It must be the weather—or rather, the climate. How else to explain another tech startup with Seattle roots moving to the San Francisco Bay Area? Last week I heard from DocVerse, a collaborative-document software company, which relocated from the Seattle area to San Francisco this summer after raising a round of funding from Bay Area investors. This week it’s Chatterous, a “multi-channel communication” startup founded by two former Amazon developers. The story of Chatterous cuts across three familiar themes we’ve written about lately: the investment climate for early-stage startups, the role of incubators, and the challenge of helping people manage their daily communications.
I tracked down Chatterous co-founder Wilkins Chung yesterday. He and his business partner Kenshi Arasaki have been busy with the move to San Francisco—they’re setting up an office in the SoMa neighborhood that will officially be up and running in the next week or so. The idea behind Chatterous, which is about to start beta trials, is to let you communicate with a group of friends, co-workers, or other contacts across different channels like e-mail, text messages, instant messaging, and Web-based social networks—as smoothly and automatically as possible.
The idea was born from an experience many people can relate to. Chung says that on Thursdays or Fridays at Amazon, he would send out e-mail blasts to friends about getting together for happy hour. But some people wouldn’t get his message because they had already left or weren’t checking e-mail. So he’d have to call them or send text messages. “I became the aggregation point, and it’s really hard,” he says. Why not create a service to handle these different modes automatically, he thought. It just so happens, he met Arasaki at one of these happy hours, and the two started talking about possibilities.
They applied for the Y Combinator incubation program and got in. “We thought, let’s go for it,” says Chung. “Opportunities don’t come along often.” So he and Arasaki left Amazon—Chung had been there for two and a half years plus an internship—and spent the winter session at the beginning of this year in Silicon Valley, developing their product and making contacts.
When the time came to raise a round of funding, Chung and Arasaki talked to investors from Seattle as well as the Bay Area. “We did talk to people from Seattle, but mostly people in Seattle came down to San Francisco,” Chung says. “We were in Seattle for a short period of time, with the idea to move down to the Bay Area.” In the end, Chung says, they raised a round of angel funding (an undisclosed amount, but Chung says it was less than $1 million) from four investors in the Bay Area.
And that’s the main reason for the company’s move—to be a lot closer to its investors. “We’d like the ability to just call them up for coffee,” says Chung. “Especially in the angel round, it’s not just about money, it’s about their experience, and being networked to people in your space.” (As an aside, Chung is from Toronto and Arasaki is from Calgary, so they don’t really have local roots that would tend to keep them in Seattle.)
Chung also had some keen observations on the early-stage investment climate in San Francisco versus Seattle. “People are willing to meet if you get an intro. Even if an investor isn’t interested, they’re really willing to help you find others who might be,” he says. “Our investors came about through referrals. It’s a lot easier to meet investors that would be suitable. [There seems to be] a lot more investment opportunity in the Bay Area than Seattle. Even if your company is in Seattle, it’s probably a good idea to come to the Bay Area. The network of investors is stronger than in Seattle in scope and breadth… In the Valley, the investor network is big, but word gets around really quickly.”
“Another thing is,” Chung continues, “a lot of investors [in the Valley] used to have their own startups. That’s a really big difference. Sure, you have people who made a lot of money in the corporate world, but still, having investors who’ve started their own company, have been through the whole thing, is very important. They can advise us on how to get through it.” The implication is that Seattle has fewer of these—which is probably true, at least in raw numbers.
At this point, Chatterous is still two guys, but they’re looking to hire. And that’s something that’s not any easier in the Valley. “The talent in Seattle is also there, it’s just as good as the talent in the Bay Area. In fact, recruiting is a bit more challenging, because there are a lot more opportunities to work for cool startups,” says Chung.
Chatterous is in the process of adding new features for its beta run, such as more types of social-networking channels. “We’re trying to make Chatterous into a product that you use without changing your existing methods of communication,” Chung says. If you’re used to primarily using e-mail or instant messaging, he adds, the aim is for you to not even notice Chatterous. That’s as opposed to a service like Twitter, which competes in the same social communications space. “The concept of updating your status for everyone to see—a lot of people outside the Valley don’t understand it,” says Chung. “Whereas with Chatterous you’re just trying to reach [certain] people and communicate with them.”
It’s definitely a crowded space, and Chatterous has its work cut out for it to stand apart. Kevin Merritt of Seattle-based Blist recently had an interesting post about how he views all the different forms of communication and their best uses—from face-to-face to e-mail to instant messaging and Twitter—and how much he likes yet another service, Yammer (which just won best in show at TechCrunch 50).
