A Real-Time, Multimedia Social Network You Might Not Know: Paltalk CEO Jason Katz (Part 6)

SM: In the ten years you have been in business, how has the business progressed? Where have you made money and gained traction?

JK: We have had good traction. In the early years we were viral, explosive, and unique. That lasted for three years and allowed us to launch with no marketing money. When the market crashed it limited competition because nobody could get funding. If I remember, Friendster was the first to come out after the money started to thaw again. Once 2004 hit and VCs were investing again, we saw increased competition from companies like Skype.

We had a loyal base of customer and we had constantly been enhancing our service. When we started our offering was push-to-talk, now you can talk to an open mic. When we started we did not have video, now we can do large group video. We have better codecs, echo cancellation, and other technologies that consumers are not always aware of. At the same time consumers have had increased access to better bandwidth and better computers.

Nobody was thinking about wireless networks ten years ago. Today all these computers with good webcams and microprocessors are a nirvana for what we are trying to do, and they all have wireless. Suddenly, we now have smart phones and we are going to do these same things from the smart phones.

SM: Do you have an iPhone app?

JK: We do. It works on the iPod touch. We have a BlackBerry application. Video will follow on those soon, and our Android version will be out soon as well. The telecon possibilities worldwide are going to be exploited. Cell phone companies have made their living tariffing any kind of international dialing. If you have an app that goes around that then you can have a popular business. We have a good user base to do this with, a decade of experience, great engineers, and eleven patents with four pending.

SM: How did your revenue ramp from the beginning of your company through today?

JK: We have been able to ramp well. The first year we made six figure revenues, the second year we almost hit $1 million. The third year was well over $1 million and revenue doubled year on year for a long time. We hit a level where we had profitable growth and we have been able to grow each year. The key is growing profitably.

SM: Did you ever raise funding after your initial $3.9 million?

JK: We did raise money in 2004 because we already had money in the bank and we were making money. We did not actually need more money, but gaining access to some funding was a good way to grow faster. Our first round was really just friends and family. Gaining an institutional investor signaled that we were a good company with reliable technology. When you are hiring employees it is nice to have that validation. It has made it easier to do business. In 2009 we bought those shares back from Softbank.

This segment is part 6 in the series : A Real-Time, Multimedia Social Network You Might Not Know: Paltalk CEO Jason Katz
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