Entrepreneurship is, by its nature, risky. But experience is a good teacher, and the mistakes of the past can become the stepping stones into the future. Greg Harris, the son of a computer hardware pioneer who has been through a half-dozen web-based businesses in the last 10 years and now he hopes to profit from his accumulated insight into what an entrepreneur should and shouldn’t do.
From the same shared office space at the Carnegie Center that harbored some of his other entrepreneurial ventures, Harris has launched a product called Mobivity that enables mobile marketing via text messaging. He bases the idea for his company, Mobile Visions Inc., on the market for text message advertisements for cell phones. He is in the retail advertising space, but the combined market for all text messaging, including entertainment, healthcare, and banking, is expected to grow to $1 billion by the end of this year.
Harris, who expects to break even soon, got the idea for Mobivity while he was working at Dow Jones, leading a technical team to integrate the systems of several acquisitions. Dow Jones outsourced his work to India and promised him six months work and a bonus if he stayed to train his replacements.
As he contemplated his next move, he asked himself on a daily basis, what’s the next thing coming down the pike? Mobile phones seemed to be the hottest new technology. Then he came across an interesting application that used mobile phones: a buyer passing a house with a for-sale sign could text message a number on the sign and receive in return pictures and details.
But this would require thousands in startup costs. He cites, for example, a tanning salon in Florida that "did it on its own," to the tune of over $10,000, not including the radio clip where a DJ announced a contest for free membership, requiring people to text message to enter.
Realizing that many a small company might want to SMS (short message service) on its own, a business idea was born – to enable other businesses to create and run their own text message marketing campaigns.
For the initial funding, Harris used his bonus and severance pay from Dow Jones. His partner, Gary Laden, a college friend of Harris’s wife, Emily, joined him at the end of last year "to do customer relationship stuff and sell," says Harris, adding, "I’m more of a tech guy." Laden invested a small amount of money as well as his time.
As Harris developed the software, Mobivity evolved to be a mobile marketing system for small to medium-sized businesses.
The best way to understand how Mobivity’s product works is through an example. Say you walk into a restaurant, sit at a table, and see a card that says, "Join our mobile (or VIP) club. Text "bigfish" to 95495 to win a free entree right now." So, you think, why not try it? A return message tells you whether you won or not, the restaurant having set the odds of how many winners per night. If you are one of the losers, your reply might offer a 10 percent off coupon on weekends.
But of course this is just the opening move. "The main thing," explains Harris, "is that the person’s phone number is in the database." Come Saturday, the manager sees a hole in the evening’s reservations at 5 and 6 o’clock, gets on the computer, and sends out 100 10-percent-off coupons for that night only. "The message beeps in my car," he continues, "just when we’ve been thinking, `What will we do for the kids’ dinner tonight?’ I click on the phone number, and send back a message, reserving for a party of five." The value of this form of marketing, he explains, is that it arrives instantly; an E-mail may not get there until tomorrow morning, and you certainly won’t get it in your car.
Harris has already worked with several area businesses. The Sydney Albert Salon & Spa in the Shops at Windsor Green on Route 1 has given away free haircuts. If someone’s reservation book is empty, the salon might send out coupons to a hundred people, offering 40 percent off on a haircut that day. Barry Wasserman, a laser eye surgeon at Canal Pointe, sponsors Trenton Thunder games where, between innings, a message invites attendees to enter a contest for a free Lasik procedure at the end of the summer. In the meantime Wasserman is gathering the phone numbers of people who need the treatment.
Mobivity, says Harris, has given up the top 10 percent of companies, sizewise, to its competitor Ipsh!, a large mobile marketing agency that serves "the big guys." Ipsh! has also created a small company to serve the same market as Mobivity, so Ipsh! and a third firm, Cellit Marketing, are direct competitors. Both charge setup fees and are more expensive than Mobivity, which offers an inexpensive basic package of $79 a month for 500 messages.
Mobivity’s potential customers are not just individual businesses marketing products or services. Sometimes companies want to mobilize their content. For example, an online amateur astronomy store offers a service where users text message their zip code to receive in return a message about what is in the sky above them. Other companies want to allow customers to post on websites via text messaging.
A growing segment of Mobivity’s clients are agencies and resellers that put their logo on Mobivity’s software. For example, one client is an agency that does the marketing for five ski resorts. "For every agency, we get five to ten clients, instead of one at a time," observes Harris, and Mobivity also receives 30 percent of the sales.
When clients of a Mobivity customer send a text message, Mobivity’s system can respond in one of five different ways when they text message a keyword:
Send back a specific text, which can be updated by mobile phone, that the business specifies;
Run a live interactive vote that allows the customer to select from four different choices while the business views statistics in real time;
Run a contest, with the business setting the frequency of random winners as well as the prize message;
Send the customer a link to a mobile web page or mobile content like ringtones, wallpapers, and videos (this is called a Wap Push); and
Use an API, an application programming interface that forwards the customer’s text message to the business’s software for processing; one example that took Harris 15 minutes to program is an application where the customer types in a stock symbol and seven minutes later gets back a stock quote. "It is the API that opens you up to the world," he explains. "Many customers use API to manipulate incoming data and send back responses, and we are the gateway." API is used, not for marketing, but for business operations or content delivery.
Halfway through the development of Mobivity, Harris and his partner decided to develop the real estate idea that initially inspired them. Undeterred by the entry of some competitors into this arena, he launched the application a few weeks ago at the National Association of Realtors conference in Washington, D.C. "We’ve gotten a tremendous response," says Harris, "a ton of calls, lots of people signing up for a free trial." They are offering one property for free, for as long as the client wants it, in hopes that the leads will get them more properties.
At this point the partners are looking for angel funding. "We are close to breaking even," says Harris. "A few very large accounts are about to close." Their projections for revenue after they receive funding are $900,000 after the first 12 months, $3.4 million in two years, and $6 million in three years, $3.4 million in 2 years.
Mobile Visions is trying to add to its roster of eight independent sales representatives. They earn the initial signup fee plus 20 percent of revenue going forward. This format is possible, because Mobivity is based on the idea of providing a recurring service, with most of the end users being ongoing customers. Harris adds that the sales strategy is likely to change once more people are working in house. Most of the advertising so far has been in Google and Yahoo and via the website www.mobivity.com.
Harris expects to have about seven staff members by the end of the first funded year. His wife, who obtained her cosmetology license two years ago, left Cosmo Blue on Nassau Street several months ago to help sell the real estate application.
At the risk of comparing apples to oranges, because Mobility is not location centric, here are some potential competitors – location-centric real estate applications for cell phones: One company, Camden-based Smarter Agent, has a dozen employees and expects to double in size. Recent Sold Homes is a software that can be downloaded to GPS-enable cell phones for $5 per month. A similar service, Apts for Rent, costs just $3 a month, and Homes for Sale is expected to launch in September.
Harris came into computers as an intellectual inheritance – his father was president of Commodore Computers. Growing up on Long Island, Harris was 14 years old when he got his first Commodore, and he has been involved in writing software ever since.
"My father joined one company after college and made his way to be president. I saw that he could have made more of his life if he had gone out on his own. He did it the safe way," says Harris. "The corporate mentality, I have never been able to handle. I am happier doing 10 different jobs at once." After leaving the State University of New York at Albany in 1988, he worked at the United Way in New York City, doing computer support. In an Atlanta suburb he managed the computer department for Shop’n Chek, a marketing research company, a job that he remembers as "awful." After a year he moved to Medical Doctor Associates, a medical temporary staffing company, as head of information technology.
The following year, when he and his wife had had their first child, they decided to go back to Long Island. At Legal Information Technology, which automated the process for scanning millions of documents for litigation, Harris wrote software and managed computers.
Then he started a website development company, Websytz, with his brother-in-law, Jordan Keltz. This period, from 1998 to 2000, coincided with the birth of twin boys. After two years Websytz had a staff of 10. The work was labor intensive, the city was expensive, and they were not able to pay themselves a living wage, so they closed the business.
Harris realized he could make more money building sites and consulting on his own. In 2000 he took some of the higher-end clients from Websytz. Calling his new company Jade Internet Technologies, based on his kids’ initials, he managed IT for online businesses, including hardware, site hosting, and technical support.
Moving to Princeton, he started an inexpensive hosting service, a division of Jade Internet, using the Websytz name. "We acquired 3,000 customers in the first year," says Harris. "It took off quickly, thanks to the way Google did its advertising back then." Originally they charged $36 a year, but "you get what you pay for," he says, and they ended up taking better care of their higher-end customers who paid more.
"It was like a new frontier," says Harris, "managing computers, hardware, late nights changing hard drives, driving to Newark where we had our data center. When it was great, it was great. When it was bad, we had 500 people calling in an hour."
Many of his dotcom clients closed their businesses when the E-biz bubble burst, but from 2002 to 2003, he was developing another company, dentists.com, a site where users could find local dentists, by their specialties. "I had telemarketers call the dentists to pay for listings to be high on the list," says Harris. He sold off the site, which is still alive, after about a year.
He also built and sold off several other businesses – one that transferred video tapes to DVDs, one that collected and sold leads to mortgage brokers, and one that shipped CDs on demand for bands. His wife launched a firm, Beautiful You, in 1999. She did hair and makeup at home for events such as weddings, and she used products from Herbal Life, a multilevel marketing firm.
When Harris put up an early website for those products, it earned a lead position on Yahoo. He and his wife were pulling in $5,000 a month profit and at the same time recruiting other sellers to work under them through another site, Distributeherballife.com, where they would get 10 percent of sales from each taker.
When Herbal Life begin to "drop ship" orders directly to the customers, Harris automated the process for online orders, and at day’s end his system would transmit all orders to Herbal Life over a fax; then Herbal Life would ship and charge Harris’s credit card. "Without touching the web site at all," he says, "we were making $5,000 a month."
But other people soon caught on. In 2001 he sold the business for a downpayment plus 24 monthly payments.
Before broadband and DSL were widely available, Harris created yet another company, Cheapdialup.com, where for $9 a month, people could use a modem to connect to the Internet. With targeted mailings, coupons, and classified ads, he quickly built the business to about 1,000 customers. He decided to sell it off, he says, "it became more of a pain because of customer support, like people calling to say they can’t get on the system."
Things were going well. When he sold a business, it paid income while he was building another business, which turned out to be, he says, "the turning point in my life." Under the company name Internet Venture Group, from 2003 to 2005, he was creating another product Kidzmail, which would allow parents to monitor their children’s E-mail (U.S. 1, March 31, 2004).
In the meantime his webhosting company, Jade, started to have problems with credit card fraud. Though he had 2,500 customers, it was time to sell – once again for a small downpayment plus monthly payments over three years. That was in November, 2004.
Problems with the buyer surfaced immediately. Harris credits the loss to using "a low-end inexperienced attorney, a friend of mine," and to trusting the buyer too much. Most of the businesses I sold, the payments kept coming for years."
The first payment did not come on time, then a check was returned. The buyer got a lawyer and renegotiated the terms, but then, out of the blue, he says to Harris, "I’m giving it back. Goodbye." At this point, the 45 servers from the data center had been transported to Florida, says Harris, "and he’s telling me, `I’m not paying you anymore.’ I freaked out." A little research revealed that the buyer’s house was being foreclosed and he had disappeared. On top of that, it turned out he had been double and triple charging people’s credit cards, and customers, now down to 800, were furious because there was no customer support.
In the end, Harris managed to sell for $25,000 what was left, including the hardware. So, instead of the $10,000 a month for three years that he had expected, no money was coming in.
At the same time, the Kidzmail product wasn’t doing well. "It was a fantastic product," says Harris, "but nobody wanted it and it was too expensive to advertise." He had a trickle of customers, but then had to shut it down.
The sale of the hosting company had been funding him, and when that pipeline clogged, he dropped everything and took the job at Dow Jones.
But he did learn something important from the debacle with the web hosting company: "What I didn’t know then that I know now is that I should have looked for angel funding or venture capital," he observes. "If I had raised $5 million for the web hosting company, it could have been one of the biggest by now."
And that’s how it goes for an entrepreneur. You win some; you lose some. But he knows now that an infusion of money at the right time is key, and he is out looking for the outside investors he needs to move his business forward.
Mobile Visions Inc., 212 Carnegie Center, Suite 206, Princeton 08540; 877-659-0629. Greg Harris, CEO. Home page: www.mobivity.com