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Here’s your program.
Andrew Warner: Hey everyone, I’m Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and coming to you from a special place which I’ll tell you about in a moment. Big question for today is how does an upstart with no money become a giant in the mobile space? Joining me today is Ty Morse. He is the founder of Songwhale, a mobile marketing business that connects brands with consumers. Ty, welcome to Mixergy.
Ty Morse: Thanks, I’m fired up to be here.
Andrew: Cool So, big names have done business with you. Toss out some of the brands that my audience is going to recognize. Who’s worked with you guys?
Ty: The Pittsburgh Steelers, the Chicago Blackhawks, Pizza Hut, McDonald’s, Panera, Dunkin Donuts, Great Clips. We’ve got a lot of good awesome brands that we have been very fortune to work with.
Andrew: You working with the NHL, NFL?
Ty: Yep. We work with several NFL teams, NHL teams, major league baseball teams. We do a lot in the [??] spirit as well, Ohio State, Penn State, University of Pittsburgh, Boston College, a lot of the big sportsmen, we have had a blast going.
Andrew: All right. We’re going to get to the location and why the connections is a little bit fuzzy in a moment, but first I want my audience to really understand what your business does. And the best way to understand, I think, is to talk about a specific example. So, how about giving me the example of how does text alerts and Pizza Hut connect to my audience? Give me that example.
Ty: Yeah, the most basic example of how people are engaging Songwhale is kicking a campaign and a brand like Pizza Hut and saying, “Hey, text in to win pizza free or . . .”
Andrew: That’s what PIzza Hut says to their potential customers . . .
Ty: Yeah.
Andrew: . . . text in for a chance to get pizza for a year?
Ty: Exactly.
Andrew: Okay.
Ty: But there are some neat things that come along with it. So, you’re seeing Songwhale on top of a Pizza Hut box and saying text in or you’re seeing it on a telephone call to action. And what happens is you text in for a chance to win pizza for a year. You’ll get a [??] back that says, ‘Hey, thanks for entering. Here are free breadsticks. Forward these free breadsticks to five people, we’ll give you a free soda, forward these free breadsticks to ten people, we’ll give you a free pizza.’
Well, a lot of people want that free pizza, so they forward it to ten people. We grow a nice big database for Pizza Hut to market to. And we keep those databases large and keep the content compelling because they’re very high quality offers. So, as we all know about mobile marketing, there’s really no room for spam. So, what we do is we work with Pizza Hut to create very compelling content, compelling offers that the consumers are going to want to [stay after] it and participate in.
So, it’s a fun way to do viral marketing over the [??]. And it’s made consumers happy and it’s worked very well for the brand.
Andrew: You know what? I love viral marketing. There’s something about the creativity involved in coming up with a good viral marketing campaign that to me is more exciting than walking into a museum and seeing all the creativity on the wall. You’ll be saying to any consumer who enters to get free pizza for life, you’re saying to them, “Forward this to your friend, and we’ll give you this. Forward this to more friends, we’ll give you something even bigger” and so on. All they have to do is forward and they get it?
Ty: That’s it.
Andrew: And do the friends become automatic members? Do you have permission to message the friends automatically, or do you have to have the friends respond?
Ty: So, the friends will get a message from their friends saying, “Hey, here’s a free Pizza Hut breadstick coupon.” And they can reply to accept. And then they’ll have the opportunity to forward on to more friends. So, it’s a really wonderful way to allow friends to share a bit good coupons and then allow Pizza Hut to extend their message.
Andrew: In the pre-interview you told me, ‘Andrew, text messaging isn’t very sexy, but I think it’s a good example for us to use to explain to people one little aspect of what we do in a much broader business.” To me first of all, text messaging, viral marketing is very freaking sexy. I could look at that all day that maybe a 19-year-old can look at porn online.
Ty: [laughs]
Andrew: But I love it. What I want to know is how many people are you able to get that way? How big an audience could you get to Pizza Hut?
Ty: Let me give you an example. Our headquarters are in Pittsburgh, Pennsylvania. We did a television call to action between the “Simpsons” and “Family Guy” with FOX TV. It was the exact promotion I just gave to you. We in less than two weeks sent over 12,000 people to the 52 Pizza Huts in Pittsburgh.
Okay, so, you’re talking about being able to hit a bolt on and within two weeks up your traffic to 12,000 and build a database that quickly in a smaller market like Pittsburgh. Let me give you an example of before that was done. Pizza Hut’s most successful mobile promotion in the new work market over a period of two months garnered about 2,000 [??] in the New York Manhattan area market.
Andrew: A bigger market.
Ty: A much bigger market and much more impacts. The Franforder [sp] which is what we call viral [??] helped a lot. TV became a strong driver for our mobile marketing programs, and obviously Pizza Hut Pittsburgh was very happy with the results. And [TD] expanded that and the Pizza Hut database is obviously hundreds and hundreds of thousands across the country.
We do separate it by market. We can do national campaigns. So, it’s definitely a wonderful case study for text messaging. Text messaging, I think, with all the cool clicks and glamor that we have on mobile phones, we know that text messaging is the foundation of any strong mobile program. So, it’s a good start.
Andrew: And you don’t just do text messaging, right? You have mobile apps. You have LAP [sp] which I don’t see too many people use anymore. But you go broad when it comes to mobile?
Ty: Exactly. What we do is we typically work with a brand like Pizza Hut and start. We build a foundation. The foundation is typically based off effort of campaign because that’s [TD]. Everybody has [??]. You don’t have to worry about different operating systems. You don’t have to worry if they even have internet capable phone? They have[??] that’s when we can start telling the message.
Then we can give them a link to a mobile website if they want a broad more rich content, a link to an app, [??] functionality. There are a lot of different pieces that we [TD]. Yeah, and then of course we time social medial now as well. But everything typically starts with a base foundation of access mobile web.
Andrew: Okay. All right. So, the internet connection is a little bad today which means that you and I are going to have to kick it into high gear and compensate for the lack of quality in the audio by giving them extra quality in the information here. And I know that we keep pushing into that.
Ty: I’m ready.
Andrew: Let’s explain to people why the Internet is bad. You are now coming to us out of, I’ll ask you about the city in a moment, but you’re coming out of Raamm Thakrar’s office. He’s the founder of Touchnote.com. Raam, thank you so much for giving us office space. Ty, why did you even need office space? What was going on? Tell people about what happen today?
Ty: Well, you know, of course, being as excited as I am about technology, I thought on my business trip here to London that, you know, I figured I could by now with just my iPad, my BlackBerry [mask] on, that should be enough.
Andrew: Yep.
Ty: Unfortunate, I forgot that I needed Skype video for this interview here. The folks at Mixergy have been patient enough, I think, Andrew, you tweeted and Raam came to the table and I’m now in Camden Town, London. I run just across the street from my best friend’s home in London. I’m doing the interview from here, so cool company and cool place I’m in right now. Thanks for lining it up, Andrew.
Andrew: You know what? All I did was tweet out. I said, “Is there a Mixergy fan out there who can please give us space in Camden London?” And Ramm just said, “Absolutely.” He helped out. He gave me his phone number. He gave us his address. He connected with you. And he made it happen in about an hour or so.
Ty: One of those awesome life experiences for me as well. You know also I’m in this place, have no idea [TD]. And here I am on [??].
Andrew: Touchnote. I’ve got to see the office. But I don’t think our camera and our connection here could do the office justice. So maybe we’ll look at pictures from Raam directly. All right. We understood now what Songwhale does. I want to understand how Songwhale got here. In order to get here you had . . . actually, why don’t we talk about the business you launched before.
What was this business that you and your current co-founder launched in the music space?
Ty: We launched and still operate a record label called Royalty Excetra [sp] Records.
Andrew: Called what, I’m sorry?
Ty: Royalty Excetra Records. Basically I have been writing music for Discovery Channel. I’m working on music for Discovery Channel with John Gremu [sp], select co-founder of Songwhale and our Chief Technology Officer. We kind of decided, “Hey, let’s go start a record label.” We loved this music thing.
So, I moved to the Twin Cities. We started a record label. I should note that before that when I was 18, John is 7 years older, we wrote Frankenstein the Rock Opera based, and, so, this kind of kicked off our partnership. John was a technical guy. I did a lot of the song writing. That kind of got us into the music stage to start a record label.
We very quickly figured out that nobody buys CDs anymore. So, we tried to figure out how to make money on it. And then I ended up at Virgin Records in the music business. [??] make less money than we did at the time. They were losing money even faster. So, we started Songwhale while I still was at Virgin. We had a little bit of experience business before than, but Songwhale was kind of the big league into the real world for us.
Andrew: Let me ask you this, then. I introduced it as a company you used to have. You’re saying you still have the company. But you’re also saying that you lost a lot of money in the business, so, why do you still have it? Did you find a way to make money with it?
Ty: No, no. That’s a great question. We continued to run it and operate it because when we started Songwhale we said, “Wow, well, we’re not going to be able to make money running a record label and nobody’s going to pay us for making music, so let’s start another company and make a bunch of money so we can just use all of it to pay to make the records.”
So, the record label still doesn’t make money. But we spend our own personal money to run the record label, [??] the CDs, put the vans on tour because at the end of the day that’s what we loved doing. So, we still haven’t figured it out. But Songwhale started with the idea of putting music content on the telephone and then monetizing it through advertising. That was the original concept. And we actually did our first show with one of our bands on our label and the wonderful Prince. That was the first Songwhale event.
Andrew: Did you say Prince, the musician?
Ty: Yeah.
Andrew: The artist formerly known as a symbol?
Ty: That’s him.
Andrew: That’s the guy. All right.
Ty: [laughs]
Andrew: There’s one other co-founder. Is Jay a co-founder in the business to?
Ty: Yes, yes.
Andrew: I introduced you here as a guy who started out with no money. But Jay made you an offer before you started that help kind of deal with the no money issue. What’s that offer?
Ty: Absolutely. So, John and I had done Frankenstein, and then we started our record label Royalty Excetra and Jay, by this time was playing pro soccer, run London and living across the street.
Andrew: He was playing pro soccer. Let’s pause here for a moment. He was playing pro soccer, how pro?
Ty: Well, Jay just played and started every single game in the World Cup down in South Africa. So, he is one of the top 11 soccer players in the United States.
Andrew: How do you know one of the top 11 soccer players in the US?
Ty: Jay and I both grew up in Wisconsin. Jay is from Green Bay. I’m from Milwaukee. We have a mutual friend. Milwaukee had the best soccer team. We had a mutual friend who I didn’t know Jay at . . . he was coming down from Green Bay to play soccer in Milwaukee where I was playing. Incidentally both of them were a lot better than me.
I was playing with a friend and I would go up to Green Bay and hang out with him. We ended up connecting and I met Jay. I pretty much ended up meeting Jay when I was 18. Jay was down in Chicago at University of Illinois Chicago playing soccer. So, once we started hanging out that was kind of it, when I was 18. We have done many wild journeys since. But the connection was through Milwaukee Kick for Soccer, basically. He was the best of anybody we knew.
Andrew: So, what’s the offer that he made you that helped launched the business?
Ty: Well, I think, the interesting thing about Jay and this is why he was on the cover of Sports Illustrated, he kind of did the same thing. He came over here and worked from nothing. He had no money in his pocket. I remember summer he was sleeping on my couch, begging me for dollars in my wallet because he had nothing. And he worked his way all the way up to the top, from nothing to the top.
And when I was doing that record label with John, I was living in John’s house. I had no money and John was driving me to Mike’s Discount Foods, 15 miles outside of Minneapolis so I could buy yogurt and milk that was expired because it was cheaper because I had no money. So, I think Jay saw the same thing that [??] and, you know, we’re best friends, Jay and I.
He knows John. John’s mother are best friend and he said, “I want to be involved in the next thing you going to do. You’ve done a Sprock [sp] Opera, you did music for Discovery Channel, now you’re doing a record in [??]. I want to be involved in the next thing.” So, he had been making money over here and he literally said, “You and John open up a banking account. I’m going to put . . .” You know, at the time it was $25,000. I was 22 or 23, that was more money than you can think of.
And he put it in the bank account. And he said, ‘You guys, just when you need it.” John and I didn’t use it for like a year. It sat in the bank account. And then one day we came up with Songwhale. We started to use that money. So, it’s one of those examples, it’s one of those crazy, you know, somebody who had made it from nothing to something, rags to riches, and took a shot on us, and it’s been an awesome journey.
Andrew: $25,000 to me doesn’t seem like that much. When I launched my first business out of college, I must have taken way, I know I took way more than that in just credit card debt to launch the business. How far were you able to go with $25,000? Where are you going to get the profitability?
Ty: With 25? No. Not at all. What happened is as we grew, and keep in mind, we went over the past three years have gone from a two people, John and I, to over 100 when you add in Indonesia, our Indonesia office and China offices. So, what happened is as we grow we get on clients, but we get these big clients on board, one of them was the Pittsburgh Steelers and we’ll have to hire more people.
So, I have learned a little lesson about something called cash flow the hard way because I studied literature and marine biology, okay? So, the reality is my way always as a journey I know what you’re doing? No. I have no idea what I’m doing. I really don’t. I had to learn business the hard way with getting kicked. And I think with that money we basically, we don’t even think about it.
I would invoice somebody and the next week be calling and them and they’d say, “Well, it was net 60.” And I would say, “What is net 60?” So, I didn’t know about the cash flow procedure. What happened is I’d call up and say, “Hey, I just hired six people and we haven’t received the payments from these clients.” So, Jay would just keep putting up money as we needed it.
At the end, I think Jay ended up putting in probably close to a quarter of a million dollars in the business by the time we started really getting it rock and rolling.
Andrew: Okay. Well, you know what? That issue almost caught me. There was one client who owed me $350,000 which was huge at the time. And I called them up several times just to say, “Am I going to get paid? Am I going to get paid?” And they must have thought that I was the biggest amateur ever because look, there’s terms on this. You don’t just send an invoice and get paid the next day, right? Meanwhile though, my cash was down to nothing. I wasn’t for sure what I was going to do. I was maxed out.
Ty: I had to learn the hard way. I have many embarrassing moments in my business career.
Andrew: Can you tell me again what that first product was? To be honest, I didn’t fully understand what that first mobile product that you guys at Songwhale launched.
Ty: Yeah. Well, to honest, I don’t we did either. So, we’re all in the same boat.
Andrew: Okay.
Ty: But I think what John and I understood was the realilty is John and I was thinking about what we should do as a business. He had gotten a Palm Treo. He had put an Apple2E emulator on it and it was just going nuts on the smartphones, it would [??], and the iPhones were coming out.
John said, “I really think we should focus on hand held technology because it’s moving so quickly and everybody has one.’ I had been very interested in the model where you give away music for free and sale sponsorship in advertising.
So, what John came up with, the original Songwhale vision was let’s use standard compliant technology that works across all of these cell phones to give away music for free. That consisted of Wi-Fi, Bluetooth, Text messaging and USB. So, literally the initial concept was people come to a concert, they turn on their Wi-Fi, they turn on their Bluetooth or they text in, or they bring a USB key and they can either download music for free.
When you download it and you play it on your iPod, for example, the album cover would be Miller Brewing Company or Visa. So, it would be advertising sponsored music. That’s how it started. In our first event, it sold out 1,500 people. We had over, I think it was over 800 participate, so, over half the attendees. We were really surprised. We said, “Oh, my gosh, this actually kind of works.”
At the end of the day, it’s smarter we got farther away from because setting up Wi-Fi networks and trying to have Bluetooth hot spots [??] the direction we ended up going and the type of things we became the most confident in. But that was the initial product.
Andrew: So, at that, now I understand the product and it makes sense. So, I’m at a concert, I want to listen to the music after the concert, I can download it to my phone using whatever device you guys set up at the time. You want to set up all the devices eventually. What I’m wondering about that is 350 people very impressive, how do you get advertising from sponsor who care about 350 people or even 3,000 people, you can grow ten times as big?
Ty: Exactly. Actually, at the first event, let me correct myself, we didn’t have Text messaging as a part of it. It was Wi-Fi, Bluetooth and USB. So, Text messaging wasn’t there yet. So, you’re 100 percent right. What happened then in 2007 was that advertisers and sponsors were still trying to figure out Mobile as well. They didn’t really know the value of it or what to spend it on.
We’re getting close to that now. And the next one people are trying to figure out is Social Media and how much it’s worth, obviously there’s a lot of people involved. I don’t know it’s worth. I was literally going into people like Miller and Visa and saying, “Look it’s not going to be a lot of people right now, but the publicity, the cool factor is very valuable because people will be talking about it.” “Oh, my gosh, I just downloaded it.” So, the viral effect.
That’s what we sold. That’s what they paid for.
Andrew: All right, I’ve got to pause right here for a moment because this is impressive. How did you get in front of the right people at Miller or any of these other sponsors? I wouldn’t even know how to open, you know, I might go into a linked end and search around, but to get them to listen to me is hard. How did you get that?
Ty: We had ended up building a pretty basting cool that worked, just because of things we had been involved in, from Frankenstein to a little rack label that didn’t do well, but we connected with a lot of people and a lot of brands. There are a lot of people that I had met from the marketing sale side of those things.
But on top of that, I was at Virgin Records at the time whenever we started Songwhale. So, I’m New York City in Manhattan. Even though it was an industry that was dying, it was still a very high profile industry. So, honestly, having access to the Virgin Records network was huge for me in launching Songwhale because I had to get in touch with a manager for somebody like Prince, somebody like Miller was already working on sponsorships there.
So, I think Virgin connections was one of the main places where we were able to connect and build a large advertising network, at least sit in front of people that would be interested. And then mobile was kind of mystical enough to be able to say, “Hey, you should really go check this out.” And people were interested. So, it was easier to get an audience.
Andrew: So, these were the contacts that you made, if I’m understanding you right, at Virgin Records when you were working for them?
Ty: Yes. Virgin Records is under EMI. There’s four major record labels and when I was there we were working on people like Katie Perry who is now a star. I mean she wasn’t anybody. She was just walking through the label at the time and [??] there’s Katie and her album hadn’t come out yet. There was still a lot of big bands that we were working with when I was there. In conjunction with those bands, we work on sponsorship.
That’s where I started to learn about. Oh, there’s a lot of big brands that like to be tied to music. I can use these connections in relationships to tie into what we’re trying to do.
Andrew: Okay. All right. I see that. I see the first version and I have a sense of how it did. What was the next product? How did the business evolve?
Ty: See what happened is we did see well and venues said, “Ah, this is really cool.” There are other services we looked through, through a Wi, for example, or through Bluetooth. So, we saw a demand for Bluetooth couponing where you set up Bluetooth [??] and they would literally just send out Bluetooth coupons to anybody who had active Bluetooth at the time.
Then we figured out you could stream wire videos through Wi-Fi. So, why don’t we have wire video sporting events. So, now, I’m sitting here at a Steelers’ game and I can . . .
Andrew: Wait. We might have lost the connection and if we did, of course, we would just piece it back together. Oh, there we go. I lost you just as you were saying something about the Steeler game, and then boom.
Ty: Okay, sorry about that. We though wow, we could use the Wi-Fi networks to stream live video to hang outs. When I’m at a Steelers’ game and there’s an [??] and now I’m watching the game, but I can also look down at my handheld and see a whole different angle and do instant replays. We built out a lot of that infrastructure. We have live security on handhelds at [??]
A lot of these games didn’t have the Wi-Fi infrastructure to support the speed of the network. We were only getting a few thousand users a game. So we [TD] sponsorship at Hines Field somebody like the Steelers who have 60,000 people and you get 2,000 to look at it on the handheld it’s not as compelling as something like Text messaging where we can go to the data base at the end of the day it’s a 100,000 people and we can ping with the push of a button.
So, we started to see that the scalability for Wi-Fi and Bluetooth for what we were trying to do didn’t work as well. We moved to things that didn’t require a onsite transmitter. So, we moved away from Wi-Fi and from Bluetooth and focused more on building very cool technology around MSM, very cool different types of technology through . . .
Andrew: Okay. I’m sorry. I’ve got to pause again right here to because another, first of all I understand the evolution now and we so underestimate the power of text, but it still virtually universal. There isn’t anyone, even if you have a star text [?] there isn’t anyone I know that doesn’t have text.
What I’m wondering is now, this is pretty elaborate big technology. We’re not talking about you guys figuring this whole business out over the course of ten years and you spent two, three years building out this Wi-Fi enabled system that let’s people see different angles on a game on their phones. No, this is like within a matter of months. How were you able to build these different big major products over such a short period of time?
Ty: I think, John, my partner and co-founder who is also our Chief [??] Officer would be happy that you understand the difficulty of doing that because I think I’m very inpatient. I’ve gotten use to John and his team being able to deliver things so quickly. I think the reality is they work very hard.
In the beginning of this company, it was just John and I in a room. And I the marketing salesman, he’s the technology and it was non-stop work. It’s been one impressive feed after another from our technology team. I think it’s tons of passion.
Andrew: How big a team was it at the time we’re talking about now, in the 60,000 person stadium and 2,000 people are watching different angles of the game?
Ty: When we started from the very beginning. It begin with John and then we added our VP Engineering who is still with us, Mike [??] and it was really those guys cranking away, building out live stream video to handheld, the Wi-Fi, the Bluetooth, and then also building out the entire Text messaging engine which is very . . .
Andrew: Text messaging came a little bit afterwards. That first product, in order to get it done it took wizards. It took people who are really good. I hate to use the word wizard because it adds just a level of mysticism that takes away from the mission of my interviews here which is to really understand what’s going on and to break it down so that it’s useful for other people.
But we know that they’re good. But we also, I imagine have to accept that there were certain things that they didn’t do in order to produce a product that worked well quickly. So, what was the little things that they figured out that they could do quickly and get this thing up and running?
I’ll give you an example, when I interviewed the founder of Dodge Ball and today Foursquare, we talked about how at Dodge Ball they couldn’t afford to send text messages because it was too expensive to send text messages back and forth. What they did was, they understood that every carrier in the US has an email address that maps to Text message and sending out e-mail to that address will trigger Text message on their users phone and doesn’t cost anything.
Small little shortcuts like that help you achieve big feeds in little time and small budget. What did you guys do like that in that early period?
Ty: These guys, now keep in mind you’re not talking to a tech guy, so I haven’t written a single stream code ever, but I think there were some, I don’t know technically but I know from, for example, a server standpoint, there were some ways that they were building out the servers that were really elegant solutions, that would have the time, have the cost, but really still allow it to have the muscle.
I think it’s so funny because you’re talking about the e-mail to text solution which is just so elegant and so simple. I don’t think I could do Mike and John a justice to be able to talk about the kind of little tricks that they used along the way. But I know that because we were building systems very quickly and they need to be very flexible, they changed to a certain type of code called Jingle.
That type of coding has allowed them to kind of move bigger pieces around and interchange back end of our systems in an easy and efficient way. Kind of switching to that code has made things a lot more flexible and allowed us to build these kind of larger scale products faster.
Andrew: All right. So, let me ask you this now, they’re clearly bright guys who could do anything. How did you get them to believe in you enough to take a risk with their careers, with their time, with their reputation to partner up with you. You know that’s a question that the non technical co-founder always has to wrestle with and some people don’t have a good answer for it which is why they don’t have technical co-founders. What was your thing that got them to believe that they should be working with you on this mission?
Ty: I think John and I had worked on a couple of [??] together already and I think that we’ve just always been an amazing team. John, I’m seven years younger, he quit his job as a programmer to do this. I think there’s two pieces to it. One, I’ve been very fortunate because John and I have really, of course Jay’s been a part of it. Between the three of us there’s an incredible amount of trust. That was the first thing, trust.
I know that I can trust that ties are going to be good on. Another thing is working hard. John and I had seen each other work hard so many times that we knew neither one of us were going to drywall. We were going to work as hard as we could possibly work.
Andrew: Give me an example of how we saw that in the past that made him think, “You know what? That guys is a bull dog. He’s never going to let up and if I’m going to commit my life to working with someone, I want that kind of bull dog because that’s the kind of person I’m going to be.” Give me an example of how we would have seen that before you launched this business.
Ty: The earliest example and the first time I met John, well, not really met him, but we were fanny friends, I was 18 years old. I was sitting in the English class in high school and the teacher played Bear Wolf the Rock Opera. It was a Rock Opera based on the epic poem Bear Wolf. I was blown away. I had been listening to Pink Floyd the War. I went up to the teacher and I said, “Who wrote that?”
He said, ‘Well, they only finish the first half, but it’s John Gremley [sp] and Zack Waldon [sp].” Well, I knew the John Gremley name because my parents are best friends of his parents. But again, he was seven years older. So, when I was 7, he was 14, we had nothing in common. I went home that day. I said, “Mom, can I have John Greenley’s phone number? I want to write the second half of Bear Wolf the Rock Opera.”
I called John. [TD] in Minneapolis. I said, “I want to write the second half of this rock opera that you guys didn’t finish.” And he said, “What instrument do you play?” And just like I don’t have my laptop today, I said, “Oh, my gosh, I don’t play an instrument. What am I going to do?” [laughs] I said, none. He said, “Okay. Call me when you play an instrument.” Well, that day I went out and I brought a guitar, taught myself how to play, taught myself how to record, recorded songs. I think it was maybe a month later I sent him a bunch of songs. He said, “Wow, these aren’t very good, these songs. But oh my gosh, there aren’t many people who’ll go out and teach themselves guitar and record, learn how to record in that period of time.” And that’s the type of personality I have. If I’m going to do something I have an obsessive personality.
I think now I rely on . . . John and I, when we started the record label, many nights, 16 hours non stop, I’ll be working on marketing and sales and he-ll be working on building out the tax write of our record label. I think he saw, OK, I can build the stuff and I know that Ty can market it and sell it. We’ve kind of shown that over and over again.
So, that’s my job until this day. I love it. It’s what I like to do. He handles the technology. It’s amazing.
Andrew: One of the things that I love about that story is because I could imagine many other people about a week into learning, saying who really cares, in the grand scheme of things it doesn’t really matter. But in the grand scheme of things the little things do matter. The fact that you did that showed not just him but it showed yourself I’m someone who sticks with things. I’m someone who can see it through to the end and someone who going to be a doer not a dreamer not a wanner.
Ty: Yeah.
Andrew: Okay. So, now I’ve got that. Sorry, I didn’t mean to interupt, but I’m looking here at the clock and I want to be fair with your time and with Ramms time. So, I understand now the great technology you built is not being accepted by the users. They want something simplier. The just don’t have the ability to access this cool stuff. You decide to go Text messaging. What’s the first Text based product that you created?
Ty: The first text based product we created was text messaging alerts [??]. It was specially in the NFL and it was to provide alerts. There’s another really cool technology that John built. It has since other people have copied, but it is really awesome. It’s all about content, so, if people were going to receive a Text on their phone it’s got to be [graded] content.
What we did is we provided, it was the marketing director, it was the PR director for the Pittsburgh Steelers. He was always at practice and Ben Roethlisberger would go down and hear his echo. Well, people wanted the [TD], they wanted on smartphones that Twiter. They didn’t have the client application. So, they wanted this information on their phones.
So, what was did, we set up the PR director so that right from his phone he could say, you know, this guy just went down with injury. It send and it would automatically lash out to their entire list and we called that field push which meant that . . . and this changed the way that people started sending Text messaging words because all the marketing directors from all the [TD] teams, could now literally see something breaking news, hit it and send it.
Of course Twitter does the same thing except this allowed it to be on every phone because every phone could receive a text message. So, that really changed the game. That was one of the first big products that we put out there into the market.
Andrew: Again, I’ve got to ask you, how do you get them to listen to, I guess you had a relationship with them at this point where you can say, “Look. This product didn’t work, give me another shot. I got text messaging it will allow you to reach your fans that way.” Is that the way it worked?
Ty: Yes, that’s my job. That’s what I have to do.
Andrew: So, how do you do it? That’s a very impressive job. I don’t want to just brush over that and say that it’s not important because the technology is great and the vision is great and so on. How do you get people especially after you just had, not a failure but not a success with 2,000 people out of 60,000 people stadium trying out this new technology. There must have been a lot of work. How do you go back out there and say, “I’ve got something new. Give me a shot again.”
Ty: I think it’s all about relationships and treating people right. At the end of the day, you’re going to make mistakes certainly. But I think that not bring bridges, being a good listener and having humility really drives wonderful relationships. So, at the end of the day somebody can say, ‘Hey, you know what? You guys gave your best shot.’
This didn’t exactly pan out how we want it, but, oh my gosh, you were working non stop, you guys are so passionate. We want to just keep working with you because there’s a general sense. Both John and I are very passionate. So, there’s a general sense of excitement. And, yeah, maybe even work, man we’ve got this other idea, really give us a shot and they turn around and say, ‘Man, I see you guys going non-stop. I see you guys never sleeping. I see you guys loving what you do. We want to be a part of that somehow.’
I think a lot of times we end up our clients rooting for us because they want to be a part of that excitement. That’s one thing we’ve always had in this business is intense crazy excitement. That’s what happens when you generally believe in something and have passion.
Andrew: You know that the connection today stinks on ice but I know that part is being communicated to the audience. I bet you that even people listening to us not being in business with you, not being connected to you, maybe people who never heard your name before who are listening to you now are picking up on that. That’s one of the reasons why I love interviewing entrepreneurs like you. Not that there are a lot of people like you who have this kind of energy, but I love it. I love it when it’s there. It’s exciting and it draws out the best of every listener and every viewer.
Ty: The other piece that has also been important in our success is I’ve hired a lot of people that are smarter than me and I think that knowing what you’re good in and not good at. So, honestly you have a company, but I know what I’m not good at. I find the people that are good at those things and that’s one of the [??] that I have to the businesses. I know exactly what I’m good at and not good at and I find the people that I . . .
Andrew: I want to know how you found them? I’m in a position right now where thankfully I Tweeted and somebody in London had office space to lend you. Being on camera like this everyday to an audience like this gives me access to people. But you didn’t have that kind of access. The person who’s listening to us right now doesn’t have the time to do interviews, doesn’t have the willingness to blog their Tweet everyday, but still would like to say I’m not good at this one little thing. I need to know what Ty knew and go and find someone who can fill the gap. How did you do it when you didn’t have enough money for recruiters and didn’t have a reputation?
Ty: Yeah. It was definitely tough. I think honestly one of biggest changes was I had met a business, we do business with the Green Bay Packers and they had another mobile partner. It’s an amazing company actually called for [??]. For info has done some really cool things. The Packers ended up wanting the director of Business Development from [??] and myself up because they said, ‘You guys have cool companies, you should talk.’
Well, [??] was the director of Business Development at [??] that time. He is now our Chief Operating Officer. He was in Silicon Valley. He also grew up in Wisconsin where I grew up. We started having these conversations and I immediately realized that my team knew more about the mobile space and I had already been living in Silicon Valley, had been living and breathing it longer and here’s us in little Pittsburgh.
We continued to have these conversations. We started doing business in Indonesian and China. Somebody like [??] started saying, “Wow, this is interesting, this is neat. And you guys are expanding.” So, I was able through that conversation twist [??] arm. Got him to move. He left Silicon Valley and an amazing company to come be our Chief Operating Officer. It completely changed everything because he was such a high caliber person.
Really, I had to convince him to take that risk. It was kind of me going out there and trying and convince him, but also on the team thing, “Hey, I’m going to take this risk.” He came out and then what he had seen in his connections then profit-gated our brand even farther. It was a phenomenal change in the business. He’s still here and he still lives in Pittsburgh.
Andrew: All right. I get that. You don’t have to have a huge audience. We all come into contact with great people all the time. You’re just noticing them and also having the willingness and the patience to keep working and recruiting them until they come in.
Ty: When you find them. It took me a year with [??]. When you find them you’ve got to stick with it. And then you’ve got to create excitement for them. If somebody’s going to pick up their life, you’ve got to make sure that you’ve got something exciting that they can see that you believe in. That’s makes them excited.
Andrew: When you finally hit on text messaging as the answer and you put it in a teams hand and you said, “You can now tell your fans whats going on in real time via text message.” How did you monetize that?
Ty: We monetized that through in a sports world they call sponsorship, but basically it’s advertising. What you’ll have is a [??] would go out. It would say, “Hey, the Steelers just scored a touchdown.” At the bottom it would say, “Brought to you by Pizza Hut. [??] pizza for free breadsticks.”
So, they would pay to have access. We were able to monetize that in a different way, more like the sports model where it’s less kind of CPM based and more ‘Hey, you’re paying a premium to get in touch with our fans and have their unvived attention this time.’ So, we capitalized on that.
We would sell these large sponsorship packages. Then what happened is that grew from, OK, just being at the bottom of the Text message to creating somebody like Pizza Hut or Panero or McDonald’s to come back and say, “I want something more. Can we create a type of game where every first down you get a trivial question and then if you answer those, you can build up points.”
So, we started building more complex text based games engaging the user. Whatever would happen with us is the brands wanted more mobile, and they wanted not just when the game was going on. So that started taking over mobile marketing for a lot of these brands outside of just sporting events and activation.
Andrew: I see. All right. And I guess that’s just you going our and getting the sponsors. You would just pick up the phone and, or how would you network? You would probably network your way in and not cold call. How would you network your way in to get one of the first sponsors?
Ty: Well, this is an interesting part about how we’ve grown our business as well. As funny as it is that we’re in Pittsburgh, Pennsylvania of all places, it’s a small-large market. You’re able to connect with brands and from there if you do a good job, I was able to climb the ladder.
So, somebody like Pizza Hut where we delivered, now the local franchise, the owner calls regional and gets all the regional people . . .
Andrew: Hang on a second. I see. So, when you went after Pizza Hut, was it Pizza Hut or Dominos?
Ty: Pizza Hut.
Andrew: Pizza Hut, so, you go after Pizza Hut. You’re not going after Pizza Hut, you’re going after little Pizza Hut the franchisee, that’s who you got to say yes and you could prove with them and then you went big?
Ty: That’s how we’ve gone big with almost all of our partners.
Andrew: Oh, that is so interesting. I wouldn’t even think of that. I would say how do I get to the top to Pizza Hut America, maybe. If not Pizza Hut, do you know the global company? You got the local franchisee. His name is on the door. He’s probably walking through his doors everyday if not every week. Of course, he’s going to take your phone call. You convince him to do work with you, but with him, unlike with Pizza , the brand where you can say, “We’ll give you branding.”
With him you have to give him foot traffic and orders and dollars and cents. How do you in the beginning prove that to him where all you can do is deliver a brought to you by message in a Text?
Ty: What we’re doing is we’re saying, “Brought to you by and then reply for a coupon.” [inaudible]
Andrew: So, Right away you said we have to have a coupon?
Ty: Right away. What happened is we created it right off the bat an incredible successful campaign for Pizza Hut Pittsburgh. And then you have the owners of the Pizza Hut franchise for visionaries and they really wanted to get into this space and make them some great friends. And then what they did is said, “You know what? This worked amazingly well here.” They were the most respected franchise then in Pizza Hut. They went to corporate and said, “Hey, you’ve got to work with these guys.”
And then their agency which is an agency called Tracy Locke, a phenomenal agency, they said, “Wow this works really well. Let’s repeat this more franchisees.” Pizza Hut is definitely action oriented. It wasn’t just based around, “Hey, brought to you by . . .” It was reply, get a coupon.
We saw that we were getting about 20% redemption on that coupon. So, when you look at direct mail for something like Pizza Hut that does really well, they’re at about five percent. So, you look at it and say, “Wow, we’re getting 20 percent redemption with Mobile as opposed to five with printing circulars.” It was a big thing that was happening.
On top of that you’re building mobile equity. So, you continue to ping people without having to print the mailer all the time. Now, Pizza Hut still uses the mailers because they work really well, but they rarely reduce cost in different ways.
We started and did a lot of these national deals by focusing on one place. Once we got large enough, now, once we had built our brand large enough to, I was running across other CEOs of other companies, so, I was running across just in function other people that were in a position to make decisions. Once we reached the critical mass it was easier for us to actually get in touch with [??] of our companies.
But a lot of entrepreneurs businesses started by building a great case and leading us to the location.
Andrew: Okay. That makes me wonder about the way you came up with these ideas. I don’t want to leave my audience with the idea that if you have a good channel then everything else works out. Yeah, a good channel is important. You went through text as opposed to going through Apps at a time when Apps were unpopular. You picked the right channel, things were good.
But if anyone else was to run any old ad through that channel, they wouldn’t get your kind of conversions, and then they couldn’t get more growth and get more partnerships and so on and expand. It’s the cleverness of ideas like text your friends and you’ll get free breadsticks that did it.
How do you come up with ideas like that? I wouldn’t think that there was an inherent viral campaign that you could put into a Pizza Hut ad that would spread like wildfire. How do you come up with it. I want to know so that I can come up with it in my audience and [??] for themselves to?
Ty: I think a lot of solutions, sometimes John and I will just be sitting around together, sometimes it’s just John and Mike. For many of the solutions that I’ve been a part of a lot of it is [??]. Here’s the best example that I can give you. We have a text messaging in real estate platform for Coldwell Banker. Okay? A mobile marketer did a feature on it last year as one of the best real estate mobile platforms out there.
Basically, when I first moved to Manhattan, I was working in Virgin Records, and this an example of how I come up with my ideas. I’m out with my wife looking for a home and we’re in a little neighborhood. She showed us three homes. And I said, “Okay. That’s nice. What else is in this area?” And she said, “Well, let’s go back to my office and check.” It was 2008. I said, “Go back to your office and check. You don’t have the listing on your cell phone so we can get the information?” She said no.
I called John. I said, “John, I’ve got an opportunity here I think. We’ve got to build this platform for real estate.” John, Mike, a couple of our partners came together build it out and then we went to Coldwell Banker and said, “Look at the solution we have built for you.” Let me explain to you what the solution was. You walk up to a home, by now you’ve probably seen this all over the place, but you walk up to a home and now on the home on top of the sign writer there will be a text code. Text one, two, three, four, five to well. That’s our short code, 94253.
They text, I get a bounce back, the house you’re standing in front of is three bedrooms, two bathrooms, $300,000. Click here for a link to [??] Well, for my own personal use, I was driving around, walking around communities. I wanted a tool that gave me a better experience for home buying. That’s how we came up with the idea. Then we end up selling it in to Coldwell Banker and Century 21 and ReMax.
It was basically, of course this makes sense to the home buying experience. You’ve driving or walking around the neighborhood [TD]. And that’s how most of ideas come up. How do you do? Milwaukee association says that I can’t just ping random people, but let’s let friends reach out to their friends and spread coupons. They’re [??]. Hey, we need to get . . . go ahead. Sorry.
Andrew: Let me ask you just. I’m just a little nervous about the time, that’s why I was [??] and also something I’ve been wondering, you see some tinkers, some people who just keep tossing out ideas, none of them hit. On the other hand you see some people like you keep tossing out ideas and many of them do actually stick and become businesses and you’re not un focus, you’re not a dillaton [sp] but you’re somehow able to create lots of different ideas.
How do you do it? How do you get lots of ideas and not lose focus and not lose track and not be half hearted about them?
Ty: I think in the beginning, [TD} been an issue for us but I do think in the beginning we have a lot of ideas and when we see ourselves being spread a little too thin, and I think that was the learning process, the [TD] process for us. We would have one of these ideas and we’re excited about [TD] things, but at the end of the day we saw that the more we try to pursue multiple ideas, the more stretched thin we got and the more difficult it was to complete processes and create good products.
Because at the end of the day if you don’t create great products for the [TD] user experience, you lose. And, so, we started to see we needed to have a little bit more focus. Even 2011 still is about focus for us. So, we generally have a bunch of ideas and then after tossing around for a little bit we let them peculate. And then what we do now, our practice is we jump on to just a couple and keep things streamline.
Ideas happen all the time in [??] world. We have learned to see the signs that says this might be something that we should spend a little bit more time on. And we’ve also learned we could do that and we could go down that path and [??] who is ready to hand us a bunch of money to build this, but we don’t think it’s going to scale in the future or we don’t think it’s going to fit into our plan. And, so, the hardest thing we’ve ever done, especially for our sales and marketing guy is say ‘no’ a lot now. No, I’m sorry, thanks so much for asking us to [TD] the solution or thanks for bringing this idea to us or I understand you want this, but it’s not [??] for our plan.
That’s probably been the hardest thing I’ve ever done. I love to say, ‘Hey, yeah, let’s go do it.’ But that’s been a part of the process for us.
Andrew: What do you mean by streamline? You say that you launched them but you launch them in a streamline way. Can you give me an example of how you do that?
Ty: Well, for an example, this year there’s probably eight different types of products we were talking about creating. At the end of the day we were excited about all eight of them, but we knew based on past experience, that we needed to really settle on three for 2011. We wanted to be more efficient and streamline then that, here are our resources and here are our developers and here are our designers and here’s our Asian team.
Yes, we stretch them completely thin and overwork, work on these eight things and probably get by? Sure. But we’re taking a different approach now. We have the resources and the ability to say, you know what? Let’s let them focus and really dig deep into {??].
And on top of that let’s give the freedom, a percentage of their time to come up with their own ways now that they’ve gotten familiar with the products of how it can be improved. And that’s really having eight and saying OK we’re going to do three and using our resources to let them dig deep into those three. That’s the new Songwhale model which definitely changed from let’s do the eight things and try and get them all done.
Andrew: You said using the resources for what on those three? I missed that one piece.
Ty: So, using the resources in an efficient way. Basically, here are the programs we’re going to allocate to product A, B, C. Here are the graphics we’re going to allocate to produce A, B, C. And then instead of having everybody mind spinning with eight products, we really just pick three for 2011 and so, okay, we’re going to let our resources be focused on these three. It sounds simple, but it’s a tough thing to do when you’re growing and have a lot of exciting ideas.
Andrew: All right. The final piece of this story is you wanted a partner with a $300 million a year television platform. Are we allowed to talk about this? Is this ready to be public?
Ty: Yeah.
Andrew: Okay. You wanted to do work with them. They felt that you were too small and under capitalized. What’s the platform and what’s the deal you wanted to work with them, and then we’ll get into what the story is?
Ty: It’s really interesting that the platform is basically their channel [??] their own. It would look like you might think paid programming. But it’s actually, you’ll see something like George Foreman cooking on the Foreman grill. We saw the effect that TV had on building all the data bases. So, we wanted our own TV platform where we could control the mobile cause action on TV instead of always having to partner with ABC or Fox or any of the other network stations.
This company is a very savvy group of guys. They’re now great friends of ours. They also saw the incredible potential that could be tying mobile into their television. So, we wanted what the other had. Basically in order for us to get access to that took on a strategic investment from them. They became partners which is great because we [??] to have this mobile piece part of their television platform and it gives us a solution that we’re looking for.
It’s been very exciting to see what’s a part of that. George Foreman would be running on TV and we would run a contextual ad at the bottom because it’s food for pizza. It’ll say, “Text to win pizza for a year.” So, what we did is we run the banner on TV so they not only get the branding but then we’re driving [??] to their daily mobile database.
Andrew: Is the company in infomercial business?
Ty: They basically own the TV space that long form infomercials are run on. Most people wouldn’t know the name of the company. I’ll leave that one out of this one, but . . .
Andrew: Okay. So, this is the company that if I had an infomercial and wanted to run it on TV, I’d buy the time from them, they would run the ad?
Ty: Yes, except it’s actually performance based. [inaudible]
Andrew: Ah, I see. That’s why they can run banners because if it wasn’t performance based and George Foreman’s company paid for that spot, they couldn’t run a banner. But since it’s performance space anyway, it doesn’t matter if they lose a little bit of results because they’re going to make it up from you and it’s all in your hands.
Ty: Right.
Andrew: I see.
Ty: The beauty is that they weren’t losing, they don’t lose on the TV side and it’s just incremental. So, we’re building a new revenue stream through Mobile and the other piece is the mobile side is performer space. So, we’re taking the performer space from out of the mobile and it’s been incredibly exciting. We’re tying television to mobile activation.
Andrew: Every answer makes me wonder even more. That makes a lot of sense. You’re saying they don’t lose any money on it. You just have extra revenue.
Ty: It’s a new revenue stream . . .
Andrew: It’s all paper performance, so, there’s no arm twisting in order to get a sponsor to buy it. You just say we’ll get you the results, only pay us when they results come in.
Ty: Exactly. You’re exactly right. And we can do satellite because we can do nationally and then we can also do service in the specific DMA in specific cities. So, we can actually run a television campaign in a specific city or we can just blow it out nationally. It’s very, very, very cool.
Andrew: I see. They control positions on Dish, Direct TV, Comcast, Files, etc. But we [??]. Wow, all right. The company is and the website is Songwhale. Ty, thanks for doing the interview.
Ty: Thank you.
Andrew: Ty’s got to run. Ty, thank you for doing . . . they’re saying you’ve got to run and give us . . .
Ty: [inaudible]
Andrew: He’s giving you a beer. You know what? Let’s get him on camera. Even though the camera is fuzzy, let’s get him on camera.
Ty: Yeah, get him on camera. He’s a great host. He’s coming over. He said beer or scotch.
Andrew: I’d gone the other way my friend.
Raam: [inaudible]
Andrew: Hey, good to see you. So, I guess it’s the end of the day where you are. Right? Oh, you need the headphones. Put them on, we’ll talk to you for a moment. So, it’s 9:00 where you are. You’re done for the day? Sorry? Oh, there we go. First of all, thanks for letting us use your office today.
Raam: You’re very welcome.
Andrew: And, so, what made you decide to say yes and lend us your office like this?
Raam: It’s a sunny day in London I was entering some change on Twitter and someone said, “We’re looking for a place in Camden.” I said, “Okay, you can use this site.” A lot of people are taking a long weekend here in London because of the Easter break. So, there’s a couple of people who not around. So, [inaudible] okay, why not.
Andrew: Wow. Are you a long time fan of Mixergy?
Raam: Yeah. [inaudible] a whole bunch of stuff and some of the stuff that you’ve done is intriguing. You’ve had a mix [??].
Andrew: Really. Tell me about that. What makes you say intriguing?
Raam: [??] a few days ago just talking about looking for [??]. I guess it was amazing to hear about who are successful. I take my hat off to people who be successful, but at the same time you [??] avoid this failure. I really like to hear about people who completely screwed up [??}.
Andrew: Yeah. I’m really looking forward to putting together that failure series because you’re right. Everyone that we talk is success and they say whatever the successors has done must lead to success and they’re ignoring the failure. I’m sure we’re going to find some things that the failures did that’s in common with the successes and I want to understand what then separates them if it’s not those common things that we expect.
If it’s not things like [??] did. I bet you will we’ll find the failure and the successors are both [??], but we’ll discover for ourselves. I’m glad that you appreciate that. I got a lot of negative feedback for that. A lot of people said that this is just not a good idea.
Raam: I know it was very great idea. Some of them, well, both members last week gave me a very good idea which was when we come out of the new direction on new partnership etc. instead of taking until the end and then working on what did with that partnership. What about doing a pre [??] which is before you actually, before it kicks in, what would be five reasons that they mess up.
Andrew: Ah, yes.
Raam: And from that [inaudible] If you could [??] announce the thing which is the reason you make from then you [??]. Okay, let’s nail it and it’s no longer the weakest link.
Ty: I didn’t know, Andrew. I could have told you tons of failures.
Andrew: I’ll love to have you back on. I’ll love to have you both on. Thank you so much for the space and thank you, Ty, for doing the interview.
Ty: Yeah, that’s a blast, but thanks again. I think it’s even more fun that I met another start up.
Andrew: I agree. Yeah, for me to. Thanks Raam.
Ty: Thanks, Andrew.
Andrew: Thank, Ty. Thank you all for watching. Bye.
