Andrew: Before we start, you’ve probably seen posts like this on TechCrunch a lot, right? Where they list all the start-ups that were recently launched at Founder Institute? Well, I want to call your attention to it because Founder Institute is accepting applications right now and I hope you apply. Because if you are accepted, you’ll have access to experienced CEOs as mentors. You’ll get introductions to investors, you’ll have access to the press, and other resources to help you launch your company right.
They’re accepting applications right now at FounderInstitute.com.
And remember Patrick Buckley, who I interviewed? He’s the guy who came up with an idea for an iPad case and he built a store to sell it online. Well, a few months after he did that, he generated about a million dollars in sales. The platform Patrick used is Shopify. If you have an idea to sell anything, set up your store on Shopify.com, because Shopify’s stores are designed to increase sales. And, because they are so easy to use and setup, even if you have a friend who is not a techie the way you are, if they are looking to set up their store, you can recommend that they use Shopify and trust that they will have an easy time setting it up without calling on you for tech support. Shopify.com.
Finally, do you remember when I interviewed Sarah Sutton Fell about how she got thousands of people to pay for her job site? Look at the biggest point that she made when we talked. She said that she has a phone number on every page of her site because she says, and here is a stat, 95 percent of the people who call end up buying from her. And, most people don’t call, but seeing a number, a real person that can be accessed by phone, increases their confidence in her and they end up buying. So try this. Go to Grasshopper.com and set up a phone number that will make your company sound professional. Not like one of these freebies, but like a professional, virtual phone system that you are going to love. And, add that phone number to your website and see what happens. Grasshopper.com. You’ve got to try them to know why I keep talking about them.
Here’s the program.
Hi, everyone. I’m Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. And, as you guys know, the goal here is to interview entrepreneurs about how the built their business, what they learned along the way, about the setbacks, about the triumphs, and bring all that knowledge back to you, so you can go out, build your own company, and hopefully do what today’s guest is doing. Which is do an interview where you get to teach other people what you learned.
Today’s guest is Nihal Mehta. He is the founder of Buzzed, a city guide that shows real time popularity of places based on posts and check-ins from Twitter, FourSquare, Gowalla, and Yelp. Previously, he founded ipsh, a wireless promotion company, which he sold to Omnicom. And, actually, first of all, welcome to Mixergy. It’s good to meet you.
Nihal: Thank you. Great to be here.
Andrew: You know what? How did I do with that intro and that description of Buzzd?
Nihal: It was perfect. Yeah.
Andrew: Oh, great. OK. And what I’m seeing, as I look at your biography and as I did some research on you, is four words just kept popping up over and over. Youth, wireless, even before there was a wireless, I saw you in wireless. Guides, as in city guides. And events. This seems to be a running theme, right?
Nihal: I think so, yeah. You know, ever since I was probably in college, I just had a natural inclination to promote. I guess the channel of promotion has definitely evolved from handing out flyers as a freshman in college to sending out text messages, which became i-p-s-h, or ipsh, to eventually mobile technology gradually became more pervasive as the actual platforms became more robust to now being able to promote through (__) social media like Twitter, FourSquare, Gowalla, Brightkite, Loopt, twhirl, the list goes on and on.
Andrew: So, you actually handed out flyers to what when you were in college?
Nihal: Yeah. Good question. So, I was, essentially, and still as a hobby, a DJ. So, often handing out flyers to your own party or a friend’s party. Literally on the street, at other bars and clubs. I think learning that art of promotion, the brute force street marketing. Going up to anybody and giving them a flyer. Obviously in some arenas is more targeted than others. I think that probably created a foundation of marketing for myself.
Andrew: What did you learn about getting people’s attention when you had to do it one on one with strangers?
Nihal: Yeah. That’s a great question. I think it draws a lot of parallels to what we are doing today. I think the two things that we talk about is if the offer is really well targeted. So, in other words, if the flyer is about something, it’s another rock band and you are at a rock show. That’s one thing. Right? Making sure the (__) targeting. The other thing is actually seeing how visible, at least how big, from just a visibility standpoint, the offer is.
So, actually, even backing up a little bit, two prongs, really, of the offer, is targeting, and the actual nature of the offer. So targeting, meaning, if you are outside of a rock club, handing out a rock flyer. And then how compelling the offer is. So, if the flyer actually says, ‘Show this flyer to the bartender for $50 dollars of free drinks’, then that is another lever that you can tweak.
Andrew: Oh.
Nihal: So, maybe those are two things that I learned. Back in the day. Is you don’t necessarily want to go to a restaurant, a Chinese restaurant and sit outside and hand out heavy metal rock band flyers. Probably doesn’t work.
Andrew: [laughs]
Nihal: Yeah.
Andrew: OK. So, you graduated from Penn and you started a company called Urban Groove Networks. What was it originally, and I know business evolve, and I want to learn about the evolution of it. But, when you launched it, what was your original vision for it?
Nihal: Great question. So, I mentioned I was a DJ in college, that was one of my hobbies. Actually, I had the experience to work at Microsoft the summer in between my junior and senior years in college. So, I went out to San Francisco. Literally, Silicon Valley, I believe the year was 1998. So, I got that amazing inspiration of literally driving up 280 and seeing billboards of Oracle and Yahoo and Google and that was even pre- major growth of those companies. But, just being in the mix there and having that inspiration.
So, then coming back to Philly senior year, with that bug inside, I knew I wanted to create a dot com. And, instead of handing out flyers, we realized (__) to sending out e-mails to a lot of our friends. And then instead of sending out e-mails, we said, ‘Listen, I’m just going to create a website.’ Where people can actually see what’s going on in the city. And so we started a site called PhillyTonight.com. We launched that in the beginning of 1999. And we were just finishing up our second semester of senior year. Myself and my partner at that time.
And, initially it was a senior project. I double majored in computer science and philosophy. And, it was my computer science senior project. And, went the traditional (__) route, which was interviewed with a ton of companies. Actually got a job at Goldman Sachs.
Andrew: Mm-hmm.
Nihal: And, I’ll never forget the conversation, maybe turning point in my life, where my parents said, ‘Listen, you have a dot com. The year is 1999. You’ve got an offer from Goldman Sachs. Goldman Sachs will probably be there in a couple of years. Little did they know that upcoming impending financial doom. Financial crisis. But, you know, they said, ‘Listen. Go for it. Make it happen.’
I was fortunate enough that the timing was right. Literally scribbling PhillyTonight.com, any dot com on a napkin, and you could raise some angel financing. Myself and my business partner were able to raise pretty quickly about a million dollars in angel capital. That helped fund the business for Philly Tonight.
Philly Tonight became a city search for nightlife for Philadelphia. We had billboards on I-95, we had a commercial with The Roots on MTV. We ended up growing Philly Tonight into Urban Groove. Which became, essentially, 15 city centers around the world. So, we had Miami, Chicago, San Francisco, Singapore, London, Dubai. And, that network was Urban Groove.
And either we would create those city guides or we would partner with (__) city guides.
Business model was all online advertising. So, we’d go to a national advertiser like a Pepsi or a Coca-Cola. I actually have to say Coca-Cola, because they were just in our office.
They actually got stuck in the elevator on their way here. Kind of embarrassing.
Andrew: Oh.
Nihal: One of the trials and tribulations of having a start-up. But, you’d go to a Coca-Cola and you’d be able to actually garner advertising revenue for them and do a trickle down effect to all your local sites and do a rev share with that. That was our business model.
Of course, in 2001, we had a major adjustment in online advertising. Adjustment is euphemism for major, huge crash. But, we were fortunate enough to build some other products within Urban Groove. One of which was a mobile product. Where you could actually sign up for SMS in London. So, say hip-hop, London, put in your phone number, and we would, Urban Groove would actually send you a text with what we recommended for you to do in London.
And, so, that became actually quite popular in 2000. We had tens of thousands of subscribers. And, what was interesting is, this was before interoperability happened in the United States. Interoperability meant if you were on a Verizon phone, you could not send a text message to a Sprint phone. That happened after ’01. So, we were doing all this SMS even before consumers were doing, or even able to SMS between networks.
So, we knew we were on to something there. In ’01, the crash happened and literally, the online advertising market just fell. Plummeted. Somebody pulled the rug from under it, and it was gone for at least 12 to 16 months. From a budget standpoint, the revenue, any sort of tangible revenue line item. Thought about spinning out that mobile product as a B2B. So, literally, selling that to brands.
We started with small record labels. My first client was GIANT STEP records, here in New York, to help power, essentially, to help power a CRM platform for them. Where they could literally sign people up with their mobile numbers and send them alerts based on when a new release was coming out or when a new artist was performing somewhere. And using it as real time CRM. Much like they would use e-mail, they would do that over SMS.
And so the smaller record label, GIANT STEP, became the bigger record label. Became the smaller brand, became the bigger brand. I actually ended up moving to San Francisco in ’01. And that company became ipsh. I-P-S-H.
Andrew: Can I pause the conversation there just to fill in some gaps?
Nihal: Sure.
Andrew: So, I’ve talked to several entrepreneurs who tried to get into the online city guide space, and they all had to pivot away from it. What do you think it is about online city guides that it’s such a tough business to crack?
Nihal: Yeah, it’s an interesting question. I think, one is consumer acquisition. Acquiring an end consumer, especially today, in 2010, is extraordinarily expensive.
Andrew: Mm-hmm.
Nihal: You know? From a behavioral standpoint. Consumers already have relationships with Yelp, with CitySearch. Brands that have been around for years. Facebook, obviously. So, any new service has to be incrementally that much more compelling to get somebody to change their behavior.
Andrew: But this was even back in ’99 that it was a tough nut to crack. That a lot of people tried doing it and as I say, they had to pivot away.
Nihal: Yeah, I think even when there wasn’t a saturation of city guides out there. Like, Urban Groove definitely had, at one point we had over two or three million unique users. And in the year 2000, that was a lot. But, I think the revenue model was hard to maintain. If you have a staff creating content, that staff costs money. You are going to end up paying whatever it is. I think at one point we had 30 folks. We had a gross burn of over 100k a month.
How do you sustain that if your revenue model is just online advertising? You cannot charge for a subscription to a city guide online if CitySearch and Yelp are free. So, you had to monetize from advertising.
Andrew: So, the reason Yelp was able to do it is because they reduced costs by having their guides crowd-sourced, essentially, right?
Nihal: Yeah, but they ended up, by the way, and Yelp still does it, paying local editors. So, it wasn’t completely crowd-sourced.
Andrew: I see.
Nihal: Yelp wasn’t really profitable until recently. And, by the way, they raised a ton of money. They raised over several hundred million dollars in capital to get them along this way. So, unless you have droves of VC that can help support your CAPEX, I think it is very hard to become cash flow positive.
So, start-ups that create a city guide either have to have extremely low burn so that they can get a couple of (__) every month and maintain, get their head above water, or have significant investment capital to ride the wave. So that they know, at least, on the horizon, there is a point where they are going to be profitable. So, I think the short answer to your question is, it’s hard to monetize.
Andrew: OK.
Nihal: You know? It’s hard to monetize when you have such a big cost basis on creating or curating content.
Andrew: The other question that came to me as you were telling the story is, I talked to venture capitalists who had investments during that period who said a lot of the entrepreneurs, they just walked away. They said it didn’t make sense for them to continue growing the business. They might as well go out and get a job.
You had an opportunity to work at Goldman Sachs. As your mom said, Goldman Sachs was going to be around. Those opportunities would be around. Why didn’t you jump on them instead of continuing to build this business and figure out where the market was and where the revenue was?
Nihal: Yeah. You know, at that time, it was more. That’s a really good question. I definitely thought about it a lot. It was probably just being stubborn. And I don’t know if that is a good thing or a bad thing. A lot of people said I was insane to start a mobile marketing company in 2001 before consumers were sending text messages. It took three or four years before the market was ready for marketing over the mobile channel.
A lot of people think I was stubborn or insane. Some people were saying, ‘Wow, you’re persistent.’ I think the best entrepreneurs don’t give up. Failure is only failure when you admit defeat. And so, I wouldn’t admit defeat. I think a lot of our original investors were close. Family and friends. I did not want to see them lose their money. I thought that I just needed to fight for it.
An analogy I still use, even today, and Buzzd is going through a pivot right now where we are actually going from B2C, to B2B. Not unlike what I did with Urban Groove and ipsh.
Andrew: Can you tell me about that? We’ll come back to the story and pick up with 2001, when you launched ipsh. I-P-S-H.
Nihal: OK.
Andrew: But, what’s the pivot today?
Nihal: So, the pivot today, Buzzd today, we are an aggregate real time social media. Twitter, Gowalla, Brightkite, Loopt, twhirl,Yelp. Last week, a small company called Facebook launched Places. And that actually considerably increased inventory of check-ins. So, needless to say, it’s helping the Buzzd consumer app. And its helping the end consumer with that value prop line, ‘Where do I go right now?’ Based on all these different social networks.
But now we are leveraging that data store to help businesses and brands reach consumers. So what that means is, if you check in to a particular venue on any of these services, we can enable that venue the opportunity to reach back out to you. Kind of like a next generation CRM platform. Much like a SMB, small-medium sized business (__) marketing that can now utilize social media direct response. Social marketing, as we call it, to respond to these check-ins.
Andrew: So, the idea is, a guy with his cell phone, a 25 year old with his iPhone walks into a bar, checks in so that all of his friends see he is in there. The bar now has the ability to interact with him and say, ‘Hey. You like this? Why don’t we give you a free drink. Or why don’t we invite you back next time and give you some kind of special deal.’ That is what you are enabling now.
Nihal: That’s correct.
Andrew: Why the pivot?
Nihal: That’s just one-use case.
Andrew: OK.
Nihal: So, the pivot was actually, its interesting. In ’01 the pivot happened because the online advertising market kind of collapsed and we had to go B2B. I think the pivot is happening now because of increased competition on the B2C front in location based services. So, companies like FourSquare, for example, have been able to gain a lions’ share of user engagement based on tapping into an amazing user psychology around gaming. If you check-in, you get badges and you get points, and you compete for mayorships. And that really resonated with now almost three million users.
So I think there is competition. Increased competition on the consumer space. Even though we are aggregating FourSquare, we still compete for that user engagement.
Andrew: I see. You are saying, ‘Andrew has got lots of different options for software for apps that he could put on his iPhone for location-based games and activities. Why would we want to bog him down with another app if we can maybe go to the businesses who don’t have a way of engaging.’
Nihal: Yeah.
Andrew: OK.
Nihal: So that was one reason. The other reason is, typically on the B2B front, there is a lot more revenue to be made than on the consumer front. On the consumer front we are relying, again, on advertising.
Andrew: Mm-hmm.
Nihal: You know? And, while advertising is definitely growing by leaps and bounds. It is now officially one percent of total ad spend in this country. Which is still tiny. If you talk about 500 billion dollars in ad spend. It is a sizable chunk. But, small to medium sized businesses spend 100 billion dollars a year in advertising every year. Predominantly in traditional channels like print. But, now that is being disrupted by performance based networks, local networks like Google, of course. (__) City Search but also reach local, Yodle, Yext, SuperPages.
So, there is a huge market there. There is a huge opportunity for revenue. I think that revenue opportunity is much greater than an already saturated competitive consumer market. Now, we are not giving up consumer. Buzzd still exists. But, we’ve created a new product to serve businesses. So, that’s launching in early October. We are just in the midst of finalizing our go to market strategy.
Andrew: One of your investors now is Blackberry Partners Fund. I imagine they invested with the idea that you would help bring location-based apps to their platform. Is there any sense now that they want you to stick with that even if it doesn’t make sense for you as a business?
Nihal: Yeah, I think to a large extent, we probably are still the largest location-based services application on Blackberry. On Blackberry alone, we have over half a million registered users. The Blackberry Partners Fund, by the way, to be clear, RIM is only one of many different LPs. And, actually, they are not even the majority LP. So, Blackberry Partners Fund really operates like a standard VC fund would operate. Obviously with the mobile thesis, with a smartphone thesis. But, not necessarily tailored to just proliferate the growth of Blackberry’s market share. That being said, they are investors at the end of the day.
Andrew: Mm-hmm.
Nihal: They invested in us almost two years ago. Because we were one of the first companies to almost pioneer location based services. I think our new thesis around the business to business, empowering businesses and brands to reach these consumers is probably less in their wheelhouse. And, it definitely wasn’t part of their original investment thesis.
That is probably a long answer to your question, but that was the initial thesis of investment with Blackberry. This is an amazing location based service with tremendous vision. I don’t think anybody realized the saturation that this market would see. The bubble, essentially, that now presents itself in location based services.
Andrew: Alright, going back to 2001, you go from Urban Groove Networks to ipsh. Is it still the same investors who own a piece of ipsh? Or do you say, ‘We are closing down Urban Groove, we are transitioning to something new and it is a brand new business.’
Nihal: So, what I did, I was 22 years old at that time, and a lot of friends and family had invested in Urban Groove. So, we actually ended up giving them almost five times the equity that they had at Urban Groove in ipsh.
Andrew: OK.
Nihal: So, we carried them over. Which is traditionally unheard of. Nobody needed to do that. Nobody typically does that. And we raised a little bit more angel financing in ipsh eventually, when the business started firing on all cylinders. So, in 2004, we ended up raising maybe another $250,000 dollars in ipsh, very nominal. All angel, no venture.
Andrew: Mm-hmm.
Nihal: We ended up selling some assets at Urban Groove, actually. We sold PhillyTonight to the city of Philadelphia. I actually gave Urban Groove to my cousin who is using it as a live sell marketing company. Now, it is called Urban Groove Strategies, UG Strategies. And then we shut down the business of Urban Groove. And, again, migrated the cap table of Urban Groove into ipsh. Ended up growing ipsh up. Being one of the first in that space.
Mobile marketing, so helping brands reach customers through SMS, mobile web, Java, Bluetooth. And ended up selling to Omnicom, which is the largest ad holding company in the world. Still is. Over 20 billion dollars a year in bookings. One out of three ads that you see on television, print, radio, billboards come through Omnicom. Essentially one out of three or one out of four.
We sold that at the end of ’05. So, our investors did well. The original guy that put in 20k in Urban Groove in 1999 ended up, six years later, seeing a return.
Andrew: What kind of return? What did he get on that?
Nihal: He got a good return. And I will leave it at that.
Andrew: OK.
Nihal: But, I think, more than the return, was just that feeling of loyalty and persistence. That this entrepreneur was not going to stop. Was not going to quit. Was not going to declare bankruptcy and go and get a job. This entrepreneur was going to keep on it. It maybe, partially, back to your initial question, what made you keep on going? I think it is partially that onus of having family and friends as investors and wanting them to succeed. And that onus, maybe, transitioned into persistence. Like, ‘Listen, there has got to be a way out.’
If you keep on punching the wall, you will find a hole. And when you see the hole and open it up and run through it. And that persistence is something, a quality that I probably learned early on. Again, maybe from that onus. And, now, its kept with me.
And, I know, today we are not giving up if there is a million players in the business to consumer location based services space. Let’s pivot and go B2B. And let’s service businesses and brands. And if there is more competition in that space, let’s figure out where our strengths lie and just punch it. And so that is what we are doing today.
Andrew: How did you get your first customers? You have a brand new technology, brand new way of looking at the world and interacting with consumers. I didn’t even realize that at the time if you were on Sprint, you couldn’t send a text message to Verizon.
Nihal: Yup.
Andrew: But, that shows how far and new the whole thing must have been to people like me.
Nihal: Yeah.
Andrew: How do you convince companies to give you money for this kind of interaction when most of us didn’t even know how to use it?
Nihal: Yeah, I think a lot of it was definitely evangelism. A lot of it was salesmanship. I mean, I learned how to be a good salesman just by being so passionate about the product.
Andrew: Can you give me an example? I’d love to see that. I get a lot of requests, since I talk mostly to developer entrepreneurs, I get a lot of requests for the sales point of view.
Nihal: Yeah.
Andrew: So, do you have an example of a sale that you got out of nowhere and how you closed it? Maybe you could even walk me through how you found out who the right person was?
Nihal: Yeah. I mean, we can start, there are so many different examples. Here is actually a really interesting example. So, this is pitching Warner Brothers Records. Maybe in 2002.
Andrew: Mm-hmm.
Nihal: And, we had created this SMS product that I thought was the greatest thing next to sliced bread. And I ended up pitching mobile marketing to this woman at Warner Brothers records in Burbank, California. And I just literally e-mailed a bunch of people from the website and said, ‘Listen, we have an amazing mobile marketing solution.’
And I am in LA. I lived in San Francisco at the time. ‘You got to meet with me.’ So, she is like, ‘Alright. Fine. Come in.’ Like, noon at this day, whatever. So, I walk in, wearing a suit. Probably the same blazer, actually. Sat down. Went through the whole pitch. ‘We do mobile marketing. We can distribute your music over SMS.’ And 30 minutes after the pitch, she is like, ‘Wait. Mobile marketing. When you said mobile marketing, I thought you meant driving your trucks around the country.’
This is 30 minutes into the meeting. And I remember she was looking a little confused. But, I was just talking, talking, talking. She’s like, ‘I thought you guys have trucks. You don’t have trucks?’ We are like, ‘No. This is mobile.’ And she was like, ‘Wait a minute. I have somebody you probably need to talk to.’
And, so she walked me into the office to this woman who ran digital at Warner Brothers Records. Her name is Robin (__). She is actually still very prominent in the entertainment industry. She said, ‘You’ve got to meet this guy. He has got an interesting piece of technology.’ And I sat down with Robin and Robin’s eyes lit up as soon as I mentioned what I was doing.
So, just that little break, that little introduction. Robin was running new media. She happened to call, and I guess she just spoke with that morning, and she happened to call while I was in the room, Madonna’s manager. So I am sitting here now, initially pitching, from their perspective, pitching trucks.
I am sitting there now, talking to, through Robin, Madonna’s manager. Like, ‘How can you get Madonna’s new song?’ I think this was American Life or something at the time. ‘On people’s cell phones?’
I said, ‘Oh. That’s what I came here to pitch. This is exactly what we do. X, Y, and Z. You can put a banner ad on your website. Friends can put in their phone numbers and it will send the track through an IVR system. And eventually they can buy a ringtone and they can do all these things in the back and they can opt in for other alerts. And they loved it.
Madonna’s manager became an advisor of ipsh. Soon after that, we ended up getting a ton of artists from Warner Brothers. Which became artists on Sony, which became artists on BMG at the time. And, so that was these little seeds that you plant that you get from breaks. That you get from persistence. I think, is what helps develop business. So,
I’ll never forget Mike (__) autobiography. One of his books, page one. Phone call, fax, e-mail. Phone call, fax, e-mail. Phone call, fax, email. Be persistent. Now a lot of people are pitching us. We give the same attention to that persistence. People that don’t give up. Every week, people that are e-mailing me. People that obviously are smart and intelligent and have a value prop. But I still believe, if you are passionate and persistent, you can do anything. You will get a break. Even if you pitch 100 folks and you get one break. That’s enough.
My break at Warner Brothers was this woman who was definitely the wrong person, that I just e-mailed a million times. Introduced me to the right person who introduced me to an even better person. And that helped completely catapult our business through entertainment and music in the early days. Which gave us a lot of visibility for ipsh. That led us to working with the biggest brands. I have probably 40 other stories like that.
But, I think the point to take away, especially for your viewers, is persistence pays. Don’t get frustrated. The mark of an entrepreneur is, you fall down, you pick yourself back up.
The worst thing that can happen is that you don’t succeed. You try again. It’s not so bad.
Andrew: By the way, I can see that other people, and maybe even me in my worst moments, if I am in there, pitching mobile, and the woman expects that I’ve got trucks, I might say, ‘Oh, man. I can’t catch a break right now. Maybe I am too early with this technology. Maybe these guys just don’t get me. Maybe I made the wrong phone call. I’ll come back tomorrow.’
You are saying you just kept at it with full passion. You didn’t allow it to shake you.
Nihal: Yeah, don’t shake it. And you know in some circumstances, too, depending on the salesperson, you can be adaptive. I wasn’t going to say, ‘Oh, actually, we can sell trucks too.’ But some people do that. I think that is probably a little bit less focused. Those are the marks of really crafty and agile salespeople.
There is a pro and a con to that. But, you know, it is definitely being reactive. Definitely listening. Definitely figuring out what the market wants and needs. And then trying to tailor your service to fill that gap.
Andrew: Do you have an example of someone who got through to you? Maybe because of persistence or clever entry?
Nihal: Yeah. Right now, I’d say two of my staff. Extremely persistent as interns.
Andrew: Mm-hmm.
Nihal: Now have full time positions. I think at ipsh, when we were part of Omnicom, technology companies that kept on e-mailing us and not in an annoying kind of way, but reminding us that they were there. I think there is a really interesting, strategic way to do that.
Andrew: How? How do you do that right?
Nihal: Instead of e-mailing somebody every week, like, ‘Remember me? Hey. You didn’t get back to me. Hey, what’s going on?’ Kind of feeling like a loser. You know?
Andrew: Yup.
Nihal: You send them an article. Like, ‘Hey. Look what we did with Coca-Cola. Hey, look at the announcement that was made two weeks ago, and this is how it affects our business. Just the sense of staying on their radar.
Andrew: I see.
Nihal: And just reminding them casually that you are still around. Because, obviously, people know that you have already asked for something. Now you are just reminding them of your presence. I think maintaining presence is important, versus bugging somebody to death.
Andrew: So how do you learn this? How do you learn to be a good salesman? I looked at your history. You didn’t go to school for salesmanship. There is no class at Penn to teach salesmanship. There are a lot of classes to teach you how to use a computer, but not how to sell it.
Nihal: Yeah. If you are passionate about something, that passion shows in every (__). I mean, in every instance, when you look somebody in the eye and you say, ‘This is what I’m doing.’ If you are not passionate about it, it is very hard to fake. So, I think that is the first (__) of being a salesman. I never learned sales. You learn it on your own. Because you are just relaying passion. You want to get that other person you are talking to as excited as you are. If you can do that, you’ve sold them. So, I wouldn’t call it sales. I would call it just relaying your passion.
Andrew: ipsh stood for instant power single handed. That was the vision. You sold to Omnicom, as you said, 2005. How did you get that sale? How did you sell your business?
Nihal: Yeah. Sorry, we are kind of in the hallway right now. So there is a lot of commotion.
Andrew: That’s OK.
Nihal: Hey (__), say hi.
Andrew: Hi. Is that the person, one of the two people you talked about earlier?
Nihal: No.
Andrew: No?
Nihal: No. This guy, he is on a (__). He could be a rockstar if he worked a little harder.
Andrew: [laughs]
Nihal: So, in 2005, we realized we had some competition in the space. ipsh was one of the companies. I was there early on, but we had a number of venture backed companies that we started seeing against us in pitches. Companies at that time called NQ, Mobiless, EnPocket. All of which, by the way, had great acquisitions. EnPocket sold to Nokia for 200 million. NQ sold to (__) for 400 million.
So, these were big companies that had big investment. So, what we ended up doing is saying, ‘Alright. Let’s go raise some money. Let’s go to the big ad agencies. WPP and Omnicom. Because a large percentage of our portfolio of clients actually came in from agencies owned by WPP and Omnicom.
Andrew: Mm-hmm.
Nihal: WPP at that time, Ogilvy, Y & R, JWT, Omnicom, TWA, BBDO, DDB. A lot of those agencies were clients of ours. And so, alright. Sort of bright eyed and bushy-tailed. Didn’t know what to expect. Let’s create a diagnostic platform. Let’s get an investment from both of them. So, I pitched WPP. I pitched Omnicom. It’s like pitching Pepsi and Coke. It was like pitching Unilever and P&G. You create instant competition. And I didn’t mean to do that initially, but it ended up happening. I went to WPP and I said, ‘Oh, we are talking to Omnicom.’ Went to Omnicom, ‘Oh, we are talking to WPP.’
Instantly they said, ‘You are talking to those guys. Oh. Maybe we will think about acquiring you. Instead of investing in you.’ And I said, ‘You know, I haven’t even thought of that, but alright, let’s keep talking.’ The first acquisition offer, I think, was June of ’05. Ended up negotiating back and forth between the two offers. Ended up taking Omnicom.
Omnicom’s offer ended up being almost three times as much as their original offer and we sold in October of ’05 to Omnicom. Another story that I remember, another anecdote, is when we were pitching WPP, we happened to be on the cover of Ad Age that month. I think it was October of 2005. Actually, it might have been September or even earlier. August ’05. We were on the cover of Ad Age.
And I remember we were negotiating with WPP’s M & A guys. And Martin Sorrell walks in the room, a complete inspiration and idol of mine and a legend in the advertising world. Walks into the room and says, ‘I just wanted to meet the guy on the cover of Ad Age.’ And he literally scribbled something on a piece of paper and that was their acquisition offer.
So, I had that piece of paper and that was an amazing day. An amazing moment. Unfortunately, we didn’t end up taking that acquisition offer. But, I am still very close with Martin and his team. And I know at some point in my life I will probably end up working with them again. But, that was another story.
Andrew: Did you say you still have the piece of paper with the offer that he gave you?
Nihal: Yeah.
Andrew: The one that you turned down?
Nihal: Yeah.
Andrew: You do. I talked to the founder of Eve.com. She says that she still has a copy of the check that she cashed when she sold her business. Do you have the one that you cashed?
Nihal: I have a screen shot of the wire transfer that hit our bank account.
Andrew: Oh. I see. [laughs]
Nihal: These little things you’ve got to keep. Because, as an entrepreneur, you go through roller coasters everyday. No matter how successful you are. You could be the low low, or high high. And you need these little relics to just help you remember all the tough times that you’ve been through and the successes that you have. So, I have a bunch of these little things lying around. But, yeah, I still keep that.
Andrew: Where do you keep them?
Nihal: It’s actually in my study in my apartment. I have it. It’s pretty visible, actually, to me. I probably look at it, I don’t know, once every couple of months.
Andrew: So, I read an article, I think from 2006, about you where you apparently were supposed to stay with Omnicom for a little bit longer but you worked out a deal to leave because you had this burning idea in you. That’s what became Buzzd, right?
Nihal: Correct.
Andrew: OK. And the original idea, back in ’06. This was way before FourSquare. What was that?
Nihal: So, the original idea was a real time city guide. It’s still pretty close to the vision that we have today. Back then, when we started the concept in 2007, we wanted Buzzd to be the platform where people would create that content.
Andrew: I see.
Nihal: We then realized very quickly that there were other platforms that were much better for real time content. Where people were already creating millions of pieces of content everyday. One of those companies is Twitter. So, we started aggregating Tweets and attaching them to Buzzd. And then, now we aggregate all the other location based services and add them to Buzzd.
I think the vision is still the same. Real time city guide. But, how we executed it was different. We wanted to be the platform to create and consume. And now, from the consumer aspect, we are just the platform to consume. Less than one percent of our users create content.
Andrew: Mm-hmm.
Nihal: 99 percent of our users just consume. Based on the way we aggregate. So, the vision was pretty consistent. Pretty dead on.
Andrew: What is a user case that explains how someone would use Buzzd to consume?
Nihal: Yeah. Use case is, it’s Friday night, you are in a new city. You fire a buzz on your iPhone, and we tell you what people are talking about right now. What bar, club, or restaurant is happening. Or you could be literally in your own city and look to see a new neighborhood or on your block and just see what is being talked about.
So, the use case is very much last minute decision making based on what other people are talking about.
Andrew: I see. So, a place that people are talking about and checking in a lot right now. That’s a hot place. I might want to check that out and go see what the conversation is about.
Nihal: Right. Yup.
Andrew: OK. Are you also an investor in AdMob? Which recently sold to Google.
Nihal: Yeah, I am. So, after we sold ipsh to Omnicom, I ended up doing a multitude of angel investments.
Andrew: Mm-hmm.
Nihal: Which was AdMob. So, I’m very fortunate to be a part of that team early on. And, there is a number of other investments as well as some that are public, some that are private. But, I think AdMob was definitely one of the companies that did exceptionally well. So, I think investing and being an entrepreneur definitely go hand in hand.
As an entrepreneur, you get to see opportunities that investors may not. And, applying that to your investment decisions can usually be pretty smart. And so, one of the things that we recently did, myself and three other buddies from undergrad, who have also been in mobile for over a decade like myself, is we just recently started a mobile seed venture fund.
Andrew: Mm-hmm.
Nihal: And that is launching right after Labor Day. To kind of formalize all of our angel investments. So instead of investing individually, we are investing together. We raised some capital from a series of limited partners and we are trying to make 30 to 40 investments over the next two years. In just early stage mobile companies. So much like I was able to get into AdMob at a relatively early stage and a lot of other companies.
Same thesis applies. Based on our operational instincts and our operational access to deals, we want to be the first or amongst the first money into these companies. And actually help grow them tremendously. The thesis is, we want to help grow these companies almost ten times the rate that they are currently growing at just based on our relationships and experience.
I met with a company this morning [interference] connecting to three carriers and two OEMs. Later this afternoon, they would have had no relationship with them and it would have been very hard to penetrate. It took me years to get those relationships and now I’m happy to pass them on and happy to help these companies that we invest in.
Andrew: I see. What size investments are you making?
Nihal: So, typically, $25,000 bets. So very small. Sometimes $50,000 or more. But we do reserve a large portion of the fund to follow on, as well, in subsequent rounds, of the companies that might need more capital. But, essentially, it’s the first 25k. It doesn’t necessarily help a company get from A to B. But, with our investment, providing that strategic advice, we think it is extremely valuable. Especially at the early stage of a company’s life.
Andrew: Is this ENIAC Ventures?
Nihal: Correct.
Andrew: OK.
Nihal: ENIAC is the name of the first computer that actually parts of are still in the engineering school of the University of Pennsylvania. And, also, ENIAC is the computer science school at the University of Pennsylvania, which I have a degree from. So, it’s kind of symbolic. Also, the first computer being a vacuum tube as large as this office and now this little handheld device that has more computing power than ENIAC. So, it is kind of symbolic and we thought it was a good name. So, that’s launching early September.
Andrew: Finally, what are you doing when you are not working? Actually I have one other finally. But, I’ll ask that and then I’ll ask another one.
Nihal: Yeah. So, obviously Buzzd, especially now through the pivot, is where I spend the majority of my time. Still probably, I would say, 14 to 15 hours a day. Right now I am doing a lot of corporate development, a lot of strategy. We are building the product. Probably spend about 10 to 15 hours a week on ENIAC. Meeting with entrepreneurs, helping entrepreneurs. I try to do three introductions a week for every portfolio company.
Andrew: Wow.
Nihal: As well as looking at new deals, participating in partner calls. And then in my spare time there is two things that I do. In all of the spare time that I have. One of which is I’ve become politically active recently. My girlfriend is actually running for US Congress here in New York. Her name is (__). Her election is under three weeks. So, maybe the start-up attitude is rubbing off on her a little bit. She’s relatively new to the political scene but has been very politically active for the past decade as well. Being a big fundraiser for John Kerry and then Hillary and then Obama. But, she’s running for US Congress. She’s become the first Indian-American woman to ever run. If elected, she will become the youngest woman in the House of Representatives.
Andrew: There’s never been an Indian woman who ran for Congress?
Nihal: Indian-American woman.
Andrew: Indian-American woman? Really?
Nihal: For U.S. Congress. Yeah.
Andrew: Wow.
Nihal: So it is historical already.
Andrew: Wow. What part of New York?
Nihal: 14th district. Which is everything east of 5th avenue. From 120th Street all the way to the Lower East Side and parts of western Queens, like Astoria.
Andrew: Mm-hmm.
Nihal: So, about 600,000 people in the district. What is interesting in a congressional primary is that you never get young people to vote. Young people voted for Barack, but they don’t know about the congressional primary. They don’t really care. Just guess. Out of 600,000 people, how many people voted in the last congressional primary? Just guess.
Andrew: I don’t know. I don’t even know who my congressman is, or congresswoman is, in southern California.
Nihal: Exactly.
Andrew: I know in New York, but not here. Not there, I mean.
Nihal: Yeah. It’s literally two percent of the entire population.
Andrew: Two percent?
Nihal: Yeah. Versus 40 percent that voted in the general election for president. And typically, they are not young people. They are people that really just follow politics, that are political fanatics.
Andrew: Yeah.
Nihal: So, typically older folks. So, part of what we are doing, a big part of hopefully what my influence as well, is really connecting with the young people through technology. So, we’ve done a great job to get friends like Jack Dorsey of Twitter, Chris Hughes of Facebook, to be part of our advisory board. And utilizing Twitter and Facebook and mobile and all this stuff that I have been innovating on and a lot of us have been innovating on as big instruments of communication for her campaign.
So, that’s in three weeks. That’s coming down to the wire. The election is September 14th. If you are in New York, you can go ahead and go to (__) and sign up to volunteer and we’d love to have you.
Andrew: (__).com. OK.
Nihal: Correct. And last but not least, in 2001, another thing that happened is we started a non-profit called Ahimsa, A-H-I-M-S-A. And initially that was in direct response to a lot of the hate crimes that were happening to Arab-Americans and Indian-Americans after 9/11. So there was a Hindu temple that was burned. There were taxi cab drivers that were killed.
So, we did what we knew how to do in ’01, which is throw an event. Throw parties. And we raised money for a lot of the victims’ families. That was the genesis of Ahimsa. Ahimsa means non-violence to all living things. It’s actually a Jain tenet. My religion is Jain, which is different than Hinduism but very similar.
And that is a big tenet in Jainism, which is Ahimsa, non-violence. I’m actually a bad Jain, because I eat meat and occasionally drink alcohol, but good Jains typically are vegan and in India, obviously, there is no alcohol if you are a hardcore, orthodox Jain.
Today, Ahimsa has actually marked from a reaction to a lot of those hate crimes to providing music education for underprivileged youth all over the world. What that means is, in one of the largest slums in India, in Ahmedabad(sp) in the state of (__), we have schools where we teach the kids in the slums how to play a sitar, how to play a (__). How to dance, how to sing.
And we are noticing that it is creating this amazing self-empowerment. Gives them an amazing sense of self-confidence. A lot of charities are focused on giving food, giving money. Well, that’s important. Some of the core basics in just creating self-confidence in dire, dire circumstances through music, I think, is definitely being underserved, and so it started in India.
Now we have 80 programs throughout the world. Post-tsunami Thailand, Latin America, even here in the U.S. We are helping disadvantaged or underprivileged youth. Create self-esteem and self-confidence.
Andrew: Are you a musician? Is that where it came from?
Nihal: I am. So, you know I mentioned DJing in college. Prior to that, my mom got me started on the violin at a very early age. I think I still have my first violin. When I was like two years old. I played the French horn and the trumpet in high school band. Obviously still an avid music fan.
Andrew: So what did it do for you to grow up playing music?
Nihal: In terms of creativity, I think it has helped immensely. Just being able to expand the horizons and being able to imagine things that you normally would not. I think from a mathematical standpoint, just counting music helps at an early age. I was very proficient in math and science in high school.
But, I think just opening the door to creativity and imagination has helped me today as an entrepreneur. Where people often take the road already paved, I like to think of myself as creating new routes. It is like pioneering like we did with ipsh and mobile marketing and like we are trying to do with Buzzd’s new products. Pioneering social marketing. Doing things that people haven’t thought of. And, I think music had a lot to do with that at an early age.
Andrew: I wouldn’t have thought. Alright. So, the final question that I wanted to come back to is, what was the best part of selling ipsh?
Nihal: I think the best part, besides validation on the marketplace is, I talk a lot about entrepreneurship and my personal experiences. I have to say it was my parents that really shaped who I am. Everybody says that, but really, besides giving me me, providing inspiration. Coming to this country with nothing. The American dream. My dad came over with $1000 dollars borrowed from his uncle. My dad was an engineer. Got a full ride at Marquette. I was actually born in Iowa because he was working at John Deere.
You know, coming to this country with nothing, to creating better lives for themselves and for their family. For myself. And, about 20 years ago, they started a business in the basement of their own home. An import export business. They now produce candles and potpourri and distribute to large retail like Walmart and Target.
Seeing this business and seeing this inspiration firsthand from the ping pong table in my basement to now 100 plus employees across multiple factories was just amazing inspiration for me.
And so, obviously they help me every step of the way. Probably one of the best things about selling ipsh is that it was not just validation for me and my team and what we built, but it was really just giving them a pat on the shoulder saying, ‘You did good here.’ You know? You inspired somebody, your son, to go and create something that just got acquired by the largest ad-holding company in the world.
And so I think that was the greatest thing for me. To go back and say, ‘Hey, thanks guys. You made this happen and thanks for being an amazing source of inspiration for me.’ And what we are finding and I am sure you are finding too and a lot of viewers on this program is that entrepreneurship is contagious.
A lot of our close friends from undergrad that had normal jobs are now all entrepreneurs. Because we are constantly breathing, and living, and talking about this. It’s not about the nine to five. It’s jumping out of bed every morning, not waiting to wake up. Because, we are so excited. Life and work are just one big mesh. And we do things because we love to do them, not because we have to do them.
And I think that is one thing that a lot of people are starting to see. I am starting to see a lot of our friends become entrepreneurs. I know I am kind of rambling, but one last point. You are only successful at something you are really passionate about. You are only going to make your mark on this work with something you are really passionate about. Everybody has that. I think everybody has that one passion that they can leave to this world. Their mark, their niche. And, it just takes some people more time than others to figure out what that is.
Andrew: What a great place to leave it. That’s a great answer. Thank you for doing this interview and it’s great meeting you.
Nihal: Nice to meet you as well. Thanks for the opportunity.
Andrew: The website is buzzd. Thank you all for watching. Come back to Mixergy, give me your feedback, and I’ll see you there.
