an Interview with CEO John Pollard

Jott lotoFor about two years, Seattle-based Jott Networks Inc. has provided a service called Jott. People call a toll-free number, record a message, and see the words translated into text and emailed, either to themselves or someone on their contact list. (I tried it with a stanza of Gilbert and Sullivan patter song, which the system got mostly right.) There is also some ability to let the service interact with others, effectively providing voice control for a number of web-based offerings. Earlier this week, the company left beta and implemented a fee structure. We caught up with CEO John Pollard for a conversation.

BNET: What is your background? John Pollard: April 2006 is when [the company] started. The product has been available since December Co-founder Shree Madhavapeddi and I came from Microsoft. Our backgrounds are mobile devices. Shree used to run the server team for instant messenger. I was a director in the mobile devices group running strategy and services, and before that I was an early employee at Expedia.

BNET: Where did you get your funding? JP: We bootstrapped it ourselves for about 8 months. We knew that we would eventually need funding with the nature of the business. But we wanted to fund it as long as we could so we could control the business and show some real value to our investors. We did a $5.4 million series A round in the Spring of 2007. The lead investor was Bain Capital and the founders of Skype are investors. It's terrific to have these guys advise the business.

BNET: What gave you the idea for the product? JP: It was an interesting eureka moment. Shree and I had talked about several different ideas. But it was almost a moment of irony. We're about as technical as it gets, but we have so many things going on in our personal and work life, how do we stay on top of them? The idea of taking your every day open phone, be able to speed dial a number, say something, and know that your thought was captured and put into a place you could use, it was an incredibly simple idea. It was like a backup for your brain. People trust their phones. They do one thing really well, which is make phone calls, and we expanded on that. We had Jott for iPhone right from day one at the store, which is doing very well. We believe cumulatively it's the number one application download in the productivity section. You don't have to call a number [to use it].

BNET: There's a free version that lets you record for 15 seconds and send a message to yourself, and then there are the subscription versions. Do you have the free one to bring people in? JP: Perhaps it's a little bit of that, but honestly, we have 420,000 customers and have done millions of Jotts. We found that people do different things with Jott. Some people require longer Jotts, and others need 15 seconds or less. What it allows us to do is offer a very valuable service for a very reasonable entry price. The lowest paid level of subscription is $3.95. Right now the iPhone app is a 15 second recording [and] is free.

One thing people say is why don't you have an advertising supported version? But we don't think people want to send messages that have advertisements in them. The paid plans are super reasonable to get into, so it shouldn't be a problem.

BNET: How many of your existing customers have converted to the paid version? JP: We're not releasing those numbers, but we've had a very strong response. Our early adopters are able to get into a promotion, and that's sign up for an annual plan, as proposed to a monthly plan, at a 20 percent discount. Half of the people who have signed up so far have opted for the annual plan. It surprised us.

BNET: What does the discount do to the business plan? Could you get too many people signing up at the discount? JP: People who take the discounted version are going to probably be less profitable than people who don't, but we've modeled it and it's fine. We'll be able to carry it. The way we figure it, it's two weeks [of discounts] and after that we'll have many, many new customers signing up. The new customers will overwhelm the old customers. We don't talk about what our break even numbers are. [They are] pretty reasonable.

BNET: Are you going after more funding? JP: We're going to start raising a B round in September. We had really top shelf VCs on the first round. We didn't over raise the first round. We tend to be conservative financially. We didn't want to have a valuation issue on the company. When it comes to the B round, it will be a more attractive proposition. We're pretty pragmatic about it. We don't need 50 million customers to make a profit. We do think there's a marketplace that is large. But we don't need to be as big as Skype.

BNET: What kind of money to throw at marketing to ramp up the business to be profitable? JP: When we did our pro forma, we had layered in the marketing expense. Not everyone has a social networking type of marketing model. But what we've seen is that we have some good word of mouth. Second, I can upload my contacts and then when I'm on the road I can Jott to them, and then they get messages from Jott. So there's a certain amount of [viral marketing]. We haven't done any distribution deals yet, but we have some coming up. We really focused first on getting the product and customer experience right before we went out and did a bunch of expensive distribution.

BNET: What kind of distribution, as there is no product to buy, just the service? JP: One thing we've been clear about is we want the Jott brand to be something that people know and trust. We've avoided deals where people would have used the service, ripped our name off, and put theirs on. What that's allowed us to do is build a nice name in the marketplace. When the time comes for distribution deals now, those customers value our company, value our brand, and want the Jott name.

BNET: Where difficulties do you anticipate going forward? JP: Entrepreneurs can have the best idea in the world, but if people don't hear about it, there are some challenges. We want to make sure we get out there, get customers, focus on quality and execution, and not stub our toe. If we take our eye off [quality], I think we're going to hurt ourselves. So I worry about focus and making sure we continue to have the quality and simplicity that people expect. I've been in software for 20 years and I've seen time and again companies packing in features and products getting complicated.

We've spent a couple of years trying to understand how people will use the product. Any business that has real cost structure, you need to understand how people will use [what it offers]. We've tried building features they want that are super simple and do it in a way that you can actually charge something for it to sustain a business. Then it comes down to how big can the thing be, and can we get enough customers to cover the cost of the business. I would say that we absolutely can, and I wouldn't be here if I didn't think we could. This is not a business in search of a business model. We have people who pay who tell us how much it adds to their lives, either in stress reduction or just ROI, and we're lucky we have that. It's a little bit of luck, and the category we decided we'd get into, we didn't know we'd be able to do it.

It's not like we're pumping money out there and there are no issues. We have to execute very well. We have to be very smart. But I'm very confident about it.