Derek Johnson is a young entrepreneur that back in 2007 while being a college student saw an opportunity to launch a website to allow members of a group to communicate more easily using their cell phones. Within a few months of launch the site grew to over 400,000 users and over 15 million text messages. It’s a concept that’s now been adopted by various websites and companies, most recently by cellphones provider o2 whose latest line of o2 phones is said to come with a unique web to mobile phone compatibility for a more seamless interaction. Here is the interview:
Cristian: Hi Derek and Welcome on board! I will get right on with the questions. So tell us a little bit about your business.
Derek: Our business is pretty simple, we have built a website that allows any type of group; athletic team, college organization, family, business etc. the ability to communicate more efficiently with their group members by using their cell phones. Tatango allows a group leader the ability to jump on a computer or their mobile phone and send one message, which then gets routed to all of their member’s mobile phone in the form of a text message. Tatango betters any groups’ communication, allowing their members to stay connected anytime, anywhere. Tatango is great for last minute notifications, weekly alerts, promotional advertising, or any message that needs to be delivered to all group members immediately. Email is the new snail mail and hardly ever gets checked, and phone calls take forever, groups need to communicate in real time, Tatango allows them to do that.
Christian: OK, so how exactly does this work?
Derek: Tatango has the simplest user interface available for group text messaging. Quite simply, a group leader can set up a group, have their members to opt-in to that group, and send one message directly from their mobile phone or computer to all of their members, instantaneously.
Cristian:You started http://www.networktext.com while being a college student, so I have to ask what’s the role of the college (or any other form of education) on starting up a business?
Derek: In my case my business education came from watching and listening to my father and actually doing it. From a very young age I was always selling something or creating businesses here and there, and I have picked up what I my business knowledge along the way.
I have mixed emotions about college. I was actually told by my college counselor that I shouldn’t even apply to the business school because my grades weren’t high enough. On one hand I don’t believe college prepares students enough for making real world business decisions. On the other hand I think college is necessary for building the foundation in which you can build the rest of your knowledge off of. I almost see college as a necessary evil. My teachers are going to love that last quote.
Cristian: From what I got, you hired mostly college students to help you out. How did you deal with all the legal stuff? Or other official company related tasks?
Derek: Correct, at 23 I am the oldest person at the company. This is a great lesson for any young entrepreneur. Do what you are good at and outsource the stuff you aren’t so good at, so you can focus on what you do best. Our company has an amazing attorney and an equally great accounting firm representing us, which allows our team and myself the ability to focus on what we do best, which is building a cool product. In terms of the other business related tasks, most of the time I can handle whatever is thrown at me. One thing to remember if you are starting a businesses, whatever problem you are faced with, someone else has gone through the same thing and they usually own a phone. Call them.
Cristian: You said to me that http://www.networktext.com grew within a few months of launch to over 400,000 and over 15 million text messages since launch. That’s quite an amazing development, so what’s special about http://www.networktext.com ?
Derek: There are three key components to our company that explain the tremendous growth we have seen and will continue to see in the future.
1. Our team. The team we have built at our company is phenomenal and the speed at which we react to user feedback and market changes keep us always miles ahead of our nearest competitors.
2. Our Users. The users that are on the site are our biggest inspiration, our harshest critic, and by far the best marketing tool we have, without them the website would be not near as good as it is today.
3. Simplicity. I love the acronym; KISS (Keep It Simple Stupid) We have kept this acronym in mind as we engineered and designed everything on the site and I think it’s very evident to any Tatango user. This allows any type of user from any type of group to easily use Tatango.
Cristian: You raised a round of capital from the Bellingham Angel Organization. What are the key factors when pitching for capital? Is it the business plan? The idea? The potential?
Derek: Great question, and I think the answer is completely different for a young entrepreneur like myself compared to a more seasoned adult pitching for capital. The biggest difference I see when I’m pitching is that being as young as I am, I actually have to prove we have a business already running (revenue, users, traction) where a more seasoned adult could sell the business plan and potential. If you are a young entrepreneur, the chances you are going to be funded from only a business plan are very slim, you have to prove you have something for most investors to even listen.
Cristian: I’ve watched one of your pitches on youtube and I have to say you have a distinctive, strong voice. How important is that when pitching investors?
Derek: I don’t think pitching has much to do with having a strong voice, I think the secret comes from confidence. When I go pitch I have amazing confidence, because I know I have a great product, a great team, the users and text messages to back all that up. People you are pitching to can sense confidence and when an entrepreneur has confidence, that makes an investor feel much more comfortable in investing in your company.
Cristian: You are keeping the cost to use the service low by placing small advertisements from a number of national brands such as Chevrolet, Denny’s, and 1-800-FREE411. How did you get them on board – I suppose it’s not so easy doing a deal with the “big guys”
Derek: This comes back to focusing on what you are good at and outsourcing the rest. We realized with our lack of advertising experience we could never approach these national companies, so instead we partnered with a company who now sells advertising on behalf of Tatango. This has left the team at Tatango free to focus on what they do best, building a cool product.
Cristian:Any plans to expand outside US?
Derek: Yes, definitely! We will be expanding into Canada and certain parts of the UK in the near future. We are very excited about being able to offer the service in other countries, especially as we have a good amount of people outside the US that have already expressed interest in using the service.
Cristian: You started out from your parents basement so, can you tell us a few words on the investments needed to start http://www.networktext.com ?
Derek: We originally raised an investment round from close friends and family members to help us flush out the business concept and get a rough version of the website developed. One of the biggest issues for any startup is cash flow. We knew this from the very beginning, which was the reason why we were working out of my parent’s basement, borrowing electricity, phone, internet, used furniture and using our own personal computers to work from. Keeping a startups burn rate low is essential; it makes you much less dependent on the next round of funding.
Cristian: Any word of advice for college students looking to start a business?
Derek: There are four key pieces of advice I give to college students looking to start a business.
1. Just do it. I know a lot of smart people with great ideas, but a lot of people have a problem with taking the leap, if you want to start your own business you have to take that leap.
2. Be the best. If you are looking for an idea for a new company or you already have a company, ask yourself, what is my company the best at? If you struggle to come up with a simple, clear answer to this question, you need to narrow your focus more.
3. Be ready to work. I have worked my ass off to be where I am today, and I realize it’s going to take a lot more work to get where I want to go. Owning your own business isn’t easy; it’s a lot of sleepless nights and early mornings
4. Start small. This is almost a necessity at our age, find something you can do with minimal capital and human resources and don’t worry about getting big right away. If you have a great idea and you can prove this by doing it yourself, getting big will come naturally.
Cristian: You’re re-branding http://www.networktext.com as www.tatango.com . Why is that and how did you come up with the name?
Derek: There were two major reasons that we decided to change the company name. First, as networkText grows and expands into different features, a company name with the word “TEXT” in it, was limiting the companies growth into non “TEXT” markets. We selected our new company name, which has no pre-defined definition so that we could develop our features and expand into different markets as we saw fit. This will allow the company the flexibility to expand, without having to worry about matching the already pre-established meanings of the words that made up our previous company name, network and text. Second, the change was to differentiate ourselves from the majority of our competitors who use “TEXT” within their names. (EZTexting, ClubTexting, TextMe, GoMoText, textmeforbusiness, promotxt, besttextmarketing, etc.) By differentiating our company name, we will have a much easier time building brand recognition and recall for the website. It took us a very long time to come up with the name of Tatango. We actually locked ourselves in a room at one point just to end up completely frustrated after spending numerous hours throwing out potential company names. Then the name Tatango popped into our VP of Business Development, Andrew Dumont’s head while he was out of the office at dinner, funny how ideas come to you when you least expect it.
Cristian: What changes would bring www.tatango.com and what other development plans you have for the service in the next 2-3 years?
Derek: At Tatango we are constantly coming out with new innovate features that make group communications with a mobile phone easier. Being able to quickly change and adapt is essential in an ever-changing market such as the one we are currently in. With Tatango you can expect to see, a complete redesign of the site, faster messaging, better contact management, customizable widgets, improved invitation methods, and an overall better functionality in comparison to networkText. In terms of the next 2-3 years, we have some very cool projects currently underway, which in my opinion are going to completely shake up the mobile industry and take group communications to a completely new level that has never been reached before.
Cristian: Derek, thanks for the interview and I wish you best of luck!
It’s great to see interviews with young entrepreneurs who are going out and making things happen. It sounds like a cool businessmodel, I wonder how long people will tolerate ads such as these. I’ll have to try out the service.