GE 125: How Mutual Mobile Generates $40M A Year With Only 15 Customers [Podcast] With Tarun Nimmagadda

tarun picHey everyone, today’s conversation is with Tarun Nimmagadda, co-founder and CEO of Mutual Mobile, which is an emerging tech company that builds breakthrough products for a more connected world.

Today we’ll talk about their unique approach to business and building products that allows them to maximize their profits while working for a minimal amount of clients at any given time.

How the iPhone Inspired an Entire Company

Tarun and his co-founders all met in college ten years ago when they moved to Austin to attend the University of Texas from various places.

On and off, they worked together on school projects, some more exciting and more successful than others.

Then, one day in 2008, Steve Jobs stepped onto a stage with an iPhone in his hands.

Even though there were a lot of nay-sayers around the iPhone, Tarun got really excited about the possibilities it represented and wanted to start a company focused around the iPhone and its possibilities, which was when Mutual Mobile was born.

The Work Mutual Mobile Does

First of all, says Tarun, when they use the phrase “emerging technology,” they’re talking about things like drones, connected devices, and other cool pieces of technology that are hitting the market…like Google Glass and the Apple Watch.

They employ lots of curious tinkerers who buy all the latest pieces of technology and sit down to figure out cool things they can do with them that will impact an industry.

When they’ve got a solid idea on their hands, they call up prospective and relevant companies in the industry and work together with them to take that emerging technology, combine it with their business, and put something useful out there that people have never seen before.

For example, one of their employees who suffers from insomnia was playing with Bluetooth sensors and hacking on technology that allowed him to measure how well he slept and combine it with other information from his day to learn how much things like coffee or exercise affected his sleep.

Once he got something semi-solid in place, they called a few companies they thought would make good partners in the sleeping industry and eventually made a deal with Select Comfort, makers of the Sleep Number beds.

A few months later, they built apps that talked to Select Comfort’s beds, and the Sleep Number bed for children even won a CES design award because it helped parents understand how well their children were sleeping.

But this is not just one isolated example. They’ve done work with Honeywell on their thermostats, BSX (a lactic acid sensor people wear), and Philips on a sleep apnea machine.

Developing for the Apple Watch

Tarun says that when Apple puts out a product like the Apple Watch, it always takes him back to the moment he saw the iPhone debut for the first time.

A lot of people were really skeptical about the iPhone (and the iPad, for that matter) saying it was just an expensive gimmick device that no one would buy.

But for those who believed in it and went all-in? Tarun says there was some awesome payoff and learnings along the way.

When the iPad came out, it was thought of as just a large iPhone, but since Mutual Mobile was in one of the top app development companies to have an app in the top 50 when the iPad came out, they were soon building apps for companies like Google and Audi.

So when the Apple Watch came out, they went all-in once again.

They had several hackathons figuring out what they could do with it, and they worked with different clients to bring their ideas to life.

On day one of the Apple Watch’s launch, they had several apps available, thanks to being invited by Apple to work on stuff before the launch. They even did collaborations with Disney and HipChat.

Mutual Mobile’s Profitability Numbers

Each year, Mutual Mobile brings in around $30 million to $40 million in profit. But because of the nature of their work, they’re very selective about who they work with, and only have about 15 customers at any given time.

Landing Their First 10 Clients

In regards to their very first clients, Tarun says they have a wall of shame for the first apps they built.

Since larger companies were skeptical of the iPhone at first, most of their first clients were small businesses or entrepreneurs that want to get something going… mostly in humor or entertainment.

For example, one of their first apps was called Hang Time. It measured how long your iPhone was in free fall after your threw it up into the air. PC World named it the dumbest app of the year.

Landing Their First Corporate Customer

Their first big corporate customer was a company called PrimeSUITE, a business who set out to find companies who did iPhone development and discovered that Mutual Mobile was one of the only ones out there.

Before PrimeSUITE was acquired, they built a lot of apps together and watched each other grow. Mutual Mobile grew from 3 to 300 people, and PrimeSUITE grew from 50 to 500.

Important Growth Trend: Quality > Profit

Tarun said one of the most important things they did was to stay focused on quality over profit.

Because even if their customer didn’t quite have the budget they wanted, they knew they wouldn’t win the next customer if they couldn’t show off their work and be proud of it.

The Decision Not to Build Their Own Products… Yet

Even though they’ve got loads of great in-house talent, Mutual Mobile hasn’t put a product that’s exclusively their own on the marketplace yet because in some ways, says Tarun, they still haven’t learned everything there is to learn about creating a successful product.

They’re just not great at creating products that are marketable and can be well-marketed… which is the standard technologist’s curse.

They’re working on strengthening their marketing muscles, but Tarun says if they just keep working out those marketing muscles, the time to release their own product will eventually come.

A Big Struggle: A Client Went Bankrupt & They Couldn’t Meet Payroll

Tarun says they were explicitly against raising money, so their only source of funding was their customers.

The combination they had of being bootstrapped plus wanting to grow quickly led to a very nerve-racking time where they used every last extra dollar to hire someone that would help them win more business so they could just go back to hiring more people.

Their bank account was almost always at zero, and at one point, they had a client that owed them $500,000.

They’d paid the first half, but still owed them $250,000 when they declared bankruptcy and didn’t pay that last amount.

Without that quarter of a million dollars they were banking on, they wouldn’t be able to meet payroll, which the co-founders knew would be an irreversible moment in terms of morale and their brand.

Thankfully, one of the co-founders stepped in to write a loan check and they paid it back to him ASAP.

Delaying Gratification & Optimizing for Growth

Amazon is a great example of a company that prioritizes long-term goals over short-term profits, says Tarun. It’s almost like they’re allergic to profits.

They say that every once in a while they have to check in with the market to make sure they can actually generate money if they want to.

Tarun says that moment came for them two years ago when they’d had enough growth and decided it was time to optimize for profits instead. (Because they needed a cushion there for tough times.)

Advice to a Recent College Graduate

“Focus on the experiences more than your short-term financial reward.”

What clarified his own decision making after he got out of college was his commitment to prioritize personal growth and experience over financial gain. That clarity laid the ground work and made many decisions much easier.

Current Daily Structure

  • Wakeup and go for a run
  • Play a game of chess with his father who is in town
  • Go to work
  • Work through his backlog from the day before
  • Prioritize daily tasks
  • A whirlwind of meetings
  • Two hours to himself to focus on longer-term items

Two Must-Read Books

Tarun recommends How to Win Friends and Influence People because it dives in on the most simple, basic principles of how people work and how relationships are formed between two people.

For him, it drove home why human relationships are so important and why it’s critical to stop thinking about yourself and start thinking about other people.

He also likes Antifragile by Nassim Taleb because it’s got a lot of really powerful ideas for people who are intellectual and like principles they can use to guide how they live their lives.

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