Founders need to ‘find the GAP and try to ACT,’ says 9GAG’s Ray Chan
Be ready for those ‘black swan’ moments: Rotten Tomatoes’ Stephen Wang
THE second day of Echelon on June 11, the annual gathering of startup ecosystem players, including entrepreneurs and investors, began with some tips and heartfelt lessons learnt by two entrepreneurs who’ve had a taste of both success and failure.
Taking the stage first was Ray Chan (pic), cofounder of 9GAG Inc, a popular social media website where people upload and share user-generated images, videos, and GIFs.
Founded in 2008 and based in Hong Kong, the site receives 67 million unique global monthly website visitors and currently boasts over 13 million Facebook ‘likes’, 2.6 million followers on Twitter and 3.6 million on Instagram.
In July 2012, 9GAG raised an additional US$2.8 million in funding from Silicon Valley-based venture capital firms that included True Ventures and Greycroft Partners. It is also a 500 Startups and Y-Combinator alumnus.
Chan said that the funds raised helped the 9GAG team alleviate the pressure of revenue generation in order to focus on the core of its platform and offering.
“I think we’re doing okay; we make an okay amount. I am Chinese so I try to be humble,” he quipped to an amused audience.
He confessed that while his talk was entitled 9GAG’s Secret Sauce to Millions [of] Visitors and Billions [of] Pageviews, it was merely to serve as attendance bait, and in truth, there is no ‘secret formula’ to success.
“People think we’re like Coca-Cola, and that there’s some secret formula we’ve got for our high traffic and user base, but there isn’t,” he said.
Instead, he shared with attendees some basic principles to follow for any entrepreneur seeking to start his or her own media or content company.
In a nutshell, founders need to ‘find the G.A.P. and try to A.C.T.’ in the quest for success. He explained it thus:
“You must have a goal, something you want to achieve, as different goals translate to different strategies. Also, people don’t join your startup because of your looks, they join because they like the goals and you pay them well.”
“You must understand the taste of the target audience and users as they are the most important component to run a company. It is very crucial for companies to identify the preferences.”
“There are media companies everywhere these days. The key is to understand the platform you are on and its quirks, be it Wordpress or Twitter, as it affects audience growth.”
After that has been defined and decided upon, the next stage according to Chan, must be:
“This is repeated twice because that’s what matters. No matter what kind of company you are, your users are the most important, not your investors. With no users, investors don’t care.”
“It’s the thing most people don’t understand. Why would people trust you over other sites to deliver good content? The key is to be consistent in delivering your content to your users.”
“We don’t think of ourselves as a media company, but rather as a tech company that works on media. So it’s important to continually test your products and experiment, to understand how users use your apps or website in order to create or curate better content to keep and grow your following”
Chan also said that he is currently the only editor for 9GAG TV, which was launched in June 2013, with the hunt for fresh blood is still on-going.
“We believe that you have to work in the position first to find out what kind of 9gagger to hire for it,” he said.
Learning from others’ mistakes
Next to take the Echelon stage was Stephen Wang (pic), cofounder and former chief technology officer of Rotten Tomatoes and Alivenotdead.com.
Film review aggregate site Rotten Tomatoes was launched in 1998 and acquired by IGN Entertainment for an undisclosed sum in June 2004.
Alivenotdead is a website for filmmakers, musicians, and other artistes to collaborate, receive exposure, network, and interact with fans. It was launched in 2007 and acquired by social media group mig33 in February this year.
Wang told attendees that instead of talking about his successes, he would rather focus on his failures and mistakes that his fellow entrepreneurs can learn from and avoid.
Starting with the topic of cofounders, he shared that he lost two of his cofounders for a design company during the first month of operations. Cofounders also dropped out from the Rotten Tomatoes venture before he found new ones, and with Alivenotdead, one cofounder dropped out due to health issues.
“Losing cofounders happens, things happen in life and can be very traumatic for a startup, even meaning the end of the venture,” said Wang.
“The question I advise cofounders to ask themselves is, if my cofounders leave halfway through, would I still continue? Many times, you start a project because you want to work with certain people.
“Then you must ask, am I excited enough about the idea to continue working on it on my own?” he said.
Wang said that while investors are important at certain stages of a company’s growth, one could also find potential cofounders in engaged angel investors. The most important aspect with cofounders is the need for mutual respect for their respective roles in the startup.
Wang also highlighted the need to test for resilience, Wang sharing that for Rotten Tomatoes, the dotcom crash of 2000 shut down one of its biggest revenue streams – advertising.
With almost no companies willing to part with their money for online advertising, it took a long time for the team to recover and shift the business model towards merchandising and affiliate programmes, which enabled them to ride out the dotcom bubble burst.
When China closed off access to foreign websites such as Alivenotdead, a significant portion of traffic and audience growth was lost. Wang admitted that the team was too caught up in trying to regain lost traffic and revenue instead of focusing on alternative solutions.
“You need to test for resilience, for those ‘black swan’ moments because the further along you go, you will hit them – either you lose channels for revenue or stumble in your growth path. If you had to throw your business plan out the window, what else would you do to generate revenue?
“What if your current business model ceased to exist? You should be planning for these situations in advance,” he added.
On the topic of when the right time is for an exit, Wang admitted that despite having given it much thought, he could not find a satisfactory answer.
“I don't think there’s right answer to that question. In the case of Rotten Tomatoes, had we sold later, we could have gotten a much higher amount; while in the case of Alivenotdead, we probably exited too late.
“That being said, I don’t think we would have been able to sell in the first place if we did not put in the prep work required and that takes a long time.
“Someone from the team needs to be out there representing the company, updating the press about new developments, and meeting potential investors – not to mention building new features at a constant rate within the company – and that’s just the prep work,” he added.
Wang noted that when it comes time for the real decision to be made, it all boils down to the internal team’s goals or requirements. In his case, the decision was made to exit due to a lifestyle choice.
In closing, Wang said that the best advice he ever received, and something he still keeps close to his heart, came during a low point of Alivenotdead’s journey, and it came from actor Jet Li.
Wang was invited to visit Li on set while he was filming a movie; Li was a supporter and fan of what the team was trying to achieve – a mutual feeling, said Wang.
He shared with Li that the company was not doing so well, with little revenue and have had to let go of employees.
“He said to me, life is just a circle, you’re at the bottom of the cycle right now but if you wait long enough, the circle is going to flip and you’ll be on top again,” Wang said.
Echelon, organised by Singapore-based regional media outfit e27, was held in the island-republic from June 10-11. It attracted more than 1,500 participants including 300 investors, 66 speakers and 120 startups.
The two-day conference will be followed by two days of workshops starting today.
Previous Instalment: Fifth Echelon off to a great start
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