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“This is an app that can reach 100 million people easily,” he says in a splurge of confidence after explaining how his picture chat mobile app lets users replicate real conversations.
He refuses to divulge download figures, but says his app's beta stage has had “thousands of testers” and more importantly, a high level of engagement.
His poise is perhaps unsurprising for a tech up-starter who has spent a large part of his post-business school career with successful, and unsuccessful, technology ventures.
Lutebox however is in the business of communication, and the founder has ambition for a globally-scaled network. So far Ali, an MBA graduate of Pakistan’s Institute of Business Management, has launched two separate consumer products, and has another two in the pipeline. “We’re getting ready for a big launch,” he says, as he leans back on his temporary home’s coach in San Francisco.
Lutebox has been approached by companies who want to buy into his software, and while they’re still negotiating terms, Ali expects to pilot his newer products with a big telecoms company which he cannot name by the end of 2014.
It would mark a high point for the fledgling company which he launched at the turn of the New Year in 2011. It would also mark a magnificent turnaround for a CEO who had to pivot his entire business model to keep Lutebox afloat.
The company’s original niche was around the theme of allowing users to video-chat while watching premium video content online. It sounds a lot like Xbox Live or Google’s Hangout. That was the problem.
Ali insists he set-up Lutebox before the big technology groups swarmed the sector, but he clearly did not have enough muscle to keep up. “We had 100,000 page views within a few months, but ultimately the problem was: we were licensing content. We should have focused on free content,” he says with an air of disappointment.
He struck a deal with Sony Music to use their premium content, and was negotiating with Lionsgate Entertainment, but the Hollywood business is terrible to be in, Ali says. “We almost became a Netflix. I didn’t want to be in that space. The economics didn’t work.”
He doesn’t like the word “pivot”, but Lutebox had to change direction – quickly. In 2013, Ali moved into the messaging space, but didn’t see the value in video-chat.
“As a grownup calling is the way to communicate, but people today get this fear [of phone-calling] because it’s intrusive,” he says. “We want to give people the ability to see who they’re talking to, but keep it like messaging.”
Click, a face-to-face messaging service, allows users to send images and text to each other through a single mobile platform. Ali argues that it is less intrusive than video-calling, but more expressive than simply text messaging.
It is too early to say whether users have truly taken to the platform, but one thing is clear: they have received promising backing. Lutebox, the company which owns Click, has raised $500,000 in investment from a syndicate of private investors.
Ali is in the Bay area to close another round of funding, which he hopes will be in the region of $1.2 million. Most UK-based technology start-ups would flock to London’s Tech City to secure investment, yet Lutebox is based in Canary Wharf, famed more so for its plethora of big banks’ HQs, rather than for being an SME hub.
He has been taken aback by the level of support he has already received from Silicon Valley. “I’ve been here three weeks and am already negotiating with three investors,” Ali enthuses. “The pace of activity in the Valley is worlds apart from the UK.”
He knows better than most. An earlier venture – Twitballot, a Twitter polling and analytics product – came out of Launch48 Birmingham in the North of England and didn’t last six months. Raising funding for Lutebox was equally difficult – eventually Ali resorted to Spanish investors.
He thinks the UK’s start-up scene will not thrive until there is an active community of investors, and successful business exits: “The reality is you can be based anywhere in London and get the same exposure [as in Tech City].”
Critics would argue that Lutebox hasn’t achieved much so far. Ali, however, remains confident. What makes him think it will be a success? “Because I’m not giving up,” Ali replies. “We’ve spent a lot of time in this space and have a product market fit, and an app that people love.”
He has been drumming up a business plan for this space since 2009, when he enrolled on a marketing-based Master's program at Lancaster University Management School. He centred his dissertation on social networking and entertainment, and his research meant that he could approach investors with an idea before Lutebox was even founded.
After graduating in 2010, however, he went to work at Groupon, a daily-deals mobile app, when it was just a start-up. A year after he left, it raised $700 million in an initial public offering, becoming the largest IPO by a US internet company since Google. “It gave me the confidence to do it on my own,” he says.
Ali is on a hiring spree. He wants to recruit a team of marketers as well as some engineers to grow the company’s user base, and is considering setting up a US subsidiary – probably in Silicon Valley.
His next two products, Scope and #Thread, are a video chatting app that lets you share your location, and a business messaging app that organizes conversations around topics, respectively. Both will launch soon.
But is he worried that he spent too much time in business school, and is behind in the mobile rat-race? A smile flickers across his face. “I joke with people that I study way too much and should’ve started a long time ago. But I see the value,” Ali replies.
An MBA, he says, is like a “crash course”. “It helps you build professionalism, deal with partners and investors – all those important things. But there’s no substitute for the real thing.”
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