Tech Startup in Cleveland Bets That Location Is Not Everything

CLEVELAND -- The Midwestern tech company, Tackk, has achieved some impressive metrics by bucking the prime directive of the real estate business and espousing a simple idea: location doesn't matter anymore.

The company's primary insight is that the location of content doesn't matter -- particularly among younger users. Specifically, that the notion of a website as the locus of a person or company may be dated. Increasingly, content floats from channel to channel and is not accessed on a particular website anyway.

Tackk has also found that geographic location matters little these days, too. Staying in Cleveland where real estate, labor and outside vendors are a fraction of the cost of those in Silicon Valley, has not had significant impact on their ability to do business internationally.

TACKK is a cloud-based software that lets users create professional quality content and graphics on web pages that can be pushed out to various platforms, like Twitter, Facebook or Instagram. Importantly, the platform does not require any log-in credentials to use it.

The Cleveland-based tech company is already quite successful by West Coast tech standards, bringing nearly a million users to the website a month and tens of millions of users overall.

The unique value of Tackk, according to founder Kyle Stalzer, is that the team, run by Stalzer, Dan Klammer and Eric Bockmuller, have focused on creating the simplest, most intuitive platform possible, so that users can get on and begin creating quality pages almost immediately.

"We are so intent on simplicity and a clean user experience that often, when we add a feature, we take one away, just to keep it simple," he said.

Tackk's earliest traction with users came in the education community. Teachers and students immediately loved the easy-to-use software that produced attractive, professional looking results.

Teachers spread the word to other teachers and the user base grew. That niche was not planned by the founders, but once it was discovered, the company focused its social media efforts to amplify the growth.

The platform is designed to make it easy to push content from the Tackk site to social media sites like Pinterest, Tumblr or Facebook. Student and teachers made use of those features.

"We find that our key demographic, people between 14 and 24, who make up of 70% of our users, don't feel they need to build a website. They just make content and push it out there."

With this younger demographic in mind, the company will soon release mobile apps for both iOS and Android platforms.

The name of the company comes from the idea of tacks on a bulletin board, where simple one page flyers deliver information or messages to a particular community.

Why the extra "K" at the end of the name? "The domain name Tack was already taken at the time, so we added another "K," said Stalzer.

The company has raised 3 million dollars to date, with an initial round of angel funding of just under 1 million to build the beta product and a second round of 2 million to launch the product.

The lead investor for the second round was New York City-based ffVC, which not only supplied needed capital, but also provided useful credibility to win over other investors and the tech world in general, where Northeast Ohio is not a well-known region.

With the strong user statistics it has now earned, the company will now be looking for a series "A" round of investment in the fall, which will likely be between 5 and 10 million dollars.

"Once that happens, we will probably double our employees," said Stalzer.

Ohio Investors have not yet embraced pure tech

Despite the many advantages of operating in Cleveland, one major drawback remains. Stalzer admits that even though its office is based in the trendy Tremont section of Cleveland, he and his colleagues have to travel to Silicon Valley regularly to win investors and maintain investor relations.

Stalzer echoes observations made by other tech entrepreneurs in the region, that investors in Ohio are comparatively uneasy with investing in web-based companies and those that do invest expect immediate revenues or a very short term plan to monetize.

Such expectations may seem reasonable, particularly in a part of the country known for manufacturing, but some investors actually take a completely opposite approach to investing.

In Silicon Valley, for example, where giants like Twitter and Facebook have become multi-billion dollar companies based on growing users first and monetizing later, many investors frown upon trying to harvest revenues too early, at the expense of growing users.

Ohio-based Knotice, a company that provides comprehensive customer data analytics, faced similar obstacles until founder Brian Deagan sold to IgnitionOne. Several companies that have been formed through the LaunchHouse Incubator in Cleveland have also had to seek capital on the West Coast.

Paul McAvinchey, who runs a Cleveland based networking organization called TechPint, says that it's just a matter of time before Midwestern investors begin to develop a comfort level with pure tech companies. "But in the meantime, there are bargains to be had in Cleveland for coastal investors," he said. "Northeast Ohio companies are extremely lean and productive. They don't over-hire and they know their stuff."

Stalzer said he was fortunate to have an early investor in Northeast Ohio named Christopher Celeste, who helped launch the business with a focus on growing users rather than revenues. Celeste is a serial entrepreneur himself, whose work has included ecommerce marketing for Victoria's Secret, as well as founding companies like FindawayWorld and Hatch Partners.

Stalzer maintains different sets of slides for pitching to various investors. "In California, your slides are all about growth metrics with almost nothing about revenues. In New York, it's a balance, you have to be at least testing out monetizing strategies," he said. "But in Ohio, if you have a thousand users, you better be monetizing a hundred of them."

Stalzer said he hopes and expects that once the region has a handful of big wins, companies that are sold for high valuations, investors here will gradually become more familiar with and comfortable investing in tech companies that have impressive growth metrics without revenues.