Jonathan Barouch. Photo: Supplied
You've got to believe in your business idea to invest $200,000 of your own money into it. You've got to be ready for pressure from investors when you convince them to put $3.5 million into creating your idea. And you've got to have a workaholic personality that loves the idea of answering emails or taking calls in the middle of the night.
That's the case for Jonathan Barouch, CEO and founder of Roamz.com, a location-based app that shows you what's going on around you based on what other people are saying on social sharing sites like Facebook, Foursquare or Twitter. Fox News named Roamz.com as one of the top five alternatives to the ubiquitous Facebook.
It's an idea that was born shortly after Jonathan, 30, had his first child. "Every Saturday morning, my wife and I would wake up and think 'What will we do today?'" says Barouch. "You could pick up the paper and google what was happening nearby but there wasn't really a way to see what local people were talking about. With social media I could see content was being shared - on Twitter, Instagram and so on - but that content was very fragmented across different social media."
Barouch's application centralises that data so if you're walking along a street in South Melbourne on a Monday morning, the app will recognise your location and suggest places you might like to get your morning coffee on the way to work. Alternatively, if you're in the Hunter Valley in New South Wales, it will suggest wineries you might like to try. All these suggestions are based on what other people have shared about that place, along with their pictures and comments.
While the app is free to users, businesses that are interested in being featured more prominently can pay a "per location" fee. This also provides the business with data on who is talking about their organisation and analytics such as what they are saying, what time of day and so on.
Creating a business to solve a problem
"It wasn't a lightbulb moment," says Barouch. "I realised there was a culmination of things to be solved in local advertising."
So in 2010, Barouch create mock-ups of his idea, spoke to technology experts to see if his concept was feasible and spent a couple of months building his business model. "I did a plan, sketched it out and did a basic prototype and starting pitching it around."
Although he was ready to invest $200,000 of his own funds, he knew that he would need much more money to build such a complex app. "I pitched it to VCs (venture capitalists) in the US and they got it straight away but would only back me if I moved to San Francisco. I wasn't ready to do that and, ultimately, I did a deal with an Australian listed company, Salmat."
Getting new investors meant relinquishing a portion of ownership. He now owns "a fraction under 40 per cent". "As long as you feel you're the owner of the business, it doesn't matter whether you own 10 per cent or 100 per cent," he says.
Barouch secured investment in January last year and start putting together his team. "By April, we got our chief technology officer on board. By July we had a decent sized crew of about four or five software engineers and we launched the first version of the app in October 2011."
An entrepreneurial addiction
This is not Barouch's first foray into business. He won headlines (and TV appearances) at the tender age of 17 when he started his first business, Fast Flowers, when he was just in Year 12. The business was one of the first florists that allowed customers to order via the web. That was way back in 1999, an eternity ago in internet terms. He built the business to more than 40 staff and 200,000 customers with stores in Sydney, Brisbane and Melbourne, before selling it to Jack Singleton in October 2010.
"I went from working seven days a week and being on call 24 hours to nothing," he says. "As soon as I left the business, my Blackberry was dead. There was nothing, no emails. I remember sitting by my family pool and thinking 'I can't do this for the rest of my life. I'm going to be bored crazy.' "
Rising above the noise
With new apps being launched every day, Barouch was faced with the challenge of capturing people's attention and then getting them to download and use the app.
"I think I underestimated how crowded the mobile space is," he says. "Not necessarily in what we're doing but the mobile market has exploded so quickly. You pick up the paper and every day there is a new app that's being talked about. That's a challenge for us and other people playing in this space ... how do you rise above the noise?"
Barouch initially gained attention for his app because he chose to launch it at a high profile tech summit in the US. However, his next most effective strategy came from an unexpected - and almost accidental source - posters. That's right, old-fashioned posters stuck up on walls.
"We tried different types of marketing - including mobile marketing - but it's the posters we stuck up in Sydney and Melbourne that did really well for us," he says.
"We put up about 1000 music-style posters and very soon I had about 30 or 40 of my friends texting, tweeting or Facebooking me pictures of these posters. I was really surprised that something so small got so much recognition. I watched the downloads the week those posters went up and saw that they had a big impact.
"We don't have a traditional marketing problem to solve. For example, if I was selling chips, I need people to recognise my brand and then got to Woolies and put my chips in their trolley. But with Roamz.com there are quite a few extra steps involved. They need to search for the app in the App Store, install it, use it, and continue to open it so that we can send them notifications or get them engaged.
"There are a lot of steps in the process and you can lose a lot of people along the way. There's no magic bullet answer - we're still getting it right as we go along."
According to Barouch, Roamz.com now has about 150,000 users, with about one-third in Australia, one-third in the US, and the other third in the rest of the world. Now with 12 staff Barouch has just launched an updated version of the app and plans to continue to iterate and adapt the app over the next few years.
"In three years' time, ideally I would like our app to be good enough so that if you're leaving home on a Saturday morning in Sydney, it will understand that you're probably looking for coffee so it will show you the local stores that are around," he says.
"But it will also show you have four of your friends nearby, and that your mum is going to the beach. We want to be able to mash all the data we know about you and, through the GPS tracking, even know how fast you are walking. If you're walking slow, you might be open to meeting with friends so we'll connect you with people. if you're in a hurry, we'll shut up and leave you alone - unless we know it's something you won't want to miss out on, like the fact you're favourite band is playing nearby."
The magic million mark
The success of the app obviously depends on the number of people using it. "We knew we wanted at least 100,000 people on board before we started working with brands," says Barouch, who has obviously now passed this milestone. "By the time we get to a million users, then the business becomes quite valuable. That kind of traction shows that we can operate at scale and I hope to get there within the next 12 months."
It's an ambitious goal for the young father, who has since had a second child. And it's a workload that is not for the faint-hearted.
When it comes to creating a start-up Barouch says: "Make sure it's really something you want to do because it's seriously tough. If you don't grow quickly, competitors will copy your idea. You have to manage people well and leverage your network.
"It's very different to a corporate role. If someone emails me at 10pm and it's important, I have to answer it. It's not a matter of waiting til 8am. If you do that, you miss out on opportunities that may never come again and you have to grab every opportunity and run with it as quickly as you can."
Barouch says it's also vital to find like-minded people to hang out with. "There are some days when it's really tough and you feel like you've been kicked in the guts. It's helpful to talk to people who understand. But when something goes well, and you walk past somebody who is using your app, that's fantastic. Every single time that's happened, it's made me smile."