There is a conventional wisdom among web startups building social services for consumers. Build the product first, focus on perfecting it for your users, get as big as possible, then figure out how to monetize. It’s the story behind Facebook, Twitter, Tumblr and Foursquare.
But what if you went about things from the opposite direction. Snap Interactive has their holiday party last night at their offices in the west 30s. There flagship product is Are You Interested, a dating app that began life as one of the first apps on the new Facebook platform back in 2007.
“I won’t lie to you, user experience, design, those have not been our focus. We optimized for revenue and growth. Now we have those thing on cruise control, we can start to work backwards on building a great product.” said Cliff Lerner, Snap’s CEO.
The other unique thing about the company? They aren’t VC backed, in fact they are already public, as a penny stock. The company actually went public in 2006, a year before they launched Are You Interested on Facebook.
Being public means quarterly statements, and Snap just reported record third quarter revenue of $5.09 million, a 198 percent increase over the same time last year. This is partly thanks to Facebook’s launch of its apps platform on mobile in October, which helped Snap to a 30 percent increase in daily logins.
“At first, not having raised venture was hurting us, because it made it tough to get covered in the tech press or expand rapidly,” said Mr. Lerner. “But now, being a public company is really helping. The hiring environment in New York is so competitive, being able to offer developers stock in a public company that they can easily trade has become a big weapon for our HR.”
At a time when startup employees seed Zynga clawing back stock options and shares in recent IPOs like Groupon plummeting, the opportunity to have stable, liquid equity in a public company is increasingly attractive
Betabeat covered Snap back in January, when the Goldman Sachs sale of Facebook sent Snap’s stock rocketing up an astonishing 1000%. They followed this with an $8.5 million private placement, and have actually increased their amount of available capital since. They moved into a bigger office and have been hiring like mad.
Why haven’t we been covering this company more closely? To be honest, we were snobs. It seemed to us like a spammy Facebook app and the poor design was a kind of a turn off. They aren’t connected to the startup scene or any big name local investors.
But after spending time with their developers last night, we’re interested to see if they really can engineer a meaningful startup in reverse. “We have always tried to align ourselves with Facebook. So at first that meant virality. Then later it meant the news feed. Now it means the timeline, telling a story, focusing on the depth of data,” said Mr. Lerner. “We got here by focusing on that extra ten cents, by trying to get that user to come back tomorrow. Now we care less about that. We want to make sure the user is coming back, not tomorrow, but in six months.”
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