You Say Potato, I Say Hot Potato

With the recent launch of a much-buzzed-about iPhone app, Justin Shaffer, the CEO of Brooklyn-based social networking startup Hot Potato, is capitalizing on the rapidly growing consumer interest in mobile technology and microblogging. Privately-held Hot Potato was started in January 2009 with the goal of connecting online user communities to live events—think Facebook or Twitter, but with less of a personal monologue and more of a shared storytelling element. Hot Potato differs from other social media sites like Facebook or Twitter because it is “focused on connecting people around live events in real time” through a “personalized stream of messages, notes, and photos (videos coming soon as well), to be an analog for how we actually enjoy and experience those events,” explains Shaffer.

For example, users can connect with a specific group through live chats about events like the Super Bowl, a concert at Madison Square Garden, or the season finale of their favorite TV show. “It’s not a sports site. It’s not a music site. It’s not a political site. But, it can be relevant in all those categories; it depends on how you use it,” says Shaffer. “We just think of it as a shared interest among a group of people, friends or otherwise.”

The Hot Potato iPhone app does much that the website itself does, but with the added element of mobility. “You can go back and follow it through chronologically and read people’s commentary about a specific event, and as that’s scaled up to a larger and larger audience, it gets even more interesting,” says Shaffer. “We have a simple scheme for iteration of the app as well, based on liking a common thing and sharing messages, that lets the most interesting content boil up to the top in real time as the events are going on.”
With the online universe constantly looking for the next big thing, this is a niche area for Shaffer to capitalize on.

For now, Hot Potato is focused on aggregating audiences, but Schaffer anticipates revenue will be generated by advertising/sponsorship opportunities available for the service. For example, the NFL could sponsor threads about football games or the same types of companies that sponsor televised games (e.g., beer, snack food, and electronics) might also sponsor online discussions about the games. “There are a bunch of possibilities that stem from having good access to the audience, from high-touch event sponsorship, to lower-touch opportunities to generate sales for content owners and event organizers and promoters,” says Schaffer. “Some of this will be around sales of goods related to events, and some of it will be about obtaining preferential access to audiences gathered on Hot Potato during events.”

From Baseball to the Social Media Ball

Shaffer’s background is in engineering, and he worked with Major League Baseball online (mlb.com) for eight years before jumping into entrepreneurship last year. “It took six months of pretty focused work from a product perspective and engineering,” says Shaffer. “From the perspective of an entrepreneur, we had a really rough time with fundraising.” However, Hot Potato was able to raise $1.42 million in first-round funding from the likes of Huffington Post cofounder Ken Lerer; his son Ben Lerer, founder of Thrillist; Facebook executive Dave Morin; and About.com cofounder Scott Kurnit. Schaffer also raised an additional $1 million from First Round Capital, RRE Ventures, Betaworks, and Ron Conway.

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