Even though Mitch Lazar, CEO of mobile startup Taptu, likes to talk about the technology behind the company's newsreading app, he also admits that it's a challenge to stand above the wave of competitors.
"Some of it's a Coke-Pepsi test," Lazar said. "Some consumers are more savvy than others, but breaking through to show the differentiation of a product has a lot to do with the marketing power. How much cash do they have to spend?"
Now Taptu has some extra cash itself. The company just raised a new $3.5 million round from previous backers DFJ Esprit and Sofinnova, adding to its previous $20 million in funding. In part, Lazar said, that's an investment in Taptu's new business strategy, which involves partnering with publishers to create custom newsreading apps through a new service called Tapform. One of those partnership deals should be announced in the next month or so, Lazar said.
Taptu actually started out as a mobile search startup, but as it tried to turn its technology into a real business, it narrowed its focus to newsreading. (Bringing Lazar on board as CEO last year was also part of that shift.) The app is still powered by Taptu's mobile search technology underneath, Lazar said, which is shown off in features like the ability to "DJ your news" by automatically aggregating stories on topics of your choice from "thousands" of sources, rather than just a few RSS feeds. That technology distinguishes Taptu from most other newsreading apps that just offer what Lazar called a "presentation layer," rather than interesting news recommendations or search options.
According to Lazar, the competitor that comes closest to Taptu is actually Zite, the startup that was acquired by his old employer, CNN, last week. (Lazar was part of the team that launched CNN.com.) He argued the deal is a sign that existing media companies want to get into this market, and many of them don't want to build an app from scratch. That can mean acquiring a company like Zite, or partnering with Taptu.
At the same time, Lazar said the company isn't abandoning the existing Taptu app or its hopes to make money from advertising.
"I think [Tapform] helps grow our business," Lazar said. "You can see ads in the product now, and we'll continue to focus on our organic experience. But to build that is always a challenge."