2010 Q&A with Sprout Social's Justyn Howard

Many of the Q&As from the first couple years of Silicon City appear to have been pulled offline, which is too bad, because they include some of my favorites. Back then, many of Chicago's tech stalwarts were just getting off the ground, such as Sprout Social. I talked to CEO Justyn Howard just after he wrapped the company's first funding round. Here's the text, just as I turned it in. 

The Chicago tech-startup investment fund Lightbank has added Sprout Social to its list of supported companies. The Sprout Social team moved its offices to 600 W. Chicago on April 29—Lightbank is based there, along with Groupon, whose co-founders, Eric Lefkofsky and Brad Keywell, also run Lightbank. Sprout Social isn’t disclosing the amount of the investment, but the startup also has access to Lightbank’s staff and resources as well as regular brainstorming meetings with Mssrs. Lefkofsky and Keywell.

Sprout Social offers social media tools for small businesses—it helps businesses track and participate in conversations at sites such as Facebook, FourSquare, Yelp and Twitter, and also offers communication and lead generation tools. 

Crain’s contributor Steve Hendershot spoke to Sprout Social CEO Justyn Howard about the new business.

Crain’s: Your business is aimed at helping small businesses interact with current and potential customers. How is Sprout Social planning to reach its own potential customers and convince them to invest in social media?

Justyn Howard: The cool thing is that our target audience of small businesses have come to the realization that they need a presence in social media and on the web in general. They know that business is migrating more and more toward social channels, and you’re seeing smaller businesses with a Twitter presence or setting up a Facebook fan page. Historically, the reason it’s been hard to put tools together for these folks is because they were hard to reach, but now they’re already in these places. So when we’re reaching out and trying to help them coordinate their efforts, they already have an inkling of what to do—they just need the tools to do it well. So it’s good timing: we don’t have that hurdle of convincing them to become active in social media anymore, and we can focus on getting them the tools to make them as effective as larger organizations with a dedicated social media staff.

Crain’s: How long will you stay in this private beta phase? When you launch publicly, what will the revenue model look like?

JH: We intend to roll out publicly right around July 1; that’s when we’ll make a concerted effort to drive traffic and get new customers. Right now we have probably about 350 users managing about 500 different social media accounts.

Our revenue model is subscription-based. We haven’t quite nailed down the pricing or tiers, which will vary based on the features you’re interested in and how many people you have managing social media. But it will be cost-effective, in the $35-$50 per month range.

Crain’s: How do you collect all this data that you relate to your clients, both in terms of monitoring brand conversations and also lead generation?

JH: That’s another way in which the timing of this is very good. We’re starting to see more of the places where these conversations take place open up their data. A year or two ago, you would have had to go do some black-hat scraping, a lot of parsing of data to get these conversations in front of your users. Now a lot more platforms like Yelp, Twitter, and even recently Facebook, are starting to open up their data and give us access to it. Now our job becomes, ‘How do we display this in an effective way? What logic can we apply to help our customers make sense of it all?’ But instead of the data itself being the challenge, it’s more about putting it together in an intuitive way that relates to the average business user, who may not be the most sophisticated in terms of social media.

For lead generation, we monitor a lot of different channels and look for different things. There could be signals in a message—someone might say something that explicitly suggests they’re interested in what your business offers, for example. Or it could be location-based. For instance, we could look for people showing interest in a certain topic within a certain geographic radius. Or we can look for people who are engaged with similar businesses, with competitors. We can also look for common connections between your customers—if your customers have friends in common, those friends might be good contacts. So we use as many signals as are available through these data sources, and then, depending on your type of business, we determine what’s most applicable to you and how you want to approach it.

Crain’s: That sounds powerful, if slightly terrifying from a privacy perspective.

JH: There’s no contact information passed, and we’re working under the same constraints as anyone with access to the Twitter public feed or Facebook public posts—we’re not using anything proprietary or anything that could be considered private. It’s all things that you can find in other ways, but it would take a little longer, a little more work to do it.

We’ve also built a lot of controls in software to discourage any type of spamming activity. We want to ensure that nothing we do is perceived as a poor practice by consumers, and we also want to ensure that our clients—who may be people without a lot of experience in social media—don’t get off on the wrong foot. We don’t want them to be seen as annoying or spammy by consumers.