VChatter, the “Safe” Alternative to ChatRoulette, Doubles Down

1/20/11Follow @wroush

Menlo Park, CA, startup vChatter, which runs video chat services that randomly link users on Facebook, Bebo, and the Web, said today that it has raised an additional $350,000 in seed funding from individual investors, bringing its total capitalization to $600,000. The company markets itself as a PG-rated alternative to ChatRoulette, the once-trendy social video service plagued by a subpopulation of anonymous male users who prefer to be seen—to put it delicately—from the neck down.

When vChatter debuted last May, “They weren’t controlling the naked guys very well” on ChatRoulette, CEO Will Bunker says. That created an opening for another service that would connect people seeking short one-on-one video conversations with (fully clothed) strangers, a pursuit that Bunker says is an increasingly popular leisure-time distraction. (VChatter discourages lewdness by tying users to their public identities within Facebook or Bebo.)

But even if more recent efforts to sanitize ChatRoulette succeed, there’s still room for more than one video chat service in the social-networking world, Bunker says. “There are a lot of businesses that aren’t one-winner-take-all,” he says. Since people using ChatRoulette or vChatter never know who they’re calling, he points out, the network effects that lead users to clump up on services like Facebook are absent. “I think the underlying need to communicate with human beings is hard to overestimate—it’s just part of who we are,” Bunker says. “So all I’ve got to do is put together an interesting and unique way of serving that need, and I think it could be really big.”

So far, vChatter has about 4 million regular users, says Bunker. They use the service three to four times per month, on average, and spend about six minutes per visit. The service is accessible from inside Facebook or Bebo, or from vChatter’s website, where users can log in using their Facebook credentials.

Silicon Valley standards would say $600,000 isn’t a lot of money, even for a Web startup, but that’s all the company needs for now, given that it can outsource much of its development work to engineers in India and rent bandwidth and processors so cheaply from Amazon Web Services, according to Bunker. “A few years ago, I couldn’t have imagined doing it this inexpensively and getting to millions of users, but damn, it’s gotten cheap,” he says.

Bunker is known as the co-founder of the dot-com-era online dating site OneandOnly.com, which later became Match.com. The largest investor in vChatter’s latest fundraising round is Dave Kennedy, Bunker’s co-founder at OneandOnly.com, who put in $100,000. Individual investors from Colorado, Illinois, and Texas also chipped in. “It’s been friends and friends-of-friends,” says Bunker. “People love this idea. They say it’s the best idea I’ve had since [online] dating.”

Despite his training as an industrial engineer and experience in go-go Silicon Valley startups, Bunker has a country-boy demeanor. He joined the Dallas-area computer industry scene in the early 1990s, launching OneandOnly.com with Kennedy in 1995. By 1999 it had become the biggest dating site on the Web.

Ticketmaster bought both OneandOnly.com and Match.com in 1999, slapped Match.com’s brand name on OneandOnly.com’s technology, and promptly kicked Bunker and Kennedy out of the company, Bunker says. Ticketmaster CEO Barry Diller, the media mogul, “had this weird rule where if you make liquid money out of a sale, he wouldn’t let you stay,” he says. “I guess he was the only rich guy who could work there.”

Since then, Bunker has tried his hand at everything from catfish farming to cookbook wikis to online study aids. (Spending three years at flash card site Yoyobrain “got my programming skills back up to speed,” he says.) After moving from Dallas to Silicon Valley and watching the ascents of friends “who worked no harder than me but had better ideas,” Bunker says he decided to get “more critical about my idea generation.” He located a co-founder, Hitesh Parashar, who was willing to help him revive an idea he’d been thinking about since the OneandOnly days—video-powered online speed dating.

“Back in the 1990s the network speeds weren’t there to support it,” Bunker says. But it was still a good idea, he argues, and was simply awaiting the spread of technologies like webcams, broadband Internet connections, and Adobe’s Flash video platform (the latest version of which has built-in, peer-to-peer video chat features that make life for startups like vChatter infinitely simpler). “How does a kid with no money [i.e. 18-year-old ChatRoulette founder Andrey Ternovskiy] get to 30 million users so quickly? There’s got to be a compelling underlying human need there,” says Bunker.

As an entertainment network, vChatter has two major ways to earn revenues, in Bunker’s view. One is advertising: every fifth or tenth time a vChatter user presses the “next” button to call up a new chat partner, they might be shown a short video ad instead. But the company will need to attract 20 to 50 million users before ads will be a major revenue provider, Bunker says.

Meanwhile, the startup is also testing virtual goods sales. In one variation, users can pay a small amount to create a still image—a sort of photographic calling card—enhanced with an animation effect or a seasonal skin such as a “happy new year” message. “It’s all about either showing off, or trying to entice the other person to communicate with you longer,” Bunker says.

Most of the newly raised funds, Bunker says, will go toward the software engineering needed to perfect such features. “When we started this, neither of us knew how to program in Flash,” Bunker says. “I’m of the ready, fire, aim school: if there is a big enough demand, you don’t have to have a great product. But now we’re finally getting people who know what they’re doing.”

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

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