When I talked to PocketSmith’s Jason Leong last year he explained why his startup isn't looking for VC money. Leong and co-founders James Wigglesworth and Francois Bondiguel instead preferred to spend their time perfecting their product and their marketing plans rather than spend their time pursuing investors and diluting their share of the company.
It means that every cent the company spends comes from their own, er, pockets, so PocketSmith has been run on a smaller budget that the average teenager. In fact, Leong told me yesterday that for the first six months, keeping PocketSmith in business cost $120 per month—basically enough to keep the web server running and that’s about it.
It helps that they live in Dunedin, where mortgages and rent are affordable, distractions are few and there’s plenty of talent and ideas flowing through the university. There’s a spirit of camaraderie among the local startups too and now there’s The Distiller, a loose network of enterpreneurs with the aim of building capabilities and experience among its members. And PocketSmith’s product is an online personal finance application—you’d expect them to be able to watch the pennies.
So where do the PocketSmithers stay when they come to Auckland? At a backpacker hostel, of course. And last night the trio put on their suits, left the hostel and marched off to SkyCity for the annual Tuanz awards, where they were in the running for the Commerce award. The competition? Two companies you may have heard of: Fonterra and Air New Zealand. It’s fair to say that Leong was not optimistic.
They won, of course, and so they should. They have a smart strategy. They’re targeting influential blogs to spread the message and it seems to be working. They’ve been profiled on high-traffic sites like LifeHacker and TechCrunch. They already have customers in 75 countries and they’re converting their free users to paid customers at the rate the industry considers successful (five percent, apparently). It’s still early days but they’re observing the power of the network effect: six weeks ago PocketSmith had 6,000 customers, and now it has 8,000. You can see where that is going. They’re also targeting large corporate partners; they’ve already signed a US company that will eventually see PocketSmith offered to as many as 18 million users, and they have other deals in the pipeline.
Still, it’ll be a while before Bondiguel, Leong and Wigglesworth start staying in more swanky digs on their trips out of town—but I’m sure the room service will be all the more enjoyable for that.