We wrote about HipChat back in August, when the startup took in $100,000 from Sandy Jen and Elaine Wherry, both co-founders of instant messaging company, Meebo, and TechFellow Awards recipients, as well as the Founders Fund.

Pete Curley, co-founder of HipChat, has a great video pitch on his company profile on Vator, so we put him into a Vator Box episode (which we haven’t aired in a while). For those not so familiar, Vator Box is a show where we bring in an investor, typically a well-known venture capitalist, or a seasoned entrepreneur and we take a look at startup pitches and evaluate them.

In this episode, Jed Katz, a venture capitalist at Javelin Venture Partners, was our guest host. He joined me and my co-host, Ezra Roizen, digital media investment banker.

We look at HipChat, a young startup providing instant messaging and group chat for small companies, typically with fewer than 50 employees.

Here’s our takeaways from watching Pete’s pitch.

– Jed gave the product a thumbs up. In his words, “It’s a cool product.”

– We highly encouraged HipChat to give the product away for free because its target market of SMBs (small- to medium-sized businesses) of fewer than 50 people is a relatively frugal customer base. HipChat is doing just that with a 30-day trial. But at the time we filmed this, HipChat’s business model was to charge $1 per user, per month. It was unclear whether there was any free version at the time. After 30 days, HipChat’s subscription service kicks in.

– If HipChat is looking for an exit down the road, they may best be served trying to build up a significant user base as oppose to building up revenue.

– By having a significant number of users (over some revenue), the company may have more defensibility. A larger company may choose to acquire them rather than copy them if they have a big enough user base.

– Javeline Venture Partners is an early-stage VC firm based in San Francisco. Would Jed want to meet with Pete? You’ll have to watch to find out!

 

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