Author: Will Chang

The Future of Imgur

If I said “Imgur” to you, what would you think of? The front page? Cat photos galore? A blank stare? What should cross your mind is “Imgur (pronounced IM-uh-jur) was founded by Ohio State computer science student Alan Schaaf in 2009 as an image-hosting service meant to complement Reddit but has since evolved into an online image-sharing community with over 160 million active users and images garnering over 60 billion monthly views.” With a unique online persona, Imgur has quietly ascended the ranks of internet popularity, currently holding an Alexa rank of 44. Unsurprisingly, Imgur has also attracted the interest of investors looking to cash in on its user base. As someone who wastes an inordinate amount of time browsing Imgur, I’m interested to see how Imgur will preserve the character of its community while also catering to monetization efforts.

In a word, Imgur’s culture is best described as “quirky.” Imgur is very much a community-oriented site, centered around the sharing of funny, informative, or just plain weird images. Posted images are evaluated based on a system of upvotes and downvotes, with the highest scoring posts displayed on “FP,” or the “Front Page,” on Imgur’s homepage. Users, called “Imgurians,” can also receive votes on their comments on posts. Votes serve to assign users levels of “Notoriety” or online reputation, ranging from the unenviable “Forever Alone” to the vaunted “Glorious.”

The Imgur front page, a curated list of the most popular images of the day

The Imgur front page, a curated list of the most popular images of the day

Imgur’s community has enjoyed minimal involvement from Imgur’s administration and has developed a policy of self-policing; offensive or unsavory material is often downvoted or deleted and there exists a strong, unspoken obligation to keep the community clean. GIFs and memes are the language of choice, and a number of inside jokes exist within the community. Users can attain near-celebrity status through their posts, their usernames easily recognized. Moreover, Imgur has served to connect users across the world; a Google search for “Imgur love story” will yield a host of results chronicling users who have found romance through the site.

Naturally, Imgur’s success as a community has not gone unnoticed by keen-eyed venture capitalists. Andreesen Horowitz poured $40 million into the site in April 2014, five years after Imgur was founded. With the presence of investors, revenue-generating moves are clearly in Imgur’s future.  While Imgur does offer premium accounts with unlimited posting plans and also runs a small online merchandise store, the site has become more aggressive in pursuing additional revenue streams, namely advertising. Companies are now able to purchase the right to post promoted material, with their posts appearing on the front page for all to see. Recently, companies such as eBay and Old Spice have been particularly active with Imgur ad campaigns, making their products a regular sight on the front page.

While it may seem that a spot on the front page allows for instant reach to Imgur’s massive user base, Imgur’s unique culture complicates the process. Imgurians can be extremely opinionated regarding advertising on the site, almost protective in a sense. Advertising is viewed as an intrusion; the front page is a showcase of the most popular images of the day, not a space that can be bought. Advertisements that make no effort to understand Imgur’s community are heavily downvoted and can even have an adverse effect on a company’s reputation. Truly successful advertisers have a pulse on Imgur’s current events and construct their posts accordingly, with their effort rewarded by Imgurians who are pleased to see such understanding.

A well-received ad by eBay showing a list of past transformations in techology

A well-received ad by eBay showing a list of past transformations in techology

Advertising on Imgur, while still in its infancy, is poised to become a huge part of the site. As of now, ads are few and far between, with only one promoted post shown on the front page each day. If Imgur is to make ad revenue a major part of their business model, it will need to find a way to deliver ads on a large scale without disturbing the core values that have been established within the community. It would be a shame for users to leave the site because their browsing experienced is threatened by ads. The situation is a delicate one, but if Imgur plays its cards right, it would have access to an unprecedented concentration of ad revenue from loyal users.

Subscription (Box) as a Service

Nature Box. Ipsy. Stitch Fix. There’s a new SaaS sheriff in town, and it’s not software. Since 2010, with the debut of beauty service Birchbox, subscription box services have popped up in a frenzy. It’s easy to see the allure of subscribing to a box service: for $10-$40/month, consumers will receive monthly surprises at their doorstep, filled with curated goods that they’ll enjoy and often exceeding the value that they paid for the box. Today, boxes have entered nearly every market vertical from groceries to pets to fashion. Subscribe to Blue Apron and you’ll receive a weekly delivery of fresh, easy-to-cook meals. Bespoke Post ships a monthly themed box of men’s lifestyle gear, while Julep Maven offers nail polish and beauty products. Simply name a need, and you can find a subscription for it.

One of beauty service Birchbox's monthly offerings.

One of beauty service Birchbox’s monthly offerings.

It’s easy, however, to be swept away in subscription box mania. While new services seem to launch every week, running a subscription service is more than collecting products and shipping them away in boxes. Here, BVP’s Kent Bennett outlines the five criteria for subscription service success: entertainment value, enrichment, quality of product curation, cost efficiency, and consumer convenience. Even when these five boxes are checked, however, running a successful subscription business is no easy task. Profit margin is key, as always. Gross margin per box must be carefully calculated through a sustainable pricing model that attracts customers but covers COGS. Fixed costs can pile up through labor, product selection, and advertising, while customer acquisition must be effective enough to generate traction yet cheap enough to be offset by revenues. Logistically, orders and subscriptions must go off without a hitch, and services such as Cratejoy now offer software solutions to manage a service’s shipping, design, and more.

Unsurprisingly, subscription boxes have not flown under the radar of VCs. Birchbox, Nature Box, and Dollar Shave Club, among the most successful services, have raised $72M, $60M, and $150M in funding, respectively. Such funding is not misguided. As mentioned previously, given a unique product that attracts a loyal customer base, subscription boxes offer a reliable source of recurring revenue. Given the myriad services that exist to help manage a subscription business, overhead costs are often low, and some industries, like beauty products, boast killer margins. What’s not to like?

The question that remains for VCs is whether or not the subscription box model can generate acceptable ROIs. Little press has been had regarding exits; the first that comes to mind is Nordstrom’s acquisition of Trunk Club but little else does beyond that. As a unique business model, the subscription box faces unique challenge on its path to greater success. While there’s nothing wrong with subscriptions springing up in every industry, it’s unlikely that boxes in niche markets like wine and intimates will ever see levels of traction that takes them to the next level. Furthermore, the subscription-based service allows customers to cancel their purchases at any time should product curation not meet their standards; unlike a software package that simply sits in a computer, boxes are physical products that take up space and will be held to a higher standard.

Even the most successful boxes are vulnerable to these risks. Heavy emphasis must be placed on product branding, so that when a package arrives on the doorstep, its arrival is like that of a welcome face. Boxes must ingrain themselves into the lives their customers and become commonplace items in a household in order to achieve long-term success. And while companies like Nature Box have gained widespread popularity, it’s hard to see the merits of a public company built solely on boxes of healthy snacks. Profitable box services looking to exit should instead look to the M&A markets where they would fit nicely within larger marketplaces like Amazon. Either that, or don’t raise capital and stay private as solidly built business.

To Venture or Not

Picture this: You’re lying on the couch on a lazy Sunday afternoon when it suddenly hits you: that fabled killer idea that every entrepreneur dreams of (or the best iteration of an original idea. Your choice.). Inspired, you sit up. Suddenly, the rest of the day doesn’t seem so hazy. Facebook wasn’t built in a day, and they sure didn’t get anything done while covered in a fine layer of Cheeto dust. This is your chance to frolic with the unicorns! Your cursor closes your Netflix tab for the first time in days, and you get ready to dial some numbers. Who to call first? You heard somewhere that the fellows over at True Ventures are pretty cool; maybe they’ll put up your seed round. But your finger just can’t quite push the call button. You recall some not-so-cherished memories of your last idea that flamed out in spectacular fashion. Investors just didn’t see the growth potential in your dog massage-sharing platform like you did (you’ll prove them wrong one day!). Down goes the phone. Who needs funding? You’ll grow this business alone, and in your mind, you know that it’s the best decision for your company. Right?


And in many cases, you wouldn’t be alone. While venture funding gets all the press, the reality is that only 0.05 percent of all startups are venture-backed (and 0.91 percent are angel-backed). The rest of the crowd makes do with funding from family & friends, bank loans, crowdfunding, and personal savings. The term “bootstrapping” refers to a self-sustaining process sans external input, or, in startup terms, operating with no outside investment. The virtues of bootstrapping are tempting:

All equity remains within the company.

No outside investment means no outside ownership. Sure, if you set aside an employee option pool (which you should, you cheap bastard), you could own 80-90 percent of your company depending on how many employees you have when you exit. Case in point: of the $575 million Match Group just paid for dating site Plenty of Fish, founder Markus Frind will walk away with $525 million, or 91 percent. While distribution of equity will vary across industries, investors can receive 15% to 35% in a typical seed round with that number jumping to 50% in a typical Series A. Bootstrapping eliminates that outside share, keeping ownership within company lines.

Take the business where you want to go.

If you do raise venture capital money, you are no longer alone in your business pursuits. Your VC’s views of your company’s future may not align with yours; they may want to take the company in a new direction that might be more profitable, but you may want to stay the course and work on what originally inspired you. It’s also not uncommon for founding CEOs to be ousted from the leadership of their own companies in favor of bringing in a “professional” or “growth stage” CEO. Granted, founder CEOs are usually only replaced if they have lost the confidence of their employees or if they are truly failing at their job. Regardless, most founders would probably prefer to avoid this.

Prevent money from taking over.

Now that outside money is involved, the success of your business is beholden not only to you but also your VCs. And those VCs have to answer to their LPs who, in the end, are seeking worthwhile returns from their capital commitments. The harsh truth is: it is about the money. Venture capital is already by nature a very illiquid asset class. Funds have lifetimes of around 10 years during which LPs cannot access any investments that they have made. And after 10 years of being locked out, it’s fair for LPs to expect a reasonable ROI from funds (the average ROI for venture capital over 10 years was 10 percent in 2014). For VCs to achieve acceptable returns, they need their portfolio companies to have exits, and big ones too, since the bulk of VC returns are usually generated by a minority of investments (I’m generalizing here, but the numbers are in line with this). By accepting funding, you also accept the obligation to return money to your VCs and their LPs through an eventual exit, even if an exit may not be the best choice for your company in the long run.

Stay hungry and stay focused.

Yes, raising a round will get you the money to move into that hip office space and finally get those exalted free meals the peeps over at Google talk about in every news article. But do you really need those? There’s a difference between running a company on your own dime vs. a VC’s checkbook. When you’re operating alone, every penny matters, and everything else counts as a luxury. An entrepreneur should focus on his or her product, plain and simple. Through board meetings and investor calls, venture money can take away from time that would have been devoted to development and production. A group of two people usually chooses where to eat quicker than a group of nine, and when you take on funding, your company becomes that group of nine that can’t move as fast or adapt as quickly as everyone else.

So what?

Bootstrapping is nothing new. Well-documented success stories that include MailChimp, WooThemes (acquired by Automattic), Github, and the aforementioned Plenty of Fish are a testament to the viability of bootstrapping. But as survivorship bias dictates, we tend to overlook the stories of failures, those who bootstrapped and didn’t make it. For many startups, VC support and funding is a necessity. Funding offers the opportunity to scale a company orders of magnitude faster than bootstrapping does, reducing the possibility that a competitor steals the market before you’ve even begun to enter. For startups chasing billion-dollar markets, the boost offered by venture capital will often outweigh the lost ownership percentage. Rest assured that no one sympathized with Jack Ma for owning “only” 8.9 percent of Alibaba.


This post is not meant to portray VCs as greedy, controlling company killers. Venture capital has been an important factor behind a long string of successes, and the numbers validate that venture capital as an investment model is here to stay. VCs do provide immense benefit to the entrepreneurs they work with. The best VCs will value an alignment of interest with founders and many adopt a hands-off approach when managing their investments, allowing entrepreneurs to work as they please, while the value of their professional connections cannot be understated. All things considered, maybe you should pick up the phone and give True Ventures a call after all. Or not.

A Summer of Exploration


When many people think of startups, they think of Mark Zuckerberg hacking away at Facebook in his dorm room, taking the first step into a rocketship to fortune. Or they think of Uber with its cars seemingly omnipresent in every major city, or Snapchat  and the near billion photos and videos it processes every day (let’s face it, no one uses Discover). Some may even think of TaskRabbit and Palantir, huge successes in their own right. What is often lost among the dreams of billion dollar valuations is the incredible amount of hustle and hard work that it takes to have a slim chance of success. As a 2015 TEC Fellow, I’m here in San Francisco this summer to work behind-the-scenes at a startup and see what it takes to call oneself an entrepreneur.  

We’re two weeks into the program, and so far the experience has been incredible. “Instant friends” is the closest I can come to describing our class of 14 fellows. Hailing from across the nation (and the world!), I’ve been thoroughly impressed with everyone’s background, vivacity, and dedication to their work. While we’ve only been here a short while, I look forward to spending as much time as I can with them.

I’ve been working at Kissmetrics, a company that provides a marketing analytics platform for businesses. In short, our platform allows businesses to see how individual users are interacting with their websites and gain insight into how they can improve their conversions. We like to say ‘Google Analytics tells you what’s happening. Kissmetrics tells you who’s doing it.’ During my internship, I’ll be assisting with day-to-day operations such as managing our daily blog newsletter and webinar series as well as more interesting tasks like analyzing and improving our social media strategy and sales funnel.

As someone who can’t claim to have any major technical skills (read: non-coder), I’m sometimes doubtful of where I fit within the tech world. Can you really make it in the valley without being well-versed in at least one programming language? While I’ve worked hard to acquire a working knowledge of code, the short answer is yes. Save for a select few, young, growing companies will always need marketing, sales, and even biz dev teams to scale up. My hope is that before the summer ends, I’ll have a firm grasp of what I have to offer the world as an entrepreneur in the future.

Check back in next week for more!