NEW YORK-Fatherhood was the inspiration for creating and naming mobile virtual network operator Kajeet Inc., and the market will test whether those fathers really do know best when it comes to offering a wireless service that will appeal to kids.
Daniel Neal, Kajeet’s chief executive officer and one of its founders, described the MVNO’s “tween” target demographic as an age group between many things: in between innocence and responsibility, dependence and independence, and wanting to fit in yet stand out. Neal spoke at the Informa MVNO Sustainable Business Models conference last week.
Kajeet has been in development for three years, Neal said. The MVNO-whose name was fashioned from the first letters of the names of the founders’ children-has been flying under the radar, except for its announcement earlier this year that it had raised $27 million in Series A venture-capital funding.
Kajeet’s service will be prepaid. The MVNO has been working with Sprint Nextel Corp., UIEvolution (which designs user interfaces, including that of Mobile ESPN) and Comverse, according to Neal. The service will target tweens between the broad range of ages 8 to 16, with the company’s sweet-spot target audience between ages 11 and 14. He estimated that there are 4 million boys and 4 million girls at each year of age.
“If you’re going to go into the market, look for a big market and be passionate about it,” Neal said.
He added that Kajeet’s target market will require constant research to stay on top of the demographic’s changing tastes. Kajeet, Neal said, considers itself a “life stage” company rather than a “life style” company, and the company designed its business model with a churn rate that reflects the passage of customers out of the target market.
“We assumed that we would not have the customer for all that long, in order to think conservatively about the economics,” he said.
Neal declined to say whether Kajeet eventually would have a “graduation” brand to offer its customers once they age out of its target market, but did indicate that his preference is to follow the philosophy to focus on a segment and “superserve the segment.”
“There are other people doing the older youth and young adults,” Neal said. “Our emphasis is going to reside in a younger set of customers. My bet is that this is a better place to be.”
Although Neal was coy about giving many details on what Kajeet will look like once it launches, he did say that “you won’t find MySpace on our device” and that the company would “go above and beyond just following the rules” of ethically marketing to children. His presentation included the use of the tag line “Kajeet: Use it for good.” Neal also acknowledged the possibility that the MVNO might not get every detail right upon launch, but said the company will learn from the mistakes that other MVNOs make as well as from any missteps it might take.
“We’ll do it, and change it if we’re wrong. We might decide, `Oops, we shouldn’t have done that,’ or `We should do something else,”‘ he said.
Neal said that Kajeet considers its primary competition to be family plans, rather than other wireless services such as Disney Mobile. And as far as family plans go, he said, “we find that it’s not really designed to superserve the needs of the kid”-which Kajeet will aim to do.
The buying power of the age group is significant, because they’re influencing parental decisions, through what Neal referred to as “kidfluence” or “pester power.” According to statistics cited by Neal, children under the age of 12 influenced $535 billion in spending in 2005.
Although handsets such as the Firefly and Verizon Wireless’ Migo device are purportedly for children, Neal said that tweens don’t want “child-like” phones, instead coveting the devices and mobile services of adults around them. Or, in the words of one child passed along by Neal, in reference to the Firefly: “Daddy, don’t send me to school with that. I’ll get beat up.”
“It’s really tempting to come into the market with a Treo for tweens,” Neal said lightly. “We’re not going to do that just yet.”
