RedLaser: How A Company That Nearly Died Sold To eBay

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Here’s the program.

Andrew: Hi, everyone. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart. How could two guys whose company was almost dead end up selling millions of apps and change the way people use their mobile phones? Joining me are Vikas Reddy and Jeffrey Powers, founders of Occipital. They created an app called RedLaser that made the cameras on people’s mobile phones into smart barcode scanners. With their app, you can scan items in stores like Best Buy and see if you can buy those items cheaper online.

After selling millions of apps and licensing their technology to companies like Target, they sold RedLaser to eBay. Today they still hold ownership of their parent company, and they’re still changing the way that we use our mobile phones through a new app called Panorama 360. Guys, welcome to Mixergy.

Vikas: Thanks.

Jeffrey: Thanks.

Andrew: So when we talked before the interview, I screwed up on the pronunciation of the names. How did I do there in the intro?

Vikas: You got it pretty close. The only thing was Vikas was slightly off.

Andrew: I had it wrong.

Jeffrey: Yeah, you got Occipital and my name.

Andrew: Vikas, Vikas, Vikas, Vikas. That’s the way to say it. I should’ve said it five times before we started just to reinforce it in my head.

Vikas: No worries.

Andrew: So it is Vikas, right?

Vikas: Yep, that’s right.

Andrew: How many copies of RedLaser did you guys sell before you sold that product to eBay?

Jeffrey: Yeah, so we sold about two million copies of RedLaser on the App Store before selling the entire product and associated technology to eBay.

Andrew: Okay. My goal for this interview is to find out how you guys launched the business, how you almost died, what you did to recover, and how you got this app to be so freaking successful. My idea is that the person who’s listening to us right now is going to be in your situation or maybe even is in your situation and I want them to learn from your experience. We talked in the pre-interview and you said one of the things that’s important to you is to talk a little bit about your upcoming app. In fact, the one that launched. I’m going to let you talk a little bit about that and then we’ll go into the story and we’ll fit into the story of RedLaser and we’ll finish with Panorama 360. But I want you to make sure that you get the part that you’re really excited about. What is Panorama 360?

Jeffrey: So I’ll talk a little bit about the app and maybe Vikas will pull up a quick demo in the meantime.

Vikas: Yeah.

Jeffrey: But the app is called actually 360 Panorama. It’s on the store. You can download it now. It just launched. It’s essentially an app that allows you to capture panoramas in real time. So back when we did RedLaser, the big thing we did was made it real time. We made it so you didn’t have to take a still photo to get a barcode scan. We’re doing the same thing with Panorama. You just pan the camera and it’s automatically stitching every single video frame. And what’s awesome though about this new update that’s just available now is that for the first time you can basically share a street view of anywhere. So you just, you know, you’re on the street and you’re like, “Oh, I got to show you this scene. I can’t get it in a single photo.” So you just capture a panorama by just panning your phone and you can upload it like this.

Vikas: And this is actually running just on a normal Safari mobile browser so I’ll do it quick. See it’s got the full 360 view there.

Andrew: I see. So you’re showing me what I would see if I stood by that poolside and turned around 360 degrees.

Jeffrey: Exactly, yeah. The idea is to capture it in, I think, 20 seconds or so to actually get this on here.

Andrew: Hey, let me ask you guys something. Why are you so freaking hungry to show me this app? You guys have made it. RedLaser was a phenomenal success. TechCrunch loved you. Everyone in the tech world loved you guys. Other app makers integrated you and talked you up. I would think that you’d be pretty laid back and say we got a new app, Andrew, life is good, who cares? But before the interview you wanted me to talk about this. Where is this hunger coming from? You already made it.

Vikas: I think a lot of it’s around our passion for computer vision. With RedLaser, we sort of bit off a small chunk of technology that we thought we could do pretty well. And we did with RedLaser, but then we were more excited about this bigger vision of bringing computer vision to the masses. And so 360 Panorama was another step along that way. Yeah, I think that’s . . .

Jeffrey: Honestly we feel like we’re just getting started. Like we’re still in the trenches trying to prove and pull this technology to light, and so that’s why we’re so tenacious.

Vikas: Yeah and also . . . yeah, that makes sense.

Andrew: I love that. I love that about you guys. I didn’t mean it as a critical question. I said I want to know how and why you guys are like that so that I can feed off of your energy and my audience could too. All right. Let’s talk about how you got here. First of all, how did the two of you meet?

Vikas: So I think we met during a, there’s a bowling event for our engineering society [inaudible 0:05:58]. That’s actually the first time we met. I think I traded Jeff a chicken wing for some M&M’s.

Jeffrey: I think I got the better deal.

Vikas: Yeah, I think he got the better deal on that one so, yeah, that was I think the first time we met.

Jeffrey: Yeah. Yeah, that’s right.

Andrew: How did you know that you guys would be, that you guys would make good partners and that you guys could stick it out even through tough points in building a business?

Jeffrey: I don’t think we really knew, but one thing is we were kind of leaders in the engineering society together and so we both sort of went through that process. And it was like it was always last minute and it was always like trying to jump up in front of big audiences and try to say the right thing. I think that’s a lot of what it takes to run a company too, is just have that attitude of I don’t know what the heck I’m doing right now, but I’m going to get up and do it anyway. And we both have that attitude. We also both worked. Vikas if you want to you could talk a little bit about Xanga.

Vikas: Sure, yeah. We worked at the startup called Xanga.com in New York City for a while, where actually Jeff came on as an intern for a little while. So and I’d actually, yeah, just seeing projects that Jeff had worked on both there and even at the university, I was just really impressed with that and I knew he had that drive and that vision even to go after these big ideas.

Jeffrey: Right and I knew Vikas had the [inaudible 0:07:10] and stuff.

Andrew: Was there a moment or a conversation that you guys had where you just said yeah, we got to get in business together, we’ve got to do this?

Jeffrey: Not really. I think it was just like over time we had exchanged ideas about startups, and Vikas was trying to do his own startups on the side and I was just trying to start Occipital before it was called Occipital. And so I think we just kind of started churning a bunch of ideas and said hey, let’s do this.

Vikas: Yeah.

Andrew: What are some of the ideas that you kicked around before you launched Occipital?

Jeffrey: So we had a bunch of ideas. One of the ideas was around journaling and actually creating automatic journals. We kicked that idea around for a while. We wanted to apply computer vision to the journaling concept. Another idea that we had, to this day we think is really good idea, is receipt recognition. So the idea of taking a paper receipt, just image it with your phone and then automatically enter all that information into sort of a chronicle of not only your expenses but also your [inaudible 0:08:06]. And we had a bunch of other ideas along the way too.

Vikas: And that one actually, interestingly enough, that we one we applied to TechStars with that idea, but all the mentors in that program just hated it.

Jeffrey: Yeah. Its interesting TechStars is pretty selective. But in our case, they actually told us we got in despite our idea. They knew we were like smart guys that were going to drive at anything and drive super hard and do this cool new technology. But they actually hated our idea. So it’s interesting, if you are thinking about applying to one of these incubators, really they’re going to let you in based on who you are and maybe not what your idea is. So keep that in mind.

Andrew: What is it about you guys that made them understand that you guys are hard driving, that you’re going to stick it out even if you run out of money, that you guys can make it work?

Vikas: I think part of it was the feedback loop. When we first started applying to them, we showed, we met David Cohen, the founder of TechStars near the airport at LaGuardia and we were in New York City at the time. We showed him like a lot of cool tech demos. I think part of the key was even after that we kept, we sort of kept at him. So we’re like hey, here’s the progress we made, here’s some computer vision interns that we just recruited from Colombia. We’ve got nine interesting candidates. You know kind of going back and forth, back and forth trying to show that we weren’t just like oh, here’s our thing and then sitting back. We were really pretty proactive I think because we felt we had to be.

Andrew: I see. So there’s always something going on. You’re always adding something to the business, adding something to the product, bringing more people into your vision. So every time you talked to David at TechStars, you’re always showing him some progress?

Vikas: Yeah, and that still continues today. We still bounce ideas off of him and still go back and forth, show him our progress even though we’re out of the program.

Jeffrey: We have a serious, no bullshit mentality. Like it’s always about let’s see the demo, let’s see it working, let’s see the metrics, and it’s never about the fluff. And I think that resonated with them too.

Andrew: You know what? I noticed that about you guys. Most people if they want to do a demo here in the interview will have to go in the middle of the interview, go grab their phone or go grab a computer and then come in and do the demo. You guys had it in your hand, ready to do the demo. I felt like it would just be awkward and rough if I didn’t let you guys do that demo, if I didn’t let you talk about the product. All right. So 2008, is that when you launched the business?

Jeffrey: Yeah, we got into TechStars in 2008. We incorporated the company shortly thereafter. Then we didn’t actually launch any products until 2009, but we did launch the business in ’08 and we nearly ran out of money at the end of ’08.

Andrew: But you came into TechStars with some product. When did you start that? When did you start building it?

Vikas: That was, we came in with the receipt idea. We started actually building that not too long before TechStars, probably because we kind of realized, we’re like okay maybe we should go sort of launch something that’s small, try to get something that could work pretty quickly since it was only like a three-month program. And so, yeah, we applied with that. I would say we started working on that maybe two or three weeks before, maybe a little longer.

Jeffrey: Maybe a month beforehand. So around March of 2008 is when we had started kicking that idea around.

Vikas: Yeah.

Andrew: And even though it was two months later that you got into TechStars, you had enough time to show David Cohen, the founder of TechStars, some progress, some forward momentum on the business?

Jeffrey: Yeah, we had some initial recognition working, recognizing the logos on receipts and we were able to say this came from [inaudible 0:11:19] or this came from Safeway. And we had that working and we sort of had this big vision and plan for where we were going to go next. So yeah we were just trucking along.

Andrew: You know as a user I got to tell you I love that idea and I would want to see somebody create the receipt recognition app the way you would do it. Not where I have to take a picture and then tell the app where the edges of the receipt are. I just want to quickly take a picture, store it, and forget about it. And it’d be nice if it integrated into some of the programs that I use, into some of the financial packages. But really if I could just have that receipt, it’d be incredibly helpful. Okay, so you have this idea, you go into TechStars with it. When do they tell you hey, we don’t like your idea?

Vikas: I think it was probably within the first week, I think.

Andrew: Okay.

Vikas: Yeah, in fact the very first meeting we had with the whole group of TechStars, they didn’t single us out, but they were like at least one of the companies here got in despite their idea, and then I think it quickly became apparent that that was us.

Jeff: It was us. Yeah, it was right away. They were pretty much like so, yeah, cool technology, but you know we don’t think people are going to do that, so keep thinking. And that was like a week in.

Vikas: Yeah.

Andrew: Why didn’t you keep pushing through with the receipt idea? Why did you accept that you needed to go in a different direction?

Jeffrey: Yeah, I mean so we did push back a bit. We kept working on it. We had just got these two interns, and we were all working like until 2:00 a.m. trying to get this thing working. We even got it like to a prototype stage where it was not only recognizing logos but also reading some of the text in a crude manner. We just kept pushing and kept pushing and we kept getting this consistent feedback. The great thing about TechStars is the mentors, right? It’s all these people that have been successful in business and especially tech business before. And so we sort of, after collecting a lot of data, as Brad Feld would say, we sort of put two and two together and three and four and five and six together and said all right maybe these guys are onto something. Maybe this isn’t the right idea. To this day, we don’t know. Maybe they were just a little bit behind the curve because people are using their phones and taking pictures of like everything now.

Vikas: Or we were ahead and maybe that’s, maybe it would’ve been big now, but maybe at the time it was still too early, so.

Jeffrey: And one of the things that we’ve learned is that as technologists and as people that are trying to push the tech envelope forward is that we’ve learned that basically we’re always, we think the world is more advanced than it really is. We always think that it’s ready for this phenomenal technology, but really we need to dial back and sort of set our sites at something that’s a little more practical given the state of the world. And so we kind of came to that conclusion that maybe they were on to the right, maybe we were a little bit ahead of the curve and then sort of dialed back and rethought different ideas.

Andrew: I want to stick with this for a little bit because it’s really hard to know that you’re going in the wrong direction or to accept feedback like that on a product that hasn’t even really launched from people who, they’re people but they’re not necessarily your end user. Can you give me an example of a piece of a feedback that you got and maybe from a specific person who gave it to you that will make me understand how you realized that you were on the wrong track?

Jeffrey: I think the key thing’s like . . . I remember like David Cohen telling us that he really didn’t think that, or basically I think it was maybe David Cohen and maybe Dave McClure as well in the same room, I’m kind of remembering this meeting, and it was kind of like you guys are trying to change user behavior and that’s not a good thing. Or you’re trying to make users do something they don’t do today at all. That was kind of the feedback that kind of stuck with us and we thought that’s true, people aren’t taking pictures of their receipts. Then there were other jabs thrown in there like and it’s awkward and it’s weird, I don’t want to do this in a restaurant and all this kind of stuff. So we kind of came out of those meetings deflated, and that’s ultimately I think a key reason that we switched.

Andrew: All right. And the next thing that you created wasn’t the barcode scanner from what I understand, it was something else. What was it?

Vikas: So we kind of switched into almost a bigger vision of taking all of your photos, your digital photos and using computer vision and artificial intelligence to actually organize them automatically and then display them basically in amazing new ways that had never been done before, so. That was like sort of, we sort of switched into that. I mean it was, yeah.

Jeffrey: [inaudible 0:15:27] feedback about this receipt idea, right? And so we’re like all right, these guys want to be wowed with something amazing. We went into our hat of ideas that we had and pulled out photo organization. This is now a massive problem that’s growing every day because people are taking ridiculous numbers of photos compared to what they used to take. So that was a huge, big idea. Then what kind of, what happened is we realized over time that that was too big. And this was kind of still before this realization sunk in that we were sort of biting off too big of a piece for the size of our company.

Vikas: Yeah.

Jeffrey: And so we ended up going after that pretty hard and actually got some phenomenal demos by the end of TechStars and some investor interest. But it didn’t end up panning out, and this was just as we were sort of dying as a company.

Vikas: Yeah. There are several reasons why we couldn’t necessarily raise money, but I mean part of it was just that I think we were too like first time entrepreneurs, hadn’t really had, maybe now actually if we went and did that, we’d probably be able to raise money a lot easier. But at the time it was like, oh, you guys are just, you know, what companies have you done before? You know what’s your . . .

Jeffrey: Who’s your business guy, was the question that we always got. Our answer was probably a little bit callous. Instead of saying, well, we don’t have a business guy yet, we think we don’t need one yet, we were kind of like what are we going to use a business guy for? It’s like all these projections are B.S. anyway. This is totally nonsensical stuff, so we’re just going to make money. We’re just going to make stuff that has value. And that answer wasn’t very settling for a lot of investors.

Vikas: Turns out the no B.S. thing doesn’t necessarily work for pitches.

Andrew: So can you tell me what that app looked like, the one that you built at TechStars and how it sort through pictures?

Jeffrey: Yeah, in fact there’s even a demo video of it on Vader.tv if you check it out. It’s like the only video that ever online. But what it would do is it would take a photo stream from Flickr, you just type in the Flickr user ID. It would pull down all those photos, and then it would start to churn them with computer vision. It would try to find objects that are in common. It would say hey, I see this business card is showing up in a couple of photos. Hey I see this restaurant sign is showing up in a couple of photos. It would try to extract things that are apparently important, and then it would make the process for you as the user to tag that stuff incredibly easy. You know it found the same scene five times. You just tag it once. It would also do things like find similar photos of a group and then stack those together so that you don’t have to organize them in that way. If you’re giving someone a slideshow, you probably don’t want to show them six photos of the group that you took just to make sure you had one good one, right? So we did a bunch of smart stuff like that. We grouped things into events, kind of like what happens in iPhoto but more advanced. We just sort of were really trying to do this continual computation over these photo sets and try to over time get smarter and smarter and smarter so that a year later, when you’re actually looking at your photos, they’re organized.

Vikas: Yeah. And part of the goal was to make it so that you didn’t have to actually go in and do any of these things manually. The eventual goal, we had this idea that you would never have to actually go in and manually organize your photos ever again. Maybe type in a few little notes about some interesting story that we could never get from computer vision or AI, but other than that, it would be basically here’s your story.

Andrew: I see. And I’m looking at Don Dodge’s description of what Occipital . . . let me make sure I’m pronouncing it right, sorry Occipital. Guys what does the name Occipital mean by the way?

Jeffrey: Okay. So it’s at the back of your head, the primary visual cortex, so we’re basically building the computer equivalent of the primary visual cortex in the brain and that’s called the occipital cortex.

Andrew: I see, okay. So Don Dodge’s description of what Occipital does includes they can stitch photos together into a panorama, automatically label and tag photos, and construct 3-D scenes from your photos, zoom in, fly over, step inside a building, all based on simple photos stitched together into a 3-D presentation. How much of that was built?

Jeffrey: It was all prototyped and working. It was all there.

Vikas: It wasn’t necessarily scalable. It didn’t have all the, you know . . . there still may be a significant amount of effort to bring it to like consumers, right. But it was all real on demo. In fact we did a live demo at Demo Day. It wasn’t like a video or something.

Andrew: All right. And I actually did see a video of it on TechCrunch where it kind of looked like Google Maps, like you can fly into a city, you can look at the streets, you can see who is on there.

Vikas: Definitely.

Andrew: So now you go into Demo Day with that. Other startups are doing their demos. They’re getting funding. Why do you think you guys didn’t get funding?

Jeffrey: I don’t know. I think it was a complex issue. It was partly we weren’t really on the ball during TechStars. We weren’t really trying to put together our investor group really from day one, which in retrospect I think we should’ve been doing. We were pretty ambitious about the evaluation we would get, and we weren’t getting any offers for anything quite like what we needed or at least not enough volume. Our plans for how much we needed to raise were changing. We were sort of dynamic and we weren’t sure. We thought we only needed 100K to pull this off, and we kind of realized that was wrong. So we’re like we need at least 200K, and so our story was changing and there were just some other complexities and issues that ultimately we made the decision to just say, “Forget it. Let’s just try to make money instead.”

Andrew: I see. So it would’ve then helped you to have a business guy in the beginning who was going to start making phone calls to investors, start networking, and start to line people up?

Vikas: Yeah, potentially it would have. I mean I think, yeah.

Jeffrey: I think it could have. I mean it would’ve helped at least with the fundraising aspect. I don’t think at the time it was necessary for running the company. But of the actual getting the money in the bank so we could go off and do that, it would’ve been helpful.

Vikas: I think if we went back now with the same experience that we have now, we probably could’ve basically done that role ourselves. We could’ve gone back and been more proactive, like had the experience to go and had the confidence to go to investors.

Jeffrey: And honestly, if you’re in a similar position to us, I don’t actually think you need a business guy. Let’s say you’re a technical founder like we were. I mean if you’re a business guy okay get a technical founder and then go. But if you’re not, if you’re just technical, you know, read stuff and try to understand the basic, you’ve got to have some plan to make money at some point and hopefully make it realistic. But then at the same time, when you’re pitching, be realistic and say this is the plan and we have these three other backup plans and we really think these are going to go big and be successful. We don’t have any crazy projections with exact numbers on them yet. Just be frank and honest. But convey that you have thought about making money. Don’t be callous and say like, “Oh, forget that. We’re just going to make great products, and we’re just going to get money.” And I think you’ll be fine honestly.

Vikas: Yeah.

Jeffrey: Those were just some things we weren’t very good at.

Vikas: Yeah, I mean especially if the product is good and everything else seems good, I think that’ll . . .

Andrew: Can you take me back to how you felt when other startups were getting funded, when you’d gone through this system and your idea, you were told, sucked? You came up with a new idea that should’ve been better, and you still got turned down. I want to know how that felt, because I want to identify with it.

Vikas: Yeah, I mean it was pretty, I think part of it’s that the fundraising is sort of a success metric, right? And so, you know coming out of TechStars, I think like seven out of the other ten companies got funded in some way. And then yeah, there’s this perceived thing of like oh, did those guys raise money? No, they didn’t. So it’s like what are they doing? It’s sort of perceived failure.

Jeffrey: Yeah, I mean, so imagine yourself in our shoes. Every single off that we had from TechStars until like six months later was a basement office. So we’re sitting in this dingy basement office, and we’re like we’re not that confident in what we’re doing because we’re not getting a lot of external validation. We’re still heads down trying to build a product. It was a tough time. It was really a tough time. And then we’re looking at our bank account essentially dwindling to zero.

Vikas: Zero, yeah.

Jeffrey: And we’re like what are we going to do here? But honestly, the whole time, I mean it was really tough to deal with, but in some sense we had a big chip on our shoulder. We had a lot to prove. We had these people telling us that you guys, you shouldn’t have done this idea and this one’s too big and where’s your business guy and all these things were basically kind of putting a big chip on our shoulder making us say, “You know what? We’ll show you guys.” And that was honestly a lot of the drive, at least for me, coming in every day and saying, “You know what? This technology is really awesome, and we’re going to make it happen. We’re going to prove to you guys and the world that this was the right thing to build.”

Vikas: Yeah, exactly. That definitely, you have to have kind of that fire. Otherwise we would’ve just packed up and been like all right, well we’re done. Yeah, that was the flame. And I think that chip on our shoulder still maybe shows a little today. We’re still like sort of fired up and we really believe in the vision, so.

Andrew: Was there a time when one of you said I don’t know that we can make it and was, maybe not ready to give up but exhausted from trying and questioning the ability to continue and the other one came and pulled you through. I know partners are good that way. Do you remember a specific time?

Jeffrey: Let’s see., I don’t think we actually had maybe that exact conversation, but tensions definitely got really high.

Vikas: Yeah.

Jeffrey: We had some really intense conversations about should we change into this mobile focus, or should we stay with this other thing that we’d been working on the whole time during TechStars?

Vikas: Yeah, that was a big discussion for sure.

Jeffrey: Yeah, and there were definitely times during that conversation where we were probably like, “I think we should change.” “No, I think we shouldn’t.” And then it’s like, “All right. Well, maybe I’ll just quit then.” And we would have these kind of like back and forth, and we were never really serious. But there was definitely high tensions.

Vikas: We had lots of emotion and we’re both like passionate people. We’re both like at times pretty stubborn, so it was definitely an interesting time. But yeah, I mean it was, I think a lot of it though was I was really excited to work with Jeff because, you know, that really was I think the end, part of the reason that we would pull through.

Jeffrey: Yeah. I think that’s the great thing about having a co-founder that you really want to work with, right, is that you know that you guys have the chemistry to build something amazing together. You know there’s a lot of potential there. And so you feel like if you give up on the company, you’re kind of giving up on your business partner too. So you kind of, you don’t know if you’re going to get that again back, right? You don’t know if you’re going to be able to find another co-founder that’s going to be able to do something with you with the same level of excitement and quality and experience and all this stuff. So you’re losing that. So that was something that I think kept us going, is that if we do this, we’re set back like a couple years basically. We’re going to have to go get some job, who knows where, right? And this thing may never happen, because if we wait too long, we might get tied down in life and we don’t get a chance to do this again.

Andrew: I see. You’re saying even a floundering startup is more progress and has gotten further in life than no startup at all. If you guys would’ve closed this up and gotten a job, you would’ve been behind. You wouldn’t have been at zero, you would’ve been at negative because you would’ve had to find another co-founder. You would’ve had to launch the business again. You would’ve had to build some of the technology, get a new name, get the whole thing built up, and that takes away a lot of momentum that you already had.

Vikas: Yeah, I mean . . .

Jeffrey: Absolutely.

Vikas: Yeah, exactly and finding a co-founder, that’s like the biggest thing, yeah.

Jeffrey: And if you fast-forward into the present day, where we just sold the product to eBay but kept the company, we really have that attitude, right? We’re like, you know what, we don’t want to recycle and go back and go work with . . . I mean eBay we think is actually a great company. We love the mobile team. But we didn’t want to go and spend a year or two there and lose momentum.

Vikas: Yeah.

Andrew: Okay. So you get, I think I read $15,000 from TechStars. Is that about right?

Vikas: Yeah.

Jeffrey: In fact, it was a little less than that. But yeah, that’s about right.

Vikas: Yeah.

Andrew: Okay. So a little less than $15,000. You’re almost at zero. What do you do? How do you find money to live?

Jeffrey: So we basically went to the only people that know, just know in their heart that you’re going to succeed no matter what, which was my mom. And we got her, we convinced her to write us a 20K convertible note, which we ended up paying back. But she was dead convinced that we were going to succeed, and she wrote us this note, which basically got us through the next few months, all the way to profitability on the App Store.

Andrew: Wow. Wow. All right. So you get $20,000. You now have a little bit of a runway. $20,000 is nothing by the way for . . .

Vikas: It’s actually a lot when you live on nothing like we live on.

Jeffrey: Yeah, we had like, we were paying almost nothing for rent. We were like, we were super cheap. That’ s another thing about the founding team is that you can be really cheap if you set your heart to it.

Andrew: All right. So how do you go from that, the product that I just described, which is about organizing photos to RedLaser, which is about bar code scanning?

Vikas: So the story . . .

Jeffrey: Go ahead.

Vikas: Sorry, go ahead.

Jeffrey: So the story is kind of like we saw the iPhone coming on full storm, and we saw that the iPhone was allowing us to do computer vision, this field of basically science that we thought was going to really take a foothold in every day lives. We saw look the iPhone actually lets us do this. In fact we even tried to do Android in the first place.

Vikas: Yeah, it was terrible.

Jeffrey: But we realized Android wasn’t fast enough and didn’t let us do native development until recently. You can now. But so we saw the iPhone and we sort of had a couple of ideas. As we were starting our company, we always had like all these ideas. And we didn’t know which one was the right one and we were constantly reevaluating basically the field and what was going on out there. iPhone was getting really exciting and cool. And so we’re like if we’re not going to do this massive photo organization thing, what can we build that we can immediately sell to consumers? We don’t need an incredible amount of money to launch it, and so we saw mobile as that opportunity because the App Store basically gave us that avenue to get straight to profitability. So we said how can we take our skills in computer vision, bring them to the App Store, and we actually launched a product called Clear Cam even before RedLaser, which was only for jailbroken iPhones, because we couldn’t do image processing on the App Store until recently. Then we managed to make our way to RedLaser when we realized that this is something we can recognize better than anyone else. Everyone thinks it’s impossible, so let’s make it happen because everybody wants this barcode scanning capability.

Vikas: And I think part of it was we sort of bit off a small piece of computer vision with ClearCam, and then we were sort of validated there because it brought us profitability, got almost a million users, I think maybe over a million by now.

Jeffrey: Yeah, they weren’t all paying.

Vikas: Yeah, they weren’t all paying, yeah. No, yeah. It was only like 20,000 maybe paying users. But then, yeah, with RedLaser we decided, okay let’s go bite off a bigger chunk.

Andrew: How long did it take you to create ClearCam?

Jeffrey: It took us about, I want to say four months.

Andrew: Four months to get the first version of it out into the jailbroken store?

Vikas: Right.

Jeffrey: The jailbroken store.

Vikas: Yeah.

Andrew: And what did it do on day one that it launched?

Vikas: Actually, a funny story about that. We had to build our own payment system for ClearCam, because we didn’t have the App Store. And so interestingly, there was like, we were betting on when we would get our first sale. Because we had the 15 day preview time or something, we were like nah, maybe like two weeks out, maybe at the end of that. And then we actually got a sale like right away, which was kind of cool. It was like, “Whoa, is that a sale or is that a bug?” And then it was actually a real sale and we actually had a couple sales coming in right then.

Jeffrey: It was actually pretty feature complete at launch honestly. It did what it said it was going to do, which was to fix the problem of low resolution on the iPhone 3GS. It took the images from two and it upped them to four mega pixels, and that was a big thing because two mega pixels was like the big thing that everybody complained about on the iPhone 3GS.

Vikas: Or 3G, right?

Jeffrey: 3G.

Vikas: The original, yeah.

Jeffrey: So that’s what it did, is it doubled the res.

Andrew: How did you double the resolution?

Jeffrey: Computer vision magic, right? So we did our normal thing, which is take images, try to match them up, and match them up on a sub-pixel grid. So we’re actually looking between the pixels and extracting information. So it took six images and then it processed them. It took a while, about 30 seconds, and it fused them together and it pulled out better quality and basically created this one high res of them.

Andrew: Wow. Now the App Store was risky. You guys had very little money. You had a product that was going into the jailbroken app store, whose users may or may not even have access to the jailbroken apps by the time you launched, because Apple was trying to clamp down on it. Even if they did, who knows what that’s like because it’s not an authorized store. It’s a Wild West of mobile. Why did you bank your business on something so excessively risky?

Jeffrey: Because we really didn’t have any other way to do it. We tried super hard to actually use the legitimate frameworks within OS and they just weren’t there. And so we basically knew, like again, we’re so tenacious about this technology. We’re like, “This is going to be the future. This is coming. This is happening. You can see it on Star Trek. We’re going to make it happen.” And so we knew this was going to happen, we knew that eventually it was going to be opened up, especially now we got Android coming. We’re like, “These guys are going to fight it out. Android just had video camera access. Apple’s going to have to follow and enable that.” But Android was a no go for us, because of the compute processing. So we said, “You know what, let’s just take a risk on this.” And then we basically crossed our fingers that at some point in the future, even if it wasn’t successful on day one because of the jailbreak constraint that we would be able to ship it on the actual App Store. It was totally risky, but we basically had no other way to bring this thing, bring it to the light of day because there really was no other way to launch it.

Andrew: I see. So when you see the technology is moving as fast as it was, and still is today in mobile, it’s okay then to bet on future development and know that whatever you need today may not be there for a little while, but trust that it will be there soon.

Vikas: Yeah, I mean it’s definitely a risk. It’s not like, it’s definitely not guaranteed and it’s possible that it wouldn’t pan out. I mean even with RedLaser, initially we did get that in the actual App Store. But then there was some issues with Apple about the camera frameworks and like how it all worked and getting approved for certain things that we tried to do with the OS. But it’s definitely a risk, but it’s kind of like, it’s like starting to play poker, you kind of have to take the risks that you think will pan out. You can’t afford to sit back and say, we couldn’t have been like oh, we’ll just wait until we get the frameworks ready and then we can go after this. It’s like well we got to do it now.

Andrew: How did you guys get people to download ClearCam? How did you get them to even know about it?

Jeffrey: So actually one of the surprising and beneficial things was that the, since the jailbroken store was risky and didn’t have a lot of apps in it and was actually really tricky to get things published on, you actually got good visibility because all these people that were essentially jailbreaking their iPhone to see all the cool apps that are out there basically saw our app because it was in the list and there weren’t that many there. I mean if you go there now, there’s a ton. But at the time there weren’t that many. So that was actually one of the key factors, was just getting that great visibility because we were one of a few.

Vikas: Right.

Andrew: And how were you charging for it?

Jeffrey: We had this whole complex PayPal based system set up where you had to unlock the app and it was crazy complicated. And it got hacked I think a day or so in and we ended up fixing that.

Vikas: Yeah. It was like I think we had like a 15-day free trial to the full version and then you had to buy access to . . .

Jeffrey: They hacked our apps like tends to happen now even in the App Store, but they also even hacked our payment process system.

Andrew: Oh, wow. How did they hack your payment processing system?

Jeffrey: They figured out a way to inject some tags into the actual payment operations so that they would make it free basically.

Andrew: Okay.

Jeffrey: In the process they exposed their user name and stuff, so not too many people did that. And we fixed it really easily, really quickly but . . .

Vikas: Yeah.

Jeffrey: Yeah, I mean it’s tough to try to have all those moving pieces.

Andrew: Okay. But that was enough for you guys now to make how much money?

Vikas: That was like . . .

Jeffrey: Not very much. It was about $20,000.

Vikas: Yeah.

Jeffrey: $30,000 maybe. So we broke even. We had that 20K in the bank, which we were burning through as slowly as we could, and then we made about $20/30,000 from ClearCam within its first couple months.

Andrew: Okay. So that was enough for you guys to live on and even bank some, right?

Jeffrey: A little bit, yeah.

Vikas: Yeah.

Andrew: Okay. So what point did RedLaser come . . . how did the idea for RedLaser come about?

Jeffrey: So for this basically one day I was in our basement office and we were brainstorming some ideas with a local entrepreneur, Paul Rubarian, who now is the CEO of Orbotics, which is a local startup doing robotics. Vikas, Paul and I were all like sitting there brainstorming of what business could we do based around computer vision on mobile. And I just was looking at a Scientific American magazine one morning, and I saw the barcode on it, and I’m thinking that’s something we can recognize with a camera. And we had been sort of talking about this, what can we do in computer vision quickly and bring it to market right away? What can we recognize that’s actually useful? I saw the barcode, and then I went on Twitter and various places online and just started searching for this, because I figured surely someone had solved this problem.

Vikas: And I think I didn’t even believe you at first. I was like there’s got to be someone that’s done this.

Jeffrey: Yeah, we thought iPhone is this big thing now. It’s like surely someone’s done this. And sure enough, I mean there were a few apps but they were all horrible and none of them could really do this. And so we thought, optimistically, that we could pull it off even though no one else could and everyone thought it was impossible. We said, hey, we can do it. And so we set out to do it thinking it was going to be this moderate success.

Vikas: I think when we initially were talking about it, we were like, “Well, maybe it will make us like $100,000.”

Jeffrey: Yeah, we said look if this thing makes 50K it was a win.

Vikas: Yeah.

Andrew: How long did it take you to launch the first version of that?

Vikas: A couple months at least. I think it was after, had to be after, it launched in May.

Jeffrey: Yeah, it launched in May. I think we started working in March.

Vikas: Right.

Andrew: Okay.

Jeffrey: So it took about two and a half months altogether.

Vikas: Right.

Andrew: All right. So not that long at all. And the first version, what did that look like?

Jeffrey: Oh, that was, it was pretty horrible. The first version required you to take a still photograph. It required you to hold your phone about 10 to 12 inches away from the barcode and to line it up in this little tiny box. And then even then most of the time it got the barcode wrong. But surprisingly it was better than anything else at the time.

Vikas: Yeah, it was still better than anything else. But I think we were getting, we got a decent trickle of sales. It wasn’t like ridiculous. It was maybe like 100 a day or something like that.

Jeffrey: At most. I mean that was in the launch days. It was really trickling.

Andrew: And you were selling it, not offering it for free, right?

Jeffrey: Yeah.

Vikas: Yeah.

Andrew: Why?

Jeffrey: And that was a decision that we made at the 11th hour basically. We had been, it was getting better. The app was looking good, and we were always planning to launch it for free. Then we would just charge for the software development kit we were going to make available to others, because our philosophy was look, we’re good at this vision stuff. We’re not good at any of this other stuff with like getting prices or whatever, getting product info. And so kind of at the 11th hour, we said maybe we should charge for this.

Vikas: It’s pretty good, yeah.

Jeffrey: We can always make it free in the future, and we ended up just sticking with it because that was, we didn’t get any sales of the SDK, nearly anywhere near day one. So we just charged for it, and it actually started making a little bit of revenue.

Andrew: Okay. And what did it do? If it worked right, it was going to take my barcode and give me what information from that?

Vikas: Prices mostly. That was the idea. Or other information, but really mainly prices for that product.

Jeffrey: And view one went out to Google Base on the phone. So we didn’t even have a server. It just went straight, and we had a vision server that was doing image processing. But we had no . . . in fact we totally flip-flopped our processing. We used to have it where all the computer vision happened on our server, and then the search happened on the device. Then as time went on, we flip-flopped that to having all the searching happen on our server and the computer vision happen on the device. So I hope I got that right. But, yeah, it just searched Google Base was all it did.

Andrew: And from what I remember about the app description in the App Store, there was always a line at the bottom that says data is being pulled from this organization and that organization, right? How did you find the organization that would, in fact what do those companies do and then how’d you find them?

Vikas: Well, initially, we just worked with; I think it was just Google Base. That was like the first, I mean, just free API. You just hooked into it. It was querying right from the phone. Even later, we actually, I think we added in, you know, even after the app became better, like we actually like worked on it for a while over that summer and got it to the point where it was actually a successful launch in September when it actually took off and started doing well. But at that stage I think we only had, I think we had Google Base and then we added in Amazon in a slightly hacked way. It wasn’t like an official way to do it.

Jeffrey: Yeah, we were doing page scraping, which eventually we had to take out at Amazon’s request. But eventually what happened was basically the app eventually became successful, and then people started coming to us. So that’s one of the things that we sort of think about whenever we try to launch a new product is how can we launch something where we require the minimum number of partners that we depend on?

Vikas: Right.

Jeffrey: And so that’s something we try to do is launch something where it’d be phenomenal if we had great partners, but if we don’t, we can still make a success of it because that way we’re not dependant on anyone. We’re not getting into any exclusive deals. There’s no issues like that. So that’s something that we try to do nowadays. Eventually people just started coming to us when the app started taking off, and then we started adding data streams.

Vikas: Right. I mean, yeah, that’s something I think both of us would highly recommend to other entrepreneurs is try not to sign exclusive deals ever, if you can avoid it. I mean, of course, if it’s absolutely, absolutely necessary, then do it. But otherwise don’t do it ever.

Andrew: Can you give me an example of a company that came to you and asked to partner?

Vikas: I mean there’s, I guess TheFind.

Jeffrey: TheFind came to us. Did they come to us, or did we go, yeah . . .

Vikas: Yeah, they came to us.

Andrew: What kind of deal did they want?

Jeffrey: Basically it was, we obviously can’t get into the exact details of it or anything, but basically it was we share their pricing, the results. Their big thing is to find online pricing and some local pricing for products. So we basically showed their feeds, and then they would get all that click traffic from the feeds. And so for us we would make our app better, which we were charging for, and for them they were getting all this traditional exposure and click traffic.

Vikas: Actually, one of the more interesting ones is this organization called World Cat, and they had like local library listings, which I think to this day is a cool feature in RedLaser, pretty awesome, which is when you scan a book, we actually hit their service and get back a list of all the local libraries around your area that have that book. Or rather, we don’t do it now. eBay does but . . .

Jeffrey: Yeah. We also worked with another TechStars company, DailyBurn that now recently sold to IAC. But for them, we added food information that was basically crowd sourced. So all their users were using this app that we partnered with them on called FoodScanner where you’d scan a bar code, and it would say I don’t know what this food in. You would type in the calories and all the info of the product and then upload it. Then we got this database from Daily Burn. So whenever you scanned, you know, a box of Cheerios, we could tell you how many calories that were in a serving and all that kind of stuff.

Andrew: Andy paid you for that. Andy of DailyBurn who came here to do an interview, right? Company like him would pay you for the use of the RedLaser technology.

Vikas: For that one we actually just did, I think it just was a partnership. We didn’t actually . . .

Jeffrey: Yeah, we had a partnership on that app, so we were incentivized to work, to get their app to do well, because it was kind of our first SDK deal. They were the first company that was using our SDK, and for us we were selling RedLaser. So it was interesting because we chose to sell it. We didn’t have to . . . yeah, so since we chose to sell, it we just wanted to improve the quality. And for them, they wanted to get this RedLaser technology to make their app better. So we found a lot of deals over the course of the life while we were managing RedLaser where we could basically exchange no money and just exchange technology for content.

Vikas: Yeah.

Andrew: I see. The reason you partnered up with DailyBurn is because they would then give you nutrition information that you could put into RedLaser, your app, make it more valuable and have people buy your app.

Vikas: Exactly.

Andrew: And they wanted it because they wanted the technology.

Vikas: Yeah and that was . . .

Andrew: Did TheFind give you a commission on sales that were made because of your app?

Jeffrey: So we can’t probably get into the exact details, but basically it was a really traditional like content sharing type arrangement.

Andrew: But a company like that, without being specific about them, if they were giving you search results, you would get a percentage of the sales?

Vikas: Yeah. I mean generally speaking if you drove a lot of clicks, yeah.

Andrew: And this isn’t, because you guys . . . sorry, go ahead.

Jeffrey: I was just going to say the one thing we interestingly discovered is that actually we probably played it right by not, by charging for the app and focusing on not generating all the click traffic, but instead just charging for the app and kind of premium user experience because we actually didn’t see a lot of sales converting through the app. And I think that’s because purchasing online on mobile is still too tough today.

Andrew: I see. So people wanted to just know that they could buy online, wanted to know how much they could buy for, and if they found a good deal they’d just wait till they got home and then they’d go buy it on their computer.

Jeffrey: Totally. That was definitely the pattern at least a year ago. And hopefully I think it’s changing now, but it definitely was the pattern.

Andrew: One thing I’ve seen about you guys in researching this interview and now in the interview and even finding out about your upcoming app, the one that you guys are working on now, 360 Panorama, is you charge. What do you say to entrepreneurs who are online and are considering whether they should charge or not? What advice do you have for them?

Vikas: Yeah, I would say definitely, I mean depending on the business model, definitely charge because I think it’s clear validation that people care about your product and it’s actually worth something.

Jeffrey: It forces you to answer to your customers. The customers that you think are your customers who are people that are paying for your app or using your app, you think they’re your customers. If that’s really true, then it shouldn’t be a problem to charge them because you should be giving them a service that they want.

Vikas: Right.

Jeffrey: Now it doesn’t always work for all businesses, because some things have just been so sort of cheapened because of big players entering into markets that you can’t get away with charging in some cases. But if at all possible, we totally recommend it because it forces you to make sure your quality’s there and you get this great metric of how many people are actually paying for your app over time, which I think is a way better metric than how many people are downloading it for free.

Vikas: Right. Yeah, all those people are, you know, they paid for; they clearly find your product valuable, so yeah.

Andrew: Do you have an example of how it helped you guys validate an idea, validate a strategy, or even the app in general, how charging helped you do that?

Jeffrey: Yeah, I mean, downloads may be a relevant metric for this as well, but the purchasing I think was even more clear. When we were improving quality of RedLaser, we had a point in time where we were watching our sales and we were improving the app quality and the scanning quality. We had this transition point where we released an update that made the scanning a lot better, and that was really the only change. The rest of the app was more or less constant. And we just watched our sales day over day actually go up exponentially. So we were able to look at those sales, see that people weren’t complaining about the price, and that sales were actually going up exponential, which meant that people were telling other people. And so we used that sales to basically determine precisely that look it was the quality of the experience, the initial user experience that drove actual downloads and people to tell other people. So we were able to do that because we had that direct feedback loop on the sale.

Andrew: What else did you do to get new people to use your app?

Vikas: I think, initially we just tried to go out and contact a bunch of bloggers for that initial, really for that version. We were pretty excited about that version that launched on September 18th. We knew it was really good. We had put a lot of effort into it, had a lot of big breakthroughs and yeah, we just went after a lot of bloggers. I wouldn’t say we got that much coverage, because it’s one thing to notice, it’s really hard to get people to cover an update to an app.

Jeffrey: I think there was one person or one blog, I think it was the iPhone blog that covered that launch, that update because it’s super hard, yeah, to get people to cover an update. But like one covered it. But then the thing is, it’s like for us press has always been a side effect rather than like the cause of anything.

Vikas: Yeah.

Jeffrey: So then we got tons of press after the fact. I mean I was on like “Fox Business News” doing this live interview. It was crazy. But all this stuff happened as a result. And now today RedLaser’s like in the news all the time.

Vikas: Yeah.

Jeffrey: And that’s not because eBay’s doing any outreach or we were doing any outreach. It’s just because the app itself is generating a lot of interest.

Andrew: How did you go from that? How did you go from contacting bloggers and having only one of them say yes, I’ll write a post about this to suddenly being on the news and being covered so extensively.

Vikas: Yeah, I mean part of it was, I think it was two trends. One was it was we had the good fortune to launch a really good version of the app right before the holiday season, shopping season. And then everybody sort of had this idea like oh, mobile is like the next big thing. It’s pretty hot. The iPhone also had like a ton of press around that time. And so I think as the app got popular and a lot of people saw it, it was really a cool experience, like wow, this is something I never thought was possible with my phone related to shopping. I think that helped us get a lot of this press and it was, yeah, like Jeff said, it was a cause rather than an effect.

Jeffrey: Yeah, timing was everything. And the one thing that we did that was interesting is that we really pushed the envelope on the App Store. We were trying to use the camera in ways that were totally gray areas. It was like not sure if the API’s actually allow you to do this. And in fact Apple would allow it, and then they’d say wait, that’s not allowed. And then they would allow it again, and then they’d be like wait, that’s not allowed. And so we were pushing the boundaries and I think that helps you because people recognize that look, something different is going on in this app. This is doing something that I haven’t seen before. So that was one thing that we did to kind of . . . we recommend that timing is everything. Just push the envelope and timing is everything.

Andrew: You know what though, I’ve talked to a lot of other people who had the right timing, who had the right product but no one knew about it. How did people know about you guys? How’d they know that RedLaser was the app that allowed people to, that RedLaser existed, that it was the first, that there weren’t lots of others. I mean even you guys in the business thought that some other people must’ve done barcode scanning.

Vikas: Yeah.

Andrew: How did they know about you? What did you guys do to get recognition?

Vikas: I think a lot of it was the viral component. I mean I think initially we had maybe between, up until September 18th, we maybe had like 30,000 downloads total of the app. And then so maybe only 3,000 or 2,000 people had it installed. But then after that, I think once that update came out, people, the couple hundred people that actually saw it and checked it out, I think it was good enough at that stage where they literally told their other friends. And I think partly because it’s shopping, it’s a very common thing that was happening soon.

Jeffrey: That’s right. The other thing that we had a benefit of is managing to get into TechStars and having this little bit of a Tech Stars [inaudible 0:50″08], right? It’s like when you launch a product, you can guarantee you’re going to get at least a few retweets. You’re going to get at least a few people that are like very influential talking about your product. But it doesn’t get you all the way to the goal line, but that gets you that little bit of initial exposure that you might not otherwise get.

Andrew: Now tell me more about that. So this isn’t the product that you guys launched at TechStars Demo Day. This is a brand new product that’s like three products removed from TechStars. How does TechStars now help you promote this thing?

Jeffrey: Well, I mean we just kept in good contact with everyone in TechStars. Remember TechStars still has a stake in our company, so they’re still vested in seeing us succeed. And we just kept in touch with them, asked them for a lot of advice, and then told them about when our launches were happening. It just kind of filters out throughout the network, because everybody in TechStars wants to see everybody else succeed. And so you see, you get some . . .

Andrew: What specifically did they do? Did they blog about you? Did they talk to bloggers about you? Did they make introductions on your behalf? Let’s give them some credit. What specifically did they do?

Vikas: I would say all of those things. Yeah, all the above. I mean initially it might’ve been even like getting the TechStars network to help us like digg an article. You know just help us get something out there, get a lot of buzz, get a lot of retweets for some stories. But I mean a lot of its, I think a lot of them are former entrepreneurs that are trying to help, or currently entrepreneurs, the mentors and they are excited about just helping other entrepreneurs. It’s not just sort of about the money really. It’s kind of like giving back.

Jeffrey: Yeah. It’s this major credibility enhancer is just to be able to say you were in TechStars. So somebody thinks that you guys are doing something good.

Vikas: And it’s definitely helped, I mean, in trying to reach out to certain people. The TechStars network is pretty big, and you can kind of go to either David or Brad, David Cohen or Brad Feld and be like hey, do you know this person at X Company or do you know somebody high level here that I can talk to? And a lot of times, they do, so it’s kind of like an, or somebody in the network will know them.

Andrew: Interesting. So can you give me a specific example? I only understand things well when I see an example attached to them. So Digg’s a good example. What else do you have?

Jeffrey: So I think I’m certain that whenever we first got covered on TechCrunch, I’m certain that probably David Cohen fed that story over to the guys at TechCrunch and made them at least read it, right? At least be like is something we care about at all? Whereas they probably might have just thrown us into the spam otherwise, if we didn’t have an intro. So that’s a good example. There’s just a lot of intros that happened from TechStars. And then, sometimes it’s the other way around too. It’s sometimes us getting intros. But a lot of other times, other people are being intro’d to us and we’re helping out as well, so. A lot of people have come to us asking us for advice on our SDK, because we were one of the first companies to release an SDK that we actually charged for on the App Store. And so we’ve seen a lot of guys come to us on that.

Vikas: Yeah.

Andrew: What percentage of your revenue is coming from selling the SDK to other app manufacturers who wanted to integrate your technology? And what percentage came from direct sales to customers?

Vikas: It was like nine to, it’s like basically 10 percent from the SDK sales and then 90 percent from the app sales, which we actually, which is part of the reason why we kind of realized that maybe we should’ve even initially not even worried about the SDK and sort of brought that in later. But I think it was, it’s hard to say because it’s hard to know, go back and like we don’t have a control. We can’t go back and not have an SDK.

Jeffrey: The chicken and egg problem with an SDK, or technology itself, just as your product is that nobody really trusts that the technology is all it’s cracked up to be until they see it successful in an application. And so we really hit the nail on the head by launching RedLaser, proving this technology and then getting tons of interest in the technology, the SDK licensing. But like Vikas said, even in the end we’re not even sure that licensing that tech out was the right decision. I mean I think it was. I love the apps that have been created as a result of it.

Vikas: It’s kind of cool to see that.

Jeffrey: But financially I don’t know if it was the right decision.

Vikas: There’s a lot, I would say a lot of partnerships stemmed from that, so maybe not direct revenue, but a lot of things like it might be like, you know, jog a little bit of like an idea process when people saw that. They’re like I wonder what I can build with that.

Jeffrey: Right.

Vikas: If you’re a technical founder, if you’re a technical tech startup, it’s like raw tech, you know, you are the best person to show the world your technology. You are the best person to put it in an application. Don’t forget that. Now, don’t try to say like, well I just put an API around it and I don’t understand why people didn’t make crazy great apps on top of it. Unless you’re Google, that’s not going to happen. Nobody’s going to just take your thing and make an app on top of it.

Andrew: What about this? Every, maybe not every article but I’d say a good 30, 40 maybe even 50 percent of the articles that I read today in preparation for this interview mentioned the Newsweek Op Ed piece where you guys in Newsweek criticized Apple because they, what did they do? They found some portion of your code to be questionable. They pulled your app because of it. But my question is, why would you criticize your channel to your customers?

Vikas: I don’t think it was, it wasn’t a very harsh criticism. I think we were just saying that they had been, there’s like some difficulty around that process. It was just like a not very transparent process at the time. And they’ve actually taken a lot of steps to improve that by now and probably in some ways gotten way ahead of where even Android is in . . .

Andrew: They reached out to you two and you guys ended up being, you had a great relationship afterwards. They featured you in their ads, which helped you guys promote your app. But what was the internal thinking on that? Do we criticize Apple publicly or do we not? How did you come to a conclusion on it, and what were you guys thinking at the time?

Jeffrey: I mean I think we were just being completely honest, and we wanted to see Apple succeed and we knew that the only way that, and therefore us succeed because frankly that was our only platform at the time and still is. We wanted to see them succeed, but we knew that for that to happen, they were going to have to open up a little bit in terms of the process and also the camera frameworks and how you get stuff published and how do you, how you avoid these kind of black, kind of confusing rules in terms of what you can actually do. We wanted to see that change, and we were kind of given the soapbox opportunity to do it. So I guess we just . . . I don’t know. I guess we’re a little bit callous. I guess we kind of were like whatever; we’ll face the consequences.

Vikas: Yeah, it was coming from the sort of no bullshit mentality, like we didn’t want to just go up there and be like oh Apple’s been perfect, there’s nothing wrong with it. I mean I think even for them it might be good to have some of that feedback anyway as a company. So I think their . . .

Andrew: I like your brutal honesty. Can you give me some brutal honesty for other app makers, guys who are listening to this right now saying I want to learn from RedLaser, but I don’t want the soft touchy feely stuff that most people say, like rah, rah go do it. Give me brutally honest. So what brutal honest message can you give other app makers?

Jeffrey: I would say iterate, so iterate your app and don’t sit back and try to do like all kinds of, tons of marketing. I mean we’re trying marketing for our app for the first time ever. I mean that I don’t think is the key to success, I think it just helps. So don’t do any of that stuff. Focus on the quality of your app, keep iterating it. Frankly and if you are sort of done with the features that you can implement in a short period of time and your app isn’t taking off, it’s probably not going to take off. You should probably . . .

Vikas: Yeah, rethink something.

Jeffrey: . . . rethink it, reinvent it, start over. Don’t just try to keep slogging it out. Don’t accept, you know, just like 20, 30 sales a day and think that, you know, that’s great or something.

Vikas: Yeah, I would say, yeah, that makes sense. And yeah, you kind of have to go after something that’s, don’t expect to build a novelty app and have it succeed anymore. Like there’s all those things like early, in the very early days like oh, this person built a fart app and now they’re a millionaire. It’s like that’s total bullshit now. Yeah, it’s like you can’t really expect to do that. You might get lucky but it’s like playing the lottery, right?

Jeffrey: Yeah.

Vikas: You have to find something that’s either . . . you either make a compelling game, find some interesting utility that you’re adding. A lot of it’s also like focusing on things that are inherently mobile I think. Like if you’re trying to just port something else to it, unless it’s a game . . .

Jeffrey: Another thing is focus on your initial user experience. What is the one thing that you’re actually trying to do in this app that isn’t already in 68 other apps? What is that one thing, and do your users actually use that, get that, and love that? And if you come to the conclusion that well we’re doing that thing fine, but we need to add 16 features, you’re wrong. Don’t feature [inaudible 0:58:48] is the wrong solution. In fact, it’s like the antithesis of the iPhone, right? Just focus on the one or two things you do well and do that well. We’ve had competitors in the barcode scanning space that have basically tried to add a million features, and they didn’t get that initial user experience right and thus the users just dropped off a cliff because they couldn’t get past that initial experience. So what is your initial user experience? What is the one feature that you’re doing better than everyone else? And then actually prove to yourself and have your users tell you that, in fact, you’re doing that right and they can actually get that feature doing what it’s supposed to do easily.

Andrew: Did I also hear you say earlier that whatever that feature is the user needs to get to it right away and have that positive experience with it right away?

Vikas: Yeah, I think that’s totally true.

Jeffrey: Yeah, we totally agree on that. Yeah, absolutely.

Vikas: So if you hide it behind, like, you have to sign up or fill out this huge form before you can get started, than you’ve already kind of lost.

Jeffrey: Yeah, and that’s just the nature of the iPhone. I mean that’s not the nature of laptops and PCs, where you can have features that are buried in 16 menus and people would still buy your app to do that. The iPhone, it’s like sorry, you better have one or two button presses and they’re seeing the cool stuff or else they’re just never going to see it.

Andrew: You know I interviewed the founder of Optimizely recently, and he said the exact same thing applies to web apps like his. He says people don’t want to fill out a form and then go try out his web app. They just want to try out the app, and then maybe later on fill out a form. So his landing page says what’s your web address? You type in your web address, hit submit and then right away you could start optimizing that page and experiencing it. I see that coming up over and over again. All right. Next question . . .

Vikas: Absolutely.

Andrew: . . . is about eBay. Why’d you guys decide to sell?

Jeffrey: Well, I think we had this big vision for Occipital. We always thought that barcode scanning was like a step along the way. It was like not the end technology. We wanted to be working on technology that we couldn’t be done even if we worked on it for ten years straight. And honestly with RedLaser technology it was fantastic technology, but we kind of got there. We kind of got to the point where okay, it’s working about as well as it needs to work. In the meantime, cameras are getting better and in fact we don’t even need quite as sophisticated technology in a few years because cameras are just getting better and making this process easier. Eventually products are going to have more codes on them, so you don’t even have to scan the antiquated UPCs. So we were kind of like at the end of the road for that technology in some ways. It’s not to say that you couldn’t add more formats and go crazy with it, but it wasn’t our passion. Our passion was in this advanced computer vision. And we were basically presented with an opportunity to do that, to pursue that advanced vision with more resources than we had ever had before as a company. We could really go at it full speed ahead.

Andrew: Because of the amount of money that eBay paid you for RedLaser, you’re saying that you’d be able to take that money, consider it venture capital money, invest it in your future ideas.

Vikas: It’s like the best possible valuation of . . .

Jeffrey: We essentially answered to no one, right?

Vikas: Yeah.

Jeffrey: We can say no, we’re going to do this crazy Star Trek technology and too bad.

Andrew: But wasn’t RedLaser so profitable that you could’ve done that anyway? I mean we’re talking about two million apps selling at what, two bucks a pop?

Vikas: Yeah, I mean it was going pretty well. But I think like Jeff was saying earlier, a lot of the competitive advantage going forward was not going to be in the technology. So we could’ve done, yeah, we could’ve kept working on it. We probably could’ve, I mean there’s still probably a potential billion-dollar business there on mobile shopping and trying to own that experience. And I think a lot of companies are going after that now. But I think the core competitive advantage shifted from just that core barcode scanning technology to hey what are all the contents we can bring into this app? What are all the deals we can sign? And while we could’ve done that, we were doing that at the time, it wasn’t something that we wanted to spend all of our time on, so. If we were both excited about it and really jazzed about it, I think we would’ve, we could’ve kept going and just sort of built up and gone after mobile shopping.

Jeffrey: We did have that option and it was seriously considered, but we felt that this was the option that would get us focused on what we wanted to be focused on as quickly as possible.

Vikas: Yeah, we thought about maybe spinning out like a mini company that just focused on that, but it was, this was presented, it was pretty clean. I think the eBay guys were, the new team was going to be interesting, so we like those guys. They’re pretty good. eBay in general has been very successful in mobile. I think they’re thinking about the right problems there, so.

Andrew: Earlier in the interview, I asked you guys to spend more and more time talking about the low, when you guys didn’t have any money. Let’s spend a little time talking about the high, when you signed the deal for eBay what does that feel like? How does life change?

Vikas: It’s pretty awesome. I mean it was the first time . . .

Jeffrey: Yeah, it’s a success. It was validation. It was exciting because now we could do what we wanted to do. We didn’t have to worry about sort of running out of money or feeding this engine that was RedLaser, which was really sucking up our time. And so that was sort of a liberating experience is to just sign this and feel like we gave it a good home and feel like the future was ahead of us. And all this energy we had put into creating this company we were still going to get to leverage that and that was really exciting. And we were just putting together our new team. We had expanded the team a bit, and we’re still not a huge team. But we’ve expanded the team, we got a fancy new office, and we’re just really jazzed to go after this thing the way that a real startup could do.

Vikas: Yeah, V-spec startup. But it’s cool, yeah, because I think now we’re, yeah, because we’re small I think because of this eBay acquisition, we can sort of punch above our weight. We’ve got the resources of a much bigger company. We’re still a very focused technological team, so we’re pretty excited about that.

Andrew: You guys were profitable. What was the first million in profits like?

Jeffrey: It was like are we really going to make it to 300K? And then the next day, the next week really, are we going to make it to 400K?

Vikas: It was pretty . . .

Jeffrey: Where’s the end of this? And just every milestone along the way was more and more amazing.

Vikas: Yeah.

Jeffrey: And it’s kind of sad because then it sort of jades you ,and now we’re like well if we sell 100K of this new app, it’s like whatever. But like back then, it was like seriously every day I can remember waking up thinking like, holy cow, I just can’t believe these numbers. Are these real?

Vikas: Yeah, the first, the very first day, it was like September 18th, we got like 200 sales and then the next day it was like 350. It kept like almost like doubling the first couple days and that was like exhilarating. That was pretty . . .

Jeffrey: Yeah, and we’re doing the math and we’re thinking holy cow, we’re going to exceed the GDP of the United States if this exponential trend exceeds in ten years.

Vikas: Yeah.

Jeffrey: Obviously we knew that wasn’t going to happen. But, no, I mean it was a really fun experience to watch that happen.

Vikas: Yeah. I mean, yeah, and then sort of juxtaposed with the lows, right? So I think now it’s really important to sort of make sure that you sort of even those out. So when we are, when we were at the high point, it kind of helps like remember back the low when you’re like we’re at this high point now but I remember where we were. It’s not going to be like this always, so [inaudible 1:05:36].

Andrew: All right. So now the next app is 360 Panorama. Why is that important? Why is it important that instead of stopping and taking a picture and then stopping and taking a picture to the right of that and a picture to the right of that and taking pictures, and then stitching them all together into one panoramic picture, why is it important that now I could just move my camera slowly around 360 degrees and have one big picture that’s a panoramic view of what’s around me? Why does that matter?

Jeffrey: I think it brings panoramas, especially big, wide huge panoramas to everyone, right. I think if you give this app to my mom she can’t use the apps where you have to take all the deliberate stills, but she can use this app where on screen in front of you, you are seeing your panorama being created and all you do is move. I mean it’s extremely natural. It’s a natural user interface. And I think that’s why, is it brings panoramas to everyone.

Vikas: Right.

Jeffrey: But I think ultimately everyone understands the idea that in some cases panorama is really superior to a picture. When you think about the basic fact that when you’re looking at some grand vista, as a human you can see 120 degrees by 90 degrees, you can see this great vista, this panoramic vista. You pull out your camera and you point it and you’re like wow, this is not at all what I’m looking at right now. So I think there’s the inherent need to share panorama with a feeling that panorama will be better. You know if we can just get it to the mainstream to understand that you can do this too and it’s easy.

Vikas: 20 seconds, yeah.

Jeffrey: 20 seconds, 10 seconds, you get the entire panorama and you’re sharing it like street view. And street view is really successful too, because people use it to figure out how to get from A to B and figure out what’s this restaurant look like and stuff. And so we’re sort of following along that idea that people get panoramas, they want to be able to do it. We can make it easy for the mainstream, and then we can use this new feature that we have, which allows people to share it in this 360 immersive view to really then bring it up, open it up to everyone and hopefully capture panoramas places where Google Street View doesn’t go today.

Andrew: You know, I could see how I would use it. In fact, I was at a wedding in New York recently and there was a Chinese tea ceremony there and I wanted to take a picture of that and the family looking around. But I couldn’t get them all in one shot and still stay in the same room. So what I did was I think I did a video of it, and who’s going to go watch a video of just the room, nothing’s happening? And there was this shot of the whole Manhattan skyline, and I wanted to take a picture of that and I couldn’t do that. So I hit video record and I recorded it. I see the purpose of it. In fact, I would love to even, I would love to be able to go back in time and be able to use it at that wedding because I think it would save the memory so much better than just five people standing in front of the camera posing or me taking a few shots of or a video of the environment. But it seems like you guys have a bigger vision here, beyond just giving me a picture of who is at my wedding or a picture of what’s going on in the room around me. What else is there? What are you guys trying to do?

Jeffrey: I mean, we’re just trying to kind of like democratize the idea of street view. Just make it so you can street view anything. You can have imagery of basically the entire world, and it is all crowd-sourced. I mean, I also think that’s kind of what we need to do, because people, the world, the environment is changing all the time. It’s cost prohibitive for one company or a couple companies to drive the entire world everywhere and get images of everything. I think it’s more and more important to actually have that imagery, because people are starting to expect that they can see an image of anywhere that they want to go before they go. They’re sort of expecting that that’s there. Then you try to do it. You load up Google and you drag the little Street View guy into the middle of the field and it doesn’t work, right. Because there is nothing there yet. But if we can sort of do that and bring that to everywhere, I think we’ve unlocked another interesting resource which is basically street view everywhere.

Andrew: I see. So, if I was a restaurant, I would be able to do like a street view of my restaurant, complete with the little hall downstairs where people can, or the little event location downstairs where people can throw events. Put that online instead of a set of pictures. Let businesses that want to throw an event go through my office the way they do at street view or go through my restaurant. I see. I see the point there. And that’s what you guys are trying to do here.

Vikas: And it’s somewhat possible today in that you can go and you can take three different programs, take a bunch of photos, and hire a professional to do it. But what we’ve done with 360 Panorama is it takes 20 seconds with your iPhone. That’s the big draw. I think that’s what we’re going after.

Jeffrey: We don’t even know how everyone is going to use it. Everyone says real estate, and we’re, like, that totally makes sense. There’s probably a thousand other things, too. That’s kind of our idea of making it a cheap app for everyone. We’ll figure out. We’ll see what people do with it.

Andrew: All right. What about this? You guys could have sold your company, taken a long vacation, come back and maybe done this or another idea. I see you’re busting at the seams to talk about this. Why? Why didn’t you take a vacation? Why didn’t you go off somewhere?

Jeffrey: We’ll sleep when we’re dead, right.

Vikas: Yeah, it’s, like, yeah.

Jeffrey: It’s like now’s the time to do this. Yes, we’ve got success with Occipital so far. Yes, RedLaser was a big huge success for us. But it’s just a little piece. We want to create a company that’s worth a billion dollars. We want to create technology that really, really changes the world. I mean, I think maybe we’ve done a little bit of that already.

Vikas: Yeah.

Jeffrey: But not anywhere near the degree that we want to. We’re still extremely excited about that. We feel like we’re at our most productive years right now.

Vikas: Right.

Jeffrey: So we don’t want to waste those doing something on that beach. We’ll go to the beach later.

Vikas: Maybe take a pano there.

Jeffrey: We’ll take a pano.

Vilas: Yeah, a lot of it, that was probably the reason we didn’t want to go necessarily to eBay, even though it’s a great company was, yeah, like Jeff said, this is like the primetime. Your life, time is like the only thing you can never get back, right. So, these last couple years, like, how many years we have before whatever we maybe get more settled in life or whatever is the time we have to do something incredible. So, we really excited about that and just think exciting times. This is one of the best times to be doing a startup, I think.

Jeffrey: Yeah. This is the stuff we love to do, is to solve these crazy hard problems all day long. This is the way we do that.

Andrew: Hey, you know what? The phrase “change the world” almost lost its meaning because people just said it, but they didn’t really have the ability of changing the world. Today you do. What you guys created with RedLaser changed people’s worlds. It helped them lose weight, get fitter by using it on DailyBurn. It helped them just understand, help them save money at stores locally. It helped them interact with their mobile devices in a way that wasn’t possible before. I could see how entrepreneurs like you, and hopefully like the people who are listening to us today, have that ability. You’ve got to seize it.

Vikas: Yeah, absolutely.

Jeffrey: Yeah, you can. You can totally change the world. I mean, we’re seeing apps, even on the iPhone, take off like crazy. Instagram has been this crazy runaway success. It’s changing the way people share photos right now. Think about how fast that has happened. It’s amazing. So, you can change the world with your app and your technology and we want to keep doing it. We want to do it with raw technology and change it in a lot of different ways. I think we have a shot.

Andrew: All right. If people want to check out the app, where can they go and check it out?

Jeffrey: Go to the App Store, 360 Panorama. Also, you can go to Occipital.com/360.

Vikas: Yup.

Andrew: We’re doing this interview just before you relaunched the app. I went to the App Store and what I saw in preparation for this interview was a note that said, “Don’t get it now. Come back in a couple of days.”

Vikas: That’s part of the pain is when you have a better version and you can’t release it right away, there’s this whole, like . . . as an entrepreneur it’s a really . . .

Jeffrey: Yeah. We want people to have the great experience in a couple of days. Also, we want to get as much activity and interest on launch day as we can.

Andrew: All on launch day, I want people to go check this out. How much is it going to cost them to go check it out.

Jeffrey: On launch day, it’s going to cost them only 99 cents.

Vikas: Yeah.

Andrew: 99 cents.

Vikas: We’ll do a sale.

Andrew: And for how long is it going to cost 99 cents?

Jeffrey: At least a day.

Andrew: Okay.

Jeffrey: We’ll evaluate it after that.

Andrew: I’m going to say this, and eventually it might go up to $2 or so. What you’re paying for is not just the ability to take panoramic pictures, though that’s really cool and you’re going to get to use that. What we’re doing is we’re paying for a lesson. We’re paying $2 to learn from guys who’ve created something in the past, who have proven, who we can learn from and maybe copy some of your ideas and bring it to our own apps. That’s’ what I see sometimes when I go into the App Store. I’m paying a tuition. $2 tuition to learn from you guys is well worth it. Then the bonus is, next time I’m at a wedding, next time I go to New York, I get to take a picture that I actually will get to post online and people will see and enjoy.

Jeffrey: We hope people pay tuition.

Andrew: Just keep spying on these guys, learning what they’re up to, and copying as many of their ideas as possible. Better yet, I don’t mean copying in a nefarious way. I mean copying, bringing over, learning from you guys, and maybe even partnering up with you.

Vikas: Absolutely.

Andrew: The way DailyBurn did. All right. I’ve told you before this. I sent you e-mails before saying I couldn’t wait to do this interview. It was so much fun to do this interview. It’s such an inspirational story. I hope I captured that. I was reading about how you guys almost were a disaster. I talk to you guys now here and I hope people understand that you didn’t get money. It didn’t work out. The beautiful Cinderella story where everything’s, the Disney way, the Disney version of this, but it’s so cool to see that there are other options and that if you stick with it, if you try a couple of different ways, that something big could come up.

Vikas: It definitely can.

Jeffrey: Just be tenacious. Believe in yourself. You can do it.

Andrew: Thank you. Thanks for doing this interview. It’s great to meet you. Thank you guys all for watching.

Vikas: Thanks a lot, Andrew.

Jeffrey: Thanks, Andrew.

Andrew: Cool.

Jeffrey: Bye.

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