A little over a year after Urban Airship’s acquisition of location startup SimpleGeo, the company has moved to once again expand its feature set by acquiring venture-backed Tello in an all-stock deal. The startup, which debuted at TechCrunch Disrupt in 2010, had initially been focused on building real-time feedback tools for business customers, but had more recently refocused its efforts on PassTools, a visual pass builder for Apple’s Passbook. And it was this latter product that attracted Urban Airship’s attention.
According to Tello founder and CEO Joe Beninato, his company’s business feedback tool had less than a hundred customers to date, which is why they chose to move into a different area. “The other product was doing okay, but we saw this opportunity, and said ‘we think this could be much bigger,’” he explains. That assumption proved to be correct. Tello launched PassTools in September 2012, and now, just a few months later, it has thousands of customers who have created tens of thousands of passes using its platform, Beninato says.
Although there are now dozens of startups working in this space, PassTools was one of the first to introduce a WYSIWYG editor for building passes. To use the service, business customers upload a logo, pick a template and add some text – they basically will have created a pass created in five to ten minutes. This process works well for small-to-medium sized businesses without their own in-house development teams.
However, to serve the needs of larger enterprise customers, the company began quietly offering access to an API a few weeks ago. With the API, businesses could build the template using the same process as above and then programmatically plug in data into various fields on the fly. There are only a handful of customers now using that API, none of which the company can reveal at this time. These include customers in the retail space, a major telecom, and various ad agencies working with coupons. More details on these efforts will be announced in Q1 2013.
The two companies, Urban Airship and Tello, shared a common investor with True Ventures, which is how Tello founder and CEO Joe Beninato was first introduced to the team at Urban Airship. This was also one of the reasons why Urban Airship went with Tello over the other competitors in the space, as the investor had already performed a certain amount of due diligence on their end. But as Urban Airship CMO Brent Hieggelke explains, there were other reasons why the deal with Tello made sense, too. “We were just really impressed with Joe and the team, we liked the approach they were taking, and felt very comfortable that they were the right guys, with the right level of maturity and experience. Culturally, they fit in well, and there were just a lot of those intangibles,” he adds.
Additionally, while a number of the DIY Pass builders are new, early stage startups, Tello also had the benefit of being venture-backed to the tune of $3.7 million in total outside funding, following its seed round in February. Investors in the company included not only True Ventures, but also 500 Startups, Bullpen Capital, Founder Collective, Chris Sacca, Aydin Senkut, Russ Siegelman, Marc Goines, Ron Conway, Naval Ravikant, and Shervin Pishevar. (Incidentally, it’s good that Tello will now no longer need to raise capital, as Beninato recently burned bridges with one of Tello’s early backers, 500 Startups. He resigned this fall as 500 Startups mentor after feeling betrayed over Dave McClure’s investment in WalletKit. This, despite the fact that competitive investments from VCs are fairly common at the seed stage.)
Integration Will Bring Urban Airship An Entirely New Set Of Customers
As for the PassTools integration with Urban Airship’s core product, that’s still a ways out. Although Hieggelke says he would “love it” to be early next year, there’s no way to put a time stamp on that at this point because the deal is just now wrapping, and the two teams haven’t even begun to discuss integration plans. What he does know, though, is that there’s growing demand among Urban Airship’s customers for such a service. “We were in the phase of really listening to customers [about Passbook] and we started hearing the groundswell for Passbook,” he says. “I wouldn’t say it’s been a raging forest fire, but it’s been a slow, methodical pick up in terms of people – as they start internalizing what Passbook can do, they start to get really excited.”
He also explains that Urban Airship’s expertise in push notifications and location will benefit customers looking for a Passbook solution. More importantly, perhaps, is that Passbook support opens up the doors for an entirely new set of potential customers for the company.
“This gives a lot of companies that have not developed an app an ability to go into mobile by developing passes and dipping their toes in the water,” says Hieggelke. “There’s well over a million apps in the App Store,” he continues, (note: he’s referring to this report, which referenced apps submitted and approved, not live apps, to be clear), “so we don’t need a lot of apps put out there just for the sake of having an app. There may be some brands and customers that just really don’t have a use case for a fully featured app.” An obvious example which comes to mind here is with Consumer Packaged Goods companies. “I may not need a potato chip app,” laughs Hieggelke, saying that it would make more sense for those companies to launch incentives and specials via Passbook instead of standalone apps.
“There’s a whole wave of things coming,” agrees Beninato. “It’s just going to take a little time for agencies to figure things out, and for the brands behind that to see why this could be so powerful.”
The PassTools website in its present form will remain running until the Urban Airship integration is complete. No decision has been made on Tello’s previous product yet. Meanwhile, Tello’s five-person team will establish itself as the new Urban Airship office in Palo Alto, which is in addition to UA’s headquarters in Portland and its San Francisco location. Urban Airship currently has 65,000 accounts, and sees a few billion notifications on its platform per month.