Last May, Jared Hecht's fiancée was heading to a music festival in Colorado and complaining that she and her friends had no reliable way to stay in touch with each other while there. Hitting "reply all" to emails was cumbersome and not everyone in her group had a smart phone. Even if they did, they couldn't count on a data connection. Hecht called his friend, software engineer Steve Martocci, and asked for help.
Martocci, 29, and Hecht, 24, had become friends years earlier because they liked the same bands and kept running into each other at shows in New York City. "We always thought we'd be a powerful combo," says Martocci. "Jared is really smart and I like to build things."
The pair brainstormed and decided the solution had to involve some sort of text messaging because texting works everywhere, on all phones and doesn't rely on a data connection. They entered TechCrunch's Disrupt Hackathon competition in Manhattan—where entrants try to build something in 24 hours—and created a platform for real-time group communications over SMS, Web browser, and iPhone. The app became the basis for their new business.
Two months later Hecht and Martocci left their jobs—Hecht at Tumblr and Martocci at Gilt Groupe—to launch GroupMe, an application that allows users to create a private group to which they can send text messages or make conference calls. It's free and works on every kind of phone. Last summer, they raised $850,000 from a group of investors that included First Round Capital, Lerer Ventures, and Silicon Valley angel Ron Conway, whose investments include Google and Facebook.
In September 2010 they launched the beta version of GroupMe at TechCrunch Distrupt in San Francisco. By the time they introduced a 2.0 version in March of this year, they had $10.6 million from a second round of fundraising in December, an office in New York City's Union Square, and 19 full-time employees. At South by Southwest this year, GroupMe won the Breakout Digital Trend award.
"Right now we are sending more than two million messages a day," says Hecht, who says the company plans to add revenue-generating advertising to the app in the next couple of months. "In June, that will be more than 100 million messages a month." At the end of this year the company will start testing highly targeted, opt-in advertising. "We will mine keywords," explains Martocci. "So if your group says 'sushi' five times, we can send you an ad for a sushi place."
Hecht says people use GroupMe in ways he and Martocci never imagined—for bible studies, to rally around a friend undergoing chemotherapy, to organize a neighborhood watch. "We just wanted to be able to stay in touch at concerts and make going to the bar with our friends easier," he says. "So this is pretty incredible."