Executive Interview: Daniel Neal

Daniel Neal is CEO of kajeet Inc., a mobile virtual network operator targeting the ‘tween market and aiming, as he likes to say, to “super-serve kids” with a wireless service that takes into consideration their aspirations for adult devices (“They don’t want four-button kiddie phones, they’re too smart for that,” Neal says) and shares responsibility for the service between the kids and their parents. Kajeet, which recently began a retail launch with distribution through Best Buy and Limited Too stores, is a pay-as-you-go service with parental controls, separate virtual “wallets” from which kids and parents can pay for service, and partnerships with companies such as Nickelodeon.
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Q: Kajeet is now at retail launch. Talk about how you got to where you are.
A: We had over 7,000 testers to make sure everything worked and ran and this is one of the things retail really liked about us. . With well under $20 million of investment, in 14 months, we’re on our sixth production phone right now although we’re launching three in retail. We spent 10 months building, five months shaking it out and we’re rolling out this month and next month in nearly 1,500 retail points of sale nationally. . We have an amazing team of people. We’re 60 people now, but last year . we had, on average, 25 full-time employees throughout the year to do this with, and that’s what we did with help from Telcordia and Sprint and other partners of ours. .
We engaged a lot of kids and a lot of parents in the building of kajeet. The company is named after our kids, we have made them the center of things and we constantly talk with them and listen to them and take them seriously.
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Q: What did you learn from watching the rollouts of other new MVNOs in 2006?
A: Test it first. That’s why we had over 7,000 testers [starting last October]. We had originally planned to roll out service in retail in the fall. Our investors, our team, we all looked it and we said, you know, we will do a better job for customer, a better job for our retail partners, a better job for everybody that cares and invested in us . even though we built it fast-take a breath. Get a bunch of testers-7,000 is a pretty good number. Make sure everything works and scales. … That’s a lot more than you can say for others who rushed into market.
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Q: What are your marketing plans?
A: We believe the right focus is about 70 cents of our marketing dollar directed toward kids, and 30 cents of our marketing dollar toward moms. Kids [advertising] is more about TV and Internet, and some other viral and grassroots kinds of things. Moms [advertising] is all about Internet and print, meaning moms magazines, parenting magazines, things that women with kids would read. Not so much Dad. Eighty-seven percent of shopping trips with kids are with Mom.
We’re in Whyville [an online chat community for the tween demographic]. 1.8 million kids go to Whyville.com. Scion is the official car of Whyville, and we’re the official communication service in Whyville. You can go to the kajeet Chat Factory at the Whyville Mall and trick out your chat bubble. . We’re starting TV (advertising) around about the first week in April on Nickelodeon and Cartoon Network.
We have a service platform and a marketing platform; the Dudes [animated characters] are the marketing platform. They represent qualities of real kids [such as skaters, girly-girls, environmentalists, rockers, etc.]. We didn’t want to use real kids because kids change. We have our Dude World online, you’re going to see that develop. This is like Cheers, Friends, Seinfeld, South Park without the profanity; it’s a community of kids. They’re a little bit older, they’re a little edgy in attitude, but they’re not profane.
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Q: How have you been influenced by other MVNOs, and how are you approaching things differently?
A: We have a lot of gratitude to others who paved the way. I’m a big admirer of Virgin Mobile, big admirer of Boost Mobile. The lessons there is, Virgin Mobile showed us that it could be done and how it should be done, in many respects. They used Telcordia, for example. . We kind of owe Virgin a lot for getting it tuned up, getting it going on Sprint and showing us it could work, getting distribution going. . We sometimes jokingly refer to ourselves as Extra Virgin Mobile. I hope they don’t mind, it’s meant with great respect.
We also have learned from other people who have maybe gone after markets that were just hard to differentiate in. So we always looked for a big, homogenous niche where it would be very hard to differentiate, but you could do it.
We’re also big admirers of Boost. The story of Boost is fascinating. It kind of started out for shredders and surfers, but when the market started pulling it to be what I would call an urban-format MVNO, they listened. They followed and did it. . There was a demand out there in the market and . they didn’t resist it.
We’ve always believed there’s room in the market for a few, pretty sizable, very successful [MVNOs], but not dozens and dozens. We know the business model is there. . The thing that always interested us about the tween/young teen arena is that it’s the biggest, most homogenous niche in the U.S., bar none.
They all go to school 180 days a year, they all watch the same three TV networks, they all seek to assimilate, they’re all of a group. It makes it both more efficient to market to them, and you also have to be really authentic.