Thursday, November 4, 2010
Interview with Scott Kveton, Urban Airship
Yesterday, Portland-based Urban Airship (www.urbanairship.com) announced it just closed a new $5.4M Series B round of funding. We caught up with Urban Airship's CEO, Scott Kveton, to hear more about the company as well as the funding round.
What is Urban Airship all about?
Scott Kveton: Urban Airship today powers some of the world's most successful mobile apps. What we've built is a mobile service platform, which a publisher can directly built into their own apps, which helps them engage with users, monetize, and understand how those mobile applications are working. We started eighteen months ago, when our CTO had the idea of providing a simple service providing push notification and in-application purchases for iPhone application developers. From that, we worked with customers to understand what was happening in mobile.
There's been an amazing transformation in the mobile market, with the iPhone, in the last three years. We launched in June of 2009, and as we learned more about what our customers wanted, and have extended to a variety of platforms. We found that, at the end of the day, our larger customers don't really care about the device in a user's pockets, they just want to reach users and engage with them over time, and ideally monetize that relationship. We do that through our push notification service. If you're an iPhone user, you've seen those push notifications, where you might see FourSquare updates, or alerts from ESPN, or fantasy sports alerts. What we've found out about notifications, is they're really powerful to get a user back into an application, even when that application is not open. That has been a huge driver of retention inside applications.
Statistically, there is only a five percent retention rate for a free application after 30 days, and that's just not good enough. But, we've found that if you are really careful about using notifications, and not sending out marketing and making sure you deliver value to an end user, you can earn their trust and they will respect your brand. As cheesy as it sounds, they're most likely to invite you back into their pocket over time. Our tools help publishers to do that. And, while it's great to engage customers, they also want to be able to monetize them, whether that is through subscriptions, such as subscriptions to a digital magazine, a new level in a game, all those things that once a user is in an application, is engaged and using on a regular basis, they might want to purchase as content. An example of that is with Newsweek and their iPad application, where we're powering all their subscriptions. They use our notifications to let a user know when there is new subscription content available. We've not got over 4,000 customers, sent out 1.2 billion notifications, are running on more than 50 million devices, and have helped power more than 1.2 million transactions.
What keeps people from just building this themselves into their applications, and why do they use you?
Scott Kveton: We make it a lot easier for people to do. The example would be, right now, if you wanted to do email marketing, you wouldn't spin up your own mail server to do email, you'd just use a service out there. The same thing is true of what we do. The other things we do are understand the best time to send a message--because we're able to anonymously aggregate messaging information across all of our customers--we're able to inform our customers of what are the better days and times to send notifications. If you want to send sporting updates for a large sporting site or network, you might want to send it out on a Sunday or a Monday, when users of those applications are getting lots of notifications. But, if you're a group buying site like Groupon or Livingsocial, you probably don't want to send something on that day. We are able to give them the information on the best time to send their message. In particular, with mobile devices, it's more than email marketing, where you're just trying to get into their inbox and get their attention. We're more about getting to the user at the right time, at the right place, with the right message.
Let's talk about this new round. What are you using the new funding for?
Scott Kveton: The big thing for us, is adding more folks. We're trying to add more engineering talent. We've hired six people in the last three months, and we have lots of projects going to make life easier for our customers. There's lots of complexity under the hood to talk with all of these platforms, and to make a difficult problem easy. We've also just signed a lease on new space right here in downtown Portland, with 25,000 square feet. With the growth we're seeing, we think we'll easily be able to grow into that space as we continue to build the business.
Mobile application development has been a very hot area--has it been difficult for you to find mobile developers?
Scott Kveton: We've had lots of fantastic luck there. Our team is made up of ex-Google, ex-Jive, ex-Rackspace and other folks. What is interesting, is we're finding there are lots of mobile developers who are working on their applications, or doing consulting on the side. But, it's a tough go for those folks. Where we're at, we're the pick and shovel of the mobile space, which makes us interesting for lots of developers. We're tackling really difficult problems, and seeing phenomenal growth. When we talk to engineers about joining the team, it's a pretty easy sell. I am astounded by the quality of the team we've been able to build, and coming on board in the next couple of weeks.
How did you connect with Foundry Group?
Scott Kveton: True Ventures was our Series A investor. We connected with them, from someone else here who took a round from them, Puppet Labs. True really moved quickly--it only took 5-6 days to get to a term sheet with them. We connected with Foundry through True, because they've done a bunch of deals with them. We love both of those folks. We also have Founders Co-Op in the round, out of Seattle. What we love about all of them are they are all really scrappy. They're part of what I see as a new wave of venture financing, smaller funds making smaller initial investments with higher reserves. And, they're all led by entrepreneurs--serial entrepreneurs who understand the risks, and the ups and downs of building a business. It's been fantastic. We love Foundry, we love True, we love Founders Co-Op, and we'd work with them all again in a heartbeat. We've even been helping True and Foundry to help send more deals their way, as entrepreneurs find me and ask about our investors.
It's interesting to see you're one of the companies which has really developed a truly web dependent business, including using Amazon Web Services for most of your product. How has using Amazon's Web Services been for you?
Scott Kveton: It's worked great. It's amazing what you can do with a business, and how quickly you can get things up and running. When we launched the business, our CTO had the idea for the company, and we decided we'd launch this really quickly. We were not sure if there was a market, and there was no way to determine that without launching. So, we decided to launch in 30 days. WWDC (Editor's note: Apple's Worldwide Developer's Conference) was in 30 days, and we decided that was when we would launch and announce. We couldn't have done that if we had to build out our own gear, or use a standard provider. We were pretty familiar with AWS, and we were up in a matter of days. That allowed us to get out early, iterate every single day, and we couldn't have done it without Amazon. Looking over what our fixed assets are, it's basically a whole lot of laptops and some chairs. That's what we own. It's interesting, because if you think even five years ago, we'd have to have all these servers, and networking equipment, and all of this other stuff. Going even farther, we'd have to buy software licenses. Instead, we are really really heavily using Amazon and a bunch of open source stacks to build out a business--something that didn’t exist even a couple of years ago.
Finally, now that you have funding in hand, what's next?
Scott Kveton: Our big task is to continue to grow the business, and evolve our product. We've had a lots of early adopters using our products, but we're now finding that there are people in the early majority who need our solution. We've got to tweak our product so that they can just jump in, select the segment of users they want to target, craft their message, an launch a campaign and see how effective it is; pause things, iterate, and all those things people want to do. We want to turn mobile into a channel direct into people's pockets. It's extremely effective, and it builds out a fantastic relationship with the end user.
Thanks!