I’m thrilled to announce that Zong has reached an agreement to be acquired by eBay (PayPal) — full announcement, and PayPal CEO Scott Thompson’s thoughts on the PayPal Blog.

Getting to what I like to call this “acceleration moment” didn’t happen on its own. This journey has always been about people. People make great products, and companies. Nothing else. Every battle we had to win, every challenge we had to overcome, every product we had to launch, carrier to connect, and client to win wasn’t the result of any individual, it was the result of an amazing, collegial team working days, nights, and weekends, and having fun in the process. Even in the toughest times, you, team, made it feel so much easier. We were one, a pack, bringing down obstacles standing in our way, one after the other. Now, it’s time to accelerate what we’ve built!

I am so excited by the unique combination of PayPal’s 8 million merchants, brand power, risk management expertise, and financial stability, with Zong’s Carrier DNA, its largest direct carrier payments network, product innovation, and best-in-class carrier billing technology. This industry first is going to allow us to scale what we’ve built over the course of the past 3 years (and then some) in a massive way!

I’d like to thank all of our merchant partners. Over 2 ½ years ago after chasing them for months, Facebook accepted to start testing mobile payments in the now defunct Gift Store. We then worked very closely with its amazing teams to build the ideal experience for Facebook Credits. This whole experience has been nothing short of amazing. Experiencing the rise of the biggest social network over the course of the past couple of years to over 700 million users has been phenomenal. For having seen it from the inside over a sustained period of time, I can now say that Facebook’s success has nothing to do with luck. It’s all about vision, sheer talent, energy, and culture. Other key partners along the way include amazing companies and leaders like IMVU, Sulake (makers of Habbo Hotel), Big Fish Games, Sony Online Entertainment, Zynga, Playdom (now Disney), Bigpoint, and thousands of other amazing companies we have the privilege of serving. To all of you: thank you for trusting us at face value, when we were a tiny team in our cramped Spartan office. Stay tuned for a lot more innovation and scale, now that we’ve joined forces with PayPal. You won’t be disappointed with what we have in store for you!

To our 250 carrier partners around the world, thank you for letting us leverage your unique, and amazing capabilities to build a global mobile payments business. We’re all very excited at PayPal, and at Zong, to massively scale this business for you in the months to come.

Building a great company is also a factor of great investors. Starting with our early Angel Investors such as Eric Babecoff, and  later Ossama Hassanein from Newbury Ventures, who believed in us way back when in 2005 with Echovox. Frederic Court from Advent Venture Partners, who became our BD arm in Europe, sending us leads like a machine, and supporting us all along the way. Then finally when Zong was spun-off from Echovox, Dana Stalder from Matrix joined us, and was so instrumental in scaling our business, becoming my mentor, and guiding us in this amazing transformation that happened in the past 12-months.

I really can’t wait to join Scott Thompson’s team over at PayPal. The energy, passion, and drive of the team combined with PayPal’s unique scale and capabilities in payments convinced me this was the right way to accelerate what we’ve built. Most of e-commerce will shortly become m-commerce, and I genuinely believe that PayPal, hand-in-hand with wireless carriers around the world will win in a big way. We’ll be working very hard on things that will blow your mind. So stay tuned for a lot more mobile payment awesomeness!

—David Marcus (@davidmarcus)

ZONG RAISES $15M IN FUNDING FROM MATRIX PARTNERS

Funding Will Be Used To Further Its Market Leadership, Expand Merchant and Carrier Networks and Continue Growth into International Markets

PALO ALTO, Calif., April 27, 2010 — Zong (www.Zong.com), the leading mobile payment service used by online gaming and social networking web sites, announced today that it has completed a $15M round of funding led by Matrix Partners. Formally a division of Echovox, Zong is now a standalone company headquartered in Palo Alto, and will use the investment to further market leadership by accelerating the growth of its merchant network in both the US and International markets and through funding the rapid expansion of its mobile carrier network.

Zong is the mobile payment provider for Facebook Credits, a new virtual currency platform being deployed across the Facebook network of over 400 million monthly active users. Zong also works with thousands of other merchants in a variety of spaces including: popular virtual worlds, online gaming, social networking and digital content properties. Zong is the only mobile payments service that combines carrier billing with credit, debit and prepaid cards allowing Zong to be the first company to allow multiple payment options via the mobile phone.

“We are thrilled to have the support and guidance of Matrix Partners, which has a phenomenal track record in developing select mobile, wireless and internet companies,” said David Marcus, founder and CEO, Zong. “With this comes the privilege of working closely with Dana Stalder, who as a result of his extensive experience with PayPal, will be of great value to our team.”

Dana Stalder, general partner of Matrix, will join Zong’s board of directors, bringing more than 20 years of experience to the company. Dana has extensive knowledge in financial services and ecommerce, having served in executive positions at Netscape, eBay and PayPal. Dana also initiated a number of other startup projects, including PayPal Mobile and the PayPal Developer Platform.

“Matrix’s message has been clear. We are committed to helping build significant, industry leading companies and Zong fits that bill,” said Dana Stalder. “Zong is at the forefront of the evolution of the payments space and we hope to play a key role in its continued growth and success.”

About Zong
ZONG is the leading mobile payment service used by online gaming and social networking sites around the world.  Its frictionless payment experience converts shoppers into buyers at rates up to 10 times greater than traditional payment methods.  ZONG leverages direct connections with mobile network operators around the world to provide consumers, merchants and publishers a secure payment solution with unrivaled connectivity and service quality.  ZONG is the mobile payment provider for Facebook Credits and also works with hundreds of leading destination sites, such as Gaia Online, IMVU and Aeria Games. Reaching over 1.5 billion mobile users, ZONG provides local payment capabilities in over 30 countries in 16 languages.  ZONG is the only mobile payment service that combines the high conversion rates of carrier billing with the low costs and flexibility of payment card networks.  ZONG is based in Palo Alto and Geneva, and is backed by Advent Venture Partners and Newbury Ventures. For more information, please visit www.zong.com.

About Matrix Partners

Matrix Partners is a premier venture capital firm that has generated outstanding returns for over three decades. The firm has delivered several of the industry’s top performing funds of all time. Matrix Partners has offices in Waltham, MA; New York, NY; Palo Alto, CA; Mumbai, India; and Beijing and Shanghai, China. The firm has been fortunate to have invested in game-changing, industry-leading businesses such as Apple Computer, Sandisk, Veritas, Sycamore Networks, Phone.com, Starent Networks

We’ll be at the NY Games Conference this Wednesday, Sept. 30th. Hill Ferguson, our head of Product and Marketing, will be on a monetization panel discussion at 4 pm. Richard Borenstein (richard [at] zong [dot] com), our head of sales, will also be around. Send him a note if you’d like to meet up while we’re in NY from the 29th-1st. See ya there!

Howdy. Interested in learning all about Virtual Goods and monetization strategies? Come to the ENGAGE! Expo this Wed and Thurs for a full line-up of great speakers and networking opportunities.

Use this promo code and get 15% off the ticket price for an All Access pass: VALVIP

If you’re coming to the show, be sure and checkout the monetization panel discussionat 4:00 pm on Thurs. Our Founder & CEO, David Marcus, will represent ZONG. If you’d like to arrange a meeting with a ZONG representative, just reply in the comments or shoot us an email at sales [at] zong [dot] com. Hope to see you there!

Checkout the life story of Zong in the video below. Turn up the volume to get the full effect.

Today we sent an email to some of our customers informing them we will discontinue support for the ancestor of Zong that was still maintained at http://hosted.zong.com as of April 20th. We put a lot of effort in building this platform and had many SMS based apps running on it such as simple quizzes, alerts and voting. We’ve nevertheless decided to pull the plug on this activity to dedicate all our energy, heart and soul into mobile payments.

The developer platform, which is the backbone of Zong web hosted payments services will naturally continue to be maintained, developed and supported.

It’s always tough to discontinue services, but we can’t be doing so many things well. We need focus and attention. As we’re on a mission to continue leading the mobile payments market and establish Zong as a very strong payment brand, we had to make this call. Maintaining the SMS apps was simply not in line with our ambitions and company focus anymore.

For those of you looking for similar services, you can go to the excellent Textmarks in the US.

For the others who are into mobile payments: fasten your seatbelts!

Kudos to Smallworlds for their awesome Zong integration!

In hindsight, 2008 was one of the most exciting years of my life, but more importantly of Zong and Echovox as a company. We’ve accomplished many great things this year, established Zong as a leading payment solution for Social Gaming and plugged in many new clients and partners while refining and making our payment experience better and better. I want to take this opportunity to thank all of you, who have helped us make this year so successful. First and foremost, our clients, who have built amazing monetization platforms, viral games and rapidly expanding social networks and communities. Then, each and everyone of you who welcomed us so warmly in the Silicon Valley, opened your doors and knocked on your friends’ for us. Your help and trust means a lot to us. Finally, I want to say how privileged I am to work with so many great individuals within our company, either here, in the San Francisco Bay area, in Geneva or in Paris. They’ve worked relentlessly and passionately to build an outstanding platform, product and company.

2009 is already knocking on our door, and we still have a lot to do. Tons of new clients to launch with, a very aggressive global geographic footprint expansion and many new features we need to work hard on. But the momentum, the passion, the energy and more importantly, the market, are here to help us achieve our ambitious goals.

Dear Friends, Clients, Colleagues, and Partners, may you swipe the bleak economic outlook of the year to come with your energy and creativity and triumph in all your personal and professional endeavors. 2009, here we come!

David Marcus

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