SM: When you had your first IM client, who were your competitors?
JK: At that time AOL and ICQ were had the primary instant messaging clients. MSN, Yahoo and Skype had not yet entered the field. Of course, those IM clients were text only and did not involve a voice component like ours.
SM: You envisioned the concept; who designed it? How did you get it built and sustained?
JK: In the early part of 1998, when I came up with the idea, I got introduced to some programmers in the New York area through my professional network. Some of the programmers liked the concept, so they came to work and it took us six months to build the first version of the software, which was launched in January 1999.
I self-funded the company during that time. I wanted to prove that we could build the product and prove that it would be used. If nobody wanted to use the product then there would be no need to raise funds. Once we deployed the software, we found that people liked it a lot. It grew in true social software fashion and our user base is now all over the world. Once I had real software that was working I decided to raise some money.
SM: Once you had proved your concept, what was your next step? How did you validate that users were actually using the system and not just downloading it?
JK: CNET and Download.com were the main distributors. We saw the number of downloads from there. We had also built a recommendation engine within the software. Once people downloaded the software they could recommend it to friends and family. It was easy to e-mail around and enabled our viral growth. On average, every user who downloaded our software would invite five other users. We did zero marketing and grew solely via word of mouth.
SM: You launched an advanced product for 1999.
JK: We did, but our software package was only 200K. Most people used dial-up, there were no USB ports, and the only cameras that existed were not popular at all. There was no real bandwidth for video so we were just doing audio. Within a few years USB ports entered, bandwidth expanded, and we started going to video.
SM: How many users did you have in 1999?
JK: We launched in January and had 30,000 users by April. That was a fairly good ramp for new software with no marketing. Our software was free, which is really important. That is the same model used today. The CPMs were much better at that time so we thought that was going to be the way to make money. Of course a couple of years later the dot-com crashed happened and the CPM for adds disappeared. I then realized in 2001 that we would need a subscription service. The key was finding the right subscription features that people would be willing to pay for.