How Twitter Got an App Store: The Oneforty Story (Part 2)

10/13/09Follow @bbuderi

The second big thing in the genesis of Twitter app store oneforty (the first being proof that a real economy was possible on Twitter—see Part 1 of the oneforty story) was that Laura Fitton couldn’t find anyone besides herself to manage the company.

As readers of the initial installment of this story will remember, Fitton (Twitter handle: @pistachio) was a single mom with a consultancy to run and a book to write. She didn’t want to work full-time on a startup. “Entrepreneurs are nuts and out of touch with reality, and they have to be to survive the process of believing they can do what they need to do,” Fitton says. She really didn’t want to go there.

But at the same time, Fitton couldn’t sleep because this idea of creating an app store for Twitter—what is now Brighton, MA-based oneforty—would not go away. Her solution: find a dedicated team to run the business, and she would serve as an advisor.

Fitton spent the early part of this year trying to do just that. But by early March, Fitton accepted that if oneforty was going to get going, she would have to do it herself. She hadn’t intended to go to the annual South by Southwest music and media conference in Austin this year: it wasn’t a good place to market her Twitter consulting business, because everybody there already embraced social media. But now that social media awareness meant people would understand her idea. Two days before the event, she decided to fly to Austin after all and look for angel investors.

One of the first people she sought out was Guy Kawasaki of Garage Technology Ventures, an early-stage venture firm in Palo Alto, CA. Fitton had an in with Kawasaki. Back in August 2007, she had been watching the live stream of him speaking at the Gnomedex tech conference, where he remarked that Twitter was stupid. In response, Fitton had e-mailed him her Ode to Twitter post and said, “I think you’re wrong.” They had a short conversation—and about three weeks later Kawasaki posted: “God help me, I’m going to start Twittering. Dave Winer and Laura Fitton convinced me to take the leap, so it’s their fault.” (That’s Dave Winer, the RSS pioneer.)

oneforty teamSo Fitton met with Kawasaki in Austin and asked point black: would he invest in oneforty? Recalls Fitton: “He said, ‘No but I’ll advise. When I invest the company usually doesn’t do well, so advising is what you want anyway.’”

Having Kawasaki’s name to drop was nice (he’s still an advisor). Entrepreneurial strategist Dan Martell suggested she set up an angel pitch call, which allowed interested investors to dial in to hear her spiel, saving her one-on-one meetings. She did the call a few weeks after SXSW, and it proved extremely helpful. While no one invested directly from the initial call, everyone who was on it has “stayed involved in some way, shape, or form,” Fitton says. She learned a lot from the experience and the questions asked. And she put an edited recording of her pitch on a secure site that other potential angels listened to—and not only did several of them invest, she later learned it helped convince one of her first employees to sign on as well.

The buzz and momentum around Fitton built fast. Between mid-April and mid-July, Fitton spent most of her time in San Francisco. This was extremely hard, spending blocks of time away from her children (ages 2 and 4). Still, Fitton felt she had no choice. “It was like this had to exist,” she says. And, frankly, she wasn’t making progress with Boston investors. Fitton can reel off a who’s who of Boston investors and technorati she had connections with. “It wasn’t like I didn’t know anyone,” she says. “It was just still hard to get the Boston angels to wrap their minds about what we were doing.”

The oneforty founder was going to the Bay Area anyway to attend O’Reilly Media’s Social Web Foo Camp and speak on a Society for New Communications Research panel. So she saw the opportunity to leverage her planned trip there by meeting with Bay Area angels.

It couldn’t have worked out better. Fitton had met social tech guru Charlene Li at the Defrag social media conference the previous November. Just before Fitton arrived in San Francisco, Li tweeted her the name of one angel she should look up: Côme Laguë, co-founder of Bay Area venture fund Nueva Ventures. Li didn’t mention anything special about Laguë, but a few days before the meeting, Fitton learned he was Li’s husband.

Laguë would become oneforty’s first high-profile investor. But before he committed, he told Fitton that if she was going to run the business out of Boston, she needed a good angel on the ground there to support her. He introduced her to Laura Rippy, the former Handango CEO. “It was kind of like, ‘If you can get her on board, then you can get me on board,’” is how Fitton sums things up.

Around the middle of May, Rippy committed. “She’s an angel, she’s an advisor.” She even does “roll up your sleeves day-to-day work,” Fitton says. Laguë invested virtually simultaneously, and that was a real turning point, she says. “Once Côme came in and started calling his friends in, we closed very quickly.” That was her first close, of $250,000, on June 10. She had intended to raise only $140,000—seeing the 140K as a fitting number for oneforty. But she was vastly oversubscribed. And she isn’t saying how much the final close last week brought in.

The App Store Goes Live

In the middle of all this, Fitton became part of the first Boston class of TechStars, the incubator camp founded in Boulder. The three-month-long program provides $6,000 per team member for up to three people. “We barely made it in because they don’t like solopreneurs,” and they don’t like non-technical founders, Fitton says. “I was still a PowerPoint and one person when that money came in.” The small cash infusion helped her make ends meet before her first angel money closed.

Fitton flew to Boston for the camp’s opening week. But she spent half her TechStars time in San Francisco, meeting with the mentors the incubator provided over Skype. “Sadly, it meant I missed a lot of the in person stuff at TechStars, which is a real regret of mine,” Fitton says. TechStars co-founder Brad Feld told her, though: “It’s your company, you have to do what’s right” for it.

It wasn’t just conferences and the hunt for investors that kept Fitton in San Francisco. While there, she met Rob Mee, who runs San Francisco website development company Pivotal Labs. By early May, things were far enough along with the fund-raising that Mee agreed to start work on the promise of being paid soon.

Pivotal’s unique approach to development asks that customers work alongside its staffers—so Fitton stayed in town. She says that if they hadn’t gotten started coding when they did, the company might never have been born. ”When you’re doing a startup, everybody is lined up on tippy toes,” Fitton says. She had a group of angels committed but still not sending in their checks. “Pivotal starting the coding brought all my angels off the start line and into the race,” she says. “All punning aside, they were really, really pivotal in the process.”

Fitton returned full time to Boston in mid-July, and was around for much of the second half of TechStars, which officially ended in late August, although Fitton and most of the entrepreneurs stayed in the space a few more weeks. On September 10, when TechStars held its Boston investor evening at Microsoft’s NERD (New England R&D center), Fitton was one of the stars of the show. TechStars held its Bay Area investor day in Palo Alto on September 30. Seven minutes before she went on, oneforty dropped its beta shield and opened to all comers. “It was just adrenaline charged,” says Fitton.

oneforty team 2By that time, Fitton had four full-time employees—herself and three developers: Mike Champion (@graysky), tech lead for oneforty; Robby Grossman (@freerobby); and Michael Macasek (@macasek). “All 3 are scary-smart, awesome Rails developers and really great humans…” Fitton e-mailed me. “Everyone on the team is crucial to strategy, decisionmaking, etc. and they are turning out features faster than anyone had dared to hope.”

A Twitter app can be anything from a desktop client like Tweetdeck that provides an easy interface for sending and tracking tweets to a mobile application like ShoZu that lets you submit photos to Twitter and other social media services. Today, oneforty lists more than 1,800 apps and has more than 10,000 registered users. At least 150 apps are for sale; the rest can be downloaded for free. Everything was free in the beginning. So premium apps have seen “very sharp growth,” Fitton says.

The oneforty site has the basics of what you’d expect in a store, including a Most Popular apps list and an index so you can browse by category: business, games, travel, and so on. But users also automatically get their own profile pages that feature their picture and bio as lifted from Twitter, the apps they use, and any reviews they’ve written—so there’s a Facebook-like aspect to oneforty, as well.

I asked Fitton about the business model. Right now, if you click on an app, it takes you to a oneforty-hosted product page, where you can read about the app, add a review, or click a “Try it” button that takes you to the developer’s site for download. If it’s a paid app, oneforty doesn’t get anything at the moment. But it does currently have revenues—thanks to affiliate links to some other products—and if oneforty drives sales of those items, it gets a share, just like a Web vendor would in any affiliate program.

But that isn’t a big revenue stream—and it isn’t what oneforty is all about. Direct onsite app sales, where oneforty gets a cut of the sale price, Fitton says, is “one of the features we’ll be rolling out pretty soon.” There will also be a gig board for developers.

And yes, oneforty plans to sell paid premium placements, or advertisements. In fact, it has already fielded several offers, though it hasn’t accepted any. “That is definitely something we will do, but it is not something we are willing to rush into because the user experience is really important to us,” says Fitton. Content and app rankings will always be independent of ads, she says.

Oneforty will not be developing its own apps, however. Not only would that be a distraction for her team, says Fitton, ”We don’t want to compete with our user base.”

Crazy Idealistic About the Future

This is early days, of course. I wonder how much people will use the profile pages and social networking aspects of the site—that’s not usually why you go to a store. There’s also the larger question of whether people will pay for Twitter apps the way they do for apps for mobile devices like the iPhone.

But for the time being, at least, “It’s going fantastic,” says Fitton. Growth, she says, is beyond expectations—and she is fielding lots of inquiries about possible deals and new revenue streams, including one yesterday from a big venture firm she won’t name that asked for a call today (a call she plans to take). Her big challenge is how best to keep that momentum going without taking on too much. “The best way for a startup to kill itself is to go out there and try to be everything from day one,” she says.

And (no surprise) Fitton herself has no doubts on the potential of Twitter apps. She notes how ordinary people “armed with a hash tag” used Twitter to spread the news of what was happening in Iran’s election, and how a man jailed in Egypt managed to tweet “arrested” as he was being taken away, sparking a movement to get him out.

Oneforty one day will likely be collecting and sharing such stories, highlighting all the interesting or important things people accomplish with Twitter—and the tools they used to do it. “I get crazy idealistic about what things like Twitter can do for peoples’ lives,” Fitton says. “The best uses of Twitter, we don’t even know yet.”

So where does all this lead in Fitton’s mind? “I’m trying to focus on building a company. Buzz is great, but it’s almost unfortunate, because I don’t want to get distracted,” she says. Right now, she has enough on her plate just making oneforty the best Twitter app store it can be—and she says she has enough money to last until June.

But at some point she will need to raise additional funds—and it sounds like she might well want to eventually expand beyond Twitter. “I think mobile social commerce is a really, really interesting space,” she says. When she does go to attract more money, Fitton wants to find investors who have a lot of experience in scaling a company. That, she says, means finding people who understand platforms, who understand that “building a place for other people to build their business—that’s what we’re after.”

While this starts with Twitter apps, it almost assuredly doesn’t end there. “I think we can build a really, really big company,” Fitton says. She won’t say how big. But, she notes, “Amazon came out of the gate selling books to learn to build a marketplace. We came out of the gate selling apps because that’s what we need to do to learn how to build a big marketplace.”

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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