Sramana Mitra: You also did ad sales on your own?
Shane Neman: Initially, I did. The first advertiser I got was a boutique that was doing a sample sale. They asked me how much I wanted to send out an email blast. I said $5,000. I just made up a number. It was whatever I thought was really expensive at that time. They just said, “Okay, come pick up the check, and we will give it to you. We will send it next week.”
I couldn’t believe it. I remember that I was walking with a huge smile on my face to get this check from this place that was 10 blocks away. We sent out the email blast, and it did well. They then said that they wanted to do this every month. Initially, I did it by myself, but then we hired a media team to start selling the ads. To deal with bigger brands, we needed to do that.
Sramana Mitra: Was that an agency that you hired? You still remained as a solo entrepreneur and hired an agency to do that? You are saying that you did this multi-million dollar business as a solo entrepreneur.
Shane Neman: There were 1,099 guys who helped. We would send emails a lot, and it was a big source of getting ticket sales. We would sell email lists to sell ads. As time went on, the efficacy of emails got worse and worse. When we first started, we were the only name in your inbox, then spam filters came into play. We had to fight to stay in the inbox and once we were in the inbox, we were one out of 2,555 emails that you were getting from other people.
I was looking for a way to cut through the clutter at that time. In 2005, there was a rise in texting in the United States. I had a Blackberry, and it was easier to text than I had thought. We were sending these emails. How do we text everyone instead? We had everyone’s phone number and they opted in to get communication from us. I did a couple of Google searches. I was looking for a Constant Contact or Mailchimp for texting. Nothing existed then. I spent hours that day researching and figuring it out. I could find things in the UK and Asia, but there was nothing in the United States. That took me on the journey of starting EZ Texting. It was initially an SMS-broadcasting tool that I built for JoonBug.
The initial idea was, “Hey, I have all of these clients and I am going to give them access to this SMS broadcasting tool that we use internally to send messages to our database. These clients have their own database, so they can start sending texts to their recipients. We can charge them a fee to do that.” We subsidized the tremendous cost of building the software. That was what I was initially thinking.
After a few months, it wasn’t just subsidizing it with a handful of customers; we were doing $10,000 in profit. The light bulb went off in my head and I said, “Hey, this is only with 20 customers. Imagine what we could do with hundreds or thousands.” I wasn’t thinking that big at that point.
I opened Excel and I did the math and thought about what it would be like if we had 150 customers. That would be like $100,000 to $300,000. After thinking through that, I said, “Okay, it’s time to break this out into its own thing. Let’s build out the software so that you can self-sign up.” At that time, we didn’t have self-sign up because we were just giving to certain customers of ours. It was time to make it into its own standalone product. We could make a website for it and do SEO and SEM for it.
Sramana Mitra: In what timeframe did you decide to exit JoonBug and spinout EZ Texting as a separate company?
Shane Neman: Within a year, I had spun out EZ Texting into its own company. I found that I was spending more time on EZ Texting than JoonBug because I liked it a lot more. It was right up my alley because I love computer science and I love software. I was also seeing tremendous success and growth. That was exciting.
I also saw the TAM being much bigger for that. What was weighing down JoonBug at that time was the advent of social media. People were finding out where to go through MySpace and Facebook. We started becoming less and less relevant. Two years after I started EZ texting, around 2007, I sold JoonBug to a strategic competitor of ours.