New CFO Pearl Chan on What Drew Her to the Cheezburger Network and Why Humor is for Everyone

7/1/10

If you like to spend your spare time crawling the Internet for pictures of cute animals with silly captions or stories of others’ “fails” (i.e. moments of sheer misfortune caught on camera), odds are you’ve stumbled upon I Can Has Cheezburger. It’s grown into a network of 51 sites that have become the viral ‘it spot’ for online humor. The Seattle-based company has been growing fast—both in page views and employees—since it was founded just three years ago. I met up with Cheezburger CEO Ben Huh earlier this week to chat about the future of the online comedy network and all the new talent the company has been recruiting, including just-hired chief financial officer Pearl Chan.

Chan officially joined the team Wednesday after 18 months working as Cheezburger’s part-time CFO. She brings with her more than 20 years of experience with early stage Seattle tech startups, including Picnik, the hit photo editing service  recently acquired by Google. I had the opportunity to chat with Chan on Tuesday about how being a part-time CFO helped her get the job, the company’s secret to monetization, what makes the Cheezburger community so darn special, and how the company is going about becoming “anyone and everyone’s humor network.” Here are some of the highlights from our conversation:

Xconomy: In my interview with Ben, he mentioned that you’ve been working with Cheezburger on a part-time basis for some time now. How did you first get involved with the company, and what was it about Cheezburger that made you want to come on board full-time?

Pearl Chan: The investors at Cheezburger-they are the who’s who as far as angel investors in Seattle…Cheezburger is funded by angel investors as opposed to a traditional venture capital firm. And there were a number of the angel investors that I already knew because I’ve worked with them in other capacities throughout my years in working in Seattle. And when Cheezburger got to a certain size, they needed some more strategic financial help. They [the angel investors] looked around and said, ‘well, who do we know that we could recommend?’ And that’s how my name came up.

At the time I got involved with the company—about a year and a half ago—the company was still fairly early stage. I mean, there were a lot of things that were still yet to be proven, but it was starting to get a lot of buzz and a lot of traction. And it is usually about that time that it’s good to take a look at getting some financial expertise, because prior to that there really wasn’t any internal financial expertise. We had some bookkeeping that was done internally, but not by a certified public accountant or anything.

And I was actually at that time working as a consultant, so I was a part-time CFO. And it’s interesting because there’s quite a need for that in Seattle. We have a very high amount of technology companies. Especially when they’re starting too, instead of funding themselves they take in external money—any kind of external money—from investors. And when you do that it’s important to show your investors and give them comfort that you’re taking good care of their money and doing all the right things with making decisions on how the money is being spent and how it’s being accounted for and that sort of thing. However, most of the companies at that size, they don’t have enough work for a full-time person because they haven’t been able to get big enough to do that. They still need that strategic level of expertise, so a part-time CFO was really ideal. And that’s how I got involved.

The first thing that I did [when she joined Cheezburger part-time] was kind of laid a lot of foundation groundwork on basic block-and-tackle financial stuff. But we had immediately—because the company got so much traction so quickly—we immediately went into some financial strategy-type things, like what do we do with banking relationships? What do we do with the capital structure? And just kind of planning for where the company’s going to go next and what type of support it needs in growing next.

X: Ben mentioned that he’d been doing all the finance himself before you came along.

PC: It was internal! Those just plain keeping the books—how do you pay your bills? How do you pay your people? And that sort of thing—that’s when you first just need to get the business moving. But once you start getting a large number of people in and once you start getting revenue in, there are all kinds of other—I keep going back to the word, the foundations need to be set. Because if you don’t set the foundations, you can’t report on what you did and reporting is part of your report card. If you report the performance of your company, that really shows how you’ve done. And if you don’t have systems to track that, it’s hard to say how do I generate my report card for my company. And the investors want to see that too.

X: One of the biggest questions when talking about online startups is how to make it profitable? Is looking for new ways to monetize going to be part of your role as CFO?

PC: There are a lot of different ways in which you can monetize. And that seems to be quite the word that people use a lot when they talk about Internet companies. There are lots of ways in which you can monetize, and I think what we do here is the company reinvents itself almost every few months. You reinvent in lots of different ways. You reinvent in the way you brand, branding meaning how the public and how your fan base and your users view you—you’re answering to what they’re asking for. You keep changing and evolving in order to meet the needs of your user base and your fan base. So that kind of reinvention goes along all the time—it’s a continuous evolution. But as the company grows with revenue and expenses, that’s part of the reinvention. Like you said, monetization of profitability is key. But a lot of Internet companies don’t achieve both. And that’s the unusualness about this company—somehow we kind of stumbled upon it, and then we found the way and made it more scientific on how we actually continue to monetize. And yes, we definitely will need to explore all different ways to monetize, but we want them all to be able to answer our users’ needs.

When we first started up with our most wonderful fan base, we were just satisfying them, we didn’t think about monetizing them. And then the next thing you know, we have all these people visiting our sites, and we could actually advertise because there’s an audience! So first you go back to your core basis: satisfying your users. They get happy, —oh wow! We have a fan base—now you can advertise. That’s one natural progression of monetization. But then what happened is we got a large enough fan base that they kind of said, ‘we want some merchandise too!’ Because all the fans kind of like to carry around they’re little, tangible stuff that says they’re part of the fan club. So things like T-shirts, we sell some of that stuff. This isn’t something that we said, ‘oh, we’ve got to monetize,’ and we come up with these ideas. It was almost driven by what the users are asking for and what their behavior patterns are. So we started doing little merchandizing—trinkets and magnets, and things like that. Then as the fan base grew and got a little broader, the publishing companies would come and say ‘hey, how about doing a book with us?’ Yes, in a way we continue to be creative to come up with ways to monetize, but in many cases [if] you stick to your core values of keeping your user happy, those things kind of happen and naturally evolve. It sounds kind of silly, but that’s how the idea of T-shirt-a-day [came about]—it’s the fans! Instead of a T-shirt that says ‘I Can Has Cheezburger’ with a cheeseburger on it, now we have a different design T-shirt a day. It’s kind of a collaborative type of event that’s generated by the users. And because we have happy users, we somehow figure out other ways to monetize… We generate by advertising, but we do royalty programs with the books and stuff, and you say we’re doing greeting cards. Those are things that people come to us and they say, ‘hey, would you like to do this?’ And those are areas we’re continuing to look to expand.

X: It’s always hard to predict where a company will expand to in the future, but if you had a hunch, what would it be?

PC: I would think that in the near term it would be more into expanding in the current categories that we have, right? Like growing more in books or greeting cards or something of that nature—other things that people would just love to see a picture of a cat-a-day on, like a calendar or something like that… It’s not like brand new, amazing ideas. It’s just current ideas that they [users] just want our pictures on. We’re not reinventing anything completely new in the merchandizing. I mean, we’re not coming up with any special gadgets or something. It’s the same kind of stuff that people normally wear, they just want our pictures on them.

X: Do you have a favorite Cheezburger site?

PC: Of course my very favorite is the cats—I Can Has Cheezburger—that’s the cornerstone. And I think it depends on the personality, because I spend time on FAIL Blog—I mean, those are the two biggest sites—so I spend time on FAIL Blog, but it’s more my 14-year-old’s humor. He loves that site. And what’s so great about it is it has something funny for everybody. And that’s the thing: we want to be anyone and everyone’s humor network.

X: Your son must love that you got a job with I Can Has Cheezburger.

PC: It is amazing, because, you know, you get a lot of different jobs, but your family doesn’t necessarily identify with it in such a way. I mean, how many of us actually get a job with something that is so mainstream that everyone identifies with it? This is really approaching mainstream, and that’s what’s kind of funny and scary about the whole thing. Because just a couple of years ago people thought this was kind of silly—silly pictures of cats: Is this a fad? Is this really going to be something? And it’s almost like we keep pinching ourselves. But it goes back to the core, keeping your user happy…If your user is happy, they continue to submit wonderful, wonderful content. And without that—without our users participating by sending content, by voting, just being part of the community—it’s all community interaction. And we’ve been able to kind of help generate that—it’s like the viral moment that’s been going on and we just kind of help it along.

X: What’s your favorite part about the company culture?

PC: It’s a fun place to work! It has a tremendous amount of energy and potential. The investors are wonderful. The team is wonderful. And I’ve done a lot of things in my career, but what really gets me very, very excited and challenged is that nothing is set in concrete. We’re developing the playbook as we go, and that’s the fun part—to invent things as you go and try out things and see what works.

There’s nothing pre-written about what we’re doing… What is very, very secret is our ideas. We come up with all these crazy ideas—it’s almost like we have to stay on the cutting edge of humor… And that’s the intellectual property. It’s the ideas that are in the ‘brain trust’ right here. We have a really good brain trust because we have people from all different backgrounds, and we swoosh it up and what comes out is the Cheezburger way!

Thea Chard is a correspondent for Xconomy Seattle. You can e-mail her at theachard@gmail.com or follow her on Twitter at http://twitter.com/theachard. Follow @

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