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For nearly a decade, Wattpad focused on community growth over monetization. The strategy worked perfectly and led Wattpad to dominate the storytelling world including books, TV, and movies. Looking back on the journey post-acquisition, founder Allen Lau shared the strategy Wattpad used to gain its first million users.
- When facing a chicken and egg problem, look for solutions that build community first.
- Don’t assume the only market worth tackling is the English-speaking market.
- Hop on global macro trends whenever you can.
“I can’t thank Tequity enough for their support and guidance through this life-changing process – we definitely picked the right team!”
Anyone following tech media knows a bit about Wattpad.
The storytelling company grew from a Motorola RAZR app in 2006 to counting 94 million readers on its platforms across desktop, tablet, and smartphones. Stories started on Wattpad have crossed the New York Times bestseller list and topped the Netflix charts, and successes like these led to a $750 CAD million exit to South Korean tech company Naver.
It’s easy to look back on Wattpad’s success and say it was inevitable. But founder Allen Lau admitted he wasn’t thinking about long term strategy at the beginning. Speaking with SAAS NORTH, Allen shared the story of the early days of Wattpad, specifically how the platform gained its first million (and later its first 20 million) users.
SOLVING THE CHICKEN-AND-EGG PROBLEM
In 2006, Allen Lau founded Wattpad as a mobile reading app for the Motorola RAZR. He thought about inviting authors to write on the platform as well, but that put him against a chicken-and-egg startup problem.
“We realized writers wouldn’t join the platform with no audience, but no readers would join the platform with no content to read,” said Allen.
Allen solved the chicken-and-egg problem with a classic strategy. Literally.
Instead of inviting writers to the platform first, he re-posted classic novels to Wattpad that were out of copyright. That move got readers interested in Wattpad for its own merit, since reading on mobile was just beginning to take off and there were few other ways to do it (for context: Amazon’s Kindle came out in 2007 and Kobo’s e-reader came out in 2010).
It wasn’t until 2008 that Wattpad started inviting authors to publish new stories on the platform, since then it could promise new writers a decent audience of readers.
GLOBAL FROM THE GET-GO
A common piece of startup advice is to double down on one market – usually the US and English speaking markets. Allen of course put a lot of English-language books on Wattpad, but he balked at the idea that he should focus exclusively on native English speakers.
“People who speak English as a first language account for a very small fraction of the world’s population,” said Allen.
Adding books in other languages helped Wattpad grow its reader base internationally, which opened up to significantly more viral growth effects. Since the platform didn’t need to offer one-on-one customer support, only needing translations of basic platform copy allowed them to move quickly.
Different languages on the platform didn’t just help gain more users, it also further helped the chicken-and-egg problem, since Allen could pull from books around the world versus just the English cannon.
TREND CATCHING AND COMMUNITY
Allen said a third key part of Wattpad’s early growth was jumping onto technology trends. A big bet Wattpad made was that people wanted to read on mobile devices. So when smartphones came around, being ready for them was critical.
As a result, Wattpad has the honour of having apps in both the first iPhone App store release and the first Android app store (now called the Google Play store). While the company didn’t see tons of downloads on day one, being present in app stores helped them build a loyal reader base across multiple platforms and devices as mobile and smartphone adoption continued to grow.
The trend-hopping and global approach also informed Wattpad’s community building tactics. At first, the company focused on building features that allowed readers to connect over books they loved, on the new smartphones they preferred to use. Later on, the company added features to make it easy for writers to connect with their readers, and vice versa.
COMMUNITY FIRST, MONETIZATION SECOND
Allen and the Wattpad team doubled, tripled, and quadrupled down on these three pillars from 2006 to 2014. By that time, the platform had grown not just to one million users but to over 20 million users.
That’s when Wattpad raised a $46 million Series C to focus on monetization. In the following year, the company launched multiple initiatives, for example:
Paywalled content for writers to earn directly.
Wattpad Studios to turn written works into TV shows and movies.
Wattpad Books to enter the traditional book publishing space with Wattpad originals.
“It looks like we started monetization late, but that was intentional,” said Allen. “We’re in a winner-take-all market and we needed to be on top of the podium in terms of community size before we started focusing on how to monetize.”
These monetization strategies also acted as writer and reader attraction strategies. Since writers could make money – or even make it to Hollywood – through Wattpad, they joined the platform, bringing their loyal followers from other social media platforms with them.
Looking back, Allen said everything they did was about giving themselves optionality to make a lot more money in the future versus trying to monetize early for the sake of a dollar.
“In the end, it’s all about optionality,” said Allen. When you have a big, growing community, you can find lots of options to monetize.”