How to make a mint out of moggies
I have cats. I like taking photos of them. I love sharing these pictures with my friends. But I don't have a $37 million company. That's because I'm not Ben Huh, an entrepreneur whose websites have gained cult-like status around the world. And it all started with a simple website full of cute cats with funny captions.
Of course, no person in their right mind could have predicted that cats would become one of the most popular and most shared personalities on the internet. But Huh tapped into the zeitgeist and he's laughing all the way to the bank. Huh is CEO of the Cheezburger Network, a business that runs around 50 sites at any one time, all based on humour. Along with the original cat site I Can Has Cheezburger?, the other sites include This is a Photobomb and Totally Looks Like.
Taking risks and changing direction
In Australia this week, Huh is here as an ambassador for Dell's Flip Your Thinking campaign (promoting the Dell XPS12 convertible ultrabook). He is talking to students and wannabe entrepreneurs on how to take risks and not to be afraid to change direction in your business. Because driving the crazy cat pictures and inane captions that accompany them is a sea of data - and it's this data that impacts Huh's business decisions. And behind Huh's quirky public image is an entrepreneurial brain that has figured out how to generate 375 million page views a month. It's a statistic most media companies only dream about.
When Huh was a boy, he didn't expect to grow up to run one of the biggest cat picture websites in the world. After being born in South Korea, he moved to Hong Kong with his parents at the age of 10 and then to the US at 14. He went on to study journalism at university. "I love media and content," says Huh. "I worked on my high school newspaper and I even tried to create a radio station. But when I graduated from college I realised that my behaviour was a bit different in that I wasn't reading the newspaper, I was more likely to read the web. That gave me a perspective into the future."
After graduating in 1999, Huh worked for web startup cars.com (a car sales website) for five months before taking the plunge into creating his own startup, a web analytics company. "I felt that [the car sales website] wasn't a true startup; it was big corporate newspaper people trying to figure out how to be a startup. I felt I had the resources to strike out on my own."
He first bootstrapped his business, then raised money from family and friends, followed by angel investors. In total, he raised about $250,000 and was looking for another round of funding when the dotcom bubble burst. He couldn't raise another round of financing. "It folded because I didn't really know what I was doing. When I first started out, someone said to me: 'You will not raise enough capital and you will not work on your product enough'. I thought: 'That's not going to be me. I'm different.' But they were right."
From dog blog to cute cats
Huh then spent the next seven years working for other entrepreneurs so that he could learn about running a business. During this time, he started a blog for his dog "just for fun". However, one of the visitors to his blog was Eric Nakagawa, who had created a website based on cat photos. They become "internet friends".
Nakagawa's then girlfriend had emailed him a funny photo of a cat with the caption "I can has cheezburger?" "Eric thought it was hilarious and he created this website sort of as a shrine to this cat," says Huh.
Nakagawa simply began adding more photos with funny captions to the site. Few people would have predicted that it would grow so much in popularity that it would pay him the equivalent of a full time salary within eight months. But by then Nakagawa was getting tired of running the site and welcomed a chance to exit. Neither he or his girlfriend even had a cat.
What they did have was a website that ran at a very low cost because it was based on user-generated content. That is, people would send in pictures of cats accompanied with funny captions.
By then, Huh realised he could turn Nakagawa's ideas into a business. So in September 2007, after raising $2.25 million in angel investment, Huh bought the site.
It would be safe to say that Huh had mixed reactions from angel investors when he approached them about funding a website full of funny cat pictures. "You ended up with a wide range of emotions," says Huh. "Some were just incredulous. Others were more thoughtful. They asked: 'Ok what is it that we're actually buying?' Those are the ones you end up talking to. They realise that you're creating a super engaged community at low cost based on user-generated content. And this is the tip of the iceberg. We not only had an acquisition strategy but we wanted to build our own sites. You had to have a sane conversation about what seemed to be an insane business."
"Having money was no excuse to spend it"
When Huh finally got his funding, he didn't go on a spending spree renting fancy offices and hiring new staff. For the first four months, he worked on his own. "I did absolutely everything. I wanted to know that whatever we were doing was going to pay for itself. Having money was no excuse to spend it. At the time, my big vision was just to stay alive: to make enough money to live and be a profitable business so that we could operate the next day."
At the time, Huh manually sifted though the 500 or so submissions of funny cat photos that people would send in each day. Today, that number has grown to 15,000.
The only child of a construction contractor dad and a stay-at-home mum, Huh is single-minded in his approach to business and has a clear strategy on how to grow his empire. "The idea is to seek undervalued and under-appreciated properties that run on user-generated content based around humour. It's not actually about cats. It's about making people laugh. Cats are a great canvas for the human emotion because they are so expressive."
Screaming goats, red pandas - and cats
Indeed, it's confounding to both laypeople and internet culture experts that cats have become so popular on the internet. Huh explains it thus: "I tell people that a dog is like a toddler - they're either happy, or they're not. Cats are more like teenagers, they live a complicated life that's filled with ennui."
Whether or not you buy into this insight into canine-feline behaviour, Huh also has a more practical explanation. "If you're a dog owner, you go out, walk your dog and socialise in the park. If you're a cat owner, you don't socialise in this way with your cat. So you have to go on the internet if you want to share with other cat lovers.
"I think the continued popularity of cats has been really surprising. Animals come and go on the internet. Screaming goats are the hottest thing on the internet right now. Then they will go away and it will be red pandas doing funny things. But cats have been a mainstay, they are the kings of the animal world on the internet."
Getting rid of what doesn't work
Huh does not get emotionally attached to the sites he creates. He says the Cheezburger network runs about 50 sites. "But that number constantly changes," he says. "We are always trying to iterate, take risks and let the users drive what's popular. We kill the sites that aren't popular anymore."
The reality is that Huh needs to get page views because all his sites generate revenue purely from advertising. He needs eyeballs for his business model to work and Huh has a team of five dedicated to selling advertising space.
In fact, his overall team has grown to about 80 people. It's a far cry from the days when Huh was a solo operator uploading cat photos on his own. However, his initial angel funding of $2.25 million only went so far. Huh raised $30 million in January 2010, and another $5 million at the beginning of 2013. "We will probably need more funding, but we have a chance to be profitable this year."
Huh admits there can be huge challenges associated with running what looks like a fun and quirky business, particularly when it comes to adapting to the needs of a growing company. "Your business continues to morph and change as you come across different inflexion points. A company that's 12 people operates nothing like a company that's 25 people. And then when you get to 50 people you have to reinvent the wheel again because you've never experienced what it's like to run a company of that size before."
Huh and his team recently featured in a six-episode series that has been screened on Foxtel called LOLwork, a reality TV show based on life working at the Cheezburger Network. It was filmed in 2012. "We've always been looking for a Hollywood connection," says Huh. "As we grew larger we wondered how far our appeal could go. Could we reach new audiences through Hollywood? There was interest in this, but we didn't know how to make it happen."
Eventually, the series was produced by Bravo (it also produces The Real Housewives series). While Huh isn't clear on whether the TV show translated into more eyeballs visiting the site, he says it's helped the 'business numbers'. "It's easier to get meetings, you have the cachet of a nationally televised TV show so that helps to open doors."
While in Australia, Huh has yet to have a crazed fan of the website present him with a cat. But this is a regular occurrence at events in the US. After all, the site has garnered a dedicated following for those who love a giggle - and those who are obsessed with their cats. So Huh has become used to people bringing their cats to meet him at his public appearances. "People bring the Pope babies. People bring me cats," he says matter-of-factly. "The cat is usually really angry. It is not a fan of being in a crate and having some random dude pet him or her. But it keeps happening."
The irony is that while Huh is the unwitting king of cat websites and all things feline, he is actually allergic to cats. "My eyes water, I puff up. If I don't wash my hands straight away it can get really bad."
While Huh heads back to his home town of Seattle next week, he leaves Australian entrepreneurs with this advice:
1. When people say your idea is bad, take their advice to heart.
"It's probably good advice," he says. "But also understand that they don't know your business like you do. They're just a data point. No one is right all the time. All you have is a piece of data that might be right or wrong. Don't lose faith in yourself but do let that data point affect you. It may result in a small tweak that can transform your business."
2. Do something you are incredibly passionate about.
"If you don't, you're going to hate your job."
3. You don't need work/life balance.
"You just need the balance that you want. I work all the time," he says. "People look at me and say: 'You don't have work/life balance'. I get annoyed with this because why should you impose your concept of work/life balance on me? I love what I do!"
Sydney Morning Herald