Serendipitous.
With many chance meetings spanning almost a decade, that’s the only way to describe Kik’s newly announced acquisition of Toronto-based startup Relay.
Kik has its sight on becoming the “Wechat of the West,” which is what it told Communitech News when it announced a $38.3 million round of funding in late November.
WeChat offers a variety of other services on top of the messaging platform and is widely used in Asia.
As the messaging race heats up, Kik seeks to augment its chat platform with other services and add-ons, and that’s where acquiring Relay comes in.
The GIF messaging platform, which took off earlier this year, is the brainchild of co-founders Jon McGee and Joe Rideout.
Although just one year apart in computer science at the University of Waterloo, the pair didn’t meet until a shared co-op term a long way from home.
“We were working at [two] computer graphics companies in Montreal, and then kind of became drinking buddies, and started seeing each other out every now and then,” said Rideout, of their chance meeting.
After graduation, McGee went to work for Microsoft and Rideout went back to school to get his master’s from the University of Toronto.
But their paths soon crossed again.
“I interviewed at Microsoft and Jon was my host for the day, and he took me out for one of the best steak dinners I have ever had, “ Rideout said.
Although Rideout has fond memories of the meal, he landed at Google in Mountain View instead.
With web starting to overtake desktop in terms of software, McGee made the move to Amazon. It wasn’t long before he was reminded of his time in Montreal and entrepreneurship fever hit.
“When we met, Montreal was leading the world in graphics and I think that really set a bar for me that Canada can lead the way in a certain market,” McGee said.
McGee decided that if he was going to start a company, his mid-twenties was the time to do it, and so he left Amazon and returned to Toronto.
“I started two companies; one was a ticketing company, basically competing with ticketmaster; the other one was a web-based chat company and that was in about 2007,” McGee said.
His chat company, which brought real-time chat experiences to the web, took off.
McGee worked on it for a few years, but when mobile started to eclipse web, he adopted the mindset of “If I don’t disrupt myself, someone else will,” and hit the reset button.
“I started a new company specifically to do mobile chat and content, which if you fast-forward a lot, fits well with Kik’s vision,” said McGee. He also started a six-month process to recruit Rideout from Google.
“At the time, the Google Waterloo office was working on the mobile versions of Google+, so I had really been thinking about mobile tech and real-time communication and small group communication,” Rideout said of his decision to join McGee.
It took the pair a while to settle on a concept and another year of “slogging it out” to get Relay to the point where it started to resonate and gain momentum.
As they started to build Relay, they also crossed paths with Kik founder Ted Livingston. “We were running into him at coffee shops,” said Rideout, and added, “I remember running into him on a plane to San Francisco once when we were applying for fundraising and he was flying out [too].”
But it wasn’t until early 2014 that Relay took off.
“In Brazil there is this celebrity called Hugo Gloss and he wrote a blog article about Relay, and he has millions of followers on Twitter…and there was a massive spike [in users],” McGee said.
“The next thing you know we are in all the big newspapers in São Paulo and on Brazilian TV,” he added.
From there, Relay started to become big in South American countries and then spilled over into the U.S. That’s when things started to change for the team of four.
“When the U.S. started picking up that’s when we started get inbound interest, [but] we weren’t in a position that we had to sell, because we were growing so quickly,” McGee said.
2014 has been a big year in mobile chat, seeing Facebook acquire WhatsApp for $19 billion, and Japan-based Rakuten acquire Viber for $900 million.
“We had to make a call as entrepreneurs; are we going to continue on that trajectory and also be at a 100 million [users], or do we skip all those steps directly to 100s of millions immediately,” McGee said.
It’s not just the number of users that these platforms have anymore, but rather the commercial empires that players like WeChat are starting to build in other parts of the world.
“I think that people in the west are now realizing there’s an opportunity to build an equivalent [here],” Rideout said.
And that’s Kik’s vision.
“Part of the decision to join one of these big platforms is that this an extremely exciting time in history, and there’s a big prize and big platforms are going after it, and we could be a part of that and really contribute to one of those companies,” Rideout said.
With U.S.- based companies taking an interest this summer in acquiring Relay, what made them choose Kik?
“Kik just looked like it had a really good shot at being the winner, and specifically in the U.S., because they’re already so dominant there,” Rideout said. He added, “Forty percent of U.S. youth, between the ages of 13 and 25, are active on Kik.”
As the former Relay team joins Kik, the future looks bright. The company plans to double its headcount from 60 to 120 employees over the next year.
The Kik-Relay relationship is symbolic of a broader connection between the Toronto and Waterloo Region tech communities.
“This is an example of what we need more of in the region; bigger companies that are doing well, like Kik, believing in the littler startups that are also doing really well, and deciding ‘hey, let’s work together,’ ” McGee said.
“We’re seeing more collaboration between Communitech and some of the centres in Toronto, like OneEleven and the [Series 401] event that happened there,” said Rideout, who has often visited Communitech and connected with Waterloo Region founders.
McGee added, “The more we have success stories and the people who have done things successfully, helping other people to get on the right track, the more success we are going to have.”