Allen Lau, Co-founder & CEO of Wattpad, on creative communities and new business models for creativity

Below is a transcript of our conversation with Allen Lau, the co-founder and CEO of Wattpad. You can also listen to the podcast version, or watch the conversation on YouTube!

Li: 

• Welcome to Means of Creation, a weekly show where we discuss the passion economy, the creator economy, and the future of work. I'm your host Li along with my co-host Nathan, and today we're joined by Allen Lau, who is the cofounder and CEO of Wattpad, which is a social storytelling platform that enables writers to publish original stories spanning genres like romance, fantasy, young adult, mystery, historical fiction, fanfiction, poetry, and more. Wattpad also leverages the data from its community of 90 million users to turn those stories into books, films and TV shows through Wattpad Studios and Wattpad books. The company was founded in 2006, and was just acquired for $600 million by Naver, which is a South Korean internet conglomerate that owns the UGC publishing platform Webtoon. I'm sure we'll talk about that later in this conversation. And prior to being acquired Wattpad had raised a total of about $117 million in VC funding. And today, Wattpad is based in Toronto, and Allen is a vocal advocate of Canada's tech scene. Thanks so much Allen, for being here today. 
• I want to start off with your sort of origin story and founding story behind Wattpad. So you started the company in 2006. The Internet looked really different back then. It was pre-mobil, pre-smartphones, we still had dial-up internet. So tell us about the inspiration and the founding story behind why you started this company. 

Allen:    

• At that time, maybe half the world, maybe not even half, but broadband internet was becoming a thing. I got my first broadband in 2003 and it was all quite new. With mobile internet, I was able to download 1 megabyte costing $10. Anyway, back to the founding story. The original idea actually started in 2002. I was the CTO and cofounder of my first company called Tira Wireless—a mobile gaming publisher, which means a very different thing today compared to almost 20 years ago.
• I was very passionate about the mobile side, I love gadgets, I still love gaming on occasion, but it's not truly my passion. In my spare time, I love to read. And that's why I had this idea. Perhaps I could combine my profession and my passion, turn that into a mobile reading app. And I did. 

Li: 

• This is like the Kindle before the Kindle existed.

Allen: 

• Yeah, it was way before. I didn't pursue the idea. And then fast forward to 2006 the most popular phone at that time was the flip phone. Now, instead of two lines of text, I could read multiple lines at a time. 

Nathan:

• Luxurious! 

Allen:

• Exactly. A luxurious version, the market is ready for me! So I stuck to that idea. And while I was busy coding in the basement, now on one hand, cofounder, Ivan, he, instant messaged me, and sent me a link. And that's what he said, Hey, I'm working on a new product idea. Here's the link, can you check it out and give me some feedback? I clicked on that thing, and guess what I saw, he was also working on a mobile reading app. He still is a very good friend of mine, and we’ve known each other for many years. And I could not believe we were both independently working on the same thing at the same time.
• Ivan is one of the smartest people I have ever met. So if he thinks it's a good idea,  I should pursue this idea. I would love to say the rest is history. But of course, it’s been a very interesting rollercoaster ride. It’s not always smooth sailing. 

Nathan: 

• Totally. I'm curious: in those early days, what kind of writing did you envision people would use your platform to publish? Were you thinking about kind of storytelling and creativity? Were you thinking about nonfiction or blogging or personal updates? I'm just curious, what was the intended use? 

Allen:

• I was a writer. I am a writer. even though I write a lot more these days. The reason I started the company was because I love to read. And I can speak for Ivan as well. We both love to read. Look at my media consumption. video is a very small part. Audio is a very small part. And same for  So that's why we started the company. And I have to say writing was almost an afterthought, at least initially. So we were not too prescriptive in terms of the kinds of writing. We were just trying to focus on the written word, test what we chose, and I would have to say, we think more about content than the writers or creators in the beginning.

Nathan:

• Truly horizontal.

Allen:  

• Totally horizontal. Over time, we realized that we will get more traction on fictional, creative writing. And that’s what we focussed on. 

Li:  

• Right. Yeah. It's interesting, because when you started the company, I think that at the time, there was not really that much of a precedent for what you were supposed to write online. People were using blogging platforms for all sorts of things, putting their personal diaries on the internet, just being really creative. I think of that period of the internet as being probably some of the most creative times because there was no precedent for what you were supposed to do with all of these platforms. And over time, things became a bit more templatized and standardised, and there was more guidance on exactly the type of content that you were supposed to produce. But it must have been pretty interesting to see. With this platform in the early days, what types of stories people wanted to create, as well as to consume. 

Allen:

• Initially, just like any other double-sided marketplace or community, we realized that without writers and content, readers won’t have any incentive to use the platform. 
• We had a pretty interesting way to bootstrap one side of the marketplace, we used classic books. Why? Because we were two engineers who had started a company, and we had no idea how to do business development, sign deals, and so on. 
• After 14 years, I think we know a little bit about business development. But at that time, it was a very foreign concept to us. So the easy way was to just input Pride and Prejudice and all those classics onto our platform. Afterwards, as I mentioned, we were more reader focused. We knew that we had to bootstrap the supply side first. 

Li: 

• Right. So it started with written work that was in the public domain that you could acquire without having to actually find writers to combat the cold start problem. 
• I've also read stats recently about how reading for leisure is on the decline, at least in the U.S., and how the percentage of teens who are reading regularly for pleasure has decreased. And I think that's not surprising, given the whole slew of entertainment options available now. But I'm curious how you think about that trend. In light of working in this market, and whether as a result of that, you are thinking about different formats of content beyond just reading?

Allen: