Bootstrapping with a Paycheck: DudaMobile CEO Itai Sadan (Part 4)

Sramana: What kind of deal did you structure with AT&T?

Itai Sadan: It was a reseller deal. They were using our technology internally and we trained their staff to use our product. That was an amazing QA exercise of our product because we suddenly had 40 AT&T web designers working with our product giving us feedback. We had to quickly integrate that feedback into product enhancements. That really helped us get the product out the door in a higher quality, earlier.

AT&T then sold the product to small businesses. They had hundreds of the thousands of small businesses that advertised on YP.com and those were the first customers getting our product as a white label.

Sramana: Was AT&T selling your product as a service or as a product?

Itai Sadan: AT&T sold it as a service.

Sramana: So AT&T’s 40 web designers used your product to mobilize the websites of small business users. What did they charge for that service?

Itai Sadan: Back then they charged around $40 to $60 for a mobile site and they paid us a quarter of that.

Sramana: You effectively established a very solid channel opportunity very early on. How many customers did you get out of that?

Itai Sadan: They are still a customer three and a half years later and they have signed up thousands of small business websites.

Sramana: AT&T has turned out to be a major reseller partner for you.

Itai Sadan: Definitely. The brand name was also a huge benefit for us. Everybody knows AT&T and they are a very strong brand. That really helped us get the next business development deals because.

Sramana: After you closed the deal with AT&T what were your next steps? Did you raise money or continue to bootstrap?

Itai Sadan: We raised money at that point. We tried to raise money earlier but it was very difficult. Once we had AT&T as a customer it really helped our fundraising. We closed our Series A shortly after closing that first round with AT&T.

Sramana: Who did you raise your seed round from and how much did you raise?

Itai Sadan: The first round was syndicated by Oren Zeev and we raised 800,000 dollars. Oren brought in some great investors into that round.

Sramana: In 2010 you had 800,000 dollars in financing and a deal with AT&T that is starting to monetize. What happens next?

Itai Sadan: We liked the type of deal that we struck with AT&T and we looked at ways to replicate that deal. We started targeting companies that targeted small businesses and struck our next deal with Webs.com. They are a website builder who did not have mobile capabilities. They were happy to integrate with our product and deliver mobile sites to their customers through us.

Sramana: Was it the same type of deal that you had with AT&T?

Itai Sadan: It was different in that it was an OEM deal. Our platform was embedded inside of the Webs.com website builder. Their end users were able to build mobile sites by themselves.

Sramana: What was the business structure of that deal?

Itai Sadan: They were selling it for $5 a month and we had a very fair revenue sharing model between us.

This segment is part 4 in the series : Bootstrapping with a Paycheck: DudaMobile CEO Itai Sadan
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