Why Wetpaint Went from Wikis to Social Publishing—the Next Step in Social Networks

10/23/08Follow @gthuang

Back in the summertime, we did a short piece about Wetpaint, the Seattle-based Web startup that had just surpassed its 1-millionth-consumer-wiki milestone. Wetpaint is one of the more heralded tech startups in the Northwest, backed to the tune of $40 million in venture capital—including, most recently, a $25 million round led by DAG Ventures in May. Investors (and others) are intrigued by its vision of “social publishing,” which many think will be the next evolution in social networks.

The basic premise is, now that social networks exist online, what are people going to do with them? Wetpaint thinks they’re going to generate new kinds of content, and that this user-generated content is the key to the future of many Web businesses. The company pitch is that with Wetpaint’s software, any site can become social—users can post comments, photos, and other content while connecting with a community around any topic—and that this social dimension will drive up traffic. But I wanted to know more about this strategy: where it came from, why the startup’s founders think it will work, and what they’ve done to overcome various challenges to this point.

So last week, I sat down with Kevin Flaherty, Wetpaint’s co-founder and vice president of marketing. Things looked to be running smoothly at the company, especially given that its staff of just under 50 had just moved into new digs on Second Avenue three days earlier. Wetpaint used to be upstairs from Armandino’s Salumi—Flaherty says that, regrettably, they never got the “Salumi cam” up and running to monitor the line outside the popular eatery (though he ate there only once himself).

Like most seemingly overnight successes, Wetpaint’s story goes back many years. In 2002, Flaherty, an ex-Amazon employee, was working in the Seattle area at Precor, a fitness equipment company. One day, he was interviewing a young guy named Ben Elowitz, who had been a co-founder of Blue Nile, an online jewelry retailer, and had worked at Fatbrain.com. “I thought, ‘What are you doing here?’” says Flaherty. It turns out Elowitz was a fitness fanatic (and still is). He got the job, and a friendship was born.

In late 2004, Elowitz started getting the itch to do something new, and Flaherty went along. They were watching the growth of Wikipedia and saw an opportunity. Their “aha!” moment happened, sadly, when a friend of a friend who had cancer went online looking for advice on experimental treatments and how best to spend his precious time. “We thought, matching Wikis with a human need, that could be a really cool business and also impactful from a human standpoint,” says Flaherty.

Together with a few friends and former co-workers, Flaherty and Elowitz came up with a business plan, and launched in October 2005 with $5.25 million from Frazier Technology Ventures and Trinity Ventures. Their first product, a Web-based tool for creating wikis, was ready in the spring of 2006. But there were bumps in the road. “It was a learning process,” says Flaherty. “There were lots of failures.”

For starters, users had to overcome the “blank canvas” problem. Even if they were passionate about starting a wiki site about music, technology, or a game, say, users would get started with Wetpaint and then face a blank page with no content. So Flaherty says his staff sent “education e-mails” about how to proceed, designed templates as a guide, and evangelized wiki sites that were doing well. Getting a user started can still be a bit of a hurdle, Flaherty says, “but compared to where we were in June 06, we’ve made a lot of strides.”

There was a deeper challenge, though. “When we launched,” he says, “we wanted to make the best wiki on the planet. But then we realized wikis were not social enough.” To become more mainstream and popular, they needed to incorporate social networking tools, like messaging, photo sharing, and reader profiles. With the rise of Facebook and MySpace serving to create platforms for online relationships, Wetpaint wanted to position itself as the next stage in social networking. “Once you have the relationships, what do you do? You create content together,” Flaherty says—and the company’s notion of social publishing was born. “That was the critical inflection point.”

That was mid-2007. A year later, the jury is still out as to whether social publishing will truly go mainstream. Making the social-wiki interface simple and easy to use seems like a key hurdle. But with Wetpaint’s new venture rounds, raised in January 2007 (led by Accel Partners) and May 2008 (DAG Ventures), investors are clearly banking on user-interactive sites as a disruptive economic model for the Web. “People will be more likely to go on your site if they can take part,” Flaherty says. “That’s more sticky, and they’ll go tell their friends.”

Wetpaint makes money from a combination of ads, subscription fees, development and maintenance fees, and revenue sharing. In part to differentiate itself further from competitors like Wikia, Ning, and JotSpot (now part of Google), Wetpaint launched an online widget in May called “Injected,” which allows any website to become social in the Wetpaint sense. The company is also cashing in on being used by big brands like HTC and media companies like Fox, Discovery Channel, and HBO—all of which have set up wikis for customers and fans (check out these sites for the shows Fringe and True Blood).

As for the future market, Flaherty thinks there’s plenty of room for fan sites, health sites, list sites, business networking sites, and any other type of social site a user or company might create. “We’re a platform for social publishing,” he says. “Content is not a zero-sum game.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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