By Daniel Roberts
January 21, 2011

The group texting app is cool, sure, but even the founders know it’s less about the SMS and more about the power of groups.

If you’ve ever wanted to text a group of people all at once, you suddenly have a host of services to choose from. Apps that allow you to create a text message group have erupted in recent months, and venture capitalists have taken careful note of the interest users are showing.

The most prominent of the bunch, GroupMe, raised a hefty $10.6 million in Series B funding this month from Khosla Ventures and other investors. This is on top of an initial $850,000 in August from betaworks, SV Angel, First Round Capital and Lerer Ventures.

The fact that an idea born in May obtained over $11 million in funding by January shows that investors are betting big on group texting. And a number of other startups for the same function now exist as well, begun at various times in the past year. Among them are Beluga, BrightKite, Rabbly, Fast Society and textPlus.

So what’s the big deal? What need do these apps serve? “It solved a very basic problem for us,” says Jared Hecht, GroupMe’s co-founder along with Steve Martocci. (The two formerly worked for Tumblr and Gilt Groupe, respectively.) “[Martocci] and I were heading to a music festival and we needed a tool to communicate with our friends before and after the event. It just seemed like the most intuitive option.

“We initially built it thinking this is a tool for young adults, urbanites, who plan on going out in cities,” Hecht admits, “but we started seeing so many other uses. The real demographic is anybody with a cell phone.” Though the texting works on any phone, there are also GroupMe apps for iPhone and Android.

Of course, GroupMe and its kind are presenting a solution to a problem that doesn’t really exist. There are other ways to send a mass message: Facebook, email, or even right in the phone. As iPhone or Android owners know, you can easily add as many recipients as you’d like to a text. It is true, though, as Hecht points out, that if someone on a mass text writes back, it only goes to the sender. With GroupMe everyone in the group sees every reply. He also notes that not all phones have the option to send a text to multiple people; GroupMe works on any mobile, whether smart phone or not.

Hecht and Martocci believe that using GroupMe for a mass communication just makes more sense than any other format. “People have their mobile phones all the time,” he says. “It doesn’t rely on being on the Internet. Also, when you go to big events, data coverage doesn’t always work well.”

Hecht and Martocci see further uses for GroupMe beyond the obvious. The two of them have “fleshed out” an 18-month product growth map, and “group buying in real time” is just one idea Hecht throws out. “What we have now, we’ve just scratched the surface,” he says. Texting is probably just stage 1 for GroupMe and its competitors. If the idea is to give users a valuable service, and also build a base for later products, it’s working: GroupMe won’t disclose how many users they have, but it must be a big bunch; they are sending “millions and millions of messages every week,” according to Hecht.

I took GroupMe for a test-run with three college pals over a recent weekend. After receiving our welcome texts and joking about the nicknames I had created, my friend Ethan soon wrote: “It’d be better if one could see the entire conversation.” I could do exactly that on my iPhone, but Ethan uses an old flip phone, so each message was coming through as a new text, with no history shown.

Eventually my friend Sam wrote, “It’s annoying to get so many texts at the same time.” Of course, that problem depends on the members and context. Presumably, if you’re just texting about where you’ll meet up later, there shouldn’t be the problem of overload. In addition, if one person receives five texts without sending one of their own, the group is automatically muted and they won’t receive texts until they opt back in.

One obvious flaw is that permission isn’t needed for a person to be added into a group. This means, annoyingly, you could end up in a GroupMe without your choosing. (Exiting a group is easy, but presents another flaw: After my friend Ethan left the group, the system allowed me to simply re-add him.) We’ve all experienced being on a Facebook message chain or mass email and feeling aggravated by the constant replies. Often there’s no way to get out of those groups without hurting feelings or alienating people. Luckily, the rest of the group is not notified when you exit, though members could find out by checking online.

The ability to add any cell number to a group also raises obvious questions about spamming, but Hecht responds: “We check for spam very diligently; there have been zero issues with that.”

Another warning: the history of the group is saved online, as long as the group is still active. In touting the service, Hecht notes that, “text messaging is still a sacred place, almost the last frontier of privacy.” But all group members can see all of the texts by visiting the group’s page. Members of a GroupMe should be aware that texts they’re sending get archived somewhere other than their phones.

Still, for many of the purposes Hecht cites, GroupMe is simple, user-friendly, and fun. Those wanting to ask three different friends at once what they’re doing tonight should go ahead and throw them in a group. Just make sure they’re friends with each other too, or at least don’t mind being lumped together.

“I think we’ll see a lot more of these apps,” predicts Hecht, “because people are just discovering that broadcast overload is a real problem.” Hecht may be right, though GroupMe could arguably end up contributing to that overload in the long run. More than communication, it seems that the power of groups—from Groupon, to GroupMe, to Facebook’s group feature—is what’s captivating both users and venture capitalists alike.

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