscape, eBay & PayPal) and one of my good LA buddies Russ Pillar (formerly CEO, Virgin Entertainment Group, CEO of CBS Entertainment Group & President of Viacom Digital Media Group).
What’s this business about losing the deal 18 months ago?
Let me start with the power of blogging. Everyone always asks why I blog. Mostly, I love writing. When I started blogging as a VC I had zero idea it would lead to my current audience level of 350,000 page views / month. It was just a hobby that was inspired by Brad Feld & how much he gave back to the community (and me as an entrepreneur) and Fred Wilson who’s blog became a daily staple.
When the Gogii team first came to see me it was through an intro by Russ Pillar. He told me that they asked for an intro because they were regular readers of my blog. So as a marketing vehicle this investment in Gogii is a direct correlation with my midnight efforts as a writer hack.
I fell in love with the team immediately as did my partners. We did a deep dive on the product, the usage stats and the team. We immediately decided we wanted to work with them and started a full-court press to invest. I had lost a previous deal where the founder told me, “his team loved me but felt they didn’t know my partners well enough whereas the VC he went with all of the partners swarmed them.”
OK. I can do that. My entire partnership took their leadership team to dinner. My partners spent one-on-one time with them. We DO work as a partnership and not as individuals but if prospective companies didn’t see that then I was going to make it clear. On a Thursday night we had our team dinner & I thought the management team was convinced that as an LA-based VC we would work actively with them.
By the next Monday we had lost the deal to a NorCal VC. I talk about the story in more details here.
I had no one to blame but myself. I took for granted that having the team mostly on board was enough. I had never met with Matt Murphy – he didn’t know me from a hole in the wall. I knew Russ well but decided not to try and lobby him since I didn’t want to cross my personal relationship with winning the deal. I thought management was enough. It wasn’t. THAT will never happen again.
I flew to NorCal afterward and went on the offence to make sure that every VC knew who I was and hopefully thought I was a hard-working, reasonable guy.
I never thought I’d end up investing in Gogii. I thought I missed the boat. But I wanted to spend more time with the team (who I really liked) and thought maybe I’d have a chance to be the lead A-round investor in their next company. So I kept “hanging around the rim” and inviting Scott to Launchpad LA events where we got to debate the evolution of the mobile industry over glasses of wine.
When they decided that they would rather build a huge independent company rather than take an exit in a market that had become white hot & had attracted a wide case of M&A suitors – I was one of the first calls. And I pounced. And invested. And led a $15 million round. And I’m chuffed.
Expect big things. We have our eyes on where the puck is going.
This post originally appeared at Both Sides of the Table.