MocoSpace Passes 2 Million Users, Collects $4 Million
Boston-based MocoSpace is celebrating two milestones this week. For one, it collected $4 million in second-round funding from a group of investors including General Catalyst, Pilot Group, and former eBay executive Michael Dearing. And its mobile-phone-based social network recently passed the 2-million-user mark—making it perhaps busiest social-networking service you’ve never heard of.
Founded by serial mobile entrepreneurs Justin Siegel and Jamie Hall, MocoSpace has been in business since 2005, and has been in rapid-growth mode since mid-2006. The company has 25 employees, split between offices in Boston and Herzeliya, Israel. Its members do all the standard social-networking things—building customized profiles, linking to friends’ profiles, uploading and sharing photos, exchanging e-mail and instant messages, and playing games. But all this activity is largely invisible to those of us who live on the broadband Web, because MocoSpace members do almost all of it without ever booting up a PC. And they generate, in total, over 1 billion page views a month. That’s billion, with a big Carl Sagan b—no small number, whatever the size of one’s screen.
Siegel, the CEO, says he and Hall launched MocoSpace to take advantage of three trends they saw in the marketplace: MySpace-style social networking, the rise of mobile Internet advertising, and—perhaps most importantly—the decreasing cost of mobile-phone data plans, making it possible for people to access Web-based services from their phones without paying an arm and a leg.
“Friendster, MySpace, and Facebook had become big online and it seemed like the mobile phone was a pretty obvious place for a lot of this to go next,” says Siegel. “But we were really tired of being in a carrier-centric business, and our thought was, wouldn’t it be great to do something where we weren’t reliant on the carriers? The Web was a great way to do that, and we were at the stage where data plans were moving in the right direction.” And companies like Boston’s Third Screen Media (now an AOL subsidiary) had come along to support an advertising-driven mobile Internet; MocoSpace makes most of its money by selling banner ads that appear at the top and/or bottom of each page.
Hall and Siegel also realized there are plenty of people whose jobs don’t actually entail staring at a PC screen all day who might still enjoy participating in digital social networks. “Why would someone pay $7 to download Tetris to their mobile phone when they can play it free on their PC?” asks Siegel. “Well, people do, so there must be a demographic that has limited access to PCs when they want to play games. We thought the same thing might be true for social networking. MySpace, Facebook, and Bebo are great options, but tens of millions of people don’t work in front of PCs every day, and their mobile phone is a great place for them to do some of their socializing.” A mobile phone is also a much more private and personal device—and it can’t be blocked by your boss or your school library.
Siegel says MocoSpace has a broad user base, but can be broken down into two main groups. The first is a young, urban crowd—“not necessarily urban in the sense that they all live in cities, but they’re into hip hop, emo, goth—a real MTV crowd.” This group grew up with cell phones and spends much more time text-messaging and Web browsing from their phones than they do on the broadband Web, Siegel says. They’re mostly drawn into MocoSpace via word-of-mouth from their friends. The second group is older—in their early to mid 30s—and is drawn to MocoSpace because they’re interested in social networking but are overwhelmed by (or don’t have broadband access to) more conventional social networking communities such as MySpace.
But while MocoSpace may be mobile, it’s still based on Web standards. And going the Web route—rather than making the MocoSpace platform a downloadable application and working with mobile carriers to get it built into phones’ “decks” or top-level menus, the way competing social-networking platforms such as Twipster, Loopt, Zannel, Yahoo Go, and Nokia’s LifeBlog have tried to do—entailed both sacrifices and advantages, Siegel says.
“There are definitely things you can do with a downloadable application that are a little bit tougher in a browser-based experience,” he says. “But by and large we feel like we’ve gained a lot by going this route. We don’t have to port our software to all of the different handsets, which is a major expense. And we don’t have to go through the usual gatekeepers—so we’ve been able to control our own destiny, in terms of the feature sets and the editorial guidelines, which are all things that usually need carrier approval. Also, we’re not splitting revenues with the carriers this way, which is another pretty big advantage.” (“Splitting” is a euphemism—mobile carriers are the playground bullies of the communications business, typically extorting 70 percent of the revenues from outside software and content providers.)
Siegel says MocoSpace benefited greatly from launching when it did, in late 2005, when MySpace wasn’t yet a household name and had only a tenth as many users as it does today. “Today the saturation level is very high. But when we started MocoSpace, there was really nobody doing [social networking] on the mobile side,” he says. “I wouldn’t advise anyone to start a mobile community or a Web community today unless you have an incredibly strong angle. It takes a lot more than a few subtle twists to get traction and to get people to stick around in the quantities you need to have a decent business model. There will only be a few winners—and I think we’re extremely well positioned to be one of those winners.”
But that will depend, in part, on whether MocoSpace can use its new capital to hire more skilled developers and sales and marketing experts who want to live and work in the Boston area. “It’s definitely not Silicon Valley, in the sense that when you go out to lunch in Boston you are not bumping into other startup people or hearing them talk about their Web 2.0 launch or their fundraising,” says Siegel. “It’s tough to recruit talent in the area, and a lot of the kids coming from Harvard or MIT who want to get into the consumer Internet business head right out to the West Coast, for obvious reasons.”
On the other hand, Boston is gradually emerging as a hub for mobile entrepreneurship, as exemplified by companies like Third Screen, Jumptap, Buzzwire, Enpocket (recently acquired by Nokia), and MocoSpace itself. There is ” a pretty decent group of consumer-facing mobile Internet companies coming from the Boston area, so it’s starting to be recognized that there is interesting stuff happening outside of Silicon Valley, specifically in Boston,” says Siegel. “That’s certainly what we hope, anyway.”
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