Long Journey to a $435M Exit: Bytemobile Cofounders Chris Koopmans and Nicholas Stavrakos (Part 6)

Sramana: I think there are a lot of great teams that get stuck. A great team is essential, but there is a lot more to having a successful business than simply having a great team.

Chris Koopmans: If you have the right market or the right technology, you can still fail. You need a good deal of luck and a lot of work. Nothing guarantees success.

Sramana: I have studied the process of entrepreneurship in depth. It is better to do these experiments outside of the VC timeline if you can. Not everything can be done in a self-financed mode. I have talked to a lot of entrepreneurs who have mitigated market timing risk by doing other models. They would do consulting services or contract development services on the side. The VC timeline is very tricky to manage if your market takes too long to develop.

Chris Koopmans: VC capital was critical for us. We hired great salespeople, but we needed a salary for them. It probably depends on the type of company. If you are building a social media company with low overhead that is one thing, but if you are building telecommunications equipment, then you are going to need a VC.

Sramana: Certain types of companies are capital intensive. That is a side of the market that is in deep trouble. The VCs are all interested in the notion of risk-free financing. That is not where they should be. They are supposed to be providing risk capital. They are now shifting all risks to the entrepreneurs, then they are rolling in on the tail end to provide growth capital. The kind of business you were able to do in 2001 is very difficult for entrepreneurs to pull off today.

Let’s focus on the point you raised earlier. You mentioned that your customers are now focusing on tiered data plans. How does that affect you from a product roadmap point of view?

Chris Koopmans: The voice model began with carriers moved from local to long-distance and eventually cellular services. There pricing has also evolved. They have moved from selling price per minute and then into buckets of minutes. This is all a race to the bottom. If you are selling a certain unit at a certain price with reliable service, and you have competitors who do the same, then it all just gets cheaper and cheaper. Most carriers like to add features like call waiting and caller ID.

This has all occurred in the data world as well. We have seen them move from charging by the megabyte to creating buckets of data. They are still looking for a unique feature. Perhaps it is HD or an NFL application. They are looking for another type of data service that is unique and that can be bundled together for a compelling value-add. We are helping with that, especially in the video space. Users are used to paying for differentiated video service. They are used to paying more for Blu-ray than for DVD. They would rather download an Apple movie in HD than in standard definition.

There is also an opportunity for a whole new business model. Take the Amazon Kindle, where you sign up for service with Amazon but the carrier ends up getting involved in that business. Carriers get paid when you download books over Kindle.

This segment is part 6 in the series : Long Journey to a $435M Exit: Bytemobile Cofounders Chris Koopmans and Nicholas Stavrakos
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