Gogii: One of Fastest Growing Social Mobile Games Companies

Posted on Feb 24, 2011 | 47 comments


This is a post I’ve been dying to write for 18 months. I invested in LA-based Gogii, one of the fastest growing, most exciting mobile social networking companies you’ve never heard of and maker of a product called textPlus.

I know this because you’re not a young teenager.

And if you are – what on earth are you reading such a boring blog as this?!?

It’s my first ever later-stage deal.  I only recently invested and I only got here through persistence. See, I originally lost this deal. But I never gave up. I quietly watched their success from the sidelines and kept spending time with and telling the CEO, Scott Lahman, that I wanted to invest in his next company.  The opportunity came up to invest in this one and I pounced. More on that later.

But who exactly is Gogii, what is textPlus and why are they so exciting if I’ve never heard of them?

Gogii is the creator of the 36th most downloaded application in the history of the iPhone app store – a product called textPlus. To put things into perspective, the company has 7.7 million monthly active users who are creating more than 32 million text messages per day! The overwhelming majority of these users are under 25 and spend hours per day text messaging. Why are they doing it on textPlus?

Well, we started out a free text messaging platform. Duh. People like free. If you download the app on your iPhone or Android phone you can save more than $200 / year on text messaging. That’s something teenagers love.

More importantly, you can use it on your iPod Touch. This means that a whole youth generation of “would be” texters suddenly had a way to text message and drive their parents crazy. Sorry, moms. Oh, and while we’re at it we give them a free phone number. They can either be texted by name (this is brilliant if you don’t want to give people your mobile number but want to text with them) or you can give them a number to text.

You can also use the app even if you don’t have a smartphone. So Susie with her iPod touch can text anybody for free.

OK, that sounds like an interesting business, but nothing to write a freakin’ blog post about?

But the product is called textPlus, not textFree. Silicon Valley (and Alley) has been super excited about the new category of “group text messaging” and for valid reasons. The “plus” includes features like setting up & texting to groups. We just happen to have significantly more users than most of the group texting platforms you typically read about. Gogii spent way more effort marketing to what I call “The USA Today market” rather than the tech blog market. You fish where your customers are.

The textPlus group product means that soccer moms can coordinate practice schedules, bands can schedule practices, work groups can quickly ping each other when their website is having performance problems or whatever.

I know this category has gotten a lot of press. And I’ve personally played with all of the major applications in this space. Some of them are beautifully designed and have exciting teams so I know why investors are pumped up about the teams they’ve backed. But I have different reasons for being excited about Gogii.

My excitement really starts with the Gogii team!

I’m on record all over place saying that 70% of my investment decision is the team & 30% is the market. I have to love both – but it’s in that proportion. Gogii came in my office in 2009 with three of the most talented founders I had seen. Scott Lahman, Zack Norman & Austin Murray were the three co-founders of JAMDAT, the most successful mobile 1.0 games company that sold to EA for $680 million. Yes, with a “6 and an m.”

So aside from the fact that they had all worked together previously for years and had had a very successful exit, they were each talented in their own rights. Scott was one of the first employees at Activision and was VP of their Studio Business. So creating and launching hundred million dollar+ video game titles was part of Scott’s DNA. Add that to mobile and you’re talking about one talented executive.

Zack is the creative talent. He also was an executive talent at Activision having designed & managed two products (Mechwarrior 2 and 
Interstate ’76) that each grossed more than $250 million. At JAMDAT he designed the most successful mobile games – (Bowling, Bejeweled Multiplayer & Solitaire) and knows what drives engagement on “the small screen.” Zack is one of those guys that when a tech product weenie like myself meets I can’t help but walking away feeling like an uncreative nerd every time.

And Austin Murray runs sales & marketing – a role he also held at JAMDAT. He not only has experience in dealing with the carriers where at JAMDAT he established all the carrier relationships but he also led the international expansion of JAMDAT in Europe, Asia & South America giving them a footprint in 40 countries.

As you can see – they bring both executive & domain knowledge - which I’m on record as saying gives entrepreneurs “an unfair advantage.”

But wait, there’s more! Normally when we see the management team, we’re used to saying, “Ok, what roles do you need to plug beneath you? Who are the key hires we need to make?” And normally the rest of the team are young & inexperienced because that’s all the startup could afford to bring on.

Gogii’s “rest of team” included people like Tricia Bertero as CMO of Gogii who at Activision held roles such as VP Global Brand 
Management, SVP North American Sales and SVP European Publishing. And Michael Kirby as EVP of Corp Dev was formerly an EVP at Fox Interactive Media, VP at Fox Sports, director of biz dev at ESPN not to mention a Yale undergrad, Wharton MBA.

I could go on & on. The “team beneath the team” was as talented as any top team that pitches me startups. If you’re interested the rest of the management team is listed here.

And now you understand “where the puck is going”

You don’t stack an amazing mobile + games team like this to build a free text messaging platform. This is a team that from day one knew where the puck was going.

In 2009 when they came in my offices they presented a plan that had 3 phases: acquire customers cheaply (free + group texting), build meaningful social features (we will announce these at SXSW this year where I’ll be part of the team meeting people with Scott Lahman to make some exciting announcements) & then migrate this community into social, mobile games.

I knew this from day one. What you see is not what you get. “What you see” is a brilliant marketing & strategy initiative that has gotten some of the hardest to acquire customers on to our platform and not just downloading but using our application every day for hours on end. We have massively engaged youth using our product. “What you get” is one of the most mature, seasoned & experienced mobile games developers that has existed.

They have no interest in an early exit. They want to build one of LA’s premier technology & games businesses – what I call “a patron company.”

Will we get there? Obviously the tough work is ahead. But I’m super excited to work with the team.

I’m excited to serve on a stacked board with Kleiner Perkins iFund head Matt Murphy (Gogii was one of the iFund’s first investments), Dana Stalder at Matrix Partnrs (formerly of Netscape, eBay & PayPal) and one of my good LA buddies Russ Pillar (formerly CEO, Virgin Entertainment Group, CEO of CBS Entertainment Group & President of Viacom Digital Media Group).

What’s this business about losing the deal 18 months ago?

Let me start with the power of blogging. Everyone always asks why I blog. Mostly, I love writing. When I started blogging as a VC I had zero idea it would lead to my current audience level of 350,000 page views / month. It was just a hobby that was inspired by Brad Feld & how much he gave back to the community (and me as an entrepreneur) and Fred Wilson who’s blog became a daily staple.

When the Gogii team first came to see me it was through an intro by Russ Pillar. He told me that they asked for an intro because they were regular readers of my blog. So as a marketing vehicle this investment in Gogii is a direct correlation with my midnight efforts as a writer hack.

I fell in love with the team immediately as did my partners. We did a deep dive on the product, the usage stats and the team. We immediately decided we wanted to work with them and started a full-court press to invest. I had lost a previous deal where the founder told me, “his team loved me but felt they didn’t know my partners well enough whereas the VC he went with all of the partners swarmed them.”

OK. I can do that. My entire partnership took their leadership team to dinner. My partners spent one-on-one time with them. We DO work as a partnership and not as individuals but if prospective companies didn’t see that then I was going to make it clear. On a Thursday night we had our team dinner & I thought the management team was convinced that as an LA-based VC we would work actively with them.

By the next Monday we had lost the deal to a NorCal VC. I talk about the story in more details here.

I had no one to blame but myself. I took for granted that having the team mostly on board was enough. I had never met with Matt Murphy – he didn’t know me from a hole in the wall. I knew Russ well but decided not to try and lobby him since I didn’t want to cross my personal relationship with winning the deal. I thought management was enough. It wasn’t. THAT will never happen again.

I flew to NorCal afterward and went on the offense to make sure that every VC knew who I was and hopefully thought I was a hard-working, reasonable guy.

I never thought I’d end up investing in Gogii. I thought I missed the boat. But I wanted to spend more time with the team (who I really liked) and thought maybe I’d have a chance to be the lead A-round investor in their next company. So I kept “hanging around the rim” and inviting Scott to Launchpad LA events where we got to debate the evolution of the mobile industry over glasses of wine.

When they decided that they would rather build a huge independent company rather than take an exit in a market that had become white hot & had attracted a wide case of M&A suitors – I was one of the first calls. And I pounced. And invested. And led a $15 million round. And I’m chuffed.

Expect big things. We have our eyes on where the puck is going.

  • jenniferlum

    Congrats to you and Scott! Gogii is a great product.

  • http://arnoldwaldstein.com awaldstein

    A well spun tale. I'm glad to see that 'glasses of wine' were part of the uptake in the story.

    Have fun and good luck with this one Mark.

  • http://bothsidesofthetable.com msuster

    “glasses of wine” are OFTEN part of the story ;-)

  • http://bothsidesofthetable.com msuster

    Thanks, Jennifer! We're excited. More exciting news out of some other mobile companies you & I know, too! ;-0 when are you next in LA?

  • http://arnoldwaldstein.com awaldstein

    Yours and mine both Mark. We will lift some glasses together sometime.

  • jenniferlum

    Awe.sm :) I'm looking forward to the breaking news! I'll be back in LA in mid-late March. I'll keep you posted.

  • http://twitter.com/yesware Yesware

    Both of us Yesware founders had the distinct pleasure of working with Zack, Scott and Austin while they were growing JAMDAT. We've followed GOGII from afar, cheering the whole way. You're going to have a great time working with them. Congrats!

  • http://twitter.com/seungers Seung Lee

    congrats on Goggi! love the plan for migrating to social gaming as I remember over in Canada most university students were addicted playing solitaire showdown on msn messenger a 2 years ago and made me wonder why it wasn't pursued any further to take a crack at yahoo's casual gaming marketshare at the time.
    on another note, I wonder if being based in LA and being named Goggi makes a lot of Koreans in the area confused whether you invested in a mobile restaurant. you had me confused there for a second with Kogi.

  • jamesmcinerney

    Thanks for the post, very inspirational. I did have a question though: it sounds like Gogii is going to transform a lot in the future. Do the founders have a compelling vision about how they are going to keep their users on board through these transformations? (Or is that giving too much away?!)

  • http://twitter.com/rkillgo Russell Killgo

    Mark, do you think Gogii would have had the same successwith the app if they had charged for it? Let's say they asked $.99 for it. Would that many young people pay that to be able to text (or more) with their friends? — Russell

    Siffter CEO
    RussellSiffter@gmail.com

  • http://www.twitter.com/biggiesu Mike Su

    Nice! I always felt that the next evolution of the social graph would come from the phone book or text messaging. It is astounding how many text messages teens send on a monthly basis. Implicitly, the people you text are the people you care to interact with. While you may have 500+ facebook friends, there are probably no more than 10-20 people you text on a regular basis. THESE are the people that will influence your decisions. If those 10-20 people are playing a game, you will want to play with them. If those 10-20 people are buying something, you'll pay attention. I think that if there's one social graph to be built that could be better than Facebook's, it'd come from the phone/SMS, as that's the strongest implicit set of influencers and you're not going to have the problem of Facebook where you reconnect with your friend from 6th grade and post on each other's walls the first two days and then never interact with them again.

    On top of that, nobody has got mobile social graph right, and nobody has it right tied into gaming. Apple's game center is a surprisingly unintuitive mess. Most games awkwardly integrate FB connect. OpenFeint has a nice platform for achievements, but still does not get the “friends playing with friends” thing right. Gogii sounds like it has a huge opportunity to get this right!

  • Dave W Baldwin

    Big congratulations. While plotting things forward back in latter '09, I have to admit one of the obvious offshoots had me worried based on it taking from the carrier's realm, text message $$.

    So happy that the sales side of things was at the forefront of the plan. That is using real vision! Just seeing the USA Today market is something many can't quite seem to see.

    'Patron Company' is a good one to add to dictionary.

  • Aaron

    Interesting as I use Pulse.to to get my gaming groups together!

  • Kylepearson

    Its funny since I remember reading that original post on losing in VC. glad it worked out in the end!

  • Savo

    Inspirational Tale..wish I could be @ SXSW.. the BEST event ever. My son is studing Game Design @ UAT (Geek School) in AZ. I can't wait to share this story with him… He has watched his Mom (me) start up tech companies. Hope to help him someday

  • http://www.drewolanoff.com drewolanoff

    If you're at SXSW, you should catch my core conversation “Social Networking isn't Very Social.” We'll talk about a lot of what you mention :)

  • http://www.drewolanoff.com drewolanoff

    It's great to be finally working with you Mark, big things are comin'!

  • petegrif

    This is a very interesting company, no question about it. Their team is stacked.
    I was trying to get to the bottom of their business model so posted question on Quora:
    http://www.quora.com/What-is-t
    No response :(

    in any event
    congratulations Mark – way to hang in there

    I believe that gogii and path and instances of what will be a series of products that focus on and facilitate meaningful social groups rather than armadas of “friends.”
    There was a great talk bout this by Paul Adams, a google researcher based in Ireland who subsequently moved to facebook.

    http://www.slideshare.net/padd

    essential reading if you are interested in mapping real world social relationships into the virtual world

  • http://twitter.com/yoyolen Jeff Yolen

    congrats Dr Suster! fascinating to see how texting, which started in the US years after the rest of the world, is seeing so much innovation here. great tale. i can't wait for the movie: “The TextPlus Network” :)

  • http://bothsidesofthetable.com msuster

    thank you.

  • http://bothsidesofthetable.com msuster

    First, it's Gogii. But no, no confusion. We market ourselves by the name textPlus.

  • http://bothsidesofthetable.com msuster

    Yes, they have a compelling vision. It won't be a forced migration. Some users will want to work in another way, others won't. We have a very large funnel of “utility” users from which to market our more advanced free products to. Some will like them, some won't.

  • http://bothsidesofthetable.com msuster

    I think the benefit was “free.” That said, we do sell products and make good money on them. We sell:
    - vanity phone numbers
    - ad free product
    - sound packs

    and in the future we have 3-4 more products of these genre coming. But the core product is free, free, free.

  • http://bothsidesofthetable.com msuster

    spot on, sir! and now we have Austin, another invite for next year's Eagles games!

  • http://bothsidesofthetable.com msuster

    Yes, LA needs a patron. We need an Amazon, Facebook, Dell or GroupOn.

  • http://bothsidesofthetable.com msuster

    That it did. But 18 months in between!

  • http://bothsidesofthetable.com msuster

    I'm excited. Look forward to more goodness!

  • http://bothsidesofthetable.com msuster

    business model:
    - currently sell micro transaction products: vanity phone numbers, sound packs, ad-free product
    - launching 3-4 more products like these
    - longer term likely to offer social game like business model type products. No cookies for guessing – avatars, virtual goods, currency, etc.

  • http://bothsidesofthetable.com msuster

    LOL. And super funny because the first business idea I pitched to VCs in 1999 was text messaging!

  • http://www.drewolanoff.com drewolanoff

    Interesting…who would play Mark?

  • http://www.aaronklein.com/ Aaron Klein

    Congrats Mark! You left everything on the field for this one and it shows. Love your passion and enthusiasm for teams.

  • Dave W Baldwin

    Just remember the Law of Accelerating Returns… just make LA. Then LA can be the patron of a bigger locale.

  • http://www.aaronklein.com/ Aaron Klein

    I have to throw one more comment in to say: I love how you refer to this as “our product” and “we will release”, making yourself a part of the company.

    Most VCs say “their product” and “they will release” and I'm sure that's about not pissing off egotistical founders.

    But if I ever decide to go after VC funding, that's exactly the kind of investor I'd look for: someone so committed to the success of my company, they're willing to publicly risk “branding” themselves as a part of it on day one.

  • http://www.twitter.com/biggiesu Mike Su

    Nice! Someone else to share our misery!!!

  • http://www.thewebcitizen.com Thewebcitizen.com

    Mark, it seems that once more that your biggest bet on any company you invest at is the people behind it. Smart people can really change the direction of a business. Good job.

    Elias

  • http://www.thewebcitizen.com Thewebcitizen.com

    Mark, seems that your biggest bet on any company you invest at is its people. Fred Wilson had an intresting post couple of weeks ago about smart founders. He said that majority of them are dificult to deal with but they get the job done.

    Elias

  • http://twitter.com/mobilesymmetry Jim Patterson

    Good post. There's a lot of market here. I downloaded the Android app and played with it a bit. It's well laid out, easy to register, and a decent messaging interface. Best of all, it's very simple (unlike GroupMe). Search is important as the carriers have no mobile 411 and opt-in search (profile only, more if I decide to share it) is the trend.

    Several questions:
    1. What happens when the group gets bigger than the soccer Moms?
    2. How do groups converse with other groups?
    3. I'm positive this is on the roadmap, but how do you bridge the mobile-centric and the email-centric worlds (ironically, I cannot set up an account without giving Text + my email!)?
    4. The whole model moves to FaceTime, Fring, QiK and about 5 others in funding right now. How do you make sure the interface stays relevant?

    Might be opportunities to work together.

  • Scott Lahman

    Good point. Mark “joined” the team even before the deal closed. A very quick and decisive perspective change from “them” to “us.” This has been one of the great things about working with him thus far. The team loves him.

  • http://markgslater.wordpress.com/ markslater

    love this company. Love the fact that they have identified the SMS protocol as the bedrock for their endevaours.

    best of luck mark.

  • http://twitter.com/bensweat Ben Sweat

    I noticed the “we” thing as well. :) Great to see a VC bought in with the same mindset as those in the trenches.

  • http://www.terametric.com Taariq Lewis

    Come on Mark!

    I love you meng, but all group messaging startups remind me of a wonderful company called Upoc. Yeah. They went on for +6 years without a solid revenue model before being taken out by Dada Mobile. Group text messaging is not new. I think Social gives it a new spin and new life, but Upoc was social and had thousands of members texting and engaging across thousands of groups.

    What's different today except that it may snow in San Fran? Maybe I'm missing something really BIG?

    Cheers,
    T

  • http://www.aaronklein.com/ Aaron Klein

    That's great!

    A hearty congratulations on the funding round! I first heard about TextPlus when all, and I do mean all, of the iPod-toting 12 and 14 year olds in my extended family started texting me from their new numbers. :)

  • http://www.hujelabs.com Muhammad Huzaifa Ali

    I am 19 and I love your blog ! it's not boring.

  • http://artscibiz.com "FastMikie" Michael McCafferty

    Well, you had me at “free”… I just signed up!

  • http://bit.ly/hDp9Sw Domains' funded NewSpaceAgency

    SHOULD, a successful web company, always copy Google in its name and logo??? (with oo ii uu aa ee in it)

  • http://twitter.com/eranfiliba Eran Filiba

    Great post! Your enthusiasm can be read easily through your words.

    It seems like a very unique but clever method to leverage a community of messenger users into a group of gamers. I wonder if the games will be played through/on the same app, will have some sort of a meta framework with rankings or a completely separate app channeling the same community via user log ins.

    Can't wait to see how things turn out.

  • http://www.startupgazette.com StartupGazette.com

    Everybody seems to trash everybody else here. Just look at our most famous Angel, Jason C. former Weblogs inc. He just can't stop making his jealousy public.