Cozi, Climbing Ranks of Consumer Software, Looks to Deliver on Family-Focused Vision in Mobile Market

3/17/10Follow @gthuang

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partnerships with Gannett, MeadWestvaco, Meredith Corporation (publisher of Better Homes and Gardens, Parents, and Family Circle), Nestle, Best Buy, and other big-name companies. And just last month, it added a new strategic investor—a partner who shall remain nameless for now, but who plans to expand Cozi internationally.

Things weren’t always so rosy. Cape left Microsoft in 2005 to start Cozi with co-founder (and fellow Microsoftie) Jan Miksovsky. At first, they didn’t even know what they were going to build. This was in the days before Web 2.0, Google Docs, and social networks. There was a lot of talk about the “digital connected home,” and Cape envisioned a world, some years down the road, where homes would have a number of relatively cheap displays in different rooms.

But none of that looked viable yet in early 2005, and in fact, innovating in hardware seemed too hard. Even TiVo, which Cape thought was the biggest innovation of the early 2000s, would not have a profitable year until 2008. So within a few weeks of starting their company, Cape and Miksovsky knew they would focus on software. For two or three months, they interviewed people in their homes to find out what kinds of software they needed most. They came away deciding to focus exclusively on homes and families—and on software to help families manage their busy schedules.

That’s because virtually everyone they talked to—from tech-savvy Microsoft colleagues to those of more modest means—still had a paper calendar or a whiteboard with hand-scrawled schedules and instructions hanging somewhere in the kitchen. “The void we saw was overwhelming,” Cape says.

Yet when Cozi first released its product in late 2006 and early 2007—a free calendar, shopping list, and messaging service with a photo screensaver, at first just for PCs—customer adoption was slow. “It was not what we were hoping for,” Cape admits, “but the families were fanatical.” The ones who were using it seemed to love it. But it’s clear that Cozi had hit some bumps in the road. With slow adoption, fundraising was challenging. And an early bet on the Microsoft .NET platform with a downloadable application was a glaring misstep that took almost a year to recover from.

In 2008, Cozi moved its software from PCs to the Web and added features like an online journal and to-do list. It stuck with its advertising business model. The company closed a co-branding partnership with Gannett and was poised for a “phenomenal 2009,” Cape says. Then the recession of 2008-09 hit, and Cozi’s perspective on its growing business hit a wall. “The collapse of the economy took all the wind out of our sails,” he says.

But the company endured. In fact, it doubled its users and sold out all of its advertising inventory at premium rates for the majority of the year. By the last three months of 2009, Cape says, big deals were starting to happen again. The phone started to ring. And with new devices like … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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