From Solo Entrepreneur to Serial Exits: Shane Neman, CEO of EZ Texting (Part 4)

Shane Neman: Back then, Shortcodes had just come out. Are you familiar with what Shortcode is?

Sramana Mitra: No. 

Shane Neman: It’s like those five or six-digit phone numbers that you text into to get a coupon. It’s a special five or six-digit phone number, and at that time they had just come out in the United States.

It was expensive to get. It was esoteric. There was only one place that you could get it from. There were just a handful of what are called aggregators that had connectivity into the telecom system that could even take your Shortcode and get it connected one by one to every carrier.

It was a difficult and expensive process. It was a process that no SMB would ever go through. Coke or Nike might go through it through an agency, but it was not affordable for SMBs to do. That didn’t deter me. We were doing enough money for me to figure out and say that it was worth the experiment.

I built a small platform after we got our Shortcode up and running. All it did was allow you to upload a list. Text messages at that time were only 160 characters. Incidentally, that is why Twitter is only 160 characters because initially they were using a Shortcode and you could text in your tweet. I’m not sure if you knew that. 

Sramana Mitra: I did not know that. 

Shane Neman: It’s mimicking SMS essentially. The way that you can send in a tweet was through texting their Shortcode. It would recognize that it was your account through your phone number. I built that and I’m like, “Okay, I’m going to subsidize this by giving it to a couple of venues or brands.”

I would give them access to this rudimentary software and see where it goes. Within the first three months, I was getting calls from other people asking how to get access to the software. We looked at the numbers, and we had made some profit already. It wasn’t even meant to make a profit. It was made to subsidize our sending texts to circumvent the inbox for JoonBug. That was what it was meant to be. That was when I realized that this was a business in it of itself, so we separated that out.

I started spending a lot of time building out the platform, so that it could be a self-service type platform like Mailchimp or Constant Contact, but for SMS. That’s how EZ Texting was born.

Sramana Mitra: What year was that?

Shane Neman: That was in 2005. 2005 was initially JoonBug but, within that year, I separated it out to EZ Texting. 

Sramana Mitra: So you were running these two companies in parallel? 

Shane Neman: Yes. Once I had EZ Texting, I had an “Aha!” moment where just like everyone is doing email, every business is eventually going to need a website, an email list, a phone number, and a text message list. That was what I truly firmly believed. I believe that every business needs to do this. That was one of the reasons why I sold JoonBug – to focus on EZ Texting. I saw it as a better business.

Sramana Mitra: When did you sell JoonBug?

Shane Neman: It was late 2007. 

Sramana Mitra: EZ Texting was initially incubated inside Joonbug and then you spun it out. Was it also a bootstrapped company?

Shane Neman: It was. At that point, my partner left and she went into the events business and did her own thing. I just did EZ Texting. I quite literally took all the proceeds that I had made from the sale of JoonBug and put it into EZ Texting. Not only that, I sold my car and got a mortgage on my house. I got really uncomfortable, let’s just put it that way.

Sramana Mitra: How much did you sell JoonBug for?

Shane Neman: I can’t disclose that as part of the agreement that we had. 

Sramana Mitra: You said you were doing $40 million in revenue when you sold JoonBug?

Shane Neman: Yes. 

Sramana Mitra: So it’s at least one-time revenue?

Shane Neman: I would love to tell you, because I have no secrets; but I just can’t. 

Sramana Mitra: All I’m saying is that if you have $40 million, it would be very difficult for you to get uncomfortable running a business. 

Shane Neman: First of all, we had some debt. Second, I had a partner. Third, you had to pay tax. Fourth, it costs a lot of money to scale a company fast. Yes, I was comfortable, but I got myself uncomfortable again. 

Sramana Mitra: Was it because you put all the money that you made from JoonBug into EZ Texting? 

Shane Neman: Correct.

This segment is part 4 in the series : From Solo Entrepreneur to Serial Exits: Shane Neman, CEO of EZ Texting
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