How the B-School Dropouts at Bump Are Filling a Big Gap in Mobile Communications

9/13/10Follow @wroush

During his first week at the University of Chicago’s Booth School of Business in 2008, David Lieb found himself meeting dozens of new classmates and typing their names, phone numbers, and e-mail addresses into his phone’s address book, one by one.

“There is this little loop running in my mind that’s always going, ‘Why are things crappy?’” Lieb says now. “That thing went off. We’ve got these $700 devices with all these sensors, connected to the Internet, but here I am using the most archaic technology to transfer information into the device or between devices. I thought that was dumb, and somebody should fix it.”

Lieb’s obsession with the mobile-device data transfer problem would eventually cause him to interrupt his business-school career. But not before he and Booth classmate Jake Mintz had won $25,000 in the school’s New Venture Challenge entrepreneurship competition for Bump—the software they created to instantly send data between any two iPhones.

Bump, which now also works on iPads, iPod Touch devices, and Android phones, is a free app that transmits contact information, photographs, calendar appointments, and social-networking IDs from one device to another wirelessly. Users initiate the transfer by literally bumping two devices together—a trick that relies on one of the aforementioned sensors, the accelerometer.

The free app has been downloaded more than 19 million times since its release in March 2009, putting it securely within the top 100 most popular iPhone apps of all time and bringing the young, Mountain View, CA-based startup considerable press coverage—along with $3 million in venture cash from Sequoia Capital and a group of celebrity angel and micro-VC investors, including Ron Conway of SV Angel, Aydin Senkut of Felicis Ventures, Ram Shriram of Sherpalo Ventures, and Joshua Schachter.

David Lieb, CEO of BumpAfter winning the New Venture Challenge and getting accepted to the summer 2009 term of the prestigious Y Combinator venture incubator program in Mountain View, Lieb and Mintz both took an indefinite leave of absence from Booth. Lieb says he has doubts about whether either of them will go back, now that they and their third co-founder, Andy Huibers, have such a big real-world business opportunity on their hands. “Obviously the school wants to produce graduates, but producing dropouts who go do exciting things is valuable, too,” says Lieb, who is now Bump’s CEO. [See a video interview with Lieb on Page 4.]

Perhaps the most exciting thing about Bump is that it fixes a longstanding problem with most Internet-enabled mobile devices. Wi-Fi and 3G Internet access is now nearly ubiquitous, so smartphones can easily connect to Web or e-mail servers that may be hundreds or thousands of miles away. Oddly, however, there’s no good way to send data directly from one device to another that may be just inches away. To send contact information, photographs, or other personal data to a friend’s phone, you typically have to compose an e-mail with an attachment, or perhaps an MMS message.

One exception to this sorry state of affairs was Palm’s line of PDAs and smartphones, which—starting with the Palm III in 1998—had built-in infrared ports that allowed two Palm users to “beam” data to one another across short distances. It was a nice feature, but one that other device makers never adopted. As I speculated in an August column, the lack of simple device-to-device data transfer mechanisms may be one of the big reasons that even most smartphone owners still carry old-fashioned business cards.

As Lieb’s business school studies progressed through the fall of 2008, he couldn’t get the problem out of his head. “I was thinking about how we could solve it in a way that provides a good user experience,” he says. “There was Bluetooth, which should have solved this problem, but doesn’t—it wasn’t designed to do this sort of fast connection with any arbitrary device, and it’s not on every device anyway. So we took a software approach rather than a hardware approach, using what sensors we can on the phone to figure out which two phones are meant to connect.”

By “we” Lieb means himself and Andy Huibers. They’d met at Texas Instruments, where Lieb had worked as an engineer and technology strategist from 2005 to 2008. Huibers had joined the company as the result of TI’s 2006 acquisition of the digital projection startup, Reflectivity, where he’d been founder and chief technology officer.

Huibers had left TI and was working on some business ideas of his own when Lieb got in touch with his idea for a data-transfer app. “I sent Andy an e-mail and said, ‘Have you ever done any iPhone programming?’ He said ‘No,’ but within a week he went and bought a Mac and started to mess around with the SDK [software developers' kit]. By November, we thought this was kind of interesting for a business, so I started to look around for some other folks.” That’s when Lieb brought in Mintz, a former sales and marketing strategist at Texas Instruments who was Lieb’s classmate in a course he calls “remedial accounting for engineers.”

(By the way, Lieb says the accounting course was one of the two most valuable classes he took at Booth. “If I hadn’t taken that, I would have been lost,” he says. “People think accounting is math-based, but engineers struggle with it—we try to understand why the system is built this way, but they train you not to think about that.” The other “super important” course was his negotiations class. “Negotiating with potential partners, employees, VCs, it’s something I do every day now,” Lieb says.)

The key to making Bump intuitive, Lieb says, was the accelerometer—a micromechanical device that detects whether a phone is being shaken or tilted. “We knew [an accelerometer] was going to be built into every smartphone from 2008 on, and it yielded a very simple, easy-to-explain user experience,” says Lieb. “There’s no chance my mom could figure out Bluetooth, but if I told her just to bump her phone, she can do that.”

But bumping two phones is just the beginning. Making the rest of the data-transfer process work gave Lieb, Huibers, and Mintz plenty to work on through the winter of 2008-2009. Since there’s still no easy way to send wireless data directly from one smartphone to another, everything has to travel over wireless Internet connections. The truly ingenious part of the system the three co-founders hacked together is the way the company’s servers determine that two devices running Bump, out of the thousands that may be in use around the world at any given moment, should be temporarily paired.

“If I had to describe the Bump connection technology, it would be like this,” says Lieb. “We monitor all the sensors on the handset that we can—the accelerometer, the location of the device, the IP address of the network it’s connected to, and a bunch of other things. We send all that data up to the cloud, and our algorithm listens to all of the phones in the world that are bumping. Based on those sensor readings, it can figure out which two phones just shared the same bump.”

This is the system’s indication that whatever data the bumper selected in advance of the bump—a photo, an appointment, a contact—should be transferred to the bumpee’s phone. Amazingly, it all happens in a couple of seconds.

Lieb, Huibers, and Mintz had a working app in the iTunes App Store even before they applied to Y Combinator. Interestingly, since Lieb and Mintz were in Chicago and Huibers was in Sunnyvale, Huibers and Mintz didn’t meet face to face until their Y Combinator interview.

Huibers had already departed Texas Instruments at that point, and getting into the program cemented Lieb and Mintz’s decision to leave Booth. It also brought in about $20,000 in seed funding, on top of the $25,000 the startup had won in the New Venture Challenge. “All three of us had a lot of respect for Y Combinator, but we didn’t do it for the money,” says Lieb. “We wanted to get involved in the Y Combinator community. That’s probably the most powerful part of being a YC company, having access to this network.”

With feedback from Y Combinator co-founder Paul Graham and others, the trio spent the summer of 2009 making Bump faster and easier to use. The “YC network” came in very handy that August, when Apple featured Bump in a TV commercial for the iPhone. “Our traffic spiked 1,000 percent in three days, and we needed help to scale our servers quickly,” Lieb recounts. “We sent an e-mail out to the whole YC group and within two hours, we had three guys from another startup in our office helping us. If we hadn’t been part of YC, we would have had a very hard time.”

Bump’s story since it exited Y Combinator is largely one of hockey-stick growth. The app is inherently viral—if you want to share something with a friend, you get them to download Bump right then and there. “It’s this magical thing that you don’t expect to work, but it does, so we get 20,000 to 60,000 downloads a day just from people telling their friends about it,” says Lieb. Using the capital from Sequoia and its angel investors, the company has grown to 15 full-time employees and is “still hiring pretty aggressively.”

Astute readers may notice that I haven’t said a word yet about how Bump makes money. That’s because the company itself hasn’t yet shared detailed ideas about monetizing the app. But with such a large base of users, and with so few other competing methods for device-to-device transfers available, the company could have an interesting future ahead of it. I spoke with Lieb about three of the directions the company is exploring.

Bump as an infrastructure play. Bump is useful enough as a stand-alone app for transferring contact data, appointments, photos, and the like. But Lieb and his co-founders realized early on that the basic system for initiating data transfers based on sensor data would also be powerful in other contexts. So they built an application programming interface (API) that lets other company’s services tap into Bump’s software back end. And they put together an SDK that third-party developers can download for free, allowing them to build Bump-like features into their own apps.

Already, roughly 100 apps in the iTunes App Store have Bump baked in. The most prominent is probably PayPal’s app, which lets users send money to one another’s accounts by bumping their phones. A slightly more frivolous example: Boink, a “sexual compatibility calculator” that uses a bump as a prompt to compare users’ preferences in bed.

“The original motivation for Bump was that there should be a universal way to do all these things,” says Lieb. “So we want to build a platform that includes our app and a bunch of other apps that all use the same technology.” For now, most third-party services can use the Bump API at no cost, but in cases where the system is being used to generate revenue, the startup may ask for a cut of the profits. “If somebody is making money off it, we probably deserve to share in some of that,” Lieb says.

New features and new operating systems. The 2.0 version of Bump for iPhone, released in July, includes a scrolling list of what Lieb calls “mini-apps.” Right now there are only four—for sharing contact cards, photos, social networking IDs, and calendar events. But the company will be adding more of these mini-apps to allow more types of sharing. “I can’t say what’s on our roadmap, but we have a user feedback forum in the app that lets users say what they want, and a lot of those things we’re going to be building,” Lieb says. The most popular ideas on the forum right now: the ability to bump to share songs, videos, notes, and games.

Speaking of games, Bump has an extra feature on Android phones: the ability to share apps such as mobile games with friends. (To be precise, users of this feature share links that lead their friends back to the Android Marketplace app store, where they can buy or download their own copies.) On Android, 30 to 40 percent of all bumps are app-sharing bumps, “which is really interesting,” Lieb says. That’s a feature that might eventually come to the iPhone version of Bump, depending on whether and when Apple introduces features such the ability to give apps as gifts.

Then there’s the world beyond iOS and Android. “We are on two of the major smartphone platforms now, but we could be on loads of other operating systems,” says Lieb. “We have decided to do Android and iPhone really well for now and then go to these other platforms,” including—eventually—BlackBerry, Palm, and Symbian. The company might even create versions that work on phones without accelerometers.

Grow first, monetize later. When I pressed him about monetization opportunities, Lieb said the company has “a set of different ideas,” but would mention only two: collecting fees from some certain revenue-generating licensees of the Bump API, and charging for the ability to share certain types of “premium content.” But like many early-stage Web and mobile startups, the company is clearly more focused on accumulating more users than on asking them to pay for stuff.

“Our goal is really to create this engaging platform that people are using every day, and if you do that there lots of ways to monetize,” says Lieb. “I don’t want to compare us to Facebook or Twitter, but they really focused on building great products first, and then figured out ways to monetize. Had they not done that, they would probably not be where they are today.”

Lieb argues that Sequoia Capital’s investment was a vote of confidence in this strategy. “They look for companies that can be big, important companies,” he says. “We think Bump can be that. We think Bump can fill this big gap in the core connection technologies for mobile.”

Meet David Lieb on video (recorded August 17, 2010—approximately 2 million downloads ago!):

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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