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From Solo Entrepreneur to Serial Exits: Shane Neman, CEO of EZ Texting (Part 6)

Posted on Monday, May 3rd 2021

Shane Neman: We had a real problem in finding affordable tech talent. I was in New York at this time. I bootstrapped it, so I was being very careful with how I was spending the money. In many ways that was an element of the success. It was my own money.

What happened was, we couldn’t find senior-level developers or DevOps people that we wanted. We started with trying to outsource to other countries. My senior developer at that time was from Ukraine. She was saying that she had two friends from college that were in Ukraine as well.

We started that way. We only had one developer here and we had two developers there. We figured out how to work like that. It is also important to have it where the time zones have a good amount of overlap so that you can communicate for a long time during the day.

Once we saw a little bit of success that way, my CTO suggested that we should go to Ukraine and open our office there and have our entire development team there. It sounded crazy, but it wasn’t so crazy.

I told her, “You are right. Why don’t we do that? Let’s just go and see how it works.” We went to Ukraine and stayed there for a month. We set up shop there and figured out how we could build an entire team there. 

Sramana Mitra: I’ve always worked with the offshore development teams. It is something natural to me. Right from the beginning of my career, I have been using offshore development teams. 

Shane Neman: There you go. A lot of times when you work with offshore development teams, they are working for the outsourcing company. Their HR, boss, email, and office are all under the outsourcing company. For all intents and purposes, yes maybe they are working for you, but they are not part of your team. There is this duality to their identity. What we wanted to do was have an easy EZ Texting office.

Sramana Mitra: Both works. We have an outsourced company that does our technical work. They are from Jaipur, India. I see what you are saying though. You did your own captive development center in Ukraine, but I think outsourcing companies work as well. I hear you, but I have seen both models work just fine. 

Shane Neman: Okay. Yes, I think initially it worked really well. As a practical matter, because we were a tech company and had a tech product, it was important that the team be an EZ Texting team and not reliant on an outsourcing team. We wanted it to be the EZ Texting people. We were the ones who interviewed, hired, and paid them. 

Sramana Mitra: I got it. You did a captive development center in Ukraine. Let’s move on. What happens next?

Shane Neman: I just thought that it was an interesting thing. As we are going along, we are growing 50% to 70% a year. As time is going on and years are going by, it’s getting easier to sell because more businesses are aware of this product.

This is interesting because I had a conversation with the former CMO of Constant Contact on how it happened for email service providers. Her name is Nancie Freitas. Constant Contact started doing radio ads, TV ads, and all those things were giving general awareness about these types of products that helped their competitors as well. Counterintuitively, more competition was coming, but the awareness was also building as a result. We were witnessing hyper-growth at that time. The rising tide brings all boats up. That is what happened with email service providers.

Sramana Mitra: How long did it take you to hit $5 million in ARR?

Shane Neman: It took me about five years. 

Sramana Mitra: What year would that have been?

Shane Neman: That would have been in 2010. 

Sramana Mitra: In 2010, you have hit $5 million in ARR and you are still bootstrapped. How many people were in the company?

Shane Neman: There were about 30 to 35. 

Sramana Mitra: What happens next?

Shane Neman: Around that time, Twilio started coming out. That was when we started to get a lot of attention. We were in the space that they brought a lot of awareness to the ability of SMS. Counterintuitively again, that helped us a lot. Even though they were a competitor because we had an API product too, they helped us out. A lot of other businesses started using us. They started integrating with our APIs.

One of them was a company called CallFire. They had a similar story of bootstrapping but with five guys from India and Bangladesh. They were based out of LA. They had a calling product that was similar to EZ Texting but just for calls. They were a client of ours.

They approached me and said, “Would you be willing to sell your company?” That was in 2012. They said, “We are doing a raise and it would make sense to fold you into our service because we have a lot of calling customers that are asking for SMS.”

They wanted to compete with Twilio. They had both call and SMS APIs. That is how we got the attention. I ended up closing a deal with them. 

Sramana Mitra: This was a private acquirer that raised money to acquire you. That is what happened?

Shane Neman: Yes, they raised through Morgan Stanley and Investor Growth Capital. 

Sramana Mitra: How big was CallFire when they acquired you?

Shane Neman: They didn’t disclose their numbers to me, because it wasn’t part of the deal. It was a cash deal. Size-wise, they were double the size of EZ Texting based on employee count. 

Sramana Mitra: You were about $7 million at this point?

Shane Neman: Yes, but maybe a little bit more than that. 

Sramana Mitra: Did you get a cash exit at this point?

Shane Neman: Yes. 

Sramana Mitra: Did you go to work for CallFire?

Shane Neman: I stayed for two years after that. I was the head of products. I saw the integration of our SMS platform into their platform. I also ran the EZ Texting side for them during the ramp-up period. After two years, I thought my job was done. I decided that it was time for me to move on. To give you a little bit of a background, CallFire ended up changing their name to EZ Texting. This is not what typically happens when you acquire a company, but the SMS portion is the bigger business. 

Sramana Mitra: You left in what year?

Shane Neman: I left in 2015. It was late 2012 when the acquisition happened. 

Sramana Mitra: Very quickly, what have you done from 2015 to 2021?

Shane Neman: I have done a lot of things, but the main thing that I have been doing has been venture investing. I have been doing a lot of venture stuff. I have done a startup of my own during COVID. That is mainly what I have been doing. I do a lot of VC. The stuff that I am doing right now is in the early stage prop-tech investing. 

Sramana Mitra: We have a seed capital series where we invite investors to come in to talk about what they are investing in at our 1Mby1M roundtable. 

Shane Neman: The last thing that I just did is I started a new company called 411Rx. Do you know what GoodRx is?

Sramana Mitra: Is that an online pharmacy?

Shane Neman: It’s not an online pharmacy. You can put in your prescription and it will tell you that going to the Walgreens a mile down from you is cheaper than going to the Rite Aid down the block. It will give you a coupon.

I developed something similar to that but with an AI chatbot. You converse with the chatbot and it would tell you where to go and give you a coupon that way. What is interesting about it is that it is built on top of the RCS platform, which is Android’s answer to iMessage. It’s just being rolled out right now to new Android phones carrier by carrier. 

Sramana Mitra: Thank you for your time. 

To learn more about solo entrepreneurship, please study our course on Udemy: How To Succeed As A Solo Entrepreneur with Sramana Mitra.

This segment is part 6 in the series : From Solo Entrepreneur to Serial Exits: Shane Neman, CEO of EZ Texting
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