EPISODE 4... Interview with ScoutMob Founders, Part II

This is a continuation of the interview. Please watch Video #3 for the first part.

7. What else happened in that period between July to December 2010?

Michael: "There was a certain point when we knew we were going to have to raise some money or else it wasn't going to work. At that point a friend of a friend was an angel investor and he liked what we were doing with Skyblox. He came up to Atlanta to talk to us about investing. When he came up we had changed course and were leaning more towards the ScoutMob model. So then when we did a presentation for him we told him we were thinking about the ScoutMob model - a different approach from wi-fi." 

Dave: "He had a great attitude about it. He told us this isn't about any particular idea but about the team. He really liked us so he invested with us and is still an investor in ScoutMob to this day. Money was definitely tight though."

Michael: "Yeah, we were on our last leg. We knew we had to do something. That was also the time Dave had an intersting idea 'in the shower'. At the time we secured our first angel investment, Twitpay was just getting traction and it was a service that allowed users to pay other peopleTwitter. So we thought it'd be a good idea to raise our angel round through Twitter using Twitpay. Then we ran into a bunch of issues - one of them being that there was a cap of $1,000 - and also it went against some SEC regulations. What we ultimately decided on was to raise the first dollar through Twitpay. So that morning we sent it out on a press release that we were raising funding through Twitter. We also started blasting it out on Twitter and friends. Literally by 3 that afternoon, VentureBeat and New York Times picked it up. It was a fun little stunt. At that time we were still Skyblox though so it didn't really help us with email signups.

We spent from August to January mapping out ScoutMob. And then we brought on Liza, our copywriter, so it became a team of three."

Dave: "We were still at my loft so there was a lot of time spent thinking about ideas on which way to model ScoutMob as a business. Sites like Groupon and Livingsocial were just taking off and our model is significantly different from theirs and it has not changed since that time. 

Neither one of us were developers so we outsourced two guys doing both website and mobile development."

Michael: "Dave did the sales. Liza would go to each of the businesses he signed up and do the writeup and take pictures. I was the guy that sent out the email and responded to customer emails."

8. How did it grow from 9,000 users onward?

Dave: "We were so few people and we didn't even really monitor things. The only way we even knew how we were growing was by looking at how many people we were sending the email out to. So January 13th we launch we were at 9,000 and by end of January we were at 13,000. This was just by word of mouth and people forwarding it. But we didn't have a dashboard to give us specifics. After that it just took off. 

But even before we knew numbers we knew anecdotal stuff. We'd go to the Apple store and we'd say we work for Scoutmob and we'd be rockstars. People would come up to us in public and be like 'you guys are doing awesome'. Strangers would see us and not even know who we were and tell us to download the ScoutMob app."

9. So you guys didn't have specific marketing initiatives?

Michael: "One of the cool things about our business is that everyday we send out an email which is what most brands do for marketing. As such, our email is our product. Email newsletters have a weird dynamic which has made everyone in this space so successful. We always say our product is our marketing. And because of this, before we launched, from August to December, we spent a lot of time on our brand.

We thought a lot about little things like naming sections. For example, we could've used a corporate email address like info@scoutmob.com for customer support but instead we used sweatervest@scoutmob.com. A lot of small things like that where we didn't take the easy route differentiated us from our competition. And it paid off because from day one people thought our product was really cool and really took to it. So our early stage growth was really quite effortless from a marketing standpoint since it was all word of mouth. People would get the newsletter in their inboxes and forward it to their friends and that's a large part of how we grew initially." 

Dave: "The challenge you have then is if it grew virally in one market then how do you replicate that in another market. And I don't think we have a solid formula for that even to this day. It'd be easy if there was a list of ten things we did and a set budget we used in one city and just apply that to another but it didn't work that way." 

Michael: "Press also didn't have much to do with our growth at that point. We got a decent amount of press but not from a concerted effort. Press didn't fuel the growth but came as a result of the growth." 

10. When did sales become inbound as opposed to outbound?

Michael: "From the first day that we launched we got a lot of inbound deals but they weren't places we wanted to do deals for. The majority of the places we want to host deals for we still have to go out and get."

11. How did it go from 10,000 users to 100,000 users?

Dave: "Growth got pretty steady where we were growing by 10,000 to 15,000 net adds a month and roughly 20,000 gross adds a month. Then we also started launching in other markets like New York City and San Francisco and those markets started to take off."

12. What was the user acquisition like in cities like New York City and San Francisco? How did you get your first 1,000 users in those markets?

Michael: "At that point we had a base in Atlanta so we reached out to those users and told them to tell all of their friends in New York City about ScoutMob. We also had a landing page that had an image of a map with pins marking th cities we would be launching in next like San Francisco and New York City. We had a two or three month time period when we knew New York City would be next so we pushed it hard to our base. We didn't go out and market it to people who hadn't heard of or used ScoutMob yet. 

For New York City we basically sent out an email to our users saying NYC is next. We tried also to prime up New York City by running deals there once a week. So then our email list grew from 2,000 to 3,000 users and so on. So that growth was organic as well. By the time we launched we had about 4,000 to 5,000 signups.

Every space is customer acquisition and that's the whole business. You have to have that on top of the sales. We have two sets of customers: the merchants and the consumers so the consumers are a huge part of it. This space is moving around a lot. Some of the things that contributed to our successful Atlanta launch were the result of it being purely January 2010. If we launched in Atlanta right now it probably wouldn't take of like it did. There are other challenges now. Back then people hadn't really heard of what we were doing. There are different pros and cons from then and now. Groupon got the benefit of that early on and when people used it they told others 'Have you heard of this before? It's awesome'. That probably contributed a lot to the early growth. However, now customer acquisition is very competitive. There's a lot of money being spent so we don't want to get into an arms race on spending outspending because that's a game you have to be pretty deep pocketed to play. We've done well with our brand and product and focusing on a tight niche - word of mouth. And we think there's something there. But you have to juice that because that'll only get you so far."

13. Suppose you're launching in a new market tomorrow like St. Louis - what would you do?

Dave: "You have to have a critical base of subscribers before launch and that's a specific number. For us it's usually between 10,000 and 20,000 and that base gets you to a critical mass you need before launch. We also prime a city before we launch it. We send people there to sign up deals and run deals before we launch. We run one deal a week. We get signups through our landing page for that city which is just an email signup page with no deals. A certain number of people a day signup and it's usually not a high number. Then we even do things to increase that number before launch."

14. Any other plans for growth in the future ?

Dave & Michael: We're going to work on building community. RevelMob is a step in that direction, but we're still very much evolving it so we'll have to see how it works out!

This part of the interview only correlates to their traction, click here for the complete video.