How Friendship Can Create A Profitable Business: The Story of Loom.com
Trying to build a company with your best friends can be a double-edged sword.
You know them outside of their professional life, they’re always there for you, they’re your unconditional support and your drinking buddies.
But building a company can show you a side of them you’ve never seen before. It can be the reason for misunderstandings, miscommunications, and ultimately, ruined friendships and bankrupt companies.
Luckily, for the founders of Loom.com, this was not the case.
In fact, their firm belief in their strong friendship kept the company together.
Friendship. The core value behind the idea of Loom.com
Turning a Friendship Into A Business
Vinay Hiremath, Joe Thomas, and Shahed Khan - those are the names of the three friends in our story.
What do they have in common?
Thomas went to college in 2008, starting his journey to becoming an expert in economics at the University of Indiana. However, 2008 was the year of the financial crisis, so econ-studies were a challenge at the time. Every economic book needed to be updated with the latest information on the crisis and for a freshman, that’s a nightmare. He still finished all years successfully, except the last one. He left college with only one semester left.
Hiremath studied computer science at the University of Illinois but dropped out after two years.
Khan never went to college.
But their seemingly unsuccessful academic stories didn’t stop them from becoming the best versions of themselves. All three had bigger goals - goals that didn’t include academic achievements.
The Initial Idea For Loom.com
It all started back in 2015.
The three friends wanted to use their knowledge to do something useful. A good way to do that was to offer feedback to any start-up that appears on the market.
These companies were new and eager to prove themselves, but occasionally they lacked the experience to get through their first phase.
So, Thomas, Khan, and Hiremath created a two-sided market.
As experts, they wanted to give feedback to start-ups and their products or services, which didn’t go smoothly. After the initial contact with many of the start-ups, they discovered that experts’ reviews are not the primary interest for these companies.
Instead, first-hand customer reviews would be a much better idea. Not just any type of review - a video review. Some of the companies even offered 50% discounts on their products to any customer willing to submit a video review.
So, the three friends decided that it’s better to take some gig than nothing at all, and they built the video review Chrome extension.
It was a small, front-facing camera in a small circle - bubbly, but very user friendly. If it reminds you of Snapchat, it’s because the initial idea came from there. Joe and the rest of the team just modified it for desktop use.
Quite clever. The customers loved it!
But they wanted more than just the app - like being able to use it outside of the review platform, for their own purposes.
This is where the ‘eureka’ moment happened for these three friends. They started seeing the big picture - communication.
What if we could change the way people communicate in the workspace?
What if we could bring about a different approach to communication - instead of sending a long, boring email, you send a video with the same message, and a personalized tone to it?
That’s how Loom.com was born.
The Two-Weeks Notice Before Bankruptcy
The product was created in 2015, but nothing happened straight away. The guys didn’t get any funding for their idea, and they were slowly reaching their breaking point.
Until June 2016.
In this period, the team was two weeks away from declaring complete bankruptcy, so Joe decided to do one last thing before completely giving up on the idea that Loom.com would be a success story.
Together with his friends, they decided to put the product on ProductHunt, a website where anyone can share new technological solutions. This happened on June 16, 2016.
Only 36 hours afterwards, they received 3000 sign-ups for the product.
3,000 people who loved their product and were willing to use it - for the first time - and nobody was even around to see it! Each of the three founders was nowhere near a computer when this happened. In one podcast, Joe even mentioned that he was at a wedding that he couldn’t possibly miss as he was the best man.
Getting 3,000 users in those 36 hours was the push the team needed. They managed to get those users by being pushy on the platform in the first hour after posting it. This helps any new product to stay on the top of the suggestions so that people can see it. That’s all it took for users to see the value of the product.
The founders believed that this idea had some legs to it, but now the users knew this too.
Once this happened, the money started flowing in.
The Business Angel That Saved It All
It wasn’t too long before Loom.com got its first investment - and who else if not the 1517 fund?
They support college dropout teams who are willing to create something different, yet valuable, and Joe, Vinay, and Shahed fell right in the middle of this category.
After the first 3,000 users, 1517 invested $50,000 in the company.
Once the site started getting more users and receiving more positive feedback, they decided to do the ultimate thing - become the first investors of Loom.com.
The investors at 1517 gave a new meaning to the word business angel.
That first investment of $50,000 was deposited in Loom’s account 24 hours before the company was scheduled to completely break down.
Later in 2016, they managed to raise seed-money of around $4 million - not at all bad for a start-up! From that point on, things were looking pretty good for Loom.com.
Where’s Loom.com Today?
Today, more than 4 million satisfied users, and more than 90 companies use Loom.com for their business needs.
The company managed to generate $73 million in funding in less than 4 years since the launch. For a start-up, that's a pretty solid start. Two of their latest investors are the founders of Instagram - Kevin Systrom and Mike Krieger.
Last year in November, Loom generated more than $30 million in revenue, and yet Joe claims that the basic product will always stay free.
Of course, paid versions of the product were launched too, which offer significant value to the users through various benefits.
Nowadays, Loom.com is available for businesses, teams, and enterprises. If you work with Jira, the latest update enables you to record it, and they’re developing a mobile version too - which surprisingly, didn’t happen until now.
As technology changes, so will the initial goals of the company. The product will endure even more changes. But the initial core element is present everywhere in this company - the friendship between Joe, Vinay, and Shahed.
The story of Loom.com is proof that friendship can play a defining role when building start-ups, and that companies can grow better and faster when the founders care about each other. Great job, Loom!