Our interview today is with Mike Jones, former founder and CEO of Userplane and now CEO and founder of a new startup, Tsavo (www.tsavo.com). Userplane was sold to AOL in 2006. Mike recently left AOL and Userplane to work on his new venture, which is focused on the vertical content area. We spoke with Mike a bit more about his firm and what it's working on--as well as heard about his experience with Userplane and what he learned there.
Thanks for the interview. Tell us what you're up to with Tsavo?
Michael Jones: I recently transitioned to a strategic advisory role at AOL --the team at Userplane is well positioned to continue the business without my daily involvement. My new focus is the development of a content network, under the moniker Tsavo. We are focused on a wide variety of niches, and currently working on a new publishing technology providing unique and highly relevant experiences to each visitor. I formed a partnership with American Capital, hired a team, and we're building new, content-driven services today. We've also acquired a mid-sized publishing company, which currently manages a few hundred web sites in the content space. We're now at the point of building up our network.
You mention content websites--what do these look like, and what are you doing with them?
Michael Jones: Yes, they are content websites, and every one is focused on a niche--such as travel, sports, or entertainment. We've acquired and are developing proprietary publishing technology, focused on this concept of unique relevance. We have a concept we're exploring, where content is presented to different people through different views, based on individual interests. We have technology to evaluate what content users are consuming, and which will surface the most relevant content for that individual.
It sounds a bit like it's optimizing the site based on content?
Michael Jones: Optimizing technology has been in use for a while, what we are focused on is similar to ad targeting, and goes beyond recommendation engines. I have not come across anything like this, and are been interested in using technology similar to ad targeting, except for user targeting.
Why'd you decide to launch a new company, and why now?
Michael Jones: At end of the day, a few of the acquisitions came together at the right time. The initial core acquisition is helping us build and grow the business and negotiate the right deals.. We are currently looking to expand our team through acquisitions - seeking small groups of developers who have put together good products, and might have trouble monetizing those products. We're in a position to acquire those businesses and help them grow over time.
When will you be launching your products into the market?
Michael Jones: In the next few months we'll be announcing the acquisitions we've done, accompanied by the actual properties. You should see beta products within the next 60-90 days.
We understand you might have scored some funding for this venture?
Michael Jones: Yes, though it's a bit different from a typical raise. American Capital is backing us on the acquisition, and the acquisitions that we have closed are healthy, profit producing businesses. American Capital has a M&A target budget for us, as well as a general operational budget we work within. There's not a specific acquisition budget. They have committed to building the network.
Talk about your experience at Userplane--what did you learn from that, and would you have done anything differently?
Michael Jones: Userplane was interesting. We didn't take any external funding, which meant two things: it was a great exit for the founders, but the process of building the company took time. It forced us to have discipline in what we actually built, and forced us to grow on a cash flow basis. We did leave opportunities on the table due to lack of financing and ability to execute quickly on concepts . However, inside AOL, Userplane found a very good home, and they've been a great custodian to the business. Inside AOL, we did a few things--we expanded our app set, and we grew our network, which was fantastic. We also launched our social media ad network. Plus, as an entrepreneur, I had never worked at a large corporation, and it was important for me to actually get that experience. It ended up being successful for me, I got to learn how a big company works, and I worked with a fantastic set of people. I felt I learned a lot about the process, gave AOL a lot, and hopefully inspired other divisions to build and create other businesses, just as how Userplane was built. It was a good mutual exchange.
Having bootstrapped Userplane, do you think you'd do it again like that?
Michael Jones: I think, for us, it forced certain discipline. It forced us to build in a tight direction, which worked in our favor. If you can, it's a great thing to do. The thing to do is to evaluate the lack of speed of execution because you're bootstrapping, and see if it's going to limit the long term potential of the business. In some cases, it doesn't, but if you're heading into a competitive market, bootstrapping may not be the thing to do.
With this venture, we are experimenting with building and buying businesses. With that in mind a private equity partner such as American Capital positions us well to execute that mission.
You're quite active as an angel here in Southern California -- can you talk about what you see in seeding deals here and the recent activity?
Michael Jones: It does seem like there's a lot more happening now in LA. More and more I am finding great startups in LA that I fall in love with. There are small groups building interesting products, but it's relatively hard for them to find a path to the initial seed investment. It's seems like in LA, it may be more difficult to close on funding due to the lack of financial networking and infrastructure for startups. Events are happening more frequently, and small angel groups such as Crosscut Ventures are becoming more accessible to entrepreneurs. In LA the startup market is improving, more mature startups such as Userplane, LowerMyBills, Myspace and others are seeping talent that will go onto create their own startups. The ecosystem is going to grow naturally as previous successful tech startups mature.
You mention some interesting startups--any in particular you are involved with or like?
Michael Jones: There are a bunch. I am involved with quite a few, but the ones that come to mind are DocStoc, GumGum, Sometrics, Goodreads, Nesting, ShopIT and newly to LA Movoxx. There are even some mature networks, that aren't often talked about, such as People Media, which is a large dating network, running a few dozen niche oriented dating properties. There are lots of interesting companies in LA, these are just some that come to mind. Every time I look, I find interesting entrepreneurs doing great things.