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Discover the remarkable stories behind successful startups on 'How I Became...'.
Join me, Kelly Yefet, as we dive into the journeys of extraordinary founders, marketers, investors, and industry experts. Uncover the breakthrough moments, challenges, and strategies that propelled their ventures to greatness.
Each episode delivers inspiring narratives and practical insights for entrepreneurs of all stages. Get ready to be captivated by the untold tales of innovation, resilience, and triumph in the world of startups. Tune in now to fuel your own entrepreneurial journey.
Interested in marketing and growth support for your business? https://www.kellyyefetconsulting.com/
Kelly Yefet (00:01.441)
Alan, welcome to the How I Became podcast. I am beyond honored that you are joining us today. I have a whole host of questions that I'm excited to walk through with you and get your perspective on and hear your journey over the years growing Wattpad, selling Wattpad and starting your new venture with your wife. But where I'm interested to start...
Allen Lau (00:21.703)
Mm-mm.
Allen Lau (00:25.474)
Mm-hmm.
Kelly Yefet (00:28.201)
And this is just a line that I read on your LinkedIn profile that you are a recovering CEO. So I wanted to start there and understand what does that mean and how did you come up with that phrasing?
Allen Lau (00:33.598)
Hehehehe
Allen Lau (00:41.75)
Yeah, I guess the word recovering perhaps there's a tiny bit of negative connotation in there and in a way it's not wrong but also in a way it's not right. It doesn't really tell the whole story because I guess I believe many CEOs would agree whether you are CEO of a two-person company with just two...
your co-founder or multiple co-founders or a thousand person company, all CEO would agree with one thing. It's a super, super stressful job. It's perhaps you can delegate a lot at scale especially, but the decisions that you have to make, perhaps just one decision every month could be a decision that changed
completely changed the trajectory of the company. And that type of decisions are super, super stressful. And that's why, you know, it's like having a good exercise, going to the gym, you need to recover. It doesn't mean exercising is bad. You know, sometimes, you know, it's actually freshen you up, but you just need some time to recover.
Kelly Yefet (02:01.313)
Yeah, that makes sense. It is probably one of the toughest jobs out there. So now Post CEO life, how are you enjoying it? And what are you focused on? day to day
Allen Lau (02:13.602)
Mm-hmm. Yeah, so, well, I guess I'm forever recovering. I don't mean to say this in a negative way. It's just that the next thing after on my LinkedIn profile after recovering CEO is a three-time entrepreneur. So for me, I just don't have it.
Kelly Yefet (02:20.717)
Yeah.
Allen Lau (02:42.514)
in me to start the fourth one. The reason is not saying I don't like it, not saying I didn't love my job. In fact, it's exactly opposite. But the fourth time sounds a little bit repetitive. I'm not sure it's motivating enough for me to do the same thing over and over again. And in a way, it's almost like you've been to the Stanley Cup final.
a few times and perhaps, you know, I still want to go there, but perhaps in a different role, it's the same game. And that's why as a venture capitalist now is, in a way it's giving me, still giving me all the same adrenaline. And at the same time, I feel like I'm growing, I'm learning, I'm doing something new, it's a new challenge. And I think that's a net plus to me.
Kelly Yefet (03:39.701)
Yeah, so I guess with starting to small fish, you're able to kind of stay in that entrepreneurial world in a different way and helping other people achieve that Stanley Cup or achieving that end goal. And we'll get into to small fish. I'm curious though, when in your...
in your journey, maybe it was coming to Canada or your family or other influences, but what made you realize that you wanted to be an entrepreneur or that was a path that excited you?
Allen Lau (04:16.15)
Yeah, perhaps I'll give the audience a little bit more background. I, my family moved here when after I finished high school, I was 18 and 11 months at that time and technically and, and at out legally in there that's practically still a kid. So at that time I got enrolled into electrical engineering at U of T.
Kelly Yefet (04:20.125)
Please.
Allen Lau (04:45.162)
and then I got my master there. And I guess many immigrant families would go through the same thing. The first generation, they try so hard to bring the next generation to a new country. We have to make it work. And the one thing very common is, well, find a stable job, find a good job that high pay. That's, I would say...
most immigrant families would hear the same thing. I don't need to convince anyone here. So in a way, I'm not saying I just listen to my parents. I do want to make my own decision, but definitely parents made a huge influence on me. So my first job was at IBM, and I believe after the first day, I know this is not me.
I know large corporation, it's not me. So I think nine months later, I joined a tiny startup company at that time called the Arena. And keep a long story short, when I joined it was maybe 50, 60 people, something like that, and maybe closer to 100. I actually don't know the actual number, but definitely under 100.
Kelly Yefet (05:47.358)
Wow.
Allen Lau (06:13.542)
And one of the reasons I joined was my girlfriend, then girlfriend, now wife. We met in school and Eva got her first job at the arena and I saw her, such a big contrast between IBM, a big corporation and a tiny company when she joined, it was like 20 people.
And so nine months later, I joined, and it was one of the luckiest and best decisions in my life because I have the chance to work for some amazing entrepreneurs and saw the company grew from like 20 people when Eva joined. I joined nine months later to like four years later, it became an 800 person company and gets sold for.
half a billion dollars and that was in the 90s. That was a big deal when you have a chance to see a small company in literally just over a thousand days grew to become one of the top 10 PC software companies in the world, life changing. That's all I have to say.
Kelly Yefet (07:26.193)
that is, and the amount that you learn and how a company goes from so small to successfully becoming so big must have been just jaw dropping. Were you knowing that you had from, as you mentioned, like immigrating to Canada and there was pressure to be successful and I think a lot of families feel that, were you nervous to take a leap from, you know, a big.
corporate and successful company like IBM and moving to something perhaps more risky because it was so small. Obviously you couldn't tell the future, you didn't know that it was gonna be successful. So did you have a high risk tolerance?
Allen Lau (08:10.978)
I don't think at that time, I don't think I had a high risk tolerance. And in fact, my parents first reaction at that time was, well, IBM is a very reputable big company. All those things that you imagine, especially in Asian parents would say at that time, right? But I guess I wasn't able to articulate this really well, but I did not feel
Kelly Yefet (08:22.363)
Right.
Allen Lau (08:38.67)
that risky at the time. I guess now as a reflection when I look back, I can very succinctly summarize how I feel. A startup might be risky, but the startup ecosystem is not. So if it doesn't work out, it's all right because you just jump to another startup and start over again. Yeah, it's...
Kelly Yefet (08:55.625)
Hmm.
Allen Lau (09:07.346)
If you stay in that ecosystem, I don't think in the past, perhaps half a century, this ecosystem at any given point in time disappear for even a millisecond.
Kelly Yefet (09:19.469)
Right, yeah, that makes sense. And I guess whether, if you're working at the company, whether it fails or succeeds, you're going to learn a lot and all of those learnings you can apply to whatever the next startup that you end up at is, which takes me maybe to the next part of your journey there. So you were part of this company that rapidly grew and exited then what for you and for Eva at that point.
Allen Lau (09:30.946)
Uh huh.
Allen Lau (09:48.33)
Yeah, so I think after not even a year, all the founders left. It's almost like the Raptors after winning the championship, you know, they won off to different teams. And that's only natural. I think after a year or two, Eva left and joined ETI, now AMD.
ATI for those who might not remember, it was actually one of the largest, maybe the second largest or third largest tech acquisitions in Canada ever. It was the world's number one graphics chip company. Second was Nvidia and AMD bought them maybe in 2006 or something. And for me, I took the very unusual path.
when everyone left and went on to start their own company or join other company, I actually stay on for another four years, Symantec acquired the arena at that time. So I, yeah, I worked there for four years. And I would say it was kind of unusual, but it was one of the best decisions as well, because I didn't have to switch the job.
It was in a new environment. Of course over time it evolved into more like Symantec get assimilated It's a new environment, but it's not an abrupt change first of all and secondly Symantec was a far larger company than Darina even at that time I think they were number three in the world in PC software at that time and I learned how to lead how to manage a large team
uh, manage, uh, not manage, um, interact with, uh, various stakeholders. That's, uh, the skill that you, you possess only when you work for a scale up or large scale company. Um, so in a way, um, it's very, very complimentary to the skill that I acquired early on from the amazing entrepreneurs and perhaps unintentionally. Uh, I didn't know I would.
Allen Lau (12:10.254)
did that skill when I ran Wattpad when it was at scale. So yeah, when Wattpad was close to the acquisition, it was, the organization was a few hundred people. And how would I know the skill to manage such a large team? And I actually recycle a lot of that when I learned from, that I learned from Symantec.
Kelly Yefet (12:22.536)
Yeah.
Kelly Yefet (12:33.965)
You never think that a skill you're going to learn at a big, a company that grows to that scale is going to help you at the end of your entrepreneurial journey or at the end of, you know, your startup experience when you are managing a large team, because in the beginning you're starting with, you know, a handful of people. If that's you, you're like, ah, I didn't need those huge, you know.
Allen Lau (12:43.477)
Mm-mm.
Allen Lau (12:54.612)
Mm-hmm.
Kelly Yefet (12:58.205)
big team leadership skills, but I think it's amazing that you were able to pull that thread throughout the entire experience from building. But that was one of the things that I was curious about is growing as a leader from employee one to employee 100 and how you, whether it was at Wattpad or previously, but what are some of those learnings that you took because a leader of a team of one to a leader,
Allen Lau (13:26.616)
Mm-hmm.
Kelly Yefet (13:28.446)
Um, you know, multi-levels is very different.
Allen Lau (13:32.21)
Mm-hmm. Yeah, I guess as a reflection, I would say the early startup founders, the skill that they need to perform is very, very different than a leader or a CEO at a few hundred, a few thousand people, completely different skill. At the same time, one thing that few people talk about, and I think that skill is actually...
extremely valuable but rare is scaling. Going from zero to one and to 10 to 100 is also a very completely different scale. There are a lot of people, their lifetime career is in a large corporation. They can run a big corporation at the back of their hand. But going from smaller
a smaller organization to a bigger organization. I think that's also a completely different skill. And I think that's one thing that I truly, truly appreciate and especially when I look back, and I think very few people have that skill, to be honest.
Kelly Yefet (14:49.357)
there some elements of the skill that stand out to you from you know zero to one to a hundred that you would be able to point out the difference in those in those leaders across the scale?
Allen Lau (15:03.954)
Yes, let's say perhaps I'm oversimplifying, but from 0 to 10, the founders or everyone in the company would need to wear multiple hats. As an example, I believe our, Ivan and I co-founded the company and then Eva joined us shortly after. And then we started.
Kelly Yefet (15:10.226)
Mm-hmm.
Allen Lau (15:31.926)
need to expand, we start to hire people. Our first hire was a colleague that we used to work at another company, so the whole team know each other for quite some time, but anyway, I digress. The first hire, as a perfect example, in the morning he would be writing the iOS code, perhaps by noontime he would switch to Android and in the afternoon he would switch to the backend.
in a single day. So that's a good example of wearing multiple hats. And I can name 10 other things that we have to do on a single day. But when the company grew to say 20, 30 people or 40 people, many still wear multiple hats, but many start to be very specialized. You do iOS and iOS
perhaps the first marketing eyes from social media to graphics and everything in between. And at some point, we would have someone perhaps just specialize on social media and nothing else. That's a big switch because obviously the skill is very, very different. But when as you continue to scale, you need to hire managers. You have to hire...
higher leaders to lead the managers. You need to add another level in the company. That's also another skill that you might excel as an IC, an individual contributor, but you might not be good at managing. You might be good at managing, but you might not be good at leading other managers and other ICs. So that transition in a way is fascinating. That transition is...
A lot of people could not make it. I don't want to sound negative, but it's true. So I guess in a nutshell, for people who went from 0 to 100, I would summarize it as be unrecognizable every year too, because the skill that you need to do a good job changes so rapidly.
Allen Lau (18:00.386)
just be unrecognizable, you'll be doing a good job. But if you are not unrecognizable, you probably are not doing your job in a fast growing company.
Kelly Yefet (18:10.397)
And I love hearing you say that it has been mentioned by three different folks on this podcast about firing and rehiring yourself six months later and that you should continue to evolve because if you recognize yourself, you're stagnant. So you need to continue to change. And I've never thought of it that way. Obviously, you know, you're reading books or you're trying to try a new technique, but to actually think of it as...
Allen Lau (18:19.606)
Hehehe
Allen Lau (18:25.771)
Mm-hmm.
Kelly Yefet (18:38.861)
making yourself unrecognizable so you can continue to push the business forward is such a great brain structure, like a way to think about it. I'm curious.
Allen Lau (18:51.194)
Yeah, maybe I'll double click on this one for another one minute perhaps. One thing that I did was, I guess, let me start off with the problem. I recognize, oh, perhaps two months ago everything is hunky-dory, everything was working, and then I realized, hmm, things are broken now. What happened? It's not like the process or whatever you do.
Kelly Yefet (18:54.35)
Yes, please.
Allen Lau (19:20.706)
got broken, it's just the fact of scaling. So one thing I did, and I'm using this as an example, there are other things that I did as well, is every year I look at my calendar and see how I spend my time. And every year I have to make some adjustments because what worked 12 months ago might not work anymore. So there, that's the apt.
give up delegates, now perhaps the team, I hire that function, I hire that person, I could delegate to, and that's super helpful.
Kelly Yefet (20:01.617)
Were there elements of the job knowing you were technical that you missed as you started to scale because you're no longer, maybe I'm wrong, maybe you stayed very much in the back end, but as you became a bigger leader, did you miss part of the early stage elements?
Allen Lau (20:13.086)
Mm-hmm.
Allen Lau (20:22.574)
Uh, yes, but perhaps just initially. And let me explain. Um, the, uh, when we first started, uh, it was only Ivan and me. And, uh, I have to say Ivan is probably the best engineer, best technologists I've ever worked with. Everything he does is 10 X the speed of anybody else I've ever seen, including myself.
Kelly Yefet (20:49.705)
It's a good partner to have.
Allen Lau (20:51.326)
Yes, yes, yes. So initially I would say I resisted the temptation. I almost couldn't resist the temptation to write code. I love doing that. And I, even though before I started WordPress, I already start leading a large team or larger teams, right? So there was, at one point, there was a piece of code that he didn't have time to do it. It's a standalone piece of code that...
Kelly Yefet (21:10.951)
Right.
Allen Lau (21:20.066)
kind of throw away and I couldn't resist the temptation of doing that. And I quickly realized, well, uh, why, why should I be doing this after I've done that? And then it was also a very good decision. Let I tell myself, let me stop writing code professionally because I have someone who can do it faster in this case. But most importantly, even if Ivan is slower than me.
Which is not possible, but let's assume that I Have other more important. Well, I shouldn't say more important in my role more important job to do Writing code is important, but my role is different. I have it's like a hockey team Don't play defenseman when you are forward if you're goalie, don't jump to the others Side and start shooting right you have your job to do
Kelly Yefet (21:51.538)
I'm gonna go.
Kelly Yefet (22:11.378)
Right.
Allen Lau (22:18.206)
So that was an aha moment. And I think I can count so many examples along the way that I love doing this. I started doing this and loved doing this two years ago, but I have to give it up because my role has changed.
Kelly Yefet (22:39.581)
I imagine there it's hard but then you learn to love the new elements and the new challenges that you're facing as you grow but you you've mentioned a little bit of the start of the business and I wanted to talk about building the business I was reading a bit that in the early days you were pitching to Eva about the idea of reading a book on your phone and perhaps she didn't buy into the concept
Allen Lau (22:44.718)
Mm-hmm.
Kelly Yefet (23:06.473)
in the early days, but she saw that you were super passionate about it, that you were going to jump into this. So what was that experience like coming to this idea, starting to build the business, you know, bringing all the pieces together for something that you truly believed in?
Allen Lau (23:09.751)
Mm-hmm.
Allen Lau (23:24.746)
Yeah, well, perhaps give the audience a little bit more context. Uh, um, I, I had this idea, uh, more than 20 years ago when I was the CTO of my first company, Tira, uh, it was a mobile gaming company, but I love to read. So I did that prototype, but it didn't, of course, the phone size, the phone capability was so primitive at that time. So fast forward to 2006, I was a year before the iPhone came out.
Kelly Yefet (23:28.669)
Please.
Allen Lau (23:53.354)
At that time, the most popular phone was the flip phone, the Motorola Razr for those who remember that. So on that phone, you can actually read relatively comfortably. That's in a way the genesis of Wattpad. I started the resurrected prototype. And then Ivan...
Kelly Yefet (23:58.213)
Yeah, the razor. My favorite phone.
Allen Lau (24:21.086)
even though we were friends for many years, I didn't realize in his face when he was building the same thing. And once we discovered that, let's work together. And once we decided, I secretly flew to Vancouver to see him, he moved to Vancouver for like a few years. I was supposed to go to San Francisco, change the flight and connect through Vancouver and at the airport and then, well, let's start the company. That kind of conversation. So when I went back home, I told Eva, right?
Kelly Yefet (24:29.597)
Wow.
Allen Lau (24:51.274)
Hey, I talked to Ivan about this idea. You know, I've been working on this for many years and he's working on this as well. I could just see how she rolled her eyes. I wish I recorded that on a video. That was the most amazing, hilarious, but also depressing moment. Anyway, she was very supportive, even though she...
told me this is the most stupid idea I've ever seen. And she wasn't wrong because I would say, despite the flip phone was much better, there's one thing better than the flip phone, the iPhone. So when the iPhone came out, that was game changing. But initially, because it was still very, the infrastructure.
was still very primitive, not just the phone itself, but there was no, Wi-Fi wasn't as ubiquitous, perhaps starting to become ubiquitous, but mobile data from the carriers, it was non-existent. You can buy a plan, but it's like $10 per megabyte or something, it's like ridiculously expensive. So no one had it. So all those building blocks, they were not,
Kelly Yefet (26:11.729)
great.
Allen Lau (26:17.286)
in place at that time and that's one of the reasons why the initial perhaps two or three years it was tough, it was difficult, we just couldn't get any traction.
Kelly Yefet (26:30.729)
Did you, knowing that these were gonna be roadblocks in the success of Wattpad, not being able to have internet all the time, not everyone not having an iPhone the day it came out like that, was your mindset, well, eventually technology will catch up that this makes sense, or was it that you would create Wattpad in a way to live in a world where not everyone had an iPad and Wi-Fi wasn't everywhere? Like,
Allen Lau (26:58.975)
Mm-hmm.
Kelly Yefet (26:59.697)
How did you think about that?
Allen Lau (27:02.91)
Yeah, I guess to, while you use, even though I don't play hockey, I use a lot of hockey analogy, as you can tell. What does Wayne Gretzky said? Don't go where the puck is, go where the puck will be, right? That's his famous quote. And I think we, in a way, we, all of us, all three of us, Eva, Ivan,
had the ability to kind of see the future in a way. We partially helped because we, all three of us also work at T-Rail Wireless. It was the mobile gaming company that I mentioned, that I co-founded. And we kind of in the few years leading up to starting WodPed, we saw how the, what the trajectory.
Kelly Yefet (27:46.685)
Right.
Allen Lau (28:01.81)
was in terms of improvement in screen size, in phone capability, in terms of connection. We can extrapolate. Deep down we know we might be a little bit too early, but you'd rather be too early than too late. Once the window of opportunity has closed, it's done. You have to move to the next idea.
Kelly Yefet (28:25.065)
Totally, and with the idea of Wattpad being like kind of a two-sided writers and the readers, get people to start writing, start using it, and then once it's caught up, you kind of already have your first movers, your early movers, and it can snowball from there, I'm sure.
Allen Lau (28:32.372)
Mm-hmm.
Allen Lau (28:37.806)
Mm-hmm.
Allen Lau (28:46.718)
Yeah, I guess at the time we were we weren't able to articulate this as well remember It was 2006 almost 20 years ago now and YouTube was one year old Facebook was a hundred person company, right? so who I think the for many founders this is a very important point
Kelly Yefet (29:03.759)
different.
Allen Lau (29:14.142)
At that point in time, we saw the platform shift. We saw, what I mean by that is the world started to shift from the static web 1.0 to mobile, social, cloud computing, and the confluence of all three at the same time. And if you catch that wave early, if you have a unique...
products that fully natively capture that opportunity. They are, that's the best time to, in a way, to start a company. And that's only happened once in a decade or so.
Kelly Yefet (29:57.513)
And you have to have the perseverance throughout that to stick it out and hope to see the other side of it when things are changing. And you saw, the three of you saw a future, but I'm sure there's three other founders at the time that saw a different future and went a different way and there's a bit of luck that plays into it. I'm curious, and I know you've shared that there were times that you had doubts and you thought about pulling the plug on.
Wattpad in the beginning, but what was driving you to persevere and push through or perhaps what are some of the defining moments in those early days that helped you grow to what it is now?
Allen Lau (30:43.902)
Yeah, so about after a year we started, we hoped at that time to reach like a million users. It's kind of modest because YouTube, again, YouTube was one year old at that time and we saw they went from zero to maybe 10 million in a year. So one million was kind of modest. But I think we...
We should that go except that we missed by three zeros depressingly after the first year as a free product you only have a thousand users and You know if you run a B2B SaaS company like after one year you have a thousand customers Celebrate right but for free consumer product a thousand users you suck. So we were really struggling We Evan I went out for a coffee at that time
And we already start experimenting with different revenue, like advertising. We have some benefits on our websites. And I got a check. I wish I kept that check. It's a $2 check from Google. We were using Google display and it was ridiculously depressing. And we went out for coffee and this is what I said, Ivan, I cashed that check. But we all.
Kelly Yefet (32:07.025)
Did you catch it? Yeah.
Allen Lau (32:08.094)
Yeah, we catch it. I was kicking myself. I shouldn't. I should have framed it. But anyway, that turned into one cup of Tim Hortons. And I thought, well, let's get an empty cup and spare this cup of coffee. Kind of send a message like, we are really struggling. We have to figure out what to do. So in that conversation, we talk about Yao.
Kelly Yefet (32:21.795)
Thank you.
Allen Lau (32:38.102)
It's not working. Let's pull the plug. But at the end, both of us realize, well, we don't really have to pull the plug. We perhaps we can hustle. We can find some side hustles to keep us going and keep one pet alive. So keep a long story short.
We even started another company. We did consulting on the side. We did a million different things on the side and keep us going. And what we discovered in hindsight, we had the right, what pet had is the right idea. Mobile media consumption definitely took off, right? User generated content or community or social network, they all took off. But one thing we did not,
had as much appreciation at the time as it takes time for the snowball to roll down the hill. Initially, you just have to push and you push hard and it still doesn't roll. But once the flywheel, once the snowball start rolling, it's unstoppable. But it took us almost three years to reach that, I wouldn't even say escape velocity.
escape velocity, but close to the point that we can visualize at some point we could achieve escape velocity.
Kelly Yefet (34:11.337)
those three years must have been nerve-racking throughout the process. And I can't even imagine. I wish you framed that check as well, but I'm curious about as it, you know, you have the snowball started rolling and it started to work. What was the monetization models? And was that...
Allen Lau (34:16.598)
Painful.
Kelly Yefet (34:36.781)
a key component to you in building Wattpad is figuring out how to monetize it or was that more of an afterthought? Where did that play into building this and what did it look like in the early stages or throughout?
Allen Lau (34:50.41)
Yeah, well, we were bootstrapped for like five years almost. Well, we raised a very small angel round in between, but it took five years before we raised a proper round of funding. And that round was like led by Unisquare Ventures in New York, they were the first investor in trader and con base and...
Kelly Yefet (35:06.162)
Yeah.
Allen Lau (35:19.198)
Zynga and many iconic companies. So anyway, what I wanted to say was when we were bootstrapping, we didn't have a choice, but put Benes, that's an easy monetization model. We don't have to invent this for social media companies. That's kind of obvious. But when we got the term sheet from Albert Wenger from Union Square Ventures.
He, in the email, not in the term sheet itself, he said, now Alan, would you mind we add a clause in there for us to fund you guys, you have to get rid of all the S. And when I read that, must be a typo, right? Like I call him up and Albert, I wanna make sure I read this right. You asked us.
We spent so hard in the past five years to get to Raman profitability. And you asked us to go back to zero. I just want to make sure I understand. And you said, yes, yeah. Your user experience right now is so poor because you have so many ads. It will slow you down in terms of user growth. And at this stage of your company, you should focus on
Kelly Yefet (36:21.523)
Yeah.
Kelly Yefet (36:25.353)
Thanks for watching!
Allen Lau (36:43.726)
the user base. And at the end, we didn't pull all the ass, but I told Albert, you know, I hear you. I cringe when I look at my own website. We have too many ass because we have to eat. Okay. So we found the compromise, you know, and it was a very, very good solution because it allowed us to continue to iterate on the advertising business.
Kelly Yefet (36:52.253)
Scaled back.
Kelly Yefet (37:00.402)
Hahaha
Allen Lau (37:13.014)
but we make sure the homepage, there's no ban as when you're reading, there's no like interruption, you know, we in a way achieve both objectives, you know, learn the advertising business and keep the user experience very, very good. And that's our first business model. But I think until almost like year seven of the company, we didn't.
We didn't really spend much time to think about monetization. And then eventually we introduced subscription pay content and using AI to find the best content on our platform and turn them into TV shows and movies. Well, perhaps you can see the movie posters behind me. It's not like I, of course I love those movies, but those are one of the many ways that we monetize.
Kelly Yefet (38:01.493)
Yeah
Kelly Yefet (38:09.121)
Um, that's such a fascinating transition from the community element of writers and readers and pulling that into, you know, like a Hollywood-esque and getting these community writers to...
become so much bigger and so much more. And I know I briefly told you before we started chatting that my brother had wrote on Strange Yarns and I think it gave, sorry, on Wattpad, a book called Strange Yarns. And it, I think also builds a confidence perhaps for writers to kind of build an audience and see what works and what doesn't. I believe you introduced a bit of that AI element to the business. So...
before chat GPT was all the rage. So what was the thought process behind that and what was some of the considerations in introducing AI in the backend of Wattpad?
Allen Lau (39:11.102)
Yeah, it was year 2012. Afterward, we raised Series B. We were still very small. We had like 25 people in the company. But we were swarmed by one thing, data. We, I can't remember the numbers, probably 10x smaller than when we exit. But around 10 million users.
but they are highly, highly engaging. They post millions of comments every month. So we can just manually look at the data and figure out the trends, you know? So we hired our first data scientists, our founding data scientist, Brandon. That was the best decisions. One of the best.
decisions throughout the journey. We made a lot of very good decisions, I have to say, but it was one of the best. Haringham helped us learn about something called machine learning and artificial intelligence. It was 2012, remember. No one knows the AI godfathers. Artificial intelligence was only in science fiction.
Kelly Yefet (40:24.077)
No one was thinking about it. No.
Allen Lau (40:31.094)
But I think we probably were the first companies that actually deploy this. I wouldn't claim we are the first, but definitely the first batch of the companies that start to use AI to mine the data and also predictively find the best content on our website, on our platform. We, at one point, as an example,
Kelly Yefet (40:42.853)
early.
Allen Lau (41:00.894)
a very, not very popular story. We predicted that based on analysis, based on the AI is telling us, it would become the number one on our platform in a year. And it actually happened. That was the aha moment after the aha moment that this thing actually worked. I think it was maybe 2014, then we start to see the if-routes of this.
Kelly Yefet (41:30.789)
What one that is spectacular and clearly made you feel like, wow, we just made an incredible decision. What did you then do with some of that information? If thinking back, what were those key learnings that the insights provided you that made some maybe pivotal moments for the business?
Allen Lau (41:55.862)
Yeah, and now the pivotal moment of the business is expanding from a reading and writing platform to a full-blown entertainment platform that includes movies and TV shows. It also happened around that time when Brandon joined us, I think around 2013, perhaps, maybe a year later, we start to, partially because of looking at the data.
that there was an aha moment, wait a minute, this is not just the reading and writing engagement, we are sitting on a gold mine of content or creative IP, creative intellectual properties. And once we meet that, not switch, but once we had that aha moment, then we realized, well,
perhaps we should even change, not well, change to strong word, refine our vision and mission. So that's, it's not just reading and writing. If you look back maybe 10 years ago, 12 years ago now, and to that around 2012, the company mission was like, we wanna be the...
billion person using the platform to read or write something along this line. And then we switched to entertain and connect the world through stories. Very simple. In 2013 or 2014, that was the precursor to the Wattpad studios that we launched in 2016. But there were years leading off to that. And I would give
data and AI a lot of credit, not the only thing we did at that time to help us find that moment, but definitely one of the key reasons.
Kelly Yefet (43:58.546)
course.
Kelly Yefet (44:05.469)
hearing you tell the story and just thinking about where you started and the journey to where you ended up, I'm sure when you reflect on it, you're just in awe of like this whole experience. And I want to hear a little bit more about the transition to Too Small Fish and how you and Ava have started your fund and what that looks like. And
I know it's focused in Canada, so maybe a little bit of why that's the focus of the businesses you're invested in and a little bit about Too Small Fish.
Allen Lau (44:37.137)
Mm-hmm.
Allen Lau (44:40.886)
Yeah, so Two Spot Fish is almost 10 years old now. Eva left after we raised Sirius B around 2013, exactly 10 years ago she left. She took a year off. She doesn't, like me, she doesn't wanna work in a large corporation. So she is, and I think she was quite better now at that time, so.
Kelly Yefet (44:56.506)
Okay.
Kelly Yefet (45:03.774)
Yeah.
Allen Lau (45:10.734)
She took a year off and then, WordPress started to take off. We built a very, perhaps prominent brand, especially within Canada in the tech ecosystem, but of course globally as well, users all over the world. So anyway, she got a lot of like inbound, hey, Eva, now that you are not working at WordPress, do you have time?
Kelly Yefet (45:31.081)
Mm-hmm.
Allen Lau (45:40.294)
I just want to perhaps learn from your experience how we could scale, how we could start, that kind of thing. And then really quickly, she turned herself into an angel investor. And then two friends came along. Hey, well, why don't we set up a fund and let's do this together. And that's Two Small Fish Ventures Fund One started in 2015.
And before we knew in the following four years, we, we invested in roughly 20 companies, I'm a co-founder of two small fish ventures by co-founder by name, because I ran my own company, Wafai at that time, right? So, the investment conversation only happened around the dining table in the evening. And if a founder...
Kelly Yefet (46:35.121)
Hehehe
Allen Lau (46:39.054)
uh, need some help, I'll jump on, hop on a quick call, uh, for maybe half an hour, but my, uh, involvement was minimal. Um, yeah. Um, so, um, during that period, uh, we invested, uh, we wrote the first check to skip the dishes. We wrote the first check to, uh, BenchSci, which now a 500% company, AI company, uh, in the pharmaceutical space. Uh.
Kelly Yefet (46:43.047)
Yeah.
Kelly Yefet (46:48.966)
Minimal, yeah.
Allen Lau (47:07.662)
We also, after they graduated from Found & Fuel, we were the only one who wrote them the first chat. And then Ada, also, I think they are close to a thousand person company now. We wrote the first chat after the first product failed. They pivoted to, it was a completely different idea. And Mike Richardson had that chat bot.
for support idea at that time. And we were friends already. He actually hung out at the WordPress office one or two days per week for a few weeks to build the prototype because we had the most support takers perhaps in the entire Canada. So he leveraged that to build the first prototype. Yeah, so.
Kelly Yefet (47:59.023)
Good test.
Allen Lau (48:02.334)
It went really well. Uh, and then, uh, keep a long story short, uh, 2019, uh, Eva raised a fun too. And now we are onto, uh, fun three, uh, much bigger fun. Um, uh, most of our portfolio companies are in Canada, but, uh, I also believe that, uh, if, uh, someone is building the next Google, I'm self Canada and that person, that team gave you a call, uh, ping you, uh, you should listen. So.
Kelly Yefet (48:31.045)
You're not turning them down.
Allen Lau (48:32.498)
No, no, no. So we are based here. Our network is strongest in Canada, but we also have very strong network in Silicon Valley, in the US, and around the world. So yeah, we are a global investment VC, but based in Canada.
Kelly Yefet (48:52.269)
You clearly have had some heavy hitters and some wins with Two Small Fish Ventures. Is there a framework you use when choosing which companies to invest in or is there a gut feeling with the founding team? How do you make some of that assessment?
Allen Lau (49:09.89)
Mm-hmm.
Yeah, of course, I guess perhaps in one sentence, I can summarize what we invest in. We invest in the next frontier of computing and its application. Very simple to explain when you take a deeper dive, we have a lot of AI companies in the portfolio. We have a few companies that are protocols like...
Kelly Yefet (49:17.629)
Okay?
Kelly Yefet (49:25.818)
Okay.
Allen Lau (49:40.258)
blockchain protocols. I would say blockchain and AI, they are starting to converge. I have a long thesis, we have a long thesis about that, I'll spare you all the detail. And then the third area of focus is sustainable computing. So as I mentioned earlier, Eva worked for ATI, now AMD.
She has semiconductor experience. I'm an electrical engineer by design. I know semiconductor or hardware really well. And Brandon now also joins us as a partner of the firm. He has a small stint at NVIDIA as well. So we cover a lot of bases, but it's the next frontier of computing and its applications. I guess that's the easiest way to describe it.
Kelly Yefet (50:35.181)
Um, it's interesting to hear throughout, you know, all, all the hard work and, and decisions that you've had to make in some of the frameworks you shared, there's still these elements of the stars aligning to make, you know, the story come, come true and come to where you are now, which is really, really fascinating. Um, I know we're, we're almost at the end of our conversation and I always end with two questions. So. One.
Allen Lau (50:47.206)
Mm-hmm.
Allen Lau (50:58.518)
Mm-hmm.
Kelly Yefet (51:05.097)
is throughout the entrepreneurial journey and when I work with startups or founders, I find that there's a lot of myths that they're told throughout their journey and I'm curious if there are any myths that you are told or that you hear that you would want to dispel to aspiring entrepreneurs or founders within their journey right now.
Allen Lau (51:15.667)
Mm-hmm.
Allen Lau (51:28.878)
I guess in a way I kind of touch on this from the outside. Wow, you are the CEO. You are a tech founder. It's very glamorous. Perhaps not Hollywood glamorous, but it's glamorous. Perhaps not the best word to describe it, but you get the idea. But behind the scene, you're trying to make do. You're struggling. You're...
Kelly Yefet (51:38.863)
Mm-hmm.
Allen Lau (51:56.354)
five balls in the air and you juggle. So the struggle is real. And in a way, that's why Too Small Fish is very unique in a way that I actually spend most of my time helping founders to scale from just the founding team to perhaps
Kelly Yefet (51:58.576)
Yeah.
Allen Lau (52:24.754)
to all the way to a scale up. And I think that's, not a lot of people can appreciate the challenges, but I've done it three times. Every situation, every challenges that people have experienced, at least at the bare minimum, I can share that experience. So I think this is one thing that's super helpful. And...
the founders in our portfolio appreciate. And that's the biggest myth, I would say.
Kelly Yefet (53:01.273)
Yeah, I think that's a real one. I think a lot of the time when people are thinking, even like young kids coming out of university, I wanna be an entrepreneur, I wanna be rich. And it's like, it's not as pretty as it looks. It is hard, hard days, very low bottoms. And obviously there's winds and you have to take time to celebrate those, but it's a grind.
Allen Lau (53:27.274)
Mm-hmm. Yeah, we all, yeah, we didn't have time to talk about this. But during the years when we had a $2 check from Google, as a family, we almost ran out of money. We were thinking about, wow, we have to sell our house. We ran out of cash.
Kelly Yefet (53:29.977)
It's a special person has to be cut out of that.
Kelly Yefet (53:48.113)
Right, it's, looking back, I'm sure you're just like, how did we go through that? How did we make it through? But you did, and it was obviously all worth it, but I think people forget how difficult it is to run a business, to be your own boss, to be the person making all those decisions.
Allen Lau (53:56.847)
Hehe
Allen Lau (54:07.484)
Mm-hmm. Yeah.
Kelly Yefet (54:11.857)
So thank you for sharing that. The very last question, as you know, the name of the podcast is How I Became, and the idea is everyone's naming their episode on how they became whatever you are today. So if you were to name your episode, How I Became, fill in the blank, what would you name your episode?
Allen Lau (54:33.466)
I would say perhaps how I became a learning machine. Not gonna repeat what I said early on, you have to be unrecognizable every two years. Just unrecognizable is not enough, but if you run a fast-scaling startup, the end result, the outcome, you just become unrecognizable every two years. And behind that is you just need to.
Kelly Yefet (54:46.042)
Yeah.
Allen Lau (55:01.89)
keep on growing, keep on learning. You pick up new skills and all those things. And I would say learning how to build a sales team, learning how to build a marketing team from absolutely nothing. I was the one behind our trade account at one point. So that kind of skill, I don't think...
unless you run a fast scaling startup, it's just very hard to find the opportunity to learn this fast. And I would, I feel like I'm in a very lucky and privileged position that kind of fell on my lap, that I have to make it work. I have to force myself to learn and over time it became a habit. And I think that's, yeah.
That's how I became a learning machine.
Kelly Yefet (56:06.025)
incredible title. Alan, thank you so much for coming on the podcast today. I am so excited to share this episode and I really appreciate you sharing your story today. Thank you.
Allen Lau (56:17.538)
Thanks for inviting me.