Everything Starts Small

It’s a situation founders know well: the agonizing wait to see if the product/service they’ve launched will take off. The reality is, it takes months and even years to find product-market-fit. And once that happens, the struggle doesn’t really end because there’s always another, more complex problem to solve. It can begin with product-market-fit then morph into customer/user acquisition and engagement and then shift to monetization. For entrepreneurs, building a business can feel like a never-ending cycle of wait-and-see. 

When we launched Wattpad 13 years ago, my co-founder Ivan and I immediately started monetizing with ads. And when I say we “immediately monetized” the site, I really mean we earned $2 in monthly ad revenue a full year later. A minuscule amount. 

When we first launched our Android app, we saw about 10 downloads in the first month. Even in 2011 when Android really started to take off our download numbers were still puny. 

Today, we see more than 60,000 Android users sign up every day and half of our daily usage comes from Android users. Our monthly advertising revenue is in the hundreds of thousands of dollars. We’re no longer talking about trivial amounts. It’s been a long road that had to start somewhere. 

‘Everything starts small’ is a valuable mantra for any entrepreneur. Look at Spotify: When it first launched in the US in 2010 it had 100,000 paid subscribers. Today, Spotify’s number of paid subscribers is about to cross the 100 million mark.

Not too long ago, we launched Paid Stories and we also introduced a subscription model called Premium at Wattpad. The numbers are still small. But they won’t stay that way forever (especially since we’ve rolled out these programs globally). As long as we keep improving, keep optimizing and keep promoting — basically, if we continue to hustle and grind as all great entrepreneurs do — the numbers will go up.

But we can’t expect a silver bullet. No single feature or no single promo or no single country launch will 10x these numbers overnight. While it’s not impossible to find a 10x growth hack, the reality is that it’s probably better to find 100 little things to grow 10%.  

My fellow entrepreneurs, please remember: Tomorrow will be better than today. The day after tomorrow will be better than tomorrow. Everything starts small.

Strategic Partners Turn Your Vision Into Reality Faster Than You Can

A few months ago, Wattpad announced a partnership with Anvil Publishing in the Philippines. Together, we’re launching Bliss Books, a new Young Adult imprint that’ll bring some of the biggest Wattpad stories and authors to bookshelves across the country. 

The news means Wattpad can realize the vision I laid out in the Master Plan much, much faster. But really, speed is just one of the values a strategic partner brings to the table.

Anvil also has deeper insights into local purchasing habits and consumer behaviour than we do. The first part of the Master Plan is to “Discover more great stories,” and we do this by leveraging our Story DNA machine learning technology and a passionate community to find unique voices and amazing stories that are validated in Tagalog. With their local insights, Anvil can corroborate our insights using their local knowledge to guarantee a successful adaptation. 

The best strategic partners also have a reputation you can piggy-back off of. Another element of the Master Plan is ‘Turn these stories into great movies, TV shows, print books, etc.,” Anvil has a reputation for publishing high-quality books, and that’s exactly what we want to do. 

Anvil is the publishing arm of the National Book Store with hundreds of bookstores. It’s established presence means we – through NBS – have the ability to distribute Wattpad books to every practically every part of the country tying into another key part of the Master Plan to “Distribute and monetize content on and off Wattpad and earn money for storytellers.” 

The Philippines is one of Wattpad’s largest markets and a very important one since its home to some of our most passionate users. Plus, when you factor in the expertise and reach of Anvil, it was an easy decision to partner with this local company who can help us continue to celebrate and reward Filipino authors and their fans. 

Entrepreneurs: if you have the ability to form a partnership with another complementary company, seize it. The strategic upside is great and may help you realize your vision faster than you ever could alone.  

Your iteration rate is the key to finding product-market fit for your app

For any entrepreneur launching an app finding product-market fit is a lot like finding the Golden Ticket; it’s rare, but when it happens it’s life-changing.

Unlike an enterprise business, when you build a consumer app your end-user can’t easily tell you what they want (vs. enterprise apps that are focused on solving a known problem or a pain point for clients). Think about it this way: Before the iPhone launched, no consumer research would point out the need for a touchscreen, keyboardless device. Before Snapchat, no consumer would say they wanted the ability to send ephemeral messages.

Consumers aren’t able to tell you what they want; this makes consumer products a shot in the dark. There is no guarantee if or when product-market fit can be found. It’s usually a long journey of continuous iteration.

And ongoing iteration is what gets you to product-market fit. Each iteration gives you one extra at-bat. Hitting a home run is easy if you can strike out 10o times instead of 3. Y Combinator’s Sam Altman said it best in this tweet:

Screen Shot 2019-04-01 at 4.14.45 PM

Finding product-market fit is hard. Look at how many consumer products Facebook and Google shut down even with their massive resources (remember FB Paper, FB Groups app, Google+ app?) Massive resources can help, but it’s not the most critical.

In the early days of Wattpad, despite only having a handful of employees, every day the product looked a bit different. We implemented new concepts in the morning, checked in the afternoon, measured overnight and killed it the next morning if it didn’t work out. That’s how we found product-market fit in many things. And that’s how we left our competitors in the dust.

Although finding product-market fit is freaking hard, it is also very fun and rewarding once you have figured it out.

Keep on iterating!

It’s Your Decision, Don’t Dodge

When you work at a startup, seeking advice and gaining buy-in from the broader team can help you move faster … until it becomes a crutch.

Recently, I bumped into an entrepreneur I invested in. He’s making some changes to the direction of his company and after explaining them to me I pointed out some of the potential issues. He immediately asked me: “So, do you want me to revert to the old plan?”

It was the wrong question to ask.

I explained to him that it doesn’t matter what I want. As CEO with all the context, he’s the only one who can make the decision. As an investor, I’m not thinking about his business 24/7 but he is. It’s his company and it’s his decision what he does with it (and only his decision). Investors should share their experiences and opinions but they shouldn’t make decisions that affect the business.

Not long after, I had an investor friend contact me about one of his portfolio companies that’s going through a pretty rough patch. My friend said: “The CEO now blames the board of directors for making the wrong decision.” My ears perked up. This was a red flag and I told my friend as much.

A company’s board of directors only has one decision to make: Hire and fire the CEO. Inexperienced CEOs have a tendency to defer difficult decisions to the board or even other people in the company. It’s not uncommon to hear a newbie (or unconfident) CEO say something like “My recommendation to the board is …” This isn’t helpful. All this does is enable inexperienced board members to jump in and make decisions out of context. It’s tragic really.

Obviously, I’m not suggesting that there is no value to be gained from consulting with your board: Every CEO has blind spots and can benefit from another perspective. But in the end, what happens in the business is always the CEOs call.

And it doesn’t always have to be the CEO who holds the ultimate decision making ability (nor should it). I remember speaking with a senior leader at Wattpad and the person said: “I would advise we do this …” I quickly reminded this person that they are the head of the business unit and the only person accountable for it. It was an important decision with huge implications across the company, so of course, I expected this person would engage with the broader team to think through the different scenarios and make sure all the bases were covered, but at the end of the day, the person was the leader, not an advisor.

These three conversations illustrate one critical point. Whether you’re a co-founder, CEO, technical lead, department manager or even individual contributor, you are the presumed expert in your role so don’t dodge making tough decisions. Remember: You are not an advisor to your own job.

Don’t Be a Parasite If You Want To Be A Disruptor

I spoke with an entrepreneur whose company is building a new, disruptive product for the education sector. One of the challenges he’s facing is that none of the company’s co-founders have worked in the education sector before. He wondered if he should hire someone with some relevant experience.

Another entrepreneur friend of mine is building a tool that is catered to the public sector. The company is struggling to scale as a business. The sales process is too slow. The product is becoming too specific for one sector.

In both cases when these entrepreneurs asked for my advice, I told them: Don’t be a parasite if you want to be a disruptor.

There are so many verticals out there that still have not been fully transformed by the Internet — education, public sector, book publishing, the list goes one. But it’s extremely hard to transform any industry if you have a lot of dependencies with the old systems. You can’t think out of the box. Your sales cycle is too long. And often you end up with a product or a service that is incremental at best rather than revolutionary.

Now, there’s nothing wrong with that. In fact, a lot of people have built great businesses by providing incremental solutions like consulting services to the government. But, if you want to build something truly transformative and net-native, then you have to stay as far away from the traditional systems as possible and draw closer to your end users or customers.

If you want to create something truly game-changing and be a disruptor, you can’t begin the journey as a parasite.

Embrace tension to move even faster

As a startup scales, it’s natural for tension to creep up among different teams who are working on disparate objectives. Either of these conversations sound familiar?

Showing users more ads can help generate more revenue, but it could also hurt engagement. Do we optimize for revenue or engagement?

We have a limited budget. If we spend it on A, B, and C we won’t be able to pay for X, Y, Z. What should we choose?

The best way entrepreneurs can embrace and then ease tension among their teams is to establish a set of principles. Principles can help teams avoid indecision and move fast.

In the example above about serving ads at the expense of user engagement for instance, if the team has previously established that ad experiments can’t impact engagement by more than X%, it becomes easier for them to test different combinations of ads to drive the most revenue without negatively impacting engagement.

Establishing principles streamlines decision making, eliminates unnecessary meetings and propels the company forward. Everyone knows what to do and understands how much (or how little) leeway the team has.

Of course, there will be times when you may not have a principle to fall back on. That’s when the teams representing the conflicting priorities need to escalate the matter further and involve an arbitrator. Most times decisions are reversible and having an arbitrator can resolve issues quickly. In the world of startups, a quick decision always trumps a slow decision (or worse, no decision at all).  

Tension is natural and a sign your company is growing. But as your business grows and becomes more complex, decisions aren’t as straightforward as they used to. Creating a set of ground rules that inform your team’s priorities and outcomes can help avoid unnecessary confusion and conflict.