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Convore, the group chat startup that launched out of Y Combinator’s winter 2011 class, did pretty well in a lot of ways. The service, which was free to use and inspired by the 23-year-old Internet relay chat (IRC) protocol, was well-received by the press and amassed a solid following across a wide variety of different users: Businesses, developer groups, conference attendees, and plain old consumers.
But according to Convore’s co-founder Leah Culver, that just wasn’t enough.
“There’s this weird area that you can fall into as a social consumer app if you don’t have a million users or more,” Culver said in an interview this week. “You have plenty to keep you busy, but it’s not enough to get advertisers interested, it’s not enough to make venture capital firms interested. So the question becomes: What do you do with a middling social app?”
Pivot or perish
After analyzing Convore’s user metrics in mid-2011, the company decided a big change was needed if it ever wanted to prosper. The time had come to either pivot or perish. At that time, two of Convore’s co-founders, Eric Florenzano and Eric Maguire, decided to leave Convore and build another consumer-facing web startup called Boilerplate. But Culver opted to stay on and build a new project that deepens Convore’s IRC roots but narrows its user base to paying business clients who would use the chat service to for internal discussions. That business-focused IRC service, named Grove.io, quietly rolled out in early November.
Grove is built on the IRC protocol and allows any business to set up its own web-based private IRC server that includes features such as archives, search and channel access controls. The first 30 days are free; after that, business pay according to their size: $10/month for five users, $25/month for ten users, $50 month for 20 users, and so on.
Right now, Grove has around 40 businesses on board as clients, and has become especially popular with developer teams at tech startups. “Many developers specifically want to use IRC because it’s an open protocol, and it’s something they’re often very comfortable using,” Culver said.
Convore is still up and running as a free service, and definite plans for its future have not been solidified, but its business clients are currently being transitioned over to Grove.
Bootstrapped, but taking on big competition
Yammer is probably Grove’s most visible competitor in the enterprise communication tool space, but Culver says the products are fundamentally different. “Yammer may be fine for a company’s management or business teams, but we’ve found that often the developers want to talk to each other on something like Grove. If you are a programmer at a startup, IRC is how you want to communicate with your coworkers.”
Grove was built and maintained by two full-time staff — Culver and another developer, Jori Lallo — and a handful of contractors. The company has not taken on any outside money beyond Convore’s initial Y Combinator seed investment. But since Grove’s product is a paid, enterprise-focused app, VC funding is not a must-have at the moment
“We’re at the point that we would talk to investors, but the nice thing is we have paying customers so we don’t need to do it,” Culver said. She acknowledged, however, that bringing on outside funding would give Grove the ability to hire more full-time staff and build out additional features. Since Yammer currently has $57 million in VC investment and is said to be raising more, Grove could probably stand to beef up a little if it wants to be a serious competitor in the space.
Standing on the shoulders of IRC giants
But overall, it seems like Grove could really be on to something. I also think the service could punch well above its weight for a while, even without outside funding, just because of how it’s been built: For instance, since it runs the open IRC protcol, Grove already can work on a number of existing clients for desktop and mobile — the company does not have to build its own native apps. Standing on the shoulders of giants by using open protocols is a clever way to build a lean startup right now. And given the booming environment for web startups in Silicon Valley, if Grove can establish itself as a crucial service for developer-centric tech startups, it could have a nicely growing customer base for a very long time.