Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham (Part 7)

Sramana: What was your strategy for funding appssavvy?

Chris Cunningham: Our strategy for raising money was basic. We started in early 2008 by bootstrapping. Both Michael and I put our American Express cards to the limit. We got buy-in to the business on our own dime. We were talking to friends and family as well as angel investors. We raised $650,000 in April 2008, but during that time we were talking to VCs about our business plan. They saw we bootstrapped and raised angel funding. In the first quarter of [running] our business we did $250,000 in revenue. In the second quarter we did close to $700,000.

When True Ventures decided to offer us a term sheet, it was seamless and very quick; I was already meeting with them on a monthly basis. That is not the first thing that a lot of entrepreneurs want to do – they despise the notion of talking to investors. You need to have those relationships and keep people warm on your business. True Ventures brought on a New York Times company. We raised $3.1 million in capital, which took us into 2009 when we doubled the number of employees. In 2010 we took on an additional $3.5 million, which brought our total raised to $7 million. At this point we have $35 million in revenue, we have won awards for being one of the best places to work, and we have been profitable. The money we raised was to grow the business, not sit in the bank.

At the end of 2011, we brought in AOL and took more money from our existing partners as well. That brought our total raised capital to $10.2 million. We have been in business for more than four years now and we still act like a startup. We invest where we need to. The money we have raised is only for operating the business as opposed to joy money.

Sramana: That is very efficient management. I am always excited to hear stories like this one.

Chris Cunningham: If I am doing my math correctly, we are talking about $50 million of revenue in four years. I am pleased with that result.

Sramana: I was talking to an entrepreneur the other day, and we both observed that the virality that was on Facebook when Zynga took off is gone today. I suspect you understand that space well; would you like to elaborate on that?

Chris Cunningham: It has gone, and it has gone for good reason. Facebook has gotten a stronger grasp of their business. They don’t allow for spamming and poking around. Every time Facebook makes changes, we are happier. Their changes destroy bottom feeders and creates less noise and distraction. With that it is not about building an app and going viral; those days are over. Today, you have a sustained business or you find another platform to work on. There will be no emerging large social app companies in 2012. The ones that are there have sustained and built relationships with Facebook that reward Facebook financially. It is not a Wild West anymore. It used to be like a New York City without stop signs or police.

Today it is a company on the verge of going public. They have a very good hold based on their resources. I am pleased with their progress. We are friends with their team, and if we provide value to their ecosystem then they will reciprocate.

Sramana: This has been a great story. Thanks for taking the time to share it.

This segment is part 7 in the series : Monetizing Premium Social App Ad Inventory and Scaling a Capital-Efficient Business: appssavvy CEO Chris Cunningham
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