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

3/17/10Follow @gthuang

As Don Corleone said in The Godfather, “A man who doesn’t spend time with his family can never be a real man.” If that’s true, then a Seattle company called Cozi should help quite a few people become real men.

Cozi is a tech startup focused on family-related software for the home. That includes things like online calendars, shopping lists, to-do lists, message boards, and family journals for sharing family memories and photos. These are the kinds of things, the company reasons, that busy families want to have to keep the trains running on time, and which most still do with paper and pen, or a physical bulletin board. Cozi puts it all online.

But there’s something deeper here. Cozi’s mission statement is to help family members improve their relationships with each other, through its software. I’m paraphrasing, but this is essentially the company’s 10-year “audacious goal.” It’s posted on the wall of Cozi’s meeting room at its headquarters in the Smith Tower near Pioneer Square. The place feels like a comfortable living room, as CEO and co-founder Robbie Cape pointed out when he showed me around. I came away with a strong sense that Cozi is a family, not just a company. And that if Cape were in a Godfather movie, you’d call him Don Cozi. (I’m kind of hoping that sticks.)

In any case, a sweeping mission to help families is all good—and atypical of tech startups, where 80-hour weeks and product focus are the norm. But it’s one thing to have a noble mission, and another to deliver on it. That’s why Cozi is interesting right now: for the first time, it can see a viable path to achieving its mission. “We are only now starting to see signs that the vision we had when we started the company can become a reality,” Cape says.

Cozi seems to have surged ahead of most startups in family organization software, including Fircle, Famundo, and Nesting.com. Seattle-based Trumba started as an online calendar service for families, but has switched to focusing on businesses and other organizations. Meanwhile, most big companies like Microsoft and Google don’t focus on family software because to them, the market is too small.

Being privately held, Cozi doesn’t disclose its financial performance and growth rates. But here are some hints of success. Cozi’s software now comes pre-loaded on all Dell machines. It has 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 the iPad on the way, Apple had “put tablet fever in the water,” as Cape puts it. (Interestingly, he had a sharp initial reaction to the iPad, saying, “I think it is the wrong device, at the wrong price, in the right space.”)

Which brings us to today—and the clearer, though still difficult, path ahead. Cape says he’s “still paranoid” and doesn’t think the company has really arrived yet. “Until you are self-sustaining, you haven’t hit the turning point,” he says. “Anything can still happen.” But he beams when he says that Cozi’s original vision is beginning to come together.

There are a couple of key strategy points for the company now. One is the mobile sector. This isn’t entirely new. Cozi already has a mobile-optimized website for the iPhone, BlackBerry, and other devices, and it offers text-message services and also makes its information available by voice at a toll-free number. But mobile “has been this feature of the comprehensive offering instead of a core component across the entire offering,” Cape says. “That’s going to change in the next six months.”

In addition to an iPhone app, Cape says the company also wants to support other Apple devices, Google Android, BlackBerry, and Palm. Not to mention netbooks, which represent some 20 percent of PC sales. Developing software for all these different platforms is a major technical challenge for any small company (Cozi has 23 employees), especially one targeting mainstream consumers. The good news is that one of the biggest problems in mobile is acquiring customers, so if Cozi users just need to migrate from their PCs and laptops to their phones, then the company could gain mobile customers relatively easily.

“A significant amount of Cozi usage will occur while the family is on some sort of mobile device,” Cape says. “We think of mobile devices on the go, in the car, but mobile devices will be used throughout the home as well.” That’s back to the idea of connected displays in different rooms—but in a new light.

The other key strategy point is the international market. “We’re being very, very opportunistic,” he says. “We are ready and willing to move into any international market when there is a strong partner there to assist.” The company’s most recent international investor (still unnamed) wants to launch Cozi in its local market, and is “interested in funding the globalization of the product,” Cape says. That means things like handling the operational issues of storing customer data locally, and redesigning the user experience around different languages and cultures. No international agreements have been signed, Cape says, but the English version of Cozi already is used by customers in 150 countries.

The company isn’t a clear success yet, of course. Its $21 million in funding from angel investors and partners like Gannett has yet to translate into profits. So Cozi still has plenty of family business left to drum up. Indeed, not until its software is prevalent on all devices in homes across the U.S. and abroad will Don Cozi be able to say he’s making offers that can’t be refused.

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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