What Happens When You Pivot Right After Closing Your Seed
Last August, Flybridge co-led a seed investment in the social networking startup SmackHigh that totaled $1.65 million. Co-founders Giuseppe Stuto, Frank Ludiciani, and Kevin Flynn took an idea that initially started off as a bunch of people ripping on each other’s high schools and transformed it into a one-of-a-kind platform for teens around the globe.
Today, they’re doing better than ever. I had the opportunity to sit down with Stuto in SmackHigh’s Boston office to learn about his journey and what led him to co-founding the company that is revolutionizing teenage communication. Here’s what he had to say:
Nick Shanman: Where did you go to school?
Guiseppe Stuto: I went to Boston University and majored in finance. I originally thought I wanted to go the Wall Street route. After a few undergrad internships, I realized that I was an entrepreneur at my core. The finance route is extremely established, and I enjoyed the risks, challenges, and creativity of the unknown.
NS: What was your first venture?
GS: It was called Auctus Partners. A lot of college kids had the next big idea for an app, so we thought, “Why not prototype the apps for them from a web development and design standpoint?”.
We conceived a rapid mobile/web prototyping agency for anyone who had an idea that they wanted to get started. When I graduated from BU in 2011, I had a couple of job opportunities on the table: one in leverage finance, the other in banking. I decided to forego those opportunities because I was developing Auctus.
NS: How did it end?
GS: I left Auctus behind because I had my first idea for a stand alone mobile application. At the time, I was in my early 20s and had made some money from Auctus, so I spent a lot of time enjoying the Boston nightlife - something I had never been able to afford before in my life. I realized that all of the cover charges were being paid in cash, so I wanted to create a mobile application to facilitate that process. LevelUp was still fairly young, and it hadn’t really tapped into that market yet.
I invested most of the money that I had made from Auctus into the idea to outsource the app, initially called Zowler (eventually changed to CoverTonight). However, as I ultimately came to realize, the opportunity was one of convenience and not passion.
NS: What other ventures/experiences led you to build SmackHigh?
GS: In 2013, I became a mentor for BUILD, a nationwide non-profit with a Boston satellite that pairs entrepreneur mentors up with high school students in lower socioeconomic parts of Boston.
BUILD uses entrepreneurship to inspire kids into wanting to go to college. Students build a business plan, launch a product, and actually introduce their ideas to the market, courtesy of the BUILD and partner marketing network. As I mentored at BUILD, I came to see first hand how disconnected teens were from other teens that they did not know, despite them wanting to meet more people.
NS: What triggered the idea for SmackHigh?
GS: SmackHigh was actually born because of my personal friendly rivalries. In 2013, my friends and I made the SmackHigh Twitter account, but it was really just a way for us to post our opinions and smack talk rival highs schools that our friends had attended. It kind of took off from there.
NS: When did you know you were on to something big?
GS: People started tweeting at us. In hindsight, we were on to something that would guide us toward what Smack actually is today - because today’s product 180 degrees different from our first foray.
But to go back to the origin story, Frank, who at the time was still attending Harvard, put a Google doc link on the Twitter account as a way to aggregate submissions more effectively. Soon we were getting submissions from schools outside of our direct area of influence. Connecticut-based schools, New York-based schools, etc, which was really cool. We created new Twitter accounts for new states that came online.
During the whole spring and summer of 2013, I was still doing BUILD, still waiting tables, and tentatively planning on attending business school. I had my application ready and had spent a lot of time refining my package, (which actually turned out pretty well, by the way). But in December of 2013, instead of putting in my application for business school, we incorporated SmackHigh.
NS: What led you to pursue a mobile app?
GS: At BUILD, I noticed there was no way for these teenagers to openly network over everyday teenage topics on social media in a safe environment. Some social mobile providers were allowing every post to go through (which caused a lot of problems in terms of building a safe community), and we didn’t want to end up like that.
We adopted serious community guidelines - you couldn’t defame anyone or post harmful messages, etc. We assigned high school student volunteers in their respective states to curate the content coming in. Going into the summer of 2014, we were in 14 states, so we ended up outsourcing a very basic version of a mobile application, which is absolutely nothing like the one we have today. It was similar to some competing apps in a sense, except with the added option to disclose who you were.
We grew very frustrated through that summer and fall because we were able to convert users, but still we knew that just didn’t have quite the right product or the right user experience, yet.
NS: How did you get the product to where it needed to be?
GS: In August 2014, Frank and I met Kevin Flynn at WeWork Fort Point. We immediately hit it off, and I would not be as effective at my job today if it were not for his coaching.
With Kevin’s technical expertise, we decided to test a couple of different messaging applications with our SmackHigh audience. We found out that these kids fell in love with our brand, our name Smack. The products that we were putting out were not Smack products, and therefore we did not do too well on the conversion side of things - kind of the opposite problem of what we had during the prior summer.
We ended up scratching these test apps and in early 2015 we put out a very basic version of our one page submission form which is still there today. This was the first step towards centralizing how we aggregated all of our user generated content. Between February and May the website had an 800 percent growth increase in submissions. We unlocked this amazing growth that we knew was there, but previously fell just short of tapping. We raised an angel round of $450K and closed it in April of 2015.
NS: How did you end up working with Flybridge?
GS: We met Jeff Bussgang through the startup community. He was one of the VCs that we began to really communicate with. We got to know him, and we loved him. He could sense that we were on to something big, but more importantly he came to like who we were as founders. He also understood the challenges that were ahead from a product standpoint.
One central thesis was that we didn’t have the product figured out yet. We had an inkling of the community figured out, so we know there was an large opportunity here. But, we understood and continue to understand this demographic better than anyone else, so we knew it was just a matter of time before we found our product sweet spot. And the fact that he understood that, was okay with it, and was really willing to truck forward with us for whatever challenges were to come, sold us the most.
We had no intention of raising our venture round at this point in the summer. But we figured why not save time, raise now, build out our team during the summer, and in the fall, go full force. This was the best decision we could have made, and Jeff helped us come to that conclusion. We closed the round in August, continued to grow substantially, and hired some incredible people.
NS: What was your next move after joining forces with Flybridge?
GS: We put out a new beta product in the fall of 2015. It was functioning beautifully. In tandem with that we had 9K brand ambassadors, and we were managing about 1,500 of them in GroupMe group chats. They were sending tens of thousands of messages per week (if not more) in these group chats, but weren’t using our actual app as much. They were literally in group chats talking about SmackHigh. We built a community for teenagers to chat, and now they’re only talking in GroupMe.
One thing I’ve learned over the past four or five years is that persistence is very important, but you shouldn’t let persistence cloud reality and obvious data. We had put so much time into this app only for us to realize in the beginning of September that we had built the wrong product.
NS: What was wrong with the app?
GS: Teenagers want to be in group chats. That is what they enjoy. Our app was just a static feed, it wasn’t real-time. Teenagers like real-time, “lit” group chats. That’s literally what they say. One of our internal metrics is the “litness” factor. It’s all about “chill fam” and “litness,” that’s it.
NS: How did you approach Jeff with the change?
GS: We were very straightforward with our data and thoughts. At first I was personally hesitant because this was the first time that we needed to report a major shift to him, but our confidence in the relationship we had with him and how transparent we had always been about everything made it fairly easy.
We went through the data with him… and he was so understanding! We made the change, we stopped promoting the old app, and began to recalibrate our whole strategy around building a group messenger type application where teenagers can come, connect, express themselves, and discuss relatable topics.
NS: What makes SmackHigh so special?
GS: Our vision has always been consistent, and that’s what I think Jeff respected. Our strategy pivoted a little bit, but we adjusted and now we’re thriving. Kik, Snapchat, that’s for people you already know. What if you want to meet new people? There’s no other way to do that.
We’re building a way for these teens to integrate pieces of them that they want to share with the world. If you aren’t a teen, they’ll boot you out of the chat room. If you’re mean or spam, they’ll boot you from the chatroom. They self-manage it, because they care about it.
Group chats are the new wave of communication. We’re a real-time social network. Similar to how adults meet each other at social or networking events, teens can meet other teens here. The Smack app is a way for teens everywhere to come, meet cool people, stay connected with the people they meet, and communicate through their individuality.
Initially SmackHigh may have been used for people to talk smack to one another, and this app is doing the exact opposite. They love each other. The best part? It’s completely unfiltered. We made this change and ever since the engagement has been through the roof.
NS: What’s the biggest challenge you’ve had to face as an entrepreneur?
GS: As an entrepreneur, you’re going to be wrong - a lot. It’s the nature of the beast. Forging new pathways does not come replete with perfect foresight. Being a successful entrepreneur is all about coming to that conclusion, accepting it, and identifying as quickly as possible when you’re on that path.
The next step is implementing remedies along the way. This translates into pattern recognition. You have to be able to pinpoint historical patterns based on decisions, data, and behavior, and make sure the same mistakes don’t happen again.
NS: What other startups do you see disrupting the market?
GS: Snapchat. Most people don’t genuinely realize the impact they have on our youth, and how they’re literally changing human behavior. Chat and artificial intelligence within chats is also a space I see tons of exponential growth in over the next several years.
I also see a lot of potential in predictive analytics. Data is a hot space and nobody has really seemed to commercialize it just right yet.
NS: What is your advice for aspiring entrepreneurs?
GS: Be realistic with how much work it’s going to take, and don’t stop until you actually achieve your goal.
My three favorite words are “just do it." People love to talk about their ideas over drinks and out to dinner. JUST DO IT. If you have an idea, it can’t be that complicated to test it out in some way. Stop. Spend one day, and find a way to test it.
All we did was create a Twitter account. Business schools teach you to have a business plan. In my opinion, that plan will only come into play with a proof of concept. Take an idea, and turn it into reality in a day.
Going off of that, and much more importantly, make sure you love who you work with. We truly live and die by our team here, and would not have gotten to where we are today without each other.