Naver/WEBTOON + Wattpad

Last week, Naver, the South Korean internet conglomerate, announced the acquisition of Wattpad in a transaction valued at more than an estimated USD $600 million. The acquisition is expected to close in Q2 2021.

It has been an incredible roller coaster ride. So grateful that we have a fantastic outcome for everyone involved in this action-packed thriller! 

The acquisition is all about accelerating Wattpad’s growth and taking our business to the next level. It is a match made in heaven because it aligns Wattpad and Naver’s WEBTOON, a leading digital comic publisher, under the same umbrella. Wattpad’s multi-platform stories are already available across audio, book, TV, and film formats. By joining forces with WEBTOON, our combined audience has almost doubled to 160 million people overnight. In one stroke, we also gain expertise in new formats like digital comics and animation. As a result, our entertainment ecosystem has greatly expanded. The synergy is so obvious.

The last few days certainly feel like winning the Oscar. The next step is to win the real one! Yesterday was the Season 1 finale of The Wattpad Story. Today is the first episode of Season 2.

We’re not done yet! 

Sustainable Living

This blog post is sponsored by BMO ESG ETFs

The pandemic has forced many people to work from home. This can pose a challenge for people like me who are running a global business as travel is no longer possible. Well, the impact on me is less than you might think. Many people assume that I must be a globetrotter. This is anything but true. In the past few years, I have made a conscious decision to travel only when it is absolutely necessary. Even before the pandemic, airlines do not consider me as a top-tier frequent traveler anymore because I have already been using phone or video calls whenever I could to do my part to save the planet. 

However, the unintended consequence is that I am glued to my electronic devices all the time. Although this is only natural as I run a digital business, if I could, I would always try to escape from the screens and be close to nature for a few minutes during a break. 

This is one of the advantages of living in Toronto. Despite being the largest city in Canada, the large amount of green space has led to some people describing the city as a ‘city within a park.’ For us to continue to enjoy nature, I believe it is our collective responsibility to protect the environment and live a sustainable lifestyle. Not only do we have to battle with global warming, we also have to choose between planet or plastic. For example, I try to avoid single-use plastic whenever possible. The coffee that I drink is mostly fair trade, organic and it is filled in a reusable cup.

When choosing my investments, I would also like to invest my savings in a sustainable way. I believe companies should be held accountable for good management and sustainable business practices. That’s why I am excited to know that BMO has launched seven ESG (environmental, social and governance) ETFs, including the first balanced ESG ETF (ZESG) in Canada, to empower its customers to invest their savings in a sustainable way. These seven funds include:

  1. BMO Balanced ESG ETF (ZESG): The first ESG asset allocation ETF in Canada, providing a one ticket low cost solution that includes both major equity markets and fixed income securities through a balanced asset allocation of 60 per cent equity and 40 per cent fixed income exposure.
  2. BMO MSCI Global ESG Leaders Index ETF (ESGG)
  3. BMO MSCI Canada ESG Leaders Index ETF (ESGA)
  4. BMO MSCI EAFE ESG Leaders Index ETF (ESGE)
  5. BMO MSCI USA ESG Leaders Index ETF (ESGY): These ETFs deliver ESG exposure by following the best in class approach of the MSCI ESG Leaders Indexes, while capturing market returns, by targeting the top 50 per cent ESG rated equities within sectors and industries, while excluding severe controversies and industries such as alcohol, gambling, tobacco, and weapons.
  6. BMO ESG Corporate Bond Index ETF (ESGB)
  7. BMO ESG US Corporate Bond Hedged to CAD Index ETF (ESGF): These ETFs invest in investment grade corporate bond fixed income issuers that have the highest MSCI ESG Ratings.

Every individual’s situation is different and hence the risk profile is different. These seven ESG ETFs deliver a full range of investment solutions across broad markets. From Canadian to global markets, from bond to equity, BMO has it all covered, which means we should be able to find one or more ETFs that align with both our financial and social values.

The Dot-com Bubble, Sept 11, SARS and the Financial Crisis

Note: This blog post was originally shared with Wattpad employees in early April. The following is the modified version for external consumption.

Quite a few people asked me what these previous crises looked like. I am fortunate enough to experience all four crises as a leader. I say I am fortunate because these experiences will help Wattpad navigate through the rough sea this time. Yes, this COVID-19 crisis is different because of its astonishing speed and magnitude. That said, crises always have an end date. This post will tell you how it was in previous crises and the lessons learned.


Don’t panic, but we need to be vigilant. We will get through this, but I need your full cooperation.

In late 1999, I was about to leave my job at Symantec. At that time, I was a young engineering leader building Windows products. But I was fascinated by the potential of internet products. In 1999, the most trafficked internet company was Yahoo. Amazon was a startup. Google was one year old. It would take another 2 years before Wikipedia was born. 5 more years before Facebook was born. That’s how early it was.

In March 2000, I joined Brightspark Labs, an internet incubator (somewhat similar to today’s Techstars and Y-Combinator). At any given point in time, there were about 10 different internet companies under the same roof, and I would be assigned to a couple of companies at a time to help them start or scale. It was fun. It also gave me the visibility of multiple companies.

March 2000 was also the peak of the dot-com bubble. Look at the peak in 2000 in the following chart. That was me standing there! It took another 15 years before NASDAQ to reach this level again.

You might also notice that the market didn't crash overnight

You might also notice that the market didn’t crash overnight. Nasdaq lost about 80% of its value over a period of two years. When Nasdaq started to fall in April 2000, most companies actually kept hiring people. One of the Brightspark portfolio companies that I worked closely with (as their acting Head of Engineering) grew from 3 co-founders in March to over 50 people by summer. It was wild!

As the tech-laden NASDAQ continued the downward trend, investors started to panic. Funding started to dry up. All of a sudden, companies that were heavily relied on raising more capital to fund their operation discovered that the well had gone dry. When high profile companies like Webvan (the largest online grocery company, the Instacart at the time) and Excite@Home (the largest broadband internet portal and service provider in North America at the time) went bankrupt, the negative sentiment started to snowball.

Lesson 1: Never assume you can find investors to fund you.

As NASDAQ continued to fall, the negative sentiment started to spill over to other sectors. More and more consumer targeted dot-com companies started to lay off people or shut down. The aforementioned company that I worked for shrank from 50 to 3 in multiple rounds of layoffs (also within just a few short months). It was even wilder! When there was no investor and the revenue or profit couldn’t support the operation, layoffs were the only option.

Lesson 2: Revenue and profit do matter. A lot.

Initially, many of the backend focused tech companies, such as Nortel – at one point the most valuable Canadian company that employed 100,000 people – believed that they could be immune from the meltdown because they were suppliers to dot-coms but not one of the dot-coms. Wrong.

Then two planes flew into the World Trade Center in NYC on Sept 11, 2001. Good luck if you are hoping for a speedy recovery.

Lesson 3: If your customers are in trouble, you are in trouble too.

Exodus (the AWS before AWS) was another high profile causality. The following was quoted from Ben Horowitz’s The Hard Thing About Hard Things. I can’t say it better than him:

I got another sign when our largest competitor, Exodus, filed for bankruptcy on September 26, 2011. It was a truly incredible bankruptcy in that the company had been valued at $50 billion a little more than a year earlier. It was also remarkable because Exodus had raised $800 million on a “fully funded plan” just nine months earlier. An Exodus executive later joked to me: “When we drove off a cliff, we left no skid marks.” If Exodus could lose $50 billion in market capitalization and $800 million in cash that fast, I needed a backup plan.

Lesson 4: When your expenses are out of control, no one can save you. Don’t run out of cash. Just don’t. (note: this lesson may sound obvious but history is telling us that it is not that obvious to many people) 

Even Amazon was reportedly close to running out of cash.

Lesson 5: If you could stay alive during the darkest moment, you would come out on the other end much stronger because your competitors are battered and bruised.

There were numerous high profile bankruptcies in the Silicon Valley and outside of the Valley. In the Valley, the office vacancy rate was sky high – rising to 20% from 0.6% percent only 18 months earlier – because so many companies disappeared. Unemployment rate in the Valley hit 10% (note: as a comparison in Feb 2020, US unemployment rate was 3.5%). I have a friend in the Valley who spent over a year looking for a job without success. He eventually decided to change career and moved elsewhere. He was not alone.

It is worth mentioning that despite these major shocks, the collapse was mainly contained in the tech sector. Yes, the spillover caused a recession in the broader market but it was relatively brief and shallow.

Around that time, I co-founded my first company Tira Wireless within Brightspark. Fortunately, Brightspark seeded the company so we didn’t have to worry too much about fundraising initially. My Wattpad co-founder Ivan joined Tira as one of the early employees after his last employer Delano turned off the light. Delano was another high profile bankruptcy in Toronto. It employed hundreds of people at one point but it went from boom (went public in early 2000) to bust in exactly 2 years.

Anyway, Tira was nimble, scrappy and resourceful. With just a handful of people in the company (I think seven), we moved fast, found a clear opportunity in the rapidly evolving market and built something that was good enough to attract an investor in late 2002. It was really tough to raise money at the bottom of the market. Terms were crappy. But at least we could continue to build the company.

Lesson 6: Keep hustling and be nimble. Crisis and market disruption always create new opportunities. Always.

With some additional capital in the bank, we had an ambitious plan ahead of us.

Then a new virus called SARS arrived in early 2003.

Fortunately, the virus disappeared quickly. It was mostly contained in Asia. That said, the recovery momentum was slowed substantially but there was no major shock. The US didn’t even enter a recession.

Between 2004 to 2007, a new crop of internet companies – collectively called Web 2.0 companies – started to emerge. These companies include many household names such as YouTube and Facebook. Of course, Wattpad started during this era as well. It was a great time to start a company because the competition wasn’t as fierce. Tech investors became active again. Tech experienced a Renaissance. Towards the end of this era, great and not-so-great companies all get funded. Valuation became a bit out of control (in the last decade’s standard). By the end of 2007 the unemployment rate in the Valley fell back to the dot-com bubble level.

At the same time, trouble signs began to emerge in the financial sector. Multiple financial giants faced liquidity problems. Lehman Brothers collapsed in Sept 2008 and the world officially entered the Great Recession. Tech unemployment rate went up to the post-dot-com record level as many tech companies went through rounds of layoffs or bankruptcies. Consider this as the dot-com bubble 2.0. Fortunately, other ailing financial giants were all bailed out by the governments. There was a spill over to many other sectors, like auto manufacturing, which the governments promptly bailed out as well. Thanks to the bailouts, the 18-month recession was deep but given the magnitude of the problem, it wasn’t painfully long. Around that time, Apple App Store emerged. Together with Android, the smartphone era officially began. After bootstrapping Wattpad for more than three years, we raised our first round of seed funding towards the end of 2009. 2009 also marked the beginning of the longest bull run of tech and the broader market in history until it ended abruptly last month.

This COVID-19 crisis is different in so many ways. It arrived at astonishing speed – in early March most of the world was still business as usual. Four weeks later, more than half the world is now locked down. COVID-19 is a pandemic while SARS was not. The magnitude of this current crisis is also unprecedented – it is a global, extremely severe, cross-sector recession. The following two charts clearly illustrate the magnitude of the fallout. According to NY Times, the weekly unemployment number was only capped at 6.6 million because the unemployment offices have been overwhelmed by the volume and couldn’t keep up! BTW, I now know the negative impact can be more than 100%. Please read the fine print on the second chart. I never knew it’s even mathematically possible!

6 million because the unemployment offices have been overwhelmed by the volume and couldn't keep up!
Based on these numbers, it is not wrong to say:

Based on these numbers, it is not wrong to say:

dot-com bubble + Sept 11 + SAR + the Great Recession = COVID-19 x 10%

Therefore, we have to assume that this recession is going to be prolonged and severe. If it bounced back quickly, that’s great! But there is a good chance that it is not going to be a speedy recovery.

When things look black, there’s always a silver lining that we can learn from the survivors and the casualties. The former has cash. The latter ran out of cash. As simple as that.

And there are only two ways to improve the cash position: earn more and spend less. And we have to play both offense (i.e. seize the new opportunities) and defense (i.e. conserve cash) simultaneously.

To recap: these are the six lessons I learned from previous crises that are also applicable now:

Lesson 1: Never assume you can find investors to fund you.

Lesson 2: Revenue and profit do matter. A lot.

Lesson 3: If your customers are in trouble, you are in trouble too.

Lesson 4: When your expenses are out of control, no one can save you. Don’t run out of cash. Just don’t.

Lesson 5: If you could stay alive during the darkest moment, you would come out on the other end much stronger because your competitors are battered and bruised.

Lesson 6: Keep hustling and be nimble. Crisis and market disruption always create new opportunities. Always.

Allow me to drive home the point one more time: earn more, spend less and we will survive the storm stronger than ever.

Wear a Mask to Help Keep EVERYONE Safe

I took this picture on Feb 1 when I was flying back from Paris to Toronto.

Feb 1 was:

– 3 weeks after the first death in Wuhan was (officially) reported

– 2 weeks after the second death was (officially) reported

– 1 week after Hubei was locked down and all major entertainment venues in China, including Shanghai Disneyland and the Great Wall, were closed

– 1 day after the death toll increased to 200; Russia, Spain, Sweden and the United Kingdom confirmed their first cases of the virus.

During the SARS outbreak in 2003, Toronto was one of the hardest-hit cities. The memory is still fresh in my mind. Seeing how quickly the virus spread exponentially, it was very clear to me that this new virus, now called COVID-19, is another SARS except that it spreads even faster.

Therefore, I decided to wear my mask on the 8-hour flight because I didn’t want to take any chance. There were probably 10 people on this flight who did the same. Some people gave me a weird look (yes, I caught that) but I don’t really care about the stigma.

Since then, I have been wearing a mask whenever I was in a crowded space. Since the lockdown, when I really needed to go out (no more than twice), I have been wearing a mask.

Although WHO still stands by its recommendation to not wear masks if you are not sick, it really makes no sense to me. I understand that the surgical mask that I am wearing does not seal (and hence there will be leakage). However, even if it could only capture 10% of the virus-carrying particles, it would still reduce the probability of catching the virus (slightly) – in either direction (i.e. getting infected or infecting other people if I am asymptomatic).

In addition, even if wearing a mask would not help at all (I doubt), it couldn’t possibly make it worse. People might give you a weird look. Other than that, there is absolutely no downside.

Assuming using hand sanitizer, not touching my face, etc. could each reduce another 10%, all in a sudden the probability of getting infection could be greatly reduced because they all add up. Every little bit helps.

This is very similar to funnel conversion in running an online business. To improve the purchase conversion rate, one needs to improve on all parts of the funnel – from top (e.g. awareness) to bottom (e.g. intent and transact). We might only get 2% here and 4% there. However, if we could find ~10 things like that, the conversion rate could easily double and the curve would look much steeper (rather than looking flattened).

So, for your own and other people’s safety, please wear a mask if you could. It lowers the conversion rate and flattens the curve.

P.S. I know it is difficult to buy masks now, and if you could, please don’t hoard. I am lucky that our family has always had a box of masks in the house even before the crisis. But even a homemade one is better than nothing. Remember, there is no downside.

Goodbye 2010s, Hello 2020s

As we enter the final hours of the 2010s, to reflect and look forward I would like to share a couple of very contrasting collages. One was taken this year. The other was taken exactly 10 years ago.

Wattpad grew ~100x in virtually every single dimension – number of employees, the size of the office, number of users, number of stories shared but more importantly the positive impact on the Wattpad communities, our employees, our city and millions of lives we touched.

Two Small Fish Ventures grew from a side project to a VC firm with tens of rocket ships in the portfolio.

Most importantly, although the size of my family has not grown 100x (thank God!), my two little girls + an amazing lady has become two amazing young ladies + an even more amazing lady. They are the most influential on the most influential. They are the best and unquantifiable.

Look forward to 100x our impact on 100x more people in the 2020s!

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.  

Announcing Two Small Fish Ventures Fund II

Earlier today Eva announced on Two Small Fish Ventures’ blog that she has raised $9 million in the first close of TSFV’s Fund II. It is exciting to see her transformation from an entrepreneur to an angel investor and now a VC.

TSFV’s investment thesis remains the same. Fund II will continue to invest globally in early-stage tech companies with strong network effects. The goal is to help nurture them into global tech giants. She has made investments from the new fund already, including Printify and several more about to close.

There is no doubt Canada’s tech ecosystem is thriving. Access to capital is no longer the biggest roadblock for startup successes as we now have a lot of great investors in Canada. That being said, there is still one big gap in the Canadian venture capital ecosystem: very few venture funds are actually co-founded by internet entrepreneurs and product creators who have massive successes. In contrast, in Silicon Valley, there are numerous successful internet entrepreneurs turned VCs. They can recycle their experience and knowledge of building and scaling a product to reach millions of users. This is exactly what we would like to do and why TSFV is special: we will recycle our unique knowledge in building and scaling internet-scale companies to help other entrepreneurs to be successful.

It is also worth noting that TSFV is not just providing capital. Through Creator Circle, a group of successful entrepreneurs and product creators who are investors in Fund II, we are providing a mini ecosystem of like-minded, entrepreneurial people who are also recycling their invaluable expertise to help TSFV portfolio companies achieve escape velocity. When TSFV invests in a company, all these creators are part of the team because the success of the company directly affects their investment. They have skin in the game.

Expect more announcements in the coming months as the final target for Fund II is $15 million. There will also be more investment announcements as TSFV can now write more cheques (and bigger cheques!) with follow on investments too.

P.S. You can read Eva’s announcement here.

How to make meetings suck less

About a year ago I read an article about Jeff Bezos’ approach to meetings at Amazon that really resonated with me. Specifically, there were three things that make meetings more effective and efficient that really stood out to me.

  1. The Two-Pizza Team Rule – According to Jeff Bezos, Amazon tries to “create teams that are no larger than can be fed by two pizzas”
  2. No PowerPoint – “No PowerPoints are used inside of Amazon,” Bezos proudly declares. “Somebody for the meeting has prepared a six-page…narratively structured memo. It has real sentences, and topic sentences, and verbs, and nouns–it’s not just bullet points.”
  3. Start with Silence – “We read those memos, silently, during the meeting,” says Bezos. “It’s like a study hall. Everybody sits around the table, and we read silently, for usually about half an hour, however long it takes us to read the document. And then we discuss it.”

Like Bezos, I’m a big believer in small group meetings. Based on my experience, it’s too difficult to have a conversation that’s relevant to most if there are more than eight people in the room.

I don’t necessarily 100% agree with no PowerPoint, though. Yes, there are times when having a narrative works better, but in some cases, bullet points can be more effective. One can’t replace the other. Use the right tool at the right time for the right people.

What I found really interesting is the study hall format. Since learning about, I’ve tried it out in multiple meetings by allocating the first 5-10 minutes (not 30 minutes as Bezos suggests) so everyone can go through the document or deck and add their questions and comments in advance of the discussion. Here’s what I observed:

The Pros

  • It ensures everyone has read the materials and the context is fresh in people’s mind (and yes, I know meeting organizers can always send materials in advance as pre-reading, but people still have to carve out time in their schedule to get it done. This is especially difficult for people who attend lots of back-to-back meetings).
  • It provides dedicated time for pre-reading that is already built into the meeting (similar to the point above)
  • It helps reduce the amount of context switching so the quality of the conversation goes up noticeably because the context is so fresh in everyone’s mind.
  • The quality of the questions improves because people don’t have to multi-task in the meeting, i.e. listen, read, absorb AND ask at the same time.

The Cons

  • It means less time to talk, especially when meetings are only 30 minutes long (but IMO, we get this time back in a way because we might have wasted those 5-10 minutes getting attendees up to speed anyway).

As you can tell, I become a fan of the study hall format, and while I recognize it doesn’t work for every type of meeting, it’s helpful when teams need to be on the same page with specific background information. That’s when spending 5-10 minutes to make sure everyone is “in the zone” is well worth it.

Incorporating the Study Hall format to your next meeting gives you time: Time for understanding; Time for extended reflection; Time for focused thinking; All of which leads to better and more effective meetings.