Some background on Jambool. It was co-founded in 2006 by Hussein and his business partner Vikas Gupta. Both partners are long-time veterans of Amazon and worked with each other while there. Hussein and Gupta both had a desire to break out on their own and do "something different." Jambool originally produced web-based collaborative research applications and games that run on social networks such as Facebook. Indeed, they have several popular applications currently in heavy use on Facebook. About a year ago, the team decided to move away from the end-user applications space and develop Social Gold, a payments system for use in managing virtual currencies. It was this move that provided Jambool with their greatest success and led to the recent round of funding.
In some ways, even PayPal could be considered a competitor to these micropayment management systems. Hussein explained that while their system is primarily used in online games today, its functionality certainly doesn't limit it to that market. He says that their real target is any site which offers the use of a digital asset or a virtual currency in exchange for real money. The one parameter they insist on is that the virtual currency must be based on a real-world monetary system.
Some games or applications have multiple virtual currencies. Some currencies are "earned" as you gain more experience. Other currencies are purchased with real money. It's the latter of these currency types that Jambool is focused on. Anyone who has played World of Warcraft or used Wii points to download an application to their Wii console has used a virtual currency.
It seems like there is a new type of virtual currency popping up every day on some new application or game on the various social media sites. Hussein predicts that someday virtual currencies may be as reliable and valuable as Dollars or Euros. (Now we just need someone to develop an exchange to help us convert our Green Patch points into World of Warcraft points.)
The prospect of this exploding market could be part of what got Madrona and Bay Partners to dive in on this recent $5 million series B funding round. In addition, Hussein explained some of his other theories about why Madrona and Bay bet on Jambool.
He said that over the past couple of years Jambool has tried to attack several different markets in this area of social or collaborative applications. Each step of the way, they have kept Madrona and Bay Partners in the loop, constantly running ideas by them and getting feedback. They picked their funding partners, in part, because Hussein and Gupta knew people there who were familiar with the their background at Amazon and believed that the combination of Hussein and Gupta made a good team. Their history of working together and having proven that they could deliver is part of what made Jambool a good bet.
In addition to their successes at Amazon, they had shown Madrona and Bay that they had the ability to deliver results on their own. Many of Jambool's apps are consistently ranked in the very top of the pack based on number of users. The team had shown that they were able to take an unknown business, an unproven business plan and create a name in the industry that is now widely recognized by application developers in their space.
Hussein told me that the obstacles that once seemed so large are now small in retrospect. He recalled the difficulty of the days when they were trying to just get their foot in the door and get their product "out there". (Note: stay tuned for more information on marketing and PR for early stage businesses next week when I'll share my discussion with Gail Kent of The Buzz Factory.)
Hussein credits several things with getting over their obstacles. They brought on a full-time person responsible for business development. They also found an advisor who helped point them in the right direction. Hussein insists that having an advisor is paramount to a start up. He explains that it should be someone who isn't like you. You want to make sure that you get a different perspective on your ideas.
The team also made sure they were very "pluged-in" to their industry. They knew the space, in part, because they had worked on payment related software while at Amazon. Many of the people who now work at Jambool worked with them at one time or another at Amazon. They also knew many of the developers of other Facebook applications through their previous application development experience. Staying close to those developers helped them tap into that network. This helped them understand what their customers wanted and gave them insight into features that resonated.
Hussein also said that getting funding was "not as easy as it was before, but we did as well as anyone else." We discussed the fact that the days of getting funding for an idea written on a cocktail napkin are long gone. Today, you need to build something great, keep metrics on your business and then ask for funding. Hussein reiterated how important it is to be able to demonstrate your track record with real metrics.
Additionally, Hussein made one last interesting point. When we talked about Jambool's change from collaborative applications to social gaming to payments, he said that sometimes you have to be willing to throw out some things that you might have worked very hard on for a very long time to focus on what will make you successful.
In summary: get an advisor, build something that resonates, stay tuned-in to your industry, keep good metrics and track your progress. Remember that you need to prove to your funding partners why you are a good bet. A proven track record is the best way to do that. Make sure you keep your partners in the loop.
Posts
0 comments:
Post a Comment