TechFellow Winners Investing $100,000 in HipChat

In 2009 three young entrepreneurs with two product acquisitions under their belts left their corporate offices in Sunnyvale, CA and went back to their dining room table to work on HipChat, a new enterprise software in the cloud that would cut the cost and hassle of instant messaging for businesses. After a year of boot-strapping, the company moved into a new office (pictured below) and has just announced that it will receive $100,000 in angel investment funding from the 2009 winners of the TechFellow Awards for high-tech entrepreneurs that’s sponsored by TechCrunch and Founders Fund.

HipChat’s founders, Pete Curley, Chris Rivers and Garret Heaton were fraternity brothers at the Rensselaer Polytechnic Institute when they and then-partners Tawheed Kader and Glenn Dixon founded HipCal, an online calendar company that was acquired by Plaxo in 2006. The team moved out to Sunnyvale, California, where they created a social network aggregator called Plaxo Pulse. That system was acquired by Comcast in 2008 and a year later, the team split off to work on HipChat.

“When I was at Plaxo and Comcast everyone was using [AOL Instant Messenger],” said co-founder Pete Curley to Mediabistro during a recent visit to New York City. “I thought, there’s got to be something better than that. We went out and looked and the only thing available was IBM’s Lotus Sametime or Microsoft Communicator, but these things cost thousands of dollars to install. And we thought, why can’t it be just as easy signing up for an AIM account and then just getting your company signed up?”

The answer was HipChat, a secure environment where employees can chat privately or in groups and share files from their desktops, Web browsers, iPhones or Androids. Rather than each person building a contact list, the network automatically updates itself when the administrator adds a new employee. All files and conversations are automatically saved and can be searched by key word. Curley put it this way: “Instead of having the 10,000 e-mail thread with 60 people cc’d, you can just instantly go, ‘here’s the file I’m working on, here’s what we’re doing,’ and everyone can constantly be in the loop.”

When asked how HipChat compared to other collaboration clouds like Salesforce Chatter and Yammer, Curley said he felt that those systems were better suited to posting status updates like on Twitter than for sending instant messages. Although applications like Chatter are similar to HipChat,”one couldn’t replace the other,” he said.

When designing the software Curley said they had to consider the variety of people that would be using the program, from programmers and designers to the marketing staff. “It’s a very interesting design challenge because if you’re making it for [entire] companies it has to be really easy and accessible for everyone,” he said.

The service costs about dollar per person, with packages for businesses ranging in size from 0-9 to over 100 employees. The plans are charged by credit card on a month-to-month basis and Curley assured us that the service is easy to cancel. “When you’re designing software, you have to think about what you hate on every other service,” he said, so he made the “unsubscribe” button big enough to see.

HipChat was ten days into Beta testing when a user actually signed up for one of the packages and started paying. At that point, the team decided to move forward with the launch. “Whenever you buy anything online, it’s such a pain to get the credit card out, that if you can get someone to do it, then you know you’ve done something right,” Curley said. “Right now the main thing that companies are loving [HipChat] for is the group chat.”

So far HipChat’s clients include software development companies and creative design firms, “where there’s a lot of collaboration going on,” Curley said, although they’ve also received orders from a number of law firms, universities and non-profit organizations. “We give it to them for free,” Curley said of his non-profit customers, because in his experience, “they always get screwed with bad software.”

Hip Chat’s funding comes from Sandy Jen and Elaine Wherry, two TechFellows who co-founded the consumer Internet company, Meebo. They each received $25,000 to invest in the startup of their choice, with matching funds from the contest sponsors for a total investment of $100,000.

The HipChat Team first met Jen and Wherry at Lunch 2.0, a meetup group for tech companies that started out in Silicon Valley and spread to tech communities across the country.

“When we were looking to award the TechFellow investment, we looked for a startup that showed great potential, solved an unmet marketplace need, and was a creative, innovative solution,” said Sandy Jen in a statement. “We chose HipChat because the idea it is forward-thinking and has potential as a major player in the future of enterprise cloud software.”

Pete Curley said that although he and his partners initially hadn’t planned on working with investors, they will use the money for operational costs and advertising. “It’ll be nice to pay the bills with someone else’s money for a bit,” he said. Even with the extra funds, HipChat has no current plans to expand its team. “We can do a remarkably large amount with just the three of us,” Curley said.

Simplicity has been the secret of their success. “One of the things we’ve learned with startups is to focus on one thing, nail it, do it really well.” To other entrepreneurs Curley advises, “just do something. You’d be amazed at the people who have ten half-started projects. We’ve gotten really lucky but we also, you know, did stuff.”

In the HipChat demo video Pete Curley, aka “Jim” takes us into The Dunder Mifflin Room, where he searches the chat history for conversation threads and files related to the word “cute” and finds, you guessed it, something from “Pam.”

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