By Todd Allen
We're live at the San Francisco edition of Startup Grind at the lovely Wix Loungeand the Grind's own Derek Anderson is about to interview Tagged's Greg Tseng. Hit refresh/reload and follow along.
Derek: Tell us about yourself.
Greg: Greg would rather know about the audience.
He was born in Taiwan and moved here at 2.5 years old. Virginia area. Was a math/physics kid. When to Harvard, then did not finish his Physics PhD at Stanford. He'd been doing web side projects and then the PhD became a side project.
His co-founder, Johan, he met in 7th grade science. Tagged is their latest project.
D: What was your first project?
G: Flyingchickens.com a textbook pricing website, because the Harvard bookstore's prices were too high. Greg and Johan spent $200 to make doorhangers on dorm room doors at Harvard. It turned into $2K of affiliate money.
D: And what did you use that $2K for?
G: They merged Flyingchickens with limespot (sp?), a college portal based out of Cornell. It failed. Textbooks made money. They also did a secret crush list that also got some traction. After it failed, they founded crushlink.com, which was a big success. 0-10M registered users in '02 through word of mouth. Advertising revenue model - $2M profits senior year of college.
D: Derek admits he's lazy. But he wonders what you'd do with that $2M while in college?
G: Crushlink was still a side project. He and Johan were busy graduating. 9 days after 9/11/01, they moved out here. The tech bust, telecom bust and 9/11 made it a depressing place. They thought they'd sell crushlink and become physicists. Then they met Reed Hoffman. There were lousy offers for Crushlink and Reed convinced them to try and build something more.
D: Reed Hoffman was just a VP at Paypal then. How did it go down?
G: Some of it was luck, some of it was Karma and he and Reed were destined to meet. Reed was the third person he met in Silicon Valley. He fell into the PayPal crowd and felt lucky people wanted to hear from him.
D: What about that incubator you started in 2003?
G: After Reed gave them confidence and helped them start out, they let their minds go wild. They started JumpStart Technologies. they launch 10 ideas. 4 were successful cash businesses that aren't around anymore. 4 failed. 2 were Tagged and High Five.
D: You weren't a good student then, were you?
G: Nope. Peter Thiel taught them the focus lesson. They left Stanford in '04, Spun out High Five in '05 and focused on Tagged.
D: How do look at people meeting online?
G: Being an immigrant and one of the smart kids, he wasn't one of the popular kids growing up. He'd find like-minded people at summer camps (science camps). In 7th grade, he discovered BBS's online. It made him feel like there was a bigger world out there. This went to USEnet, but not to AOL chatrooms. He looks at all the possible connections now that (almost) everyone is online.
D: You were in the low end of the top 10 social sites. You didn't pivot. Why didn't you?
G: Tagged started as a social network for teens. They targeted high school when Facebook targetted college. High Five was #3 and Tagged was #9 when MySpace and Facebook were fighting it out. In '07, he decided Tagged wasn't going to be #1. For the first time they did user surveys. "Why are you here?" Most of the usage was people meeting each other on the site. At the end of '07 they pivoted from social networking to social DISCOVERY. Meeting new people.
D: How did viral evolve over the years?
G: Anything can be made viral if people will share it. Exponetial growth above 1, exponetial decay below 1. Crushlink was before spamblocks. All emails were single line entries and he remembers the day AOL started blocking his email. Anonymous emails don't work anymore. In the last 10 years things have changed. Widgets were huge for youtube videos. Facebook works for newsfeed and direct requests.
D: You're the viral marketing godfather. Were your products built off email and can you grow without email now?
G: Most of his companies did grow off e-mail. Friendly grew off Facebook, so it is possible to use other methods. For the first 1K-10K users you could just buy them (ads), you could try and get press (start by sharing with friends and family). If you design something that will grow exponetially, you need a small seed.
Crushlink started out slowly on newsfeeds.
D: Are you seeing coefficients over 1 right now?
G: Most virals have a grow coefficient of 1.x. Facebook has reached saturation, so they have an unusual problem where their penetration cuts down on virality.
D: You use two methods: connections of people (singles) and games (internally developed).
G: #1 use is dating and flirting. #2 Games (meeting people) #3 meeting like minded people. When a purpose is in mind (I need a girlfriend/roommate/etc), it's easier to build an application. Most interactions in the real world are passive. There isn't a passive equivalent online yet (i.e. meeting people on the bus).
D: You're Single.
G: I have a girlfriend!
D: Just wanted to make sure you use your product. When something comes at you (PR-wise), how do you deal with it?
G: Dealing with PR is one of his biggest lessons. He never saw the point of PR for a while. It seemed like a lot of hot air. in 2009, they had a little mistake around e-mail address books that turned into a BIG PR problem. When they hadn't done PR, the other people got to dictate the public perception of Tagged. Since 2010 they've been proactive with PR. Focus on what you can control, be transparent and authentic when you make a mistake. You need an internal moral compass. He uses the Mom Rule: only do things he's comfortable telling his mother.
[youtube http://www.youtube.com/watch?v=MDyMYKnaEKs&version=3&hl=en_US]
D: You just acquired High Five.
G: He incubated 8 years ago, now he's bought it (as of December '11). Increased registered userbase and active users by 2x-3x. They got profitable just before the economy crashed.
D:It's rare to be profitable that early.
G: In the beginning, focus on the product, growing it and product market fit. Now what you want to do, once you achieve the fit, start thinking about making a profit. You may or may not need another round of financing for that. He's more of a bootstrap guy. He wants to control his own destiny, not by his next investor. He's not build on someone else's platform (ie, Zynga and Facebook). They're building a company they _could_ go public. A sustainable company.
Q&A Time
Q: Does your mom know you didn't finish your PhD?
A: Yes, and they remind him.
Q: Tagged is a dating site. If you're successful will people leave the site?
A: We shouldn't be afraid of successes. Yes, you can only maintain 150 connections, but they refresh over time. Tagged is sustainable because its the engine for refreshing that 150.
Q: How do you surround yourself with tomorrow's mentors?
A: There isn't a formula. Personal chemistry is most important. These are the people you're going to go to with all your problems. Be very open and genuine.
Q: Could you elaborate on Social Discovery?
A: Facebook is maintaining relationships. Tagged is about finding new ones. They just don't want to touch professional relations (due to linkedin)
Q: How do you do passive meeting?
A: I don't know and I wouldn't tell you.
Q: Is there a pattern in what succeeded and didn't?
A: Its tough to draw conclusions. Startups are hard. There are so many ways to fail and you need to do 10 out of 10 things right to succeed. Any one thing can kill you. The kneejerk reason is to default to the idea being bad, but it could be anything.
Q: Can you use viral tactics for selling a physical product.
A: When it involves a purchase, it lowers the conversion rate a LOT. POM (juice) would give you some branded glasses, so your friends would see them. Tupperware parties. AmWay. Its been happening offline already.
Q: Why did you stop Crushlink?
A: It was never a sustainable product. No engagement.
Q: When do you know when to pivot?
A: It's not easy. Probably not a formula. It comes down to gut. Most successful companies become successful, not with their original idea.
Q: What do you enjoy more: the product or the viral?
A: _Right now_, he enjoys the product. He's more interested in building the social discovery product. When it's built, he's going to be into growing it.