We are starting a new feature that provides a short spotlight on entrepreneurs and companies in our area. For this interview we reached out to Social Toaster to hear how it all started and what advice they would give entrepreneurs starting out today.
Who are your customers?
Good examples of our customers are Media, Entertainment, Music, Publishing, Non-profit and Education. When determining if an organization could be a customer of ours, we ask 2 questions.
1. Do they have an existing fan base, following or database of people they’re connected to who would be willing to share content on behalf of that company to their personal social networks?
2. Is that organization creating content regularly that’s meaningful enough that people will want to share it?
How did you get started with Social Toaster?
SocialToaster came about back in 2008 – 2009, as social media was becoming popular and businesses were looking at ways to use it for marketing purposes. A consulting firm that we owned called VMT, which focused on high end web application development, worked with a lot of different media and marketing agencies. Those agencies came to us asking about ways that they could use technology and social media to bring value to their customers. Right round the same time, we were pushing out a newsletter and I had published a blog post and mentioned it in the newsletter. One of my employees came to me and asked to be included on the newsletter so he’d be kept up to date on what was going on and to be notified when the blog was updated. I asked whether or not he would be interested in sharing the articles to his friends on twitter or LinkedIn and he said he absolutely would, as long as the content was something that was interesting. This happened at the same time we were in the process of researching how companies could use social media to be successful. We realized this was a simple process that any business could use to leverage social media and by combining it with various technologies we could actually track the effectiveness of it, which was one of the key things that was missing with social media at the time. So, we built SocialToaster.
What one thing made the biggest difference in building traction with Social Toaster?
The biggest game changer for us was when we shifted our focus from initially targeting non-profits to looking at larger enterprise organizations and landing our first enterprise client which was the Baltimore Ravens. That really helped to build credibility around our platform and made it so that we were now talking to larger clients with case studies that were really meaningful.
How did you initially finance the business and what was the process like?
My partner Anne and I initially invested the profits from our consulting firm to get started. We then went through a friends and family round where we raised $100k to test market it. We then raised a seed round from an individual investor for $500k. Following that, we did another friends and family angel round for $300k and then ultimately closed on a Series A round for $2.275m. Overall the process was very challenging and time consuming.
The biggest learning experience for us was that with our initial seed round, we had a $500k convertible note where the investor had the option to convert with relatively short term on the note. He ultimately decided he was not in a position to convert and so we would have to pay that note off before we could move forward. That made it exceptionally difficult to raise a Series A round, knowing that a large chunk of the proceeds would have to go to pay off a previous investor. We really had to work to find a way, leverage personal assets and resources, to substantially pay down that note before we could move forward. It caused a huge delay in our fundraising and almost made it impossible to move forward.
What advice would you offer entrepreneurs starting out today?
I usually tell them to make sure that they have a good plan and to make sure that they have a product that is marketable, but to focus on the concept of a minimum viable product. You want to have something that is enough for you to get out on the marketplace and sell and demonstrate that there’s value around the product and around the plan and can help to substantiate your model, but you don’t want to go overboard and invest too much in building the perfect version “1” because there is no such thing.
Fanactive launched this past fall, what is next for Social Toaster?
Right now we are focusing on really building out an ecosystem around our platform. What I mean by that is that we’re looking at different technologies and ways to tie SocialToasters core value proposition in with a number of other technologies that businesses are using for other marketing channels and operational activities. So we’re looking at tying into CRM platforms, e-commerce and POS platforms, for example.