Wibiya - From Pivot to Exit

Having raised some Seed money based on their original search engine idea,122 Daniel and his co-founders got the blessing of their investors and pivoted. Within four months, they had an MVP ready to launch, but to whom? They had a rough idea that bloggers and hobbyists would be their early adopters.

With that in mind, they created a loose design partnership with a startup that had been created the year before in the Zell Program called Walyou,123 which had morphed after the Zell year from a technology warranty service into a technology blog. On Walyou, they were able to showcase their product and learn about its usage. 

They also developed their launch strategy to include a waiting list where they would slowly invite bloggers and hobbyists to use Wibiya. They figured that by making the product feel exclusive, it would seem all the more appealing to their target audience. A waiting list was also a means to understanding whether there was real interest in the Wibiya toolbar. “It was a way for us to really understand if we were on to something because eventually, if you have an empty waiting list, then you're not telling a compelling enough story,” said Daniel.

The advantage with Wibiya was that their target audience could also serve as a marketing channel. The very people invited, feeling fortunate to be included and off the waiting list, did as bloggers do, they blogged about Wibiya. The toolbar became very visible across blogs, and it naturally created a viral effect.

But sometimes, getting the target market segment right is ultimately not enough. They were right that bloggers were the natural early adopters and were quite keen to use Wibiya, however, the average blogger wasn’t generating much recurring revenue at that time. How in the world would they get bloggers to pay for Wibiya, when they barely got paid for their writing as is?

By 2009, in typical startup fashion, Wibiya found itself with an attractive product and a growing user base, but no clear path to monetization. Its user base, while robust and growing, didn’t exactly generate loads of revenue. The catch-22 was that without revenue, they could not grow, but charging their users could potentially lead to a stark dropoff rate.

To avoid this, Daniel and his team created a premium model that mainly offered usage of the toolbar without the Wibiya logo, which is known as a white- label strategy. Those not converting to the premium subscription would have the Wibiya logo in full view of their users. While the white-label strategy did not generate much revenue, it did ironically create a viral effect. As it turned out, about 90% of Wibiya’s users did not convert to the premium model but continued using the toolbar, which now showcased the Wibiya logo. Suddenly, Wibiya’s inbound traffic multiplied and their lack of conversion to premium ultimately allowed Wibiya to scale even further 

In 2008 to 2009, the online start-up industry had a lot of hype. The world was seeing companies rise, scale their user bases, and then become acquired, not necessarily having converted their usage into any significant monetary sum. From a growth perspective, Wibiya’s numbers looked great – they had tons of publishers and bloggers using their toolbar and showcasing their logo. However, when Daniel dove past the vanity metrics and took a deeper look into the data, the problem was clear. Yes, Wibiya had a lot of users, but how many of them were publishers or bloggers with large followings? Wibiya had some publishers with hundreds of thousands of readers visiting their websites every day, but there were even more bloggers who were basically writing for themselves. Understanding who Wibiya’s users really were would have helped them tailor and define a user base that could have eventually led them to monetization. However, this ultimately never occurred.

Daniel describes vanity metrics as a dilemma of that time. Startups like Wibiya were showing huge numbers of users, but the quality of those users was ignored. The term Customer Lifetime Value, i.e. the value (direct or indirect revenue) over the lifetime of their acquired user base, or their level of customer engagement, was a metric that was simply never asked about -- not by founders or investors alike. 

Companies were created, scaled, and acquired with huge user bases, but without a real business model 

or a careful look under the hood at their metrics.124 “We were captive in that narrative because we saw the success in the graphs. We told the best story we could to investors, partners, and even ourselves to some extent... that's a very dangerous pitfall to be in. It's a good place if you can move beyond it, but it's a dangerous place to stay stuck in,” said Daniel. “Today, people are way more aware of vanity metrics, and they don't look at how many app installs you have, they look for activity and engagement within it. I think that the market is also more mature in the way that it looks for value creation online now.”

While Wibiya was wanted and loved by its users, the company was built and sold without a clear understanding of the exact problem they were solving, nor an accurate customer type and revenue-driving audience. It was acquired by Conduit in 2011 for $45 million dollars, and discontinued in 2013, without the business ever having turned a significant profit. Wibiya was a poster-child for a time in business when vanity metrics defined the image of success.