Allen Lau: Leadership and Entrepreneurship

Chapter 3: Innovation & Entrepreneurship

It was Lau's strategic vision to put the launch of the app on hold that has played a large factor in its success. Lau realised that the app and the technology involved was too advanced to be supported by the cell phones of the time. Instead of compromising his product, he decided to wait it out until the perfect time. He took part time jobs to support himself and his family in the interim while working to establish the company and tweak the app.

Lau and Yeun launched the app at just the right time. The number of people who use cell phones have grown from 1 billion to 3.4 billion between 2003 and 2012, and the fastest growing segment in the booming mobile economy is the app sector. At current, apps rake in a whopping $205 billion per year and this number is expected to increase to over $576 billion p/year by 2020. It seems as though the app sector is THE place for start-up companies to establish themselves (Landau, 2014).

When you click on the orange Wattpad app on your smartphone, you immediately have access to millions of stories at your fingertips. These stories are organised by genre - fanfiction, romance, horror, teen fiction etc. - and the app uses an algorithm to track what you are reading so that it can make similar story recommendations. The app keeps a list of stories that have recently gone viral as well as lets users follower each other, add stories to their libraries, archive stories they've finished reading as well as comment on stories down to individual paragraphs (Landau, 2014).

Wattpad filled a gap in the market by democratising the book industry. Wattpad allows basically anyone to publish their stories on the app and by creating such an environment the company has been able to capture the three core values of the digital age: self-expression, connectivity and exploration.

Lau had three goals for the company: simplicity, growth and monetisation. The company has been able to achieve the first two but monetizing a free app is proving to be tricky. The app uses traditional banner ads but these cannot solely provide a primary source of income. The company is now focusing on using native advertising by brand-sponsored posts, profiles and campaigns. For example, Wattpad secured a native advertising deal with the makers of the hit novel-to-movie The Fault in our Stars. Wattpad commissioned influential writers on the app to create original stories that followed a similar theme to the movie. When readers clicked on the story to read, a full-page movie poster popped up. The poster received over 25 million impressions over a period of 6 weeks. They had success running a similar campaign for the movie, The Purge: Anarchy (Landau, 2015).

The fact that the company isn't generating profit has not put off investors. Wattpad has managed to secure $70 million in investments recently in order to expand the company. One investor, Albert Wegner, sees huge revenue potential for Wattpad. He says, "reading and writing are deeply fundamental desires, and a platform that lets people do that and lets people get feedback and appreciation from others seems exactly like the kind of thing the Internet was made for" (Landau, 2014). Lau also picks his investors wisely. One of the investors, Union Square Ventures has invested in online platforms such as Twitter and foursquare and can offer great advice about running a platform that is concerned with the active engagement of its users (Sprouter, 2012).