Why we invested in Sochat
Last month it was announced that we led a seed round in Sochat followed by a number of other great investors — Greylock, NEA, Slow, Betaworks, Foundation and Allen Zhang. Of course investment decisions are complex, often with many factors, but I’ve tried to boil things down to the main factors that drove us to lead the round.
Unique founder market fit
The number one factor in any investment decision we make is quality of the team. Our investment in Sochat was no different. Prior to founding Sochat, Luke spent two years leading WeChat’s growth team in China. For those that don’t know, WeChat is the world’s largest and arguably most advanced chat platform, boasting an astonishing 650M users. It completely dominates the Chinese marketing in a way no platform dominates the US (more on that later). As the leader of the growth team, Luke has experience that almost no one else in the world has — at most it’s experience shared by a handful of people at Facebook, Snapchat, Kik, Line and Kakao. In addition, Luke had pulled together kick ass team of engineers and product people (Luke himself a full stack engineer build most of the original version)
Space is crowded but winnable
While mobile chat is a crowded space, in the US it’s much less mature than most people realize. Unlike China, there is no really dominant player. As a late 30’s professional, WhatsApp is pretty ubiquitous for my friends and I, but very few young people use WhatsApp in the US. Depending on their social circles, most 15–22 year olds use a combination of iMessage, Facebook Messenger, SMS, or GroupMe for messaging. Snapchat is very popular with that demo, but it’s a different use case — not used for group or 1-on-1 persistent messaging. Ask a high school or college student what they use to communicate with their friends and they will almost certainly say they use Snapchat for some stuff and 1–3 messaging apps for other stuff. For example, GroupMe (who many may be surprised is still kicking) was the dominant chat platform at Harvard, where Sochat recently launched. Impressively in only 2 months, Sochat has already begun to displace it with 40% week over week growth.
By building a messaging platform from the ground up for high school and college students (and eventually beyond) Sochat has the opportunity to unify the fragmented messaging space. To do this the Sochat team continues to add features these students want :
· Auto-connect with people you’ve meet in the real world via Bluetooth
· Chat without phone numbers for added privacy
· Private, verified school chat networks
· Exploding messages
· Easily searchable gifs
· Voice messages
· Offline messaging via Bluetooth
Going really big
As a rabid Patriots fan I love watching Brady and the Patriots offense methodically work their way down the field with short, high percentage passes. This is a great way to move the chains in the NFL but is not how we at Eniac believe the best investment returns are made. We are believers in taking really big swings with each investment (sorry I’m mixing sports metaphors). While capturing a crowded market like chat with competitors like Facebook, Microsoft and Snapchat seems impossible, the upside if Sochat works, is massive. Not only will the dominant chat platform for the younger generation be worth tens of billions of dollars, it can be achieved much quicker than other sectors given the inherent growth paths through social connections. Maybe Sochat will be the next great social platform, maybe it won’t, but Luke and his team are taking a massive swing.
Those are the primary reasons we invested in Sochat. In the end it fits our core philosophy at Eniac, invest in exceptional entrepreneurs going after really big spaces. And I’m happy to say early signs are very positive. It’s going to be super fun watching it mature over the next few years.
