How Wattpad Co-founder Allen Lau Built a $750-Million Business

Allen Lau began the social-storytelling platform Wattpad in 2006 to assist writers self-publish content material and join with readers. In 2021, the Toronto-based firm was acquired by the large South Korean web firm Naver for greater than $754 million. Now, Lau is engaged on his newest enterprise: a VC fund referred to as Two Small Fish.

I used to be born and raised in Hong Kong. When I used to be in junior highschool, my father purchased me an Apple II, one of many world’s first mass-produced private computer systems. With the machine and some books, I discovered programming on my own. That was a game-changing second as a result of it helped me construct the behavior of instructing myself and sparked my curiosity in know-how.

I moved to Toronto within the late ’80s to get my engineering and grasp’s levels on the University of Toronto. After graduating, I received a job as a software program developer at IBM. But I didn’t like working at such a giant firm, and craved the power and pleasure of an early-stage agency. I moved on to the Toronto-based software program start-up Delrina, which had 100 workers once I joined in 1993. Two years later, it had 700 workers and was acquired for half a billion {dollars}. That was the quickest rocket ship I’ve ever been on. I needed extra of that feeling. 

A number of years later, I joined Brightspark, a Toronto-based enterprise capital incubator based by the identical entrepreneurs who began Delrina. Within Brightspark I began my first firm, Tira Wireless, which printed video games for cell phones. That’s the place I received the thought for Wattpad, a web-based literature platform that hosts user-generated tales. It was a option to mix the developments of cell telephones and user-generated content material. At that point, going by means of a standard writer was the one possible approach for fiction writers to seek out an viewers. Readers and writers weren’t in a position to join straight, and there was no straightforward approach for folks to hold across the content material they needed to learn. I co-founded Wattpad in 2006 to fill these gaps out there. 

It actually wasn’t a straightforward begin. Our first workplace was my eating room. I, my co-founder Ivan Yuen, and Eva Lau (my spouse and Wattpad’s head of content material and group on the time—she’s since stepped down) would sit across the desk bouncing concepts off one another. We launched with public-domain books like Pride and Prejudice to attract readers to the platform, and made a grand complete of $2 by way of Google Adsense in our first yr. 

But it was additionally fortuitous timing. A yr after we based the corporate, the primary iPhone got here out—and a yr after that, the primary Android. In 2008, Wattpad was obtainable as an app on iPhone, Android and Blackberry units, permitting folks to learn user-generated content material on their telephones. In 2011, we doubled our staff dimension, had one million registered customers and attracted greater than $4.1 million in funding. By 2013, we had 20 million month-to-month customers. A number of years later, streaming exploded onto the scene, and I pivoted the corporate accordingly. 

Using AI to gauge the recognition of tales on the platform, Wattpad launched a studio arm to leverage our user-generated IP library and minimize offers between writers and manufacturing studios. The worth proposition was a built-in viewers for the app’s hottest content material. If a author’s story was common on Wattpad, it might get optioned for movie manufacturing. In 2021, the firm was acquired by the large South Korean web firm Naver for greater than $754 million. I stepped down as CEO, however stay Wattpad’s government advisor. 

Since I’m not dedicating 16 hours a day to Wattpad, I’ve extra time to allot to Two Small Fish—the VC fund I co-founded with Eva In 2014. In October, Two Small Fish raised $24 million in its third spherical of funding, concentrating on an total dimension of $40 million. With 40 firms underneath our belt and 5 exits to this point—together with SkipTheDishes, which was acquired for $110 million in 2016—we’re simply getting began. 

The thesis is transformative know-how with a world scale. We’re sector-agnostic, since know-how is in all places. That means I’m continuously serious about the newest developments in many various industries, from trend and fintech to well being care and mining. The context-switching is difficult, however in an intellectually stimulating approach. I really feel like I’m making an impression by leveraging my experiences as an entrepreneur—and that makes me tremendous completely happy. If you take a look at the tech ecosystem in Canada, with many applied sciences in early phases of disruption—from AI and Web3 to the way forward for work—that is an incredible time to speculate.