HeyZap founders Jude Gomila and Immad Akhund set up their company as the global economic downturn began to bite. From their office in San Francisco, they tell inspiresme.co.uk how they bucked the trend to create a company that today serves over 400,000 websites.
Neither of the two were first-time entrepreneurs when they started HeyZap. For both co-founders, their previous forays in business provided one invaluable asset: experience.
“What it allowed me to do was learn a lot about how to do things and how other people did things,” explains Immad.
“You need to go through with projects and either fail or scale to experience all the variables of business, and how best to play the game,” adds Jude. “Lots of people get worried about whether their idea is good enough, but if they don’t try they’ll never know and they’ll never improve their skills.”
After a string of business ventures in the UK, the entrepreneurs found themselves in San Francisco. They enrolled in the Y Combinator program, which provides not only capital but advice and guidance to start-up businesses.
Lots of people get worried about whether their idea is good enough, but if they don’t try they’ll never know and they’ll never improve their skills.
Jude and Immad used Y Combinator to help fund HeyZap, the idea for which came about following a massive brainstorming session between the duo.
“We wrote down an enormous list of ideas, all of which covered different markets, and problems we’d identified. We had a bunch of ideas in gaming as we played a lot of casual games and thought it was interesting and exciting.”
Jude and Immad fleshed out some gaming ideas and came up with a rough concept for HeyZap: a recommendation system that filtered games through to users based on their personal playing habits and those of their friends. Whilst they liked the idea they felt it needed something more to support a sustainable business model.
“We considered the idea and thought, why don’t we make something cool and then distribute it so any website could make a games section? We liked this because it mitigated one of the major problems consumer internet start-ups face: getting users.”
Jude and Immad created this platform and launched as HeyZap.
Following the launch HeyZap has undergone a number of new developments. The founders decided to move their focus from casual gaming to social gaming, a market that continues to experience tremendous growth.
These developments came about through post-launch innovation. According to Immad, this is the most important stage of idea evolution.
“You need to innovate and deal with the feedback you receive from users,” says Immad. “Since launching HeyZap we’ve done that at least four times.
“We also changed our business model from revenue sharing to CPI, where game developers give us a certain amount of money upfront to guarantee a specific quantity of users.”
There’s clearly been at a lot of innovation at HeyZap as the founders aim to capitalise on what is a rapidly growing market. But like most companies, HeyZap has hit a number of challenges along the way. Finding funding was particularly difficult, made even harder by the global tightening of purse-strings brought about by recession.
“We set up in September and didn’t raise capital until April the following year, by which time Jude and I were in about twelve thousand pounds of credit card debt,” said Immad.
Recruitment is a complicated beast: it’s where you make or break the scaling of your company.
They also had to acquire work visas for lawful entry into the United States, a process which took nine months. During this time they were forced to travel back to the UK every three months, something that cost both time and money.
Jude points to recruitment as one of the toughest challenges HeyZap faced.
“Recruitment is a complicated beast: it’s where you make or break the scaling of your company. It’s harder than raising money, and it’s not something you can learn from a book. Without a doubt, building a great team is harder than building a great product.”
What’s on the horizon for HeyZap?
“We’re firmly focused on growth; we’ve currently got 14 people and last year raised about $3m. There’ll be a definite focus on our mobile products and we have a three to six month roadmap we’ll be following. We’ll also move to a more direct business model; at the moment we’re heavily focused on user engagement.”
Immad’s top tips for entrepreneurs:
- Take advantage of market trends – entering a growing market gives your business more chance of success. Take advantage of macro- and micro-economic trends. For example, restaurant owners can make sure they set up in areas destined for imminent expansion.
- Work with the right people – picking the right co-founders is essential as you’ll be working with them for a long time. Many early business failures are down to a poor management team. Work with people for a few weeks before committing to a relationship, and aim to work with people whose skills complement your own.
- Keep the business clean – give yourself the best chance of succeeding. Don’t try to do too many things, such as working a full time job whilst running a part-time business. Keep all parties happy from the start. Don’t, for example, give yourself 60 percent equity and your partner 40 percent; this will create tension from day one.
Jude’s top tips for making investment pitches:
- Pitch with traction – investors want to invest in companies, not just ideas or presentations. Investors want to see evidence of passion and business acumen; they need to have confidence in the management team.
- Pitch big ideas – people often think too small and build products that have limited appeal, instead of looking for a way to increase the size and reach of their idea. Being able to scale an idea’s commercial potential is important as it maximises the potential market size.
- Target large markets – investors want a high return and are interested in high-risk, high-growth markets. If you want to succeed at raising venture capital you should be looking at billion pound markets.