A Q&A with Fanzy co-founder and co-CEO Tuhin Roy. The San Francisco-based company raised $550K in its second Seed funding round in late March. Investors include Paolo Rubatto’s Start Capital, Kima Ventures and OREFA.
SUB: Please describe Fanzy and your value proposition.
Roy: Fanzy enables brands to activate and reward social fans for driving engagement with a brand’s marketing message. Brands have spent enormous time and effort building up likes on Facebook and followers on Twitter only to see those channels clamped down as social networks mature. Facebook has said that brands can expect that around 10 percent of their fans will see any post. Other data suggests that of that 10 percent, less than one tenth of one percent will then share brand content with their friends. Via light gamification and an ability to link online and physical rewards to specific ‘social achievements’—like getting retweets or successfully inviting friends—Fanzy can drive massively more sharing and hugely expanded social reach over what brands can achieve directly on their Facebook page and Twitter presence.
SUB: Who are your target markets and users?
Roy: Our market is any brand or organization that wants to get their message out over social networks and capture the power of friend-to-friend endorsements. All large companies are spending heavily in this area and Facebook has said there are 12 million-plus SMBs [small-and-medium businesses] that are using their Facebook page as part of their marketing effort. We have also recently expanded to enable Fanzy to live on both a company’s website and their Facebook page, so that obviously makes the market even bigger.
SUB: Who do you consider to be your competition, and what differentiates Fanzy from the competition?
Roy: Companies like Badgeville, Bunchball and BigDoor provide tools to website developers to integrate gamification features similar to ours. The major difference is that we require no technical work on the part of our clients. We are fully cloud-based and the marketing team can set up rewards and customize their Fanzy apps on an ongoing basis without any intervention from their own engineers or us. There are also a lot of companies including Wildfire Apps, BuddyMedia and Woobox that provide very simple engagement tools for Facebook pages. What distinguishes us from them is that we create a much more robust environment for social fans and we are used as an ‘always-on’ solution whereas most social engagement apps tend to be used for just one promotion or contest.
SUB: When was the company founded and what were the first steps you took in establishing it?
Roy: The company was founded in mid-2011. My co-founder Jeff Marois and I had been working on a social gaming project and we were learning a lot about open graph. Jeff came up with the idea of building something that lived on the Facebook page that rewarded fans for spreading the word. We built a prototype which we launched in the fall of 2011 and it just took-off virally. One brand would see it on another brand’s page and then would add it to their page without any intervention from us. Pretty soon, we had 5,000 and then 10,000 brands on the platform. At that point, we knew we were on to something. We dropped our other projects and dedicated ourselves full-time to Fanzy. We raised an initial $400K-ish Angel round, put together the engineering team and started to develop new features as fast as possible. We are now up to 25,000 brands that have used the platform.
SUB: What was the inspiration behind the idea for Fanzy? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Roy: Jeff just had an insight, which has been proven-out in recent consumer surveys by eMarketer and others—that fans were looking to be acknowledged for spreading the word. Social sharing of brand marketing was not going to happen without that additional social loyalty layer. We’ve added a ton of features as we’ve gone along but the original idea is still at the core of Fanzy.
SUB: How did you come up with the name? What is the story behind it?
Roy: Our beta was called Fanrank and it was totally focused on identifying how influential each fan was around the brand and their marketing message, and then ranking them based on that. As we developed our rewards system and more gamification, the product developed well beyond simple ranking, so we were looking for another name that captured the broader focus. I found Fanzy while playing with variations around the idea of ‘fan.’ It is actually a word in the urban dictionary that means, ‘super cool.’
SUB: What have the most significant obstacles been so far to building the company?
Roy: Building companies is all about obstacles. Our original strategy was to use a freemium SaaS model aimed at SMBs. What we have figured out is that while there are a lot of SMBs using social networks to market, the amount of time they can spend on social marketing and getting educated around it is minimal. At the same time, somewhat to our surprise, we learned that larger companies really value what we’ve built. It solves major problems for them, including how to engage hundreds of different fan bases simultaneously, how to keep fan bases engaged when the particular product is not a marketing priority and how to leverage one fan base to market another’s product. As a result of this, we have been focusing increasingly on our solutions for larger enterprises.
SUB: You just raised $550K in new Seed funding. What are your plans for the funds?
Roy: Our last raise is totally focused on developing for and selling to larger businesses.
SUB: Why was this a particularly good time to raise outside funding?
Roy: I don’t think it is a good time to raise outside funds. There are a ton of very good early stage startups out there competing for money. Then, all of the startups that do get funded are competing for Series A institutional capital. In this environment, we are really proud to have raised money from great funds like Kima Ventures, Start Capital, and OREFA.
SUB: How does the company generate revenue or plan to generate revenue?
Roy: Fanzy is on a SaaS model. Companies are paying us a monthly or yearly fee to structure and host their social loyalty programs on the Fanzy platform. With larger companies we are building white labeled versions of Fanzy that enable us to reward custom actions both online and offline. As an example, a car manufacturer might ask us to reward people not only for social sharing but also for things like coming to a dealership or configuring a new car on their website. We can reward social fans for pretty much any action that happens on a website, for purchases or for showing up at physical locations.
SUB: What are your goals for Fanzy over the next year or so?
Roy: 2011 was all about getting the product right, optimizing virality and instrumenting as heavily as possible to open graph, Twitter, YouTube, and other networks. In 2012, we are laser-focused on rolling out our solution with as many medium size and larger brands as possible. We recently brought on a great addition to our management team to head enterprise sales—we’ll be announcing this soon—and have been working on our sales processes. We’re having a lot of fun this year talking to lots of clients and customizing white label apps to meet their needs.
Fanzy – www.fanzy.com