Kiip | Interview with its Founder & CEO – Brian Wong
In San Francisco (CA), we meet founder and CEO of Kiip, Brian Wong. He shares his story how he came up with the idea and founded his company, how the current business model works, as well as Brian provides some advice for young entrepreneurs.
The transcript of the interview is included below.
Martin: Hi, today we are in San Francisco with Brian from Kiip. Brian, who are you and what do you do?
Brian: I’m the founder and CEO of Kiip and Kiip is a rewards platform that’s embed about 3.000 apps today. It actually takes these moments of achievement, that we call it, so when you level up in a game, or you finish a to do, or you log a run, in that moment, instead of putting an annoying ad there we say “Hey, why don’t we actually reward you with something from a brand that you might like.
Martin: You are quite young and you started your company around about 3 years ago. Can you tell us a little bit more about the background of yourself?
Brian: I was born and raised at Vancouver, Canada originally and I actually moved down to San Francisco to work in a company called Digg. Digg at the time was very big, it was about the same size if not bigger than Reddit. But unfortunately Digg actually ended up losing and I actually got laid off six months into the job. Now, after I got laid off, it was when I kind of found myself with extra time and I was trying to come up with something to do next, and that’s when I got the idea for Kiip. And I came up with the idea, met some venture capitalists, ended up raising like a seed round, and started the company then. I’m also a little bit younger than normal, I skipped four grades in elementary school and high school, so I graduated college when I was 18. So, I started the company when I was 19.
Martin: And can you tell us a little bit more about how you found this business idea?
Brian: Yeah, so, I was on a flight, I remember looking to my left and to my right, they call it “the idle creep”, and in that moment in time I realized that there were lot of people on their phones, playing games. And what I was very curious is why gaming was so popular, why people loved it so much, and it struck me that there was this thing that people are addicted to, it’s kind of like this dopamine rush, this euphoria, when you leveled up or hit a high score. And, unfortunately, when I saw those moments happening, a lot of it was being abused by these banner ads. And so I said “What’s the better way to actually acknowledge people when they’re in these moments of elation, or potentially to reward them to acknowledge them?” I also was reading this book at the time, called “Predictably irrational”, and parts of the book talk about this idea of serendipitous rewards, the whole notion of surprise and delight. And I was like, I think that seems very organic, seems very natural. Why can’t we make our rewards serendipitous as well? So, we’ve put that into the model and the rest is history, we decided to make that a core part of our model, it still is part of the model today, where every single reward someone receives is a surprise and delight, which is designed to preserve what they were doing originally wasn’t, for them, to use the app to get the reward, rather using the app for the sake of using it, and the reward is more like a nice gift.
Martin: Ok, understood.
BUSINESS MODEL OF KIIP
Martin: Let’s talk about the business model, Brian. I mean, you shortly described that you have some kind of ad layer putting into games. Is there more around the business model that we need to understand?
Brian: We are using something that isn’t a typical ad, and it’s not even an ad in our opinion, it’s a reward. So, layers on top of these moments in time, we directly integrate with the apps on one side, on the other side we have brands that come in and want to buy into these moments. So, we actually have to have a marketplace, we have to work with both developers and the brands, which is both complex but also very unique, because to own both sides is very, very tough, but very valuable once you have it. So, now we have it, and we work with now thousands of brands as well, so they come in and say “Hey, we want to buy into fitness moments”, for example, they pay, what we call it, cost per engagement, which is when someone actually puts in the email and claims the reward, and then we revenue share that with the developer. So, there’s a way for the developer to make money, the brand is able to participate in the moment when someone’s happy, and no one annoy them with an ad, and then the user gets something valuable. So, it’s like a triple win, it really is a win-win-win.
Martin: Great. When you started launching the company, how did you acquire the first big advertisers or maybe the developers? And how did you sort this hen-egg problem?
Brian: When we brought in our first investors, one of them was obviously the venture capitalist that lead the round, but we also brought on some brand and agency folks. And one of them was founder and CEO of company called Popchips, which was a boutique snack brand, it still is doing very, doing quite well in the US; and then also the CMO of Vitaminwater. And so, those two actually brought on our first customers: Popchips and Vitaminwater. So, I think in the beginning it’s good to have bit of favoritism, you bring in people who like your model and they want to be able to help you and then, obviously, the next challenge is to make sure you deliver for them. So we did, and so those two were the first two brands. In the terms of the developers’ side, it was just a matter of emailing everybody we could find and…
Martin: So, quite easy?
Brian: It wasn’t that easy necessarily because we had to email like a hundred people and we finally got a few developers integrate. So, we had our first few developers and we had our first two brands, and that’s what’s kicked it all off.
Martin: Ok, great.
Martin: Let’s talk about the corporate strategy. From my perspective, you have kind of advertising market, several kind of devices that you can target, web, mobile etc. And on the other hand you have different types of, let’s say, payment modes, like CPM, CPC, and maybe your type of reward. How do you plan to go forward, do you plan to stay in this so-called niche of, I call it reward mobile advertising, or do you plan to branch into other kind of mobile marketing spheres, for example?
Brian: We want to be really good in one thing, and that is delivering this content at the right moment. You can be safe to assume that we will expand by looking at more moments, so, find other verticals, like travel, finance, sports, on top of the ones that we already have, like games, fitness, music, food, and productivity. And then other platforms, so imagine wearables or even consoles, or other screens, even your watch, these are things that we have begun to experiments with rewards in. I think there’s enough room for our niche to be across every vertical and every platform, the other area we begin to expand into is looking at Kiip as.., almost using Kiip in an entirely different way. So, today brands and developers use us for monetization and for brand engagement. But, what we’ve realized was that what we were doing around rewards also helped a lot with loyalty and rewarding. And so we actually are starting to apply the platform in loyalty purposes. So, essentially to replace loyalty programs with something that’s more about instant gratification. So, Kiip essentially has become more of a platform play, there are a lot of brands as well. So, there’s a lot to do in the reward and the moment category, and we are, I think, the leading company that showed people what that potential is. The sooner we go into other categories of mobile marketing, I think we’d begin to dilute our value proposition, and I think that’s one of the things we were very good at. We should be focusing on early moments and owning them.
Martin: So you believe that the market for this reward based advertising is large enough to grow?
Brian: I would say it’s less of the reward, and more about the moment. So, what we put in that moment is totally up to us. We can put a reward in there, we can put content in there, we can put a coupon, we can put a gift card, we can put more access, we can put, you name it, video, we can do whatever we want. The whole point is in owning this moment and we’ve started to do that quite aggressively on mobile, but I think owning it even more aggressively in platforms that are not just the device are very, very important for our growth.
Martin: Brian, when we are looking at the market for advertising, and just put us in the perspective of a big advertiser, who wants to put some money on the people. What are the main criteria for him to choose one of the specific marketing channels? And second question would be would the advertiser more look for an, let’s say, one stop shop for advertising, where he can put all the money in different channels, or would he rather work together with different types of channels, for example you using as one?
Brian: It’s a great question. I think they’ll always want different things. I’ve always seen the pendulum swinging where some people want to consolidate at one stop shop and then they realize that that one stop shop has control over their pricing and they don’t see the transparency, they go back to having multiple partners, they do the multiple partners and they go to this too much logistical complication than they need to go back to one stop shop… So, there’s always going to be a place for both. I’ve never really seen a marketing consolidated towards going for either. There are certainly benefits and disadvantages to both, but I think the truth that we’re trying to hold here is that there’s no one that’s been able to figure out the alternative to the banner ad. When you look at the banner ad, no one really wants to click on it on purpose, at least on phones, and so the fact that we are alternative, and potentially the answer to the challenges that they’ve been experiencing on mobile engagement, makes us very indispensable. So think of us as like, everyone owns a wired telephone, but when the first cell phone came up, it’s not like you needed it. But when you started trying it out, you realized that it was a great alternative to being wired to the wall. And we’re able to provide that alternative. I think banner ads is like traditional solution, the lazy solution, but once you see what could be possible using a new type of engagement, it becomes very powerful.
Martin: You are quite big already, but what are the major challenges that you are facing right now?
Brian: I think the challenges are more about focusing on the platform, as we know that brands will want to buy into, it’s almost like trying to predict. So it was like, I would put a lot of money and investment into wearables, and see how we can play in those OS, but what if brands don’t really care about that. What if they end up, and many data points are proving that even though everybody thinks that’s where brands will go, they might end up doing some really retarded move, or they go back and do basic stuff. So, I don’t know and you just have to bet on something. So, we’re going to bet on it anyways, and we’re going to move the market that way, but those are some of the challenges, making sure we focus on the right areas. And the other challenges are actually less so about marketing and customers, there’s always money, there’s always customers, we have no problem getting them, it’s more internal, about hiring and getting the right people. So, it’s almost as sometimes you can get as many customers as you want, but if you don’t have the people in the company that are actually being able to manage that demand, than it’s a huge problem.
Martin: And how did you check your assumptions that the customers, the advertisers want x and not y?
Brian: For now, we have the luxury of doing it after we’ve noticed a bit of the trends. For example video, we’ve started doing video recently just because we knew that there was so much demand, and this was actually seven months delayed. Like, we noticed the demand in January, and then we started actually launching the product in July, and then we just announced it this month. So, we could be a little slower, but the thing is, especially when you know that you have an entranced way for brands to spend money on you, I think at the beginning, when you’re at the earlier stages at the company, you got to try everything. For now it’s, we don’t have to try everything, we just have to make sure that if we do try something, we invest well into it, and that’s really the key.
Martin: How do you manage, from the logical point, let’s say the flagship products that already worked, and with some kind of new products that you’re testing just the hypothesis on?
Brian: Our rule, generally, is that we know that that product, at least within the next 2-3 months will lead us to some imminent revenue, we will invest in it, right, so within 2 or 3 months, and then also if I have the gut feeling. Honestly, at the end of the day, if I think that something might work out of it, then we will go for it. There’s really no other way to tell some times.
ADVICE TO ENTREPRENEURS FROM BRIAN WONG
Martin: You are quite young as a founder, but you still have 3-4 years of experience. Our readers always are like first time entrepreneurs or entrepreneurs. What type of advice can you share with them? Maybe in raising capital at such a young age and maybe compare this situation that you had to the situation now. If you would start the company all over again, what are the differences…
Brian: Yeah, it’s a great question. I would tell them that starting a company and then growing a company or scaling the company are two extremely different things. I would say, for me, starting a company is much easier, like you have the great idea, you can rally everyone around you, you get your first few customers, you just, you’re off to a great start. For some people it’s very hard to start, for me it’s easy. Scaling has been a little bit more difficult. And you’re talking hiring the right people, sustaining customer growth, having right messaging in the marketplace, dealing with competitors, those are a lot of challenges you face on a latter side of the growth sort of equation. So, the advice I’d give people for raising money, in the beginning, it’s actually not that hard. As long as you have great team, I’m talking about amazing team, surround yourself with amazing people, like PhDs, geniuses, savants, whoever you can find that you think would be perfect for solving that problem, bring them in. Once you have that team, it’s really no question whether or not you can raise, if you have the right people, raising is always very easy conversation half. You might not have experience or track record, but if the people you’re starting your company with does, then it’s another, much easier. So, again, I would say in the beginning just having right people is incredibly important. Also, try not to pigeonhole yourself too early on, so like making rules, remember every decision you seem to make, it seems that you can always change in the beginning, will affect you in year 3 or 4. We’re talking things like how’d you decide to price things, your first price ever, your first few customers in the execution, the first exception you ever made. All those things, as much as you don’t thing count now, matter a lot. Around 4 years later, we still find ourselves asking, scratching our heads as to why we made certain decisions in year 1 and year 2, wishing that we would make it differently, which, again, isn’t a huge deal, but little things like just deciding what the anchor price was will affect your revenues in millions. It’s basically how, that’s how this tiny decision that seems in the beginning would be a huge impact over 3 or 4 years.
Martin: If you are put in the same situation today, what would you do different when raising money?
Brian: I think the markets are fundamentally different today than they were four years ago. If I were to attempt to start to raise money now, I think the challenge is really making it sure that you cut through the clutter and the noise, there’s too many people solving too many amazing problems. And today, I would say, honestly try to use the new sources of capital, whether it be angel list, or all the crowd funding guys, these are some areas that you could potentially explore to raise capital in a different way. I almost feel like crowd funding is a better model for some companies that can get preorders and use the demand to fund the product. But there are other companies that do need traditional sources of venture capital. As sexy as venture capital might seem, there are other ways to raise money today that are actually better for you. Venture capital has its place, but only for certain profile companies.
Martin: What other types of business models are, would be angel list, for example, applicable?
Brian: I think angel is applicable if you’re like a celebrity and people know of you and you just press a few buttons and you just raise like $300.000 in one go, which by the way, is very easily done if you have done something before and you’re well-known in the ecosystem. If you’re brand new, it is almost impossible. I’ve seen people “Hey, follow my company”, I’m like I’m not following your company, I don’t even know you. So, it’s like, there are things that will work on angels, and things that won’t, and then, sometimes there’s this pipe dream of the breakout company, and you’re like why is he like golden child and all of a sudden everybody’s pouring money. It’s just, numbers-wise it just isn’t going to work out for everyone. Out of the batch of YC companies, out of the batch of the ones that are favorite, out of the ones that end up showing traction by the end of the day, those are the types of companies that will end up getting funding via that model. But I think, honestly, if you end up befriending, in a good way, sort of like really accomplished entrepreneurs that have exited, that have a lot of liquid capital, in fact the best way to raise is actually to find the exited entrepreneurs that have too much money to throw around and don’t mind throwing 50k, 100k into a round. All of the sudden, you have three of them, you have 300k. And that’s more than enough to start, in my opinion, to proof an idea. So, the exited ones are the ones that will have the type of capital that can fund you in the beginning.
Martin: What would be your advice on, if you built the minimum viable product, what are the key variables that you should test? In order to get, after you’re getting the 300k…
Brian: It’s really hard for the MVP, especially because you can test it with some customers… Sometimes your customers don’t even know what they want, so it’s always both sides. You get the feedback from your customers of whether or not they want to use it, and then you find out later on that because it was so new, they didn’t even know what they needed it when you first tested it. And then maybe later on they need it, like they need it like crack, they had no idea. So, I would say that the most important things are whether or not people are using it the way that you imagined they would use it, and then find out why they aren’t using it the way you imagined them to use it, and then use the input of how they’re using it to inform other product decisions. Because, my favorite stories come from this guy, Stewart Butterfield, that started Flickr. And then recently Slack, which is this really popular enterprise communication tool. Every time he’s created these two very, very successful companies, it’s come from something else. So, when he started Flickr, it came from his games company, it ended up, this sharing of photos ended up becoming the Flickr product. And then for Slack, he started another games company, that didn’t work out, and then he started Slack again. It’s almost like his model is: let me start a games company and everything else that comes with it just becomes a product, ends up becoming way more successful. Slack is being valued to almost a billion dollars now. That’s like, there are so many stories that I’ve seen, not just Stewart, where they would create one thing, and the entrepreneur thinks this is one thing, and then the use case that people have of it, that ends up becoming the really successful use case, because they’re so focused on that one thing they forget to see how everybody else is using it. And then, the other use cases usually are the ones that might be the billion dollar company hiding in there. And the genius entrepreneurs are the ones that can identify that.
Martin: But still, if their cash is not sufficient for having this kind of pivot, and showing some traction in this new business model, some VCs might not put money in there.
Brian: But that’s why you need to surround yourself with geniuses. They can identify these things, and “No, listen, you might think you have this, but you actually have this”. And you need people around you that can kind of come up with those ground shattering, some sort of insights, because, too often when you’re in it yourself, like myself, I’m in it all the way, like really deep, it’s very hard for me to float up to the top and go “Oh, yeah, what do we have here?” It’s very, very difficult, almost impossible. So, the people who are around you that can do that, or the ones that are very valuable to you.
Martin: You started quite fast in the school. Are there any tips on productivity you can share with entrepreneurs?
Brian: My productivity tips from year 1 to now are very different. So, year 1 is, you have no such things as sleep, you have no such thing as rest, every day counts, every minute counts. Now, it’s still the case, but you really need to find sole and almost space to let yourself wonder and think about things that help your business grow. Because, in the beginning, you already know your game plan. You have everything laid out, to build the company and once that’s done, the company is built, has its foundation, has its revenue streams, has its sort of operational infrastructure, but now, once those things are all built, like you can bury yourself in that stuff every single day, you need to have enough time to think about what are the next products, what are the next customers, what are the big picture items we need, what are the big partnerships we need to do? You need to give yourself that extra room, which means things like not burring yourself at work just for the sake of burying yourself at work, it’s very easy to do that. It’s very easy to stay at the office until 11pm, midnight, every day. But does that mean that you’re more productive than the next guy? Probably not. You need to have that extra room to be able to see the big picture for your company as well.
Martin: Might this be from your perspective one of the reasons why VC sometimes exchange in the CEO, because he might not change from this kind of “I’m focused on the first product, get it ship and that’s it”, but cannot be, it’s not able to take step back and think about corporate strategy and what are the next products, roadmap, etc.
Brian: I can’t really comment on that or know what the decision-making process is like, but I feel like I can certainly understand why some founders and CEOs decide to do certain things because they have different objectives that they enjoy spending time on. The good news is that, because I have a business degree, and I also love operating and I love being visionary at the same time. I think both of those things land nicely, I just need to acknowledge things more explicitly early on and hire operating goals, and that’s what we’re doing right now, so we’re really in the middle of it right now. I think 4 years later, because I’m still here, I think I’m hopefully doing something ok, but there’s a lot to keep in mind as a company grows.
Martin: You said in the beginning that you really should focus on having rock star, super geniuses on your team. Is there some kind of rule that you identified for the number, the size of the team, and what are the criteria for such “super geniuses”. Whether it’s really only PhD, something like this, or whether you put it more on other criteria?
Brian: I don’t just mean PhDs, I’m talking of people who have done it before, or very interested in that one single area, very entrepreneurial, maybe have the same drive as you. Those guys work really well when you’re between like 3 to 7 or maybe 10 people. The moment you pass 10 people, the moment you got like 15 people maybe, you’re going to lose some of these people, because they want to be part of something early on. So when I say in the early days, having those people to support now, maybe you don’t want to hire another ridiculous, early stage, savant guy, because they won’t survive at a 70 person company. They’re just not designed to be in a later stage business. So there’s different types of people you want to hire. Now, what you need is loyalty, what you need is very, almost machine like efficiency, which will come from people who have done this before, and also are very used to scaling vs. the ambiguity of the start. And so the good news is that those people wouldn’t have joined your company in year 1 or year 2, but they will join your company in year 3 or year 4, which is what’s happening now.
Martin: And how do you find this type of savants, for example?
Brian: You got to hang out with really smart people. These are big events, these are like going to things like TED, these are going to things like Davos, these are going to things like DLD, founders, all this really big events, you want smart people like that, and also three intros. Usually, smart people hang out with some people. So, once you get to know one or two or three, they all hang out in different areas and you end up getting to know them, stuff like that. The challenge today is that there are a lot of really big problems that need to be solved, and these smart guys are in definitely lot higher demand, so I think you want to find them in non-conventional sources, though I feel like the ones that already have done it in the whole Silicon Valley system, have extremely high views of how valuable they are. And I’m not saying that they overvalue themselves, they certainly know exactly how much they’re worth, so they will charge a lot. But if you look at a guy who’s a recent PhD in like University of Florida, or some random place in the US, they have no idea how cool they are, you want to find these people. Those are the guys, and gals, I’m sure can be able to help you, and may not understand how they fit in the startup ecosystem yet.
Martin: Ok. Imagine a friend of yours ask yourself: Brian, what is your most valuable advice that you can give me when I want to start my own company? What would you tell him?
Brian: Single, most valuable piece of advice: ask a lot of people for a lot of help. Just ask people. I’m talking like, even if you didn’t think that person would respond to your email, just email them and ask them for help, because asking, I think, is very underrated, and you never know what’s going to happen. And you might be, some parameters of your network or your intelligence, like me, I think I’m not even that smart when it comes to lot of things we’re trying to attack, but just the fact that I ask people for help, moves the needle, gets things done, those people are willing to help, the ones that end up responding to you. If they don’t respond you, it’s not like they would help you anyways, so it ended up being good thing that you actually open those doors. Because if you don’t ask people, they don’t know how to help you.
Martin: Should you only ask people that you know or…?
Brian: No, ask people who you have no idea… Ask people who are strangers. That’s the beauty of tackling the problem, is that even that you don’t know this person, what will bring you together is this problem you’re trying to solve. And everyone, I feel, always want something exciting to sink their teeth into, there’s not a single person that I met in my life “I want to have very boring, unfulfilling life”. There are people who want that excitement, how much of that excitement is definitely up for you to discuss with that person, but they will certainly, in the beginning at least, want to dip their toes in there and try to at least help you in some way or fashion.
Martin: Ok. Brian, thank you very much for your time.
Brian: Thank you.
Martin: And if you enjoyed this interview, you can have a voucher over there, clicking and… Have a nice day, thank you.
Welcome to the 11th episode of our podcast! You can download the podcast to your computer or …
Do not let your parent status discourage you from becoming an entrepreneur. There is a growing …