GroupMe is a New York startup in the hot field of group messaging. Its application allows people to share messages within a circle. Co-founder Jared Hecht, a former business development executive for Tumblr, explains how the concept applies to everyday life, why it relies on simple texting and what it has planned to generate ad revenue.
GroupMe was a hit at South by Southwest, but some have questioned its usefulness in everyday life. How are you seeing people use the service?
When we created GroupMe, it solved a very basic problem that Steve Martocci and I had: how do we stay in touch with our friends better when we’re going to musical festivals for the weekend, or we’re going to a concert, or trying to go out to dinner with a group of friends, or a bar for the night. But what we saw was about 25 percent of our use cases are based in advance of the event. We’re really broken down into two template type of groups. One are temporal based, like SXSW. But the other ones are what we call persistent groups and these are comprised of people who are important to you in your everyday life. We see family use cases all the time. We see soccer moms, little league days, jogging groups, coworkers, college buddies, your fantasy league for sports, the people you watch a television show with on a repeatable basis. It’s become a dominant way for our users to persistently stay in touch with people who are important to them in real life. These persistent groups are a massive use case for us. We hear about how these persistent groups actually help and enhance people’s real life relationships by bringing them together more and making them feel connected all the time to the people in their life who are important to them.
Apps get all the attention nowadays, but GroupMe works just as well for those with feature phones. Is that intentional?
Absolutely. We have people who have our app installed on iPhone, Android, and Blackberry who can chat using the data side of the service, but texting is the true user experience. It all boils down to the individual user and what their preference is. Do they like to chat in app or do they like to chat over SMS? The reason why we started with SMS was because when we initially created GroupMe not all of our friends had smart phones. We needed to leverage a platform that was accessible to everybody, which was SMS. So if I just have an app that only works on smartphones and I have one friend who is part of my fantasy football league but can’t participate in that group because he has a feature phone, that group is no longer useful to me. It’s no longer a group. We believe that this is a tool that needs to work everywhere, all the time for anybody, and the only way to do that was to leverage SMS because it was the lowest common denominator. It’s critically important to us that we maintain the integrity of that. Nobody should be restricted from a group simply because they have a feature phone and not the latest smartphone.
Do you plan on incorporating advertising?
Toward the end of this year or early next year, you’ll see us getting in to what we like to call “real-time positioning.” What we want to do is to help groups make decisions better in real time, because a lot of these people in groups are trying to do something. They’re all coordinating on their phones. They’re talking about where they want to meet, what they want to do, where they want to go and when they want to go there. Whether it’s going to a restaurant or grabbing drinks at a bar, whether it’s going to a movie or going to a show. There’s a lot of purchasing intent in these groups. If there are six of you in a group and you guys are trying to decide where you want to go get food and you decide you want to go get sushi, we want to show you a list of sushi restaurants that are in the epicenter of where you are geographically. What restaurants will be able to take you in the next hour, two hours, and which one is going to give you a 30 percent discount if you walk through their door in the next hour. That’s where we want to go, and that’s where our long term minimization strategy is. Sort of like the concept of real-time group buying.
Fred Wilson recently wrote many startups waste money on marketing. How important is marketing to your growth plans?
I think there are two different types of marketing. One type is going out there and spending money and getting your name plastered on billboards, buying downloads, and sponsoring crazy events. For most startups that doesn’t work, because startups, regardless of how much money they raise, at the end of the day they’re spending it, and that’s probably not where it’s best initially. But there’s also effective marketing. Like the stuff that we’re doing with brands and featured groups, that’s marketing, no matter what. So in a couple of instances I think it’s really important actually. What we did at SXSW was great. We went down there and we collected user feedback. The interaction of having our entire staff down there talking to our users and showing them that we’re real people and collecting their feedback to try to understand what they like and don’t like about the app, that is marketing. It’s interacting with our users, talking to new users and figuring out what they like. So I think it’s really important actually. There’s a difference between throwing money at marketing and smart marketing to create general awareness and brand awareness. I think it works.
Color definitely is off to a bumpy start, but it’s done some interesting things. Are there plans for GroupMe to provide location features to groups?
Not particularly. One of the reasons I find Color very interesting is that they’re solving a much different problem that needs to be solved. They’re really at the total polar opposite end of the spectrum of social. Their whole thing is there is no relationship. You share everything all the time with everyone around you. That’s pretty much the opposite of where we’re founded. We believe that we need a platform that’s more reminiscent of a real life platform. It allows you to communicate and manage real life connections that are important to you. That’s fundamentally different than what Color is after right now. That’s what we think.