It was the early 2000s when Toronto tech entrepreneur and avid reader Allen Lau decided he wanted to make it easier to read books on his mobile phone. (Back when the phone of choice was the Motorola Razr.) “I love to tinker with electronic devices,” says Lau.
He knew he had a good idea, and assumed he wasn’t the only one thinking about doing it. “For any good idea you can safely assume that someone in Mumbai, someone in Beijing and someone in London or Paris, is independently and without you knowing it, executing on that idea already,” Lau says.
When Lau discovered that his friend, fellow entrepreneur Ivan Yuen, was working on a complementary web-based writing application, the idea expanded. In 2006, the duo created Wattpad, a multilingual application (now an app) that connects readers with original works of fiction generated by users from around the world.
Fifteen years later, Wattpad is a multi-platform entertainment machine, publishing user-generated original online content that often finds second life in books, TV series and films. After being was acquired by South Korean internet company Naver last May, Wattpad is finding new synergy. Together, Wattpad and WEBTOON, a division of Naver that works in comics and animation, now reach more than 160 million global monthly viewers.
None of the above would have happened if Lau had gotten stuck refining his idea rather than quickly bringing it to market to test its value in real time.
“Ideas are cheap,” says Lau. “Execution really matters: get things done, iterate, test the market — and do it fast.”
Lau shares how Wattpad evolved from an idea to global phenomenon and offers insights on how to bring a “disruptive” product to market. (Hint: conventional wisdom doesn’t always apply.)
Did you have a strong idea of who Wattpad’s user would be when you started?
We didn’t have a target demographic. But one thing we knew was that we can’t just build a company for Canadians — not even just North Americans. Only 5 percent of the global population speaks English as a first language. And one thing we also recognized early on was that the internet was something really special. The internet is free, it’s global and it’s real-time. It is connecting with pretty much everyone now, but at that time it was pretty much half the population. This is very different than anything else that we’ve seen before and because of that we connected the dots and decided that we needed to create a global product that is multilingual. I think this was one of the best decisions we made. When we first launched, we had the 10 most popular languages already supported in the product.
Wattpad has grown beyond its original platform. When did book publishing and film and TV production become part of the vision or was that always in the back of your mind?
The short answer is no. When we started in 2006, we wanted to democratize reading and writing and that’s what we did. User-generated content, mobile, via the internet, in multiple languages, that was the idea. And then around 2011-2012, we already had multimillion users around the world using the product and there was an a-ha moment when we thought, wait a minute, we are not just a reading and writing company. Of course, that’s what we do but when people write fiction that piece of fiction is an intellectual property in and of itself. That’s when we started thinking of ourselves as an entertainment company.
Prior to Wattpad, you were the CTO and co-founder of Tira Wireless. How did experience inform what you did with Wattpad?
One thing that’s very difficult for the first-time entrepreneur, is expanding domain expertise. To start a company, you have to think about your go-to-market strategy. But if I’m an engineer, how would I know how to sell? A lot of people don’t really realize that you need all of those elements, maybe not on Day one, but perhaps on Day Two once you’re starting to get traction.
Did you bring in people with that expertise or is that something you had to develop yourself?
For early startups, unless you already have capital, you don’t really have a budget. The only capital that you have is your time, and you have to do everything, and you have to master that skill pretty quickly. The conventional wisdom is talk to someone and learn from them. There’s nothing wrong with that. However, I would also say that conventional wisdom is kind of useless when you’re building something that is disruptive and transformative. If you are building a paradigm-shifting company, a lot of that learning can be a hindrance because you do things very differently.
Were you concerned about messing up what you’d achieved when you began to evolve the platform to take on new forms of media?
In the day-to-day execution, you have to be focused. Even if we had the idea of making movies in 2006 when we first started, it would have been disastrous if we had added this then. Always start off with something narrow that you can take on, execute and iterate quickly so that you know it is a good idea. In the back of your mind, you always have a longer roadmap to connect to where you want to be. That roadmap itself is an iterative process. You always have to think, OK, now we have cracked this code, where else can we expand? If you look at very successful companies, one thing they have in common is that they still sell their first product and keep on expanding it in an adjacent area. I think the key word here is adjacent. There should be a strategic link between what you are building so that you can leverage what you have already built and move into that area.
Wattpad was sold to Naver in May. What does that mean for the app?
The acquisition is also very unique to what Wattpad is because we find so much synergy with Naver. It has a division called WEBTOON, which is doing exactly what Wattpad is doing with fiction except they focus on comics. They understand the business inside out and we saw this synergy. They, like Wattpad, expanded from comics to animation. Some of their top IPs have been adapted to movies or animation. The approach is very similar. Wattpad has built an IP factory that can generate IPs that is consumed by an audience of a billion people.
We are not really a publishing company or movie company, we are an IP company, we bring the top IPs into multiple formats. Regardless of what your consumption habit is — whether you want to watch movies or listen to an audiobook or read only on paper we can capture your attention. But the key to our success is offering as many formats as possible. The beauty of merging with WEBTOON specifically is the IP catalogue is doubled, our user base is more or less doubled. WEBTOON has similar audience size around the world, and now the media formats that would support this have also doubled. That’s why this is such a unique opportunity for Wattpad to accelerate our business in ways that we couldn’t possibly achieve as a standalone company before.
When you are approached by young people or someone who has an idea they want to develop, what advice do you give them?
People are not iterating fast enough. They get stuck in an idea for too long. Ideas are not the most important part. I have five friends who told me, ‘Oh, I had the Facebook idea way back in 2005!’, and my answer is ‘well, yeah, you had the idea, but Mark Zuckerberg did the execution perfectly.’ To paraphrase what Nike said, just do it. This is very unnatural to a lot of people, shockingly unnatural to a lot of people, especially for people who are used to working for larger companies. It’s a completely different mindset. The mindset change can be very difficult for the first-time entrepreneur.
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