“Private Twitter for small groups”

“BBM for every platform”

“Reply-all for SMS”

I could describe GroupMe in a lot of ways, but “really exciting” would have to be the most accurate one, and we’re very excited to announce it as one of our newest investments at First Round (See the Techcrunch article here). 

Personally, I’m incredibly psyched about the scope of the vision and feel very lucky to be working with such a promising young team.  They also couldn’t have asked for a better syndicate of investors.  When First Round started talking with the Steve and Jared, we introduced the company to Betaworks and to Ron Conway’s SV Angel fund.  Both groups signed up for the deal, as did Lerer Media Ventures, and several other prominent angels—including Josh Stylman and Pete Hershberg, who backed my previous company.

The path to our involvement with the company dates back to last December, actually, when I attended a Gilt Groupe “Expert Talk” run by Josh Knowles, formally their VP of Engineering.  He introduced himself and we kept in touch through all the various social media channels—until I heard he was leaving Gilt.  I reached back out to him and we reconnected for lunch at Coffee Shop right before the Techcrunch Disrupt conference.  Knowing I was there, he told me that I had to meet his friend Steve, who had hacked up something cool at the pre-conference Hackathon.  I was actually at the Hackathon, too… but had missed Steve’s presentation.

We met the next day, along with his partner, Jared Hecht.  I knew Jared from his time at Tumblr.  They showed me a very lightweight HTML5 mobile site that enabled you to start a group chat that fell back to just text messages when you logged off the web.  Built on top of Twilio, it was pretty simple from a technology standpoint—but what got me was the enthusiasm of the team and the scope of their vision.

GroupMe is more than just a way to text in groups.  It fits the way mainstream users want to communicate.  I’ve always believed in small, private groups—dating back to when I first started blogging.  I acknowledged that most blogs were private and only read by a handful people—like on Live Journal and MySpace.  Believe it or not, the average person doesn’t want to talk to 5000 people.  They want to talk to their four closest friends—the same people they look to go out with on Saturday night, or the friends from home they left behind when they headed off to college.

Jared and Steve understood this intuitively.  Moreover—they understood how a lightweight communication app without a lot of structure to it had the potential to be a lot of things to a lot of people—the Twitter phenomenon.  What we saw here was Twitter built for the way mainstream users want to connect.  What you might lose in the power of search and virality, you gain in the additional ways users will interact with you.  I wouldn’t negotiate weekend plans via Twitter, or debate a feature with a product team.  Nor would I share important job news before sharing with just my immediate family members.  Being the place where you communicate privately with the most important people in your life, or the small groups you see the most, is a critical part of the communications stack addressed very poorly at the moment.  E-mail reply-alls aren’t a permanent solution.

You see this kind of behavior in BBM—Blackberry Messenger.  Unfortunately, that’s stuck on the Blackberry platform—tied to a sinking ship in my opinion.  GroupMe has a chance to be BBM for the rest of us, but also to be an open platform that other interesting group functionality can be built on top of—sending casual invites, starting a flashmob, group buying, quick conferencing (via voice, too!).

Right now, the app is extremely early—just a few months old, but the the team is making quick progress in an interesting area.  They’ve met some great developer hires and are cranking away to launch new features for the TechCrunch Disrupt in SF—quite fitting given where they started.

As a personal note, I’m excited to finally get to announce a First Round investment in a company that I was involved with in New York City.  The next two should get announced in a couple of weeks. 

Reading The dirty little secret about Google Android, I've been enjoying the insightful analysis of how Apple's decision to free the device from the restrictions of the carrier were key to the identity of the device, and seem more in keeping with what Google originally promised with the Nexus One.  

Unfortunately, the Nexus One flopped.  The non-Apple customers buy their wireless devices and service very differently.  Mass-market phones, even smart phones, need marketing spend behind them, and those campaigns are linked to carrier restrictions and modifications which compromise the "open" vision.  The upshot, according to the article:

the consequence of not putting any walls around your product is that both the good guys and the bad guys can do anything they want with it. And for Android, that means that it’s being manipulated, modified, and maimed by companies that care more about preserving their old business models than empowering people with the next great wave of computing devices. 

I think this rolls back into the S-Curve of technology adoption.  

[credit: Wikipedia]

As the market matures and a it becomes a mass market product,  smart phones and apps become both more standardized and more understandable for the average community.  We see and hear idiotic advertisements exhorting us to be "twin texting turbos" with the Droid 2.  And this is great for Verizon's bottom line, for marketers and developers launching Android apps, and for mobile web content growth.  But it basically sucks for the innovators who want to be able to get a great device and move from carrier to carrier in the US market.

Other perspectives: Nic Brisbourne of DFJEsprit writes

[T]he longevity of the app paradigm versus open web standards will depend in large measure on who wins the hardware battle.  Open standards at the software level probably will probably only prevail if hardware manufacturers with a PC mindset prevail over those with a preference for closed ecosystems...

Unfortunately, the principles of openness have been interpreted to mean an open app ecosystem, and haven't changed the economics of the closed carrier/device model in the US.  Google wants a big market for Android apps and as many users as possible, and that motivation is at cross-purposes with the open-ness that geeks want.

This is me and my own opinions talking, not the firm that gives me money to eat...   hopefully, that's pretty clear.

In the past, I've heard lots of arguments about how New York City needs its own [insert something national]. 

"We need our own Techcrunch!"

"We need our own SXSW!"

"We need our own Google!"

Honestly, I had never really put much stock in those ideas.  I pretty much thought the Google of the New York tech scene was, in fact, Google.  The world is a global place, made even smaller by technology.  I didn't quite understand what the point of recreating what was easily accessible, just not native.  I didn't mind that Techcrunch did Disrupt here--I thought it was great for New York.

However, I've interacted with a couple of outside groups lately that have pushed me to rethink my opinion on the value of being native to New York City.  More and more, I'm seeing it as important to the process of shepherding local efforts to building great businesses.   

You see, New York is the most infinitely complicated city in the world.  Nowhere else do you have as many industries converging in one place--which creates the best potential for idea cross-pollination on the planet.  Unfortunately, that potential goes largely untapped, since New York is also one of the most siloed places.  

It's not that we don't want to interact with others who aren't doing what we're doing--we're all just pretty damn busy, that's all.  That's why there's a lot of potential low hanging leadership fruit for anyone who cuts across several industries--like Julia Kaganskiy of the Arts & Tech Meetup.  Similarly, it's not surprising to me that Evan, Hilary, and Chris--the founders of HackNY--are either New York natives or have been here long enough to feel like natives.  

New York geography also has it's subtle influences on the social and business dynamic--perhaps not so subtle to natives.  If you live here, you know having an office too far west of a subway is like getting banished to a desert, what it means when people say you can't get to Brooklyn to Brooklyn (you have to go through the city!), and why checking in above 59th street gets you a special badge.  

New York is also a city of aspiration--which is great for the most part, but it also means you get a lot of dreamy eyes getting in the way of the heads down crowd.  Understanding whose stars you want to hitch a ride on is a function of seasoned discernment.  It's not a small town--and you can hide a reputation pretty easily.  Is there a story behind the breakup of that management team?  Did you talk to the co-founders?  Was it really just an intern that got fired from posting to that Twitter account?  What's the real story behind that investor's track record?  Who really has influence and who just has a bunch of Twitter followers--and who's completely under the radar?

People ask me how much time it takes for me to put out my NYC events list each week.  My first response is usually "not nearly as much time as it would if I didn't know most of the people putting on events."  After a while, you get a sense of who's really pushing the envelope to create great experiences and draw in top professionals.  

New York has become a very attractive place for outsiders--venture capital funds, accelerators, etc.  They're all looking to tap the potential of the Big Apple, work with local talent, and help build local startups into great companies.  The question is whether or not these professionals provide nearly as much value as the potential of those who are deeply rooted in the ecosystem?  

I've said before that innovation is a ground war--it's house to house.  You can't fish out the best entrepreneurs without trying to turn over every rock possible--and in NYC, that's a lot of rocks.  It's also a function of building trust--and people aren't going to trust you with their startup ideas unless they see you around, know other people that know you, and hear that you're already out their providing value.  That's what brings the right people together.  If you believe that the best programs are the ones that bring together the most innovative startup professionals, you'd be hard pressed not to accept the fact that there's a home field advantage.  

Owen Davis has done a great job this summer with SeedStart, and there's certainly room for even more supportive programming for the innovation community.  My growing sense is that the best efforts to help the NYC scene are going to be similar to what we've seen over the past five years--natives, like SeedStart, who understand what makes NYC a unique place to build a company helping themselves.  They're also potentially more committed to the long term viability of their programs--because they have nowhere else to go or be distracted by.  New York isn't part of a portfolio--it's home.

Don't get me wrong--there has been and will continue to be lots of value contributed to the community by newcomers, but I think there's something to be said for participating, listening, and learning about what we've got here before you just march in as "liberators".  

New Work City (NWC) is one of the most important hubs of the NYC technology scene.

Why?  New Work City houses ~50 amazing tech freelancers and entrepreneurs running a dozen or so fledgling startups such as Perpetually, Loosecubes, Urban Pregame, Homingcloud and TouchGraph.  Creating a home for independent workers and early stage entrepreneurs creates the fertile soil needed to seed innovation and birth new companies. NWC is that home. In short, New Work City is a home for the homeless and a desk for the deskless, individuals otherwise relegated to working from coffee shops or trapped in the depressing isolation of their own apartments.

If you’re thinking “desks for rent” you’re missing the bigger picture.  It’s all about the people. NWC is people getting together because working in a stimulating environment surrounded by friendly passionate people who love what they do is f***ing awesome. It’s productive, it’s fun, and it’s deeply satisfying.

On September 1, a mere ten days from today, NWC opens its new home:  a brand new 5,000sq space at Canal St and Broadway. The NEW New Work City will support a larger community and will be amazing. As an independent space, New Work City is self-sustained by paying members of the community — people like me. There’s no sugardaddy bankrolling it and no VC firm backing the space.  It’s run as a break-even business and it’s entirely volunteer run — truly a space for us and by us.

In ten days, the dream for NYC to have a dedicated coworking space will be realized. It’s a dream that initially took shape back in the summer of 2007 as part of an East Village coffee shop (CafeBricolage).  Many of the same people are still at the helms.

Having an awesome home to independent workers and entrepreneurs is crucial to New York City’s goal to become a major technology hub.  However, NWC needs your financial support to make this happen. We need about $100,000 total for the new space, and are attempting to raise $15,000 through Kickstarter.  Please donate to our KickStarter fund and be generous (let’s smash through this goal!)

Also, please seriously consider whether your company or organization could benefit from a partnership/sponsorship opportunity with NWC.  If so, please get in touch with me and I’ll happily put you in touch with “mayor” Tony.

By supporting NWC, you’re supporting NYC as a healthy place for startups.  On behalf of me and all New Work City members, thank you for your support,
Jonathan Wegener

Possibly Related Posts:

• Young Entrepreneurs and B2B Startups: Doomed to Fail?
• Five Pre-Funded NYC Startups To Watch
• Location, Location, Location: The Hyperlocal ‘Moment’ of Awe
• A Tech Geek’s Guide to Tourism
• Part 2: Do The Numbers Work? The $100/day Business

Blockbuster chief of digital strategy is quoted in Fast Company:

You can always say I wish I did X and not Y. But if you asked me in 2009 whether we'd be the only one in the mobile space selling movies other than Apple and whether we'd have Blockbuster On Demand--never in my wildest dreams would I have aimed this high. [emphasis is mine].

What's the point of a strategy if you can execute on it and pass your own dreams? No wonder my money is on Netflix FTW.

Over the past few days, I’ve been at home in Alabama, which as you may imagine, is quite different from New York City. Other than the grossly uncomfortable heat index (100+ every day) and noticeably shorter skyscrapers here, I’ve also noticed that some of the mobile tools that I used in New York are no longer particularly useful.

Take Foursquare, for example. It is useful in New York for me because there are a large number of venues that I can check into, and also because I have  a large number of Foursquare friends that also live in NYC. Also, the density of Manhattan / NYC (in terms of both people and venues) further increases the usefulness of Foursquare. Why? Because there is a greater probability that when I see a pop-up notification of a Foursquare friend who is checking in, it’s actually in a close enough range that it makes sense for me to find the friend to say hi. In suburban Birmingham, where getting anywhere usually requires at least 10-15 minutes of driving at a minimum, the ability for Foursquare to help provide that same connection diminishes greatly. Plus, given the lower penetration rate of Foursquare usage down here, if I even chose to check in, I would have to add a new venue myself.

I think it’s this critical mass of New York users and New York venues, as well as the partnerships that Foursquare has made with NYC-based companies, that has greatly helped it to become the location-based application of choice compared to, say, Gowalla. Earlier this year, around the time of SXSW 2010, I was chatting with a friend from Austin Ventures about location-based services, and it seemed pretty clear that we each had our regional alliances. My friend was a backer of Austin-based Gowalla, and I was a supporter of New York-based Foursquare. This was not surprising, since you’d expect greater adoption and penetration in each startup’s founding city, leading to a critical mass of users in that location.

During SXSW 2010, it seemed as if Foursquare and Gowalla were still neck-and-neck in terms of their potential to become the dominant location-based mobile app, but if you had been a limited partner giving me money to invest, I would have put that towards Foursquare, something I mentioned to my friend. Why? Because the pure size and density of the New York user base, as well as the potential connections to media, advertising, and finance in NYC are a huge advantage in terms of customer acquisition, all other things equal. I think that that boost towards critical mass is a huge value add for many startups (though not all) and should encourage more entrepreneurs to base their companies in New York.

Agree? Disagree? Please add a comment!

P.S. Current stats (as of July): Foursquare is now over 5 times larger than Gowalla and growing 75% faster.

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In other SocentVC-related news, 40 billionaires have now pledge to give away 50%+ of their wealth as part of The Giving Pledge. The number keeps going up! Read more about The Giving Pledge here.