Bump, With a Fresh $16 Million, Explores New Ways to Connect Mobile-Device Users—Q&A with David Lieb and Jake Mintz

1/12/11Follow @wroush

As we reported Monday night, Mountain View, CA-based Bump Technologies got a big bump itself this week, in the form of a $16 million Series B funding round led by new investor Andreessen Horowitz. Bump is famous for building iOS and Android apps that let mobile-device users share files by literally bumping their devices against one another. (Accelerometers in the devices detect the motion, Bump’s servers match up devices that bump in the same time and place, and the actual file transfers occur via wireless data networks and the Internet.) In a blog post, Bump said it plans to use the money to hire more engineers and product managers and improve its mobile apps to allow more kinds of in-person interactions.

I’ve been following Bump closely since interviewing co-founder and CEO David Lieb last September as part of a project to profile Y Combinator-backed startups in the Bay Area. Yesterday I reached Lieb and co-founder Jake Mintz and asked them to fill me in about the funding—which represents a big jump over the startup’s $3 million first round in late 2009—and about their plans to explore new markets for the company’s brand of proximity-based mobile networking technology.

Much of the conversation was about ways the company might build on the “bumping” experience—for example, by allowing mobile device owners to bump with merchants or music fans to bump with bands at a merchandising table. We also talked about the burgeoning technology of near-field communications, or NFC, and how it might compete—or connect—with Bump’s technology. (Lieb and Mintz were notably skeptical about NFC’s potential in areas like mobile payments.) Overall, it was clear that Bump has a long roadmap of applications it wants to explore, but that Lieb and Mintz are keeping the startup on a conservative path, sticking to just two mobile platforms, iOS and Android, and trying not to get sidetracked by all the exciting yet ultimately distracting applications to which they could put their technology.

Here’s an edited version of our talk.

Xconomy: How did this funding round come about?

David Lieb: We have had a lot of inbound interest, honestly since like a month after we closed our Series A in October 2009. We didn’t really need to raise a round then, obviously, but we kept in touch with some people we think are visionary in the space. In the fall we started to think that this opportunity is really big, and we started to think about what we wanted to do to really attack it. Around that time we meet with Marc and Ben over at Andreessen Horowitz again, and gave them an update, and at that point they were pretty excited about what we were doing. Of all the people we talked to, they really saw the vision of what we wanted to do. We didn’t go out and do a full-scale fundraising cycle. We met with them and decided they were the idea partners for us at this stage.

X: What makes Andreessen Horowitz so ideal?

DL: I was at a lunch meeting with Greg McAdoo from Sequoia Capital and Marc, and Greg asked Marc, ‘I’d like to hear what your investment thesis is on Bump.’ And the answer he gave was really interesting. He said that when he looked at the Web and mobile, there are a certain number of social networks that will emerge, and that number is very small—like 10. And he sees Bump as the social network for physical proximity, for the people and things you are physically interacting with. That is the network Bump has created and captured. So that is the core, high-level thesis he has.

X: But in practice you’re only the proximity-based social network for people with Android phones and iOS devices. Do you have plans yet to expand to other platforms like BlackBerry and Windows Phone?

Jake Mintz: Currently we are going to continue focusing on Android and iOS. We think those are the platforms of the future. They have the most momentum and they are growing the fastest. As we continue to experiment with our products, we can do everything we want to on those platforms. We would rather take our limited engineering resources and put them toward incrementally improving the product that millions of people already have, rather than spending five times the resources to bring out a basic version on other platforms.

DL: But since we last spoke, we have rolled out a bunch of new features, especially on the iPhone side of things. We added music sharing, we have improved the photo experience, and we have expanded what you can do with Bump. Previously, you could only connect with people by physically bumping with them. We got a lot of user feedback saying things like ‘I love Bump, but my brother lives in New Jersey and I’d love to share content with him as well,’ so we opened it up to allow connections not based on physical proximity.

X: So much of your identity is around that act of physical bumping with someone who’s right next to you. How do you extend the feature set beyond that without losing touch with that?

DL: Our focus is still enabling these powerful, in-person interactions. But as part of that, we’ve built this really flexible messaging platform that works really well for lots of things. So when people asked us to open it up, we created this idea of a long-distance bump.

JM: There are a couple of ways you can add a friend without bumping with them, and the primary way is through your address book. We think that’s a pretty good representation of the people you actually communicate with and care about. It’s interesting—our algorithms for matching people are pretty good, but we actually see slightly more than half of the suggested connections get rejected. And one possible explanation for that is, when we look at the way people use Bump, most of the time they aren’t sending a few messages to a lot of people, they’re sending a lot of messages to just a couple of people. So it remains a powerful, close network rather than being this gigantic network that crosses a lot of social groups.

X: When I visited in September, you had 15 employees, and now it’s four months later and you still have only 15 employees. Is that a sign that you’ve been trying to be super-efficient and keep the burn rate low? And is the hiring pace going to accelerate now?

DL: We have had a very high bar for hiring. In a software company like ours, it’s very important to get the top engineers and the top designers and developers. Those types of folks are [2x to 10x more productive than the average person. So we've held our bar really high, and we haven't added anyone since you were here---we've converted a few interns but we haven't hired anyone new. One of the big things we are going to do with the money is grow the team. We think this opportunity is enormous. If we play our cards right and execute right, we think Bump could be on every mobile phone in the world in a couple of years. And that is what we think this funding is going to let us do.

X: You've talked elsewhere about the idea of being able to bump not with another person, but with a business or a person at a merchandising table at a concert or perhaps a kiosk in a store---so that bumping could turn into a form of marketing. That's another departure from your original formula---is that something new or has it always been on your product roadmap?

JM: It's something that we have thought about from the very beginning. It's in a lot of ways much more difficult than what we've done so far. With Bump, so far, we've built software that gets noticed because people share it with their friends---it distributes itself. Once we start moving beyond people to places and brands, we start talking about physical hardware and about working with other companies, so there is a lot more friction that goes into that. But in general, one of the things we think is really exciting going forward is moving beyond just person-to-person to person-to-place and person-to-brand.

If you look at how you spend your day, you communicate with a lot of people, but you also form a lot of connections and interact with a lot of non-people. We think there is this big opportunity to create richer, more robust transactions---to take things you are already doing and make them easier, or to take things that were impossible to do before and make them possible. Pretty much every day since we've launched, we have had inbound interest from merchants, brands, bands, and others saying 'We really like the Bump technology, have you though about expanding it?' We just haven't had the resources to build the right product for that. That's a lot of what this next year and this funding is going to let us do---to build a product that can enable all these interactions for places, brands, and things.

X: I'm wondering to what extend you've been influenced by all the attention recently to near-field communications technology---including the idea that all phones will eventually have NFC chips that allow them to store credit-card data or virtual cash. As you talk about enabling person-to-place interactions, are you trying to make sure that Bump still has a place in a world where lots of phones may have near-field technology?

JM: NFC is a really interesting technology, but it's been kind of funny for us, because a lot of people have written off Bump, saying 'Once NFC comes out there's no need for Bump anymore.' But what got us excited about working on Bump years ago was that we thought there was this huge opportunity to build powerful and valuable interactions [between mobile devices], and we looked around and there was no technology to enable that. So we went off and created our own that would work on modern smartphones without NFC.

There are really three layers to Bump. There is the connection, and there is the network formed with the technology, and there’s all the interactions built on top of the connections. The last two, the network and the interactions, are what’s really valuable. The connection technology is an enabler. It’s necessary for us to do this stuff, but we don’t think that’s where the big value is. If NFC becomes ubiquitous—and this is the fourth time it’s been hyped up and was supposed to take over the world, so it may or may not actually happen, we’ll see—it actually makes our lives easier, because we can leverage that as a connection technology and no longer have to put our resources toward what we see as the least valuable of the layers.

X: Mobile payments is seen as one of the biggest application areas for NFC. You guys have had a collaboration with PayPal for a while, where their mobile app uses a bump to initiate a payment. How interested are you in mobile payments as a bigger application area for Bump going forward?

JM: We think mobile payments is interesting, and through our partnership with PayPal we are doing some interesting experiments, but it really isn’t our focus. We actually think that most consumers and most merchants are pretty happy with their existing solutions. NFC enabling of phones isn’t going to let me leave my credit cards at home for a long time, if ever. All these companies working on NFC payments have these great stories about how it’s going to replace your wallet, but we’re not sure they’re really looking at it from the user’s perspective. If the consumer is happy with their credit card, and the merchant doesn’t want to change their hardware, where is the value to the people who actually have to adopt the technology?

X: Going back to person-to-person sharing. Right now people can use Bump to share photos, music, social network IDs, appointments, and contact book entries. Do you have plans to enable people to transfer more types of content?

JM: Absolutely. Even if we were only continuing on this person-to-person trajectory, we would need to grow the team substantially, because we think there are so many more things we could build.

When we try to figure out our person-to-person roadmap, we look at how people are already using Bump and who they’re using it with. Right now people are using Bump mostly at night and on weekends, with friends and family, to do social and self-expression types of things. The majority of what Bump is used for today is photo sharing—that’s about two-thirds of our traffic. The second most popular sharing type is music. What other things can we build that really fit that pattern fun, social, lifestyle expression? We can’t talk about exactly what we’re building, but it’s definitely a lot more things.

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

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