Sramana: How did you go from running a calling card site, e-card site, and birthday alert system to building Sonico?
Rodrigo Teijeiro: In 2007 we were observing MySpace. We realized it was not a difficult site to build. I had the team and the knowledge as well as the marketing skill. We investigated the product a lot and launched our own social network product for Latin America in July 2007. To start a social network, you need various components.
We could not start off slowly. At that time Facebook had 10 million users and MySpace had 100 million. The really big player was MySpace. We really believed that long-term viability would be about people with real connections. At that time the major players in Latin America were Hi5 and MySpace. Most of the social networks in Latin America were about dating. I think that having first and last names, sortable profiles, and controlling spam and porn was a key component for long-term success.
I used the birthday alarm system as our social draft. You would not want to receive a birthday alert for somebody whom you did not know. You would not send e-cards to people you did not know. I essentially incorporated the birthday alert system and the e-card site as an app into Sonico. We did not build Sonico directly with users from those sites, but we started pushing traffic to it tremendously.
Sramana: How exactly did you pull traffic from your birthday alert system and your e-card site into Sonico?
Rodrigo Teijeiro: Conceptually it was like an app in Facebook. When you would register for either site, it would ask you if you wanted to sign up for Sonico and explain that you could share photos with your friends. We did very basic advertising campaigns to push people to sign up into Sonico.
Sramana: What kind of conversion did you get? You had a user base of 30 million.
Rodrigo Teijeiro: In six months we had over 10 million registrations in Sonico.
Sramana: Did you bootstrap Sonico as well?
Rodrigo Teijeiro: One year after I launched Sonico I raised capital. Six months after we launched, I found that nobody really believed in what we had. We had no investors and had not been out in the press. I was a nobody, and when I approached the press they would ask me who my investors where, where I came from, and told me that my numbers did not seem real.
I realized that it can be powerful to have a stamp of approval. I did not have accolades and anything back then. It was incredible how journalists would not write anything about me. I knew that my net worth was essentially zero because I never did an MBA or had worked in another company. I did not know anybody. I essentially started knocking on doors of entrepreneurs in the region until someone paid attention to me and we had lunch.
I wanted to raise a million dollars, but I was told to raise more money since the market was hot. We put the number around $6 million but the market was super hot. However, I wanted to maintain control of the company. I wanted to control compensation, the board, and everything else. I searched for a term sheet that had that, and I got it.