about this episode
Visit http://www.sourcebits.com to begin your web app development journey. Take a meeting with Sourcebits and you’ll also get a 15-minute meeting with Jason Calacanis! Email firstname.lastname@example.org for more info.
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Jason talks with Mattias Miksche, CEO and Co-Founder of Stardoll.com. The world’s largest online fashion and dress up games community for girls!
2:00 – Show brought to you free by Sharefile!
5:30 – How did you get to millions of people using Stardoll?
8:10 – How does a little homegrown project reach VC’s?
10:00 – Discussion about Stardoll timeline and history
12:30 – Why was it hard to monetize for advertising originally?
13:05 – When did you know that model would scale?
15:25 – How do you go to DKNY and say you want to use their dresses in a virtual landscape?
19:45 – Do you think that your virtual lines will turn into tangible products for sale?
20:40 – How does that relationship work with JCPenny?
22:05 – Thank you to our white labeled partners!
22:55 – When is the moment that mobile comes in and becomes the platform?
23:07 – Mattias’s past beef with Steve Jobs over flash
24:50 – Native vs. HTML vs. Flash applied Stardoll
25:48 – Which global regions are shifting to mobile the fastest?
26:00 – Discussion on mobile market shifts
30:00 – Discussion on the difference between boys vs. girls online interaction
32:00 – How do you reconcile different internal opinions? Walk me through your thought process
34:00 – What happened to your user base when you decided to gamify the way you did?
36:05 – What’s the longest duration user you have? How long is that?
37:00 – How do you deploy womens’ fashion in the middle east?
39:30 – Discussion on Stardoll products and platforms
41:00 – Do you like prerolls?
42:20 – Were you one of the first Europian investments for Sequoia?
44:00 – How do you attribute the success of the Scandinavian countries?
47:00 – Discussion on Swedish politics and background
52:00 – Discussion on starting over with mobile
54:20 – Thank you Mattias! Great Show!
Distribution provided by CloudSigma. The cloud that adapts to you. Visit CloudSigma.com/This WeekIn, for a free $200 credit.Today’s episode of ThisWeekIn Startups is brought to you by ShareFile from Citrix. Secure File Transfer, Built For Business. Visit Sharefile.com, click the microphone and enter TWIST for a free 30 day trial.
And by SourceBits. Visit Sourcebits.com. To begin your mobile app development journey.
Jason: Today on the program Mattias Miksche who is the CEO and founder of Stardoll. Which has 20M young women using the product on the web and now moving to mobile. So today on ThisWeekIn Startups we’re going to learn about shifting your web business into a mobile business. Mattias is right in the middle of this. He is a highly successful entrepreneur who has garnered tens of millions of users. Now he’s got to get them from the web onto mobile. It’s a great story. Stardoll is with us today. Stick with us.
TWiST title sequence.
Jason: Hey, everybody. Hey, everybody. It’s Jason Calacanis. This is ThisWeekIn Startups. The show where we talk about building startup companies and products that hopefully change the world. Or they fail and they go down in a flaming wreck and we learn something. Trust me. For me, my career it’s like I’m batting like 500. Which would make me like the best baseball player ever. But in entrepreneurship, let’s face it, half of the stuff that you do fails. That can really screw with your mind. The fact is failure is the precursor to success. Every time I’ve gotten my ass kicked as an entrepreneur or seen my colleagues, entrepreneurs get their asses kicked, that’s the sign that they usually learned something critical, brushed the dirt off their shoulders, got up and then crushed it. That’s what we talk about on this show. We talk about, honestly, how goddamned fracking hard it is to be an entrepreneur? How much pain and suffering there is. How psychologically devastating it can be at times. But also how absolutely glorious it is to make something in this universe. You get one spin around the globe. To sit there and not try to make something or be part of a team that makes something that’s epic, that serves some bigger mission and that people just love and enjoy. That would be a waste right? I encourage everybody to be an entrepreneur but, gosh, not everyone is ready to be an entrepreneur. It’s going to be a brutal journey if you do choose to take it. This is your resource. ThisWeekIn Startups now we’re closing in on 400 episodes. I’ve been doing it for 4 years. Two or three times a week I meet with an entrepreneur or a venture capitalist or an angel investor or a media pundit like Doug Rushkoff was recently on the program. We talk and we talk and we talk about this huge puzzle which is creation, which is a startup, which is entrepreneurship, which is being a founder. It is a puzzle and it’s constantly changing. It’s like, “Here’s the Rubic’s Cube, by the way, we just went from a 3X3 cube, to a 4X4, to a 5X5, to a 7X7 and not it’s not colored there’s symbols. It constantly changes. The advice that we learned in the first year of this episode is probably changed in a lot of cases. You need to tune into this program every week. This is your workout. This is your going to the gym. I am your personal trainer. I am going to kick your ass so that you learn from all the mistakes that I’ve made and other entrepreneurs have made. Sound like a good deal? Great. It’s only $1K a year to subscribe to the program. No. It’s free. It’s free thanks to my friends at ShareFile. That was a pretty good ad segue you think? Hopefully. Listen. ShareFile is a great product. Most businesses email their attachments right? Docs, spreadsheets, power points. But we need to make sure that stuff gets in the right hands and stays confidential. That’s why ShareFile is important to every business. 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Being on it sort of one of those things in entrepreneurship that you want to be. As you can see we share these huge, huge things. Here’s the Sourcebits spot. They uploaded 800mb. No problem. We can see here are all the people who have been uploading it and downloading it and what rights they have to it. Just all that audit stuff makes it awesome for us. I highly recommend ShareFile. You need to sign up for your 30 free trial right now. No credit card required. Visit ShareFile.com, click on the radio microphone button and use the promo code TWiST as in ThisWeekIn Startups, TWiST. So go ahead and go to ShareFile, click on the radio microphone button and start your free trial. Thank you so much ShareFile. By the way, we have the ShareFile TWiST Club. You can download the top 10 questions ever answered in this program, episode. A special episode. Step 1. Sign up for ShareFile using the promo code TWiST. Step 2. Send us a request a file link to ShareFile@Launch.co. So just say, “Request a file” at ShareFile@Launch.co and we send you that file. Boom. Now you got the 10 best questions across the 400 episodes or so that we’ve done. Available only by requesting through ShareFile. Mattias we’ve known each other for, I don’t know, 5, 6, 7 years.
Jason: We’re both backed by the same venture capital firm Sequoia.
Jason: Your business has been a juggernaut against one of the hardest demographics to capture online. Which is young females.
Jason: How did the company start? How did you get to tens of millions of young girls using Stardoll?
Mattias: Well the company history is not your typical Silicon Valley or typical entrepreneurial story. The company actually started out as the brain child of a 60 year old finnish lady. Ex-cleaning lady and factory worker. A fantastic woman called Lisa who grew up and lived her whole life in Finland. In 2002, one day while at home with her two sons watching them play violent video games she thought, “Isn’t this crazy? Why isn’t someone doing something beautiful, creative and fun for girls?” She started looking around on the web and she saw nothing out there for girls. When she was a kid growing up in the 50s she had paper dolls. You know the old style paper dolls that she did for her younger sisters. So she came up with the idea of virtual paper dolls. She got her first computer, taught herself to draw, you know Photoshop, Illustrator. Came across a trial version of Flash one day. Imported the stuff into Flash and came up with the idea of when you move the thing, the garment, with the mouse you could actually have a virtual dress up doll.
Mattias: So she drew 2D dolls. You know, body on one side, garments on the other side and you dress up a celebrity.
Jason: What an entrepreneurial story.
Mattias: It is a fantastic story and she is a fantastic lady. So she came up with the idea of virtual dress up. She had no business idea behind it. She did it for herself. She had her personal home page. She put these celebrities out there, international celebrities, that she saw in the glossy magazines of Finland. Finnish stars or Hollywood stars. Madonna, I think, was her first dress up doll. She just put these dolls out there and soon traffic…
Jason: The world responded?
Mattias: … yeah. Responded. By 2004 she has gotten her first real server, her first home page called Paperdollheaven.com. Traffic was just going through the roof. That’s when I got in. I got in the company together with Index Ventures the european venture capital firm who looked at the company and the original…
Jason: Who were the principles over there at Index? You had Daniel Rimer?
Mattias: Yeah. The Rimer brothers. There’s three of them. Exactly. Mike Volpi here in the US.
Jason: So how does that go down? The VCs are scouring for these little sleeper projects and then they look for some profession manager like yourself and then match you? Or did everybody know? Or is there just like press? How does this little tiny, home grown project reach Index Ventures, the #1 or #2 VC firm in Europe?
Mattias: Well in this case I think it was a relative of the Rimer Brothers who has a daughter who was 10, 12, who has found the site, showed it to her uncle, one of the Rimers. They said, with the reptile eyes of a VC, “Wow. This might be the next thing.”
Mattias: This was actually pre me. There were travels back and forth between London and Turco. Not Helsinki. it ended up with the finnish founders saying, “You can buy the site from us.”
Mattias: “We don’t want investment. We want to sell the company.”
Jason: Right. Yeah. She’s 60 something years old. So it would probably be nice to retire.
Mattias: But she’s still an employee.
Jason: Oh she is?
Mattias: She’s still a shareholder of the company. Yeah.
Jason: Wow. That’s fantastic. What a great story.
Mattias: I got in together with Klaus Homer, a european angel investor, and Index bought the site. I was crazy enough to take it over and think that I could do something else around it. At that time it was basically dressing up celebrities. Which was fun but I thought it could be more fun if you could dress up your own doll, your own avatar. This was even pre the movie Avatar when Avatar was still a geeky, strange world.
Jason: So this is the early 2000s I guess?
Mattias: This is 2005. The summer of 2005.
Jason: So pre Farmville?
Mattias: Pre Farmville. Pre everything.
Jason: Pre everything? Essentially Flash was the big enabling technology at that time, huh? It made a lot of things possible. YouTube was based off of Flash supporting video.
Mattias: It made a lot of things possible. There were a lot of virtual worlds that came up in that 2005, 2006, 2007. 2D. At that time we also had Linden Lab and Second Life.
Jason: World of Warcraft.
Mattias: 3D virtual worlds were in. But I really thought if you do something fun, something that a 12 year old girls could identify with, it’d be much more fun than dressing up a celebrity.
Jason: How interesting. We’re here in The Inited States and this sort of mythology about innovation coming from Silicon Valley, even America having a lock on it. This incredibly innovative, virtual world with virtual currencies and virtual items debuts well before Zynga did Farmville.
Mattias: Yeah. We were definitely not the pioneers. We were very early but we had our siblings, cousins, that have a hotel in Finland also in Finland.
Jason: Oh yeah. Habbo hotel, huh?
Mattias: Who’ve been doing it for a couple of years.
Jason: Habbo right?
Mattias: There was Sy World in Korea.
Jason: Sy World was very big.
Mattias: That had been doing it for a couple of years. We looked at them and we thought, “If we could build a site, if we could build an experience that’s fun enough, that’s free for everyone, but that’s fun enough so that a couple percent pay every month that could be a business model.” Nowadays we know that is the business model. The freemium, the free to play. But back then it was really a novelty. People were like, “What?”
Jason: “You don’t charge?”
Mattias: “You’re going to pay for what? Stuff that is not real?”
Jason: Yeah. Then you’re going to pay for a virtual dress.
Jason: So when you told that to Index, “We think the model here is not selling the software or a monthly subscription like World of Warcraft.” Which was crushing it on the… What do they say when you say, “We think we’ll sell virtual goods?” Do they say, “You’re crazy,” or do they say, “Try it?”
Mattias: No. They say, “Try it.” It was kind of a joint decision between all of us. Because I knew we already had at that time… The site we bought, the site I inherited was called Paperdollheaven.com. We rebuilt it into Stardoll.com and basically flicked the switch, took a deep breath and turned from one product to another. But at that time we already had like 2M or 3M uniques a month. So we already had good reach. Having been an entrepreneur before in the media field I knew reach equalled advertising dollars. But I also knew advertising dollars on a global basis, especially in a demo that’s that young, it’s hard to monetize.
Jason: Why is it hard?
Mattias: It’s hard because advertising revenue is easier if you have your own sales force if you’re really big in one country. it’s easier to have 2M uniques in one country than to have 2M uniques spread globally.
Mattias: You know that. I know that.
Jason: Super inefficient.
Mattias: Super inefficient. The only way you can monetize that basically is by remnant, Google ads etc…
Jason: Some ad network.
Mattias: But if you want to sell your own premium integrated stuff that’s not where you begin. So we said advertising, that could be a business model for us later. It’s now a very important part of our business. But when we started out we said if we could get a couple percent of these users to pay us that’s going to be our business model.
Jason: When did you know that that model would scale? How soon did it take? Did you have a moment in there where you were like, “Oh God. I’m an idiot trying to sell virtual dresses?” You know, because this is one of the things when you’re doing something innovative at times you can feel like you’re an idiot can’t you?
Mattias: Yeah. It was a gamble. To some degree it was a gamble. We thought we’d built something unique. We looked around the web. There wasn’t anything like it at the time.
Jason: Maybe Asia?
Jason: Sy World would sell some things right?
Mattias: Sy World were really, really innovative. They didn’t just sell digital stuff they actually had a time limit on it. So you bought virtual furniture for your virtual living room and it was time based. You’d pay like $5. As soon as you paid a clock started ticking. Then at the end of a month all that stuff would disappear.
Mattias: So they were even more innovative.
Jason: That’s pretty cut throat.
Mattias: We didn’t dare to go that far. We said, “If you buy some…”
Jason: That’s like a payday loan company or like rent to own company.
Mattias: Exactly. Now we said, “If you pay…” The analogy has to be if you paid for something it’s yours.
Mattias: So you know that’s still an important rule of Stardoll because now we have a secondary market as well. Users can sell stuff peer to peer. So if you bought something like 2 or 3 years ago that’s now out of stock it can be worth a lot of money.
Jason: That is kind of an interesting William Gibson Virtual Light, Idoru. I don’t know if you’ve read those books?
Jason: Yeah. I mean it really is amazing how science fiction just ten years ago is now science fact.
Jason: He postulated people would be buying kimonos and stuff like that in Idoru and these virtual avatars cause they wanted to look good in their big meeting for their special interest group, their SIG. They would have to go and have a great outfit that time. That is what happened.
Mattias: Exactly. In our case the most valuable item on Stardoll are virtual dresses from our 2007 DKNY collection. We worked with DKNY for 4 years. They were all limited edition.
Mattias: So if you have that you can trade it for a gazillion star dollars. Which is our virtual currency.
Jason: Now when you go to DKNY on that sales call… You’re a former media exec so you know sales calls… and you say, “We want to use your brand on virtual dresses for little girls.” How do you do you get them to embrace that without laughing? Who pays who? How do you navigate the who’s paying who? Because it would seem like that’s a marketing opportunity for them in one way. It would seem like for you you get to leverage their brand. So maybe you should be paying. I mean you could argue this three different ways.
Mattias: Yeah. You’re extremely right. That was exactly the argument.
Jason: Take me to that moment. Take me to that meeting.
Mattias: The argument we had way back when when we started. Our first meetings with brands was in 2006-2007. I would say 9 out of 10, when we knocked on the door and we finally got to a marketing or a biz dev executive within the fashion companies that we wanted to feature on the site we always got back, “So how much will you pay us?”
Mattias: I say, “No. You’re going to pay me because I have 10 users on my platform and it’s value to you to have your brand featured on my site.” Their argument back was, “No. It’s value to you to have…” So at some point you’ve got to say yes or there is value going both ways but we’re a company, I’m an entrepreneur. I have to pay my bills.
Mattias: In the end I said, “If you’re not paying you’re not going to be on the sight.” Like a Vogue or like an Elle, you know, sometime during these years we’ve made exemptions to that rule.
Mattias: I’m sure that a Gap or any other big brand advertiser maybe pays a little bit more for their full page ad in Vogue than the new hot, independent designer.
Jason: Got it. There’s a little negotiation, a little give and take there cause they want to build an ecosystem.
Mattias: The same with us. The same with us. We haven’t… But basically if you want to be featured with your brand on our site we’re going to charge for it. Otherwise it doesn’t make sense for us. In the case of DKNY it was actually a fantastic woman, the VP of marketing at DKNY International at that time who totally got it.
Jason: Yeah. You can give her a shout out if you want to or not.
Mattias: Who totally embraced the sight of the idea. We had a fantastic relationship.
Jason: So it takes though, at that time, 1 out of 10, 1 out of 20 are going to get it and say let’s do it?
Mattias: Yeah. Exactly.
Jason: It’s part of an entrepreneur is begin wiling to see the beauty in the 1 in 20 as opposed to the brutallness of 19 in 20.
Mattias: Yeah. (laughs)
Jason: How do you psychologically get through that? I mean you come home, you talk to your spouse, you talk to your team and you’re like, “Hey. We got 19 “no’s” but I think the 20th will be a “yes.” I mean it takes a certain amount of delusionalness?
Mattias: Exactly. Well you can’t do it forever. You do it 9 out of 20 times but you don’t do 99 out of 100 because then it’s not worth it any more.
Mattias: For us, I think, DKNY was like the 9th.
Mattias: Then we did a couple more. But we also realized for our users real life brands were important but they weren’t that important.
Mattias: We had fantastic illustrators ourselves who came from the fashion schools, who came from the best art schools. When we noticed how hard it is to get external brands… It’s funny because what is a brand? A brand is virtual anyway, right?
Jason: Sure. It’s a concept.
Mattias: A brand is something that lives in your head.
Jason: Yeah. It’s a construct.
Mattias: So the brand… The idea of a brand is virtual from the beginning. So we also thought we could fill… We could make our own brands. So really from day one we actually started making our own brands. Our first brand was called Pretty in Pink. We just did… That was our line for our young pink girls. We had a lot of emo and goth girls, you know, was big 2006-2007. So we said, “We have to have something for them. Something black, a lot of red.” So you know we came up with the goth brand. Our users though these brands were beautiful, well executed and worth as much as any other brand. Today we probably have like 50 or 60 brands any given day on the site out of which the majority are Stardoll brands.
Jason: When you look at the top 3 or 4 brands… having done this for whatever number of years, you know, it’s getting close to ten. Closer to 10 than to 5… do you think that you’ve created brands that would make their way into the atom based world that you’ve tested them so well that this goth brand or this pretty pink brand has now a built in audience of 1M people that it could become… LIke Angry Birds is becoming a TV show or a movie. I saw Angry Birds just at the movie theater couple months ago. Do you think you’re going to have that happen? Has it happened?
Mattias: It has already happened. We have a clothing line at JC Penny’s for the last two years.
Jason: You’re kidding?
Mattias: Yeah. We have a Stardoll clothing line and we have actually done individual lines around these brands as well. We’ve had a Pretty in Pink line. We’ve had our Rio Chicas, which is our latin line at JC Penny’s as well. So we are…
Jason: How does that relationship with JC Penny work? You come in and say, “I’ve sold 100K virtual dresses. You should buy 10K real ones.”
Mattias: Yes. We show them that we have a fantastic following, a great brand. We have a licensing department. We work with licensing agencies. Instead of them licensing any other movie brand or something else they can sign up for a licensing relationship with us. We can actually provide them with a lot of traffic and with a lot of people who already know the brand and who love the brand.
Jason: Alright. When we get back from the commercial break I want you to tell me about the moment mobile comes in and becomes the platform that, let’s face it, Gen Y and even Gen Z which is what people refer to as the generation after Y, that’s becoming the default. You’ve got to really make that jump I assume.
Jason: So when we get back from commercial I want you to explain how you’re making that jump. I think a lot of brands are dealing with that. Being mobile first or transitioning from the web to mobile. After this commercial break. Hey, everybody. Hey, everybody. What an amazing episode of ThisWeekIn Startups this is. I’m so happy you tuned in. I want to tell you about my friends Sourcebits. They built for me the app for the Launch Festival. Where we did crowd funding for the first time live. Very innovative. They did it under such time constraint and they did it so deftly and they were such great communicators. I would be getting wire frames in PDF format with all the pertinent questions. They were on it, on it, on it. I love their design led engineering. That’s their mantra. They do a great job at it. Meaning they understand that beautiful is essential. A lot of people ask, “What happens after you contact Sourcebits with your idea right?” The answer is the discovery process. An amazing discovery process. You meet with their team of designers and engineers and even the CEO for two full days and they hash out all your ideas. This is ideation, this is discovery, this is understanding your customers. All that kind of good stuff. They get all the deliverables, like the functionality map, the initial wire frames and the design concepts. It only costs $5K to use Sourcebits to build your app. If you use Sourcebits to build your app that cost goes toward the project. So you could just spend $5K and do this incredible two day process and learn a lot. Offer: take a meeting with Sourcebits and you get a fifteen minute meeting with me. You know I love doing that. I’ve done this for about a dozen or so people, two dozen or so people over the last couple of years. Maybe two dozen as Sourcebits as a partner on the program. Sourcebits has done a great job for me. Sourcebits has done a great job for those folks. Even the folks who didn’t wind up using it were like, “I was impressed with the process.” They do a great job. If you build your app with Sourcebits I’m going to demo it live here on the show. So we really like to support our partners. Sourcebits has been so supportive of us. Between the Launch Festival and also this show here that we really appreciate it. New apps coming from Sourcebits, Twine. Look at that. There is the design-led engineering of Sourcebits and Twine. Are you in? Here we go. Twine is revolutionizing the way you meet new people. They’re establishing a cross system of neutral neurolinks. Whatever that means. It sounds pretty high falooting. Think Circle or Highlight but much much better. It’s coming out next week. Go ahead and pre register for Twine.me. I am intrigued and I am going to sign up right now for Twine.me. All done by our friends at firstname.lastname@example.org. That’s a little plug for me in there. See that? See what I did there? A little plug for me. Thank you so much to Sourcebits. Thanks to Twine. Twine.me. These folks over there do a great job. Mobile apps, cloud and web development and design. Let’s get back to this amazing program. Thanks to our very special sponsor there for helping out the program. You know we couldn’t do this program without our white labeled sponsors. Mattias and I are taking about sponsorships here and how to build a business. I had a very simple approach. I just picked the top 15 brands I loved then I had our people call them and say, “Jason loves your brand. Do you want him to read an ad for you?” They said, “Yes.” Then the eCigarette company called and the protect your social security number businesses called. I was like, “I don’t really use those products.” I’m not an eCigarette kind of guy or monitor my credit score kind of guy. I feel like those products are kind of scammy. I’m not going to read a commercial for them. Then we sell out. So thanks to our sponsors for doing that. Our partners if you will. Alright. So things are going great, you’re crushing it. Flash is the default on every single browser, 98% penetration, etc…
Jason: Then Steve Jobs starts to say, “Hey. Flash sucks.”
Mattias: Yeah. I have a beef with Steve Jobs.
Jason: He is like, “I am going to destroy Flash.” He went on a relentless jihad against Adobe, Flash, under the auspices of the number one crashing pieces of software in his tests were Flash. Whether that’s true or not… I don’t know that we all have clarity or not… but Flash has been buggy so maybe it’s a great cover for him. But he did try to destroy that company, didn’t he?
Mattias: Well you know more about that than I do.
Jason: It was odd though.
Mattias: Yeah. His war against Flash has certainly impacted us because… Yeah. Flash doesn’t work on any iOS device. As you know, a. we have a web site, b. it’s built in Flash.
Mattias: So now that the whole shift is happening from PC based or desktop based internet access to mobile, especially, especially when it comes to entertainment, especially when it comes to a young audience…
Mattias: … we’re definitely hit by that. So we’ve been working on an iOS version of Stardoll, our flagship product, for over a year.
Mattias: It’s finally launching, knock on wood, in a month. But that’s hurt us. Definitely.
Jason: Yeah. Were you in, sort of, denial about like hey at some point they’ll relent and Flash will work? Did you hold out hope for that? Because it has been amazing that they have been able to filibuster this. I thought for sure that Adobe would be, at some point, able to conquer Apple’s objections. Cause it does work on Android, correct? Well maybe not that well but it does seem like they would have flipped their position but they never did. It was kind of like…
Mattias: Well we never made bets on it. We looked more at HTML5 or not HTML5, iOS native or which route to go?
Jason: What conclusion did you come to? Yeah.
Mattias: Well the conclusion is, for games, you have to build native right now. It’s the only way really for us. But, for us, rebuilding everything from Flash was definitely a pain. On the other side we have 70K-80K graphical assets that we have in vector format. So we can use a lot of the underlying assets that we have used on Startdoll.com into the mobile experience. But again, the whole front end you have to rebuild it.
Jason: So you’re actually at a disadvantage to somebody starting from zero?
Jason: I mean that is the conundrum, isn’t it?
Mattias: Yeah. We’re definitely, as a company, in a transitional mode where, you know, the web is not growing for us anymore. Stardoll.com is not growing for us. We know that our users are shifting onto mobile. You know, we are a global company so it kind of evens out for us but you can definitely see which regions of the world are shifting faster than others.
Jason: Which ones are?
Mattias: Northern Europe is shifting the fastest. I mean I just need to look in my own living room. I have a 12 year old daughter. A year ago she used the computer still for entertainment and fun. But last November she got her first iPhone and since then she only uses the computer for making homework basically.
Mattias: The phone is her only, first, second, third, fourth, fifth means of communication and fun and information.
Jason: That’s interesting. We have a show called WellCast on YouTube that’s targeted at the same demographic, 13-17 year old girls, 10-17 I guess. Although I can’t say 10-13… I guess I can say 10-13 if they’re watching with a parent. But anyway YouTube is 13 and up. It’s complicated, right?
Jason: But boy it’s like 60% mobile consumption and the other shows we’re doing on YouTube are a third mobile. Which is still a staggering number but to have 60% be mobile is just extraordinary.
Mattias: It’s crazy. Especially if you’ve been in the web world a long time. As you have been, as I have been. I’ve been in it since ’95. You know, I’ve kind of built my career around being a tech guy or a semi tech guy at least who sees the trends and builds business opportunities on them. Then suddenly you’re kind of standing on the train station watching the train roll much faster than you thought.
Mattias: For us that was really a year ago. A year ago is when we really saw that our web traffic, which has always been growing… Stardoll.com has never been an overnight success, you know with a huge growth and has never had any down turn either. We’ve kind of been chugging along. Like a diesel engine of the web.
Jason: Right. Then plateau.
Mattias: Then suddenly here comes mobile.
Mattias: And really surprised me. Even though we had planned for it I always thought as many other people did that mobile internet would come on top of desktop internet.
Mattias: Desktop internet would just slow down a little bit and then mobile internet would come on top of that, right? That’s what we all thought.
Mattias: Well now we know that desktop internet actually… You know. It’s cannibalizing.
Jason: It is definitely cannibalizing. I saw a report recently. Two plus hours a day in apps. I still was thinking, “My God. People are spending two hours a day on apps. What’s going to happen to television? What’s going to happen to video games?” I mean it’s just taking over everything. For young people it might be even more than that.
Mattias: As you also know it’s simultaneous.
Jason: Sure. There is that.
Mattias: It’s cross platform now. You’re using your iPad while you’re watching TV, while you’re doing WhatsApp or Viber or Insta… on your cell phone. That’s the world we live in.
Jason: Social has taken a big step function up as well. That affects your product design as well, right? I mean people are not as much into solo games as they are into high collaboration.
Mattias: Yeah. Stardoll has always been social.
Mattias: It’s always been about showing off your fashion sense of your creativity on your avatar, showing it off to others, getting the feedback, having friendships, forming clubs, having competition. So it’s always been… When we started we said we were a community. A very old world at least.
Jason: Yeah. Community was social.
Mattias: Community is social per se.
Jason: It is social.
Mattias: So we’ve always been social. But we’ve also been a virtual world where you can be whoever you want to be. Which is also a part of escapism is part of Stardoll. So maybe behind that beautiful avatar is not always, you know, that same person. On Stardoll you can be whoever you want to be. You can change you’re look. So we’re not that social that you have to display your real name and your real age and all of that. So we’ve always been social but not one to one social to your physical Facebook me.
Jason: Right. Let’s talk about the difference between boys and girls in their use of this technology. It seems to me boys like to have goal driven stuff. Back to your original founder of the site. Very goal driven. Let’s complete a mission. Let’s destroy everything in front of us. It seems like Farmville and some of those other ones are about accomplishment and recognition of an accomplishment and sharing it and that kind of thing. Is that something that we’re putting on girls or is that actually true about the nature of girls in how they differ from boys? I have a daughter now and I wonder about it.
Mattias: That’s a very good… We’ve debated this internally in company for 7 years, since we started.
Jason: OK. So take me inside that debate.
Mattias: Do girls want to play… Do girls want to compete, yes or no? Do girls like points, yes or no? Do girls like goal driven games, yes or no? I would say there’s no black and white. I mean there’s definitely girls who like all of the stuff that we usually label boys with. But I would say that collaborative stuff, creative stuff and social things where you share things where you don’t really compete is definitely more a girl trait in games than with boys. I mean Stardoll nowadays is much more gamy than it was when we started.
Mattias: We now have levels, we have points, we have badges. We had a lot of “gamification” things done to Stardoll which our users like but the overall, I would say, gameplay is still about collaboration and social and having friends and showing off to your friend, being one in the group.
Jason: It’s a very emotional issue for people how we design games for girls versus boys. How do you as a CEO and founder when you have a team obviously that you respect, you hired them, you employ them, when you have people who have differences of opinion and people do differ on this topic, how do you reconcile somebody who feels strongly like, “We need to make games that make girls more competitive.” It must be somebody with that position. Or somebody with the position of, “Hey. We need to make it more social.” Great products are not made from splitting the difference, you know, they’re made from some amount of leadership. So do you navigate that? Do you test it? Or do you just let everybody have a voice and then say, “You know what? You had your voice. This is what we’re going with because I have to make a decision.”
Mattias: All of the above.
Jason: Take me through it a little bit. Expand. There must have been some passionate debates.
Mattias: There have been passionate debates, definitely.
Jason: Do people walk out the door if they lose those debates? I mean this seems like such a core mission thing that I’m just thinking with all of your experience how…
Mattias: Yeah. We’ve had our parts of that in the company definitely.
Mattias: But sometimes it’s easy to say let’s test it but then again it’s not that easy to test it. If you want to build a total new back end structure that supports missions, quests, points, etc… That’s nothing you just do on the back end. It’s not a simple A/B testing. You know.
Mattias: Or the landing page that you do. That’s something you have to… You do your analysis, you look at the world and where it’s going and you say, “Should we do this or not?” You debate back and forth. In this case we had a big majority of the people in the company that said, “We need to do this. We should do this.”
Jason: The gamification?
Mattias: The gamification thing.
Mattias: In the end we said, “Yes. We’re going to do points and levels but it shouldn’t be the only game loop on the site. People who don’t want to be part of that should still be able to keep their old game play.” The game play where the community basically sets the rules.
Mattias: So we did it. I think we did it really well. The “old” users who already were having their clubs and their competitions, who are basically building their own game within the boundaries of the site, they could continue to do that. For everyone else there were the competitions and the levels and the badges that you could get.
Jason: What was the reaction of the actual user base? You have legacy users and obviously new users. When you put people on that sort of treadmill obviously it increases usage. I’ve been on that treadmill with different games. Clash of Clans I guess is the number one now I played.
Jason: Before that I played… It was the ngmoco one. I can’t remember. But anyway, these sort of build your castle kind of games. Are those short term crack? Like do they give you this sort of massive boost but then burn people out because they feel like this game is becoming a drag and you kind of… Did you risk a community killing with accentuating leveling up game mechanics too much?
Mattias: I mean we definitely thought about our existing users and the existing community. Because if you have a very strong community, as we have, everything you do is going to be disturbing for them in the short term. So you don’t want to offend them. At the same time you want to show them that this is the way we’re going. That’s actually fun for you too. If you don’t think it’s fun you can still keep on your old game.
Jason: So you communicated that somehow?
Mattias: We communicated that so we have different levels of users. We have a lot of blogs that are written by users off of Stardoll about Stardoll. So they’re very influential. They’re probably watching this program as well. So we let them know sometimes what we’re planning to do. We release news to them first and let them check it out and read about it. Then introduce it to their readers and their peers.
Jason: So a little letting them inside the tent to get that early feedback before you just push it to everybody. Which is sort of Zuckerberg’s style. Like, “I’m just going to push it to everybody. You guys deal with it.”
Mattias: Yeah. When we make the decision to push it we will push it but we let them know first and we let them try it first. We have a couple of users that we call royalty. Which is like the highest echelon of users. You’ve been a member a long time and you’ve been a paying member. You’ve done all these other things. We usually let them get the product first.
Jason: What’s the longest duration of user you’ve had? What’s the largest amount of time that they’ve been active in the community? Just in terms of hours if you had to guess.
Mattias: We still have users who joined us in 2006…
Mattias: … when we launched the game.
Jason: So they’re 6 or 7 years in?
Jason: Holy cow. So they started at 10, 12, 13 years old and they’re now approaching college age you think?
Mattias: We have a lot of grown women as well on the site you know. Our mean age is almost 16 on the site. Our median age differs between continents and countries. I would say in Europe and North America the median age is 10-15. In South America it’s 12-17. In the Middle East where we are huge… If arabic were a country, now it’s a language…
Mattias: If arabic were a country it would be the number 3 country probably. There our users are 15-25 median.
Jason: How do you deploy an empowering women’s fashion product in the Middle East, in the arabic speaking world where they are in some cases really upset about such things?
Mattias: Yeah. Apparently we found… We never planned on it. Apparently the look and feel of Stardoll, the graphical part of it is nice enough and safe enough for a saudi arabian mom to allow her daughter to be on it.
Jason: Oh. So not that offensive?
Mattias: No. No. There’s no nudity.
Jason: Well if there’s a bikini swimsuit.
Mattias: Yes. You can wear that.
Jason: Not in Saudi Arabia if you’re a woman.
Mattias: Well on Stardoll you can. You know, we haven’t been banned by any of those countries.
Mattias: Then we run the site in 28 different languages. So we run the site fully in arabic, for example, and have moderation and customer service in arabic.
Jason: Interesting. I would guess that you’re a big part of the cultural change there. I mean I think a lot of these internet services, Facebook and even this women’s empowerment movement, that must feel pretty good to be part of that.
Mattias: I hope so. What’s more important for me is the hard… What really makes me feel proud and heart warming is when you see the collaboration and friendship on the sites. When you see a 16 year old albanian girl being best friends with a Texas girl sharing their stuff with someone from Kenya.
Jason: Israel, Saudi Arabia and Kenya and China. That’s actually a great feeling.
Mattias: It’s a great feeling.
Jason: It does, when you think about the internet, that was supposed to be one of the high order parts of the goal, mission of the commercialization of the internet. I mean at least for old school guys like us it was to try to make the world smaller and increase communication between people who were at war with each other. It actually is happening. That’s a great feeling.
Mattias: That is a great feeling.
Jason: How would you describe the company today? Because you are doing many different products now?
Mattias: Exactly. Two years ago we were a one product company on one platform. We did Stardoll.com on the web. Today we have Stardoll.com which still is our flagship product, over 50M-60M unique users a month from the whole world. But we also have Stardoll on Facebook. Now we have several different mobile apps out there. The big one, Stardoll itself, coming on iPad and iPhone in about a month. So now we’re a cross platform entertainment company that does both media and gaming. Which is strange because if you’re a web guy like myself suddenly you’re COO of something that is also a game development company. I’m not a gamer, personally, myself. So there’s a lot of new skill sets needed in the company. You need to juggle those two. Another thing is going from web, where we figured out the business model. For us two thirds is user generated revenue. One third is advertising. Onto mobile where the advertising part is tiny. The big brand advertisers that we have on the web, we worked with the biggest consumer brands, the bigger entertainment brands. We have our own sales team in the US and in the UK, etc… Suddenly we’re on mobile. What do you have there? You have interstitials now. You have crazy spanners. That’s a big transition for us and everyone else.
Jason: For the whole industry.
Mattias: Everyone else in this industry.
Jason: The lower third or the lower fifth banner on mobile, to me, just seems to be a terrible, terrible idea. It’s got to be something better. Do you like the idea of interstitials or play a video for free? Maybe the pro version doesn’t have a 15 second pre-roll? It seems to be working great for YouTube.
Mattias: That’s what’s working now. You know. Advertisers like video. Users can stand it. It’s a little bit intrusive but it seems like that’s one of the formats that’s going to be around on mobile.
Jason: It does seem like the creative is getting a lot better thanks to YouTube’s TrueView. I don’t know if you follow what that is.
Mattias: I haven’t followed that exactly.
Jason: Basically, you know the idea that you can skip the ad. If you skip the ad the advertiser doesn’t pay.
Mattias: Is that the brand name?
Jason: I think it’s called TrueView.
Jason: So what’s very interesting about that is if you do not click skip then they pay per view. Which is very high, right? They’re paying 10¢ or 20¢ for each view.
Mattias: Which they should. It’s worth it.
Jason: Of which they should. It’s worth it. Which means they’re now incented to make something so compelling in the first 15 seconds that you keep watching. Or 5 seconds. I think maybe it’s 5 seconds. So you have to just really embrace it. I really sort of feel like YouTube’s changed the whole creative process for ad agencies. So let’s just talk a little bit about being an international company. You wound up getting Sequoia to invest. I’m assuming Danny Rimer and Index was a really good indicator for them that there was something here. Were you one of the first times they ever invested in something in Europe. They don’t have an office in Europe or do they? Maybe they added one.
Mattias: No. They have an office in Israel.
Jason: Israel, India, China.
Mattias: Not Europe I guess. But very close to Europe.
Jason: Not Europe. It feels like it’s part of Europe sometimes. But they don’t have one in Europe specifically.
Mattias: No. No they don’t.
Jason: What do you think of that?
Mattias: I actually do think we were the first investment in Europe for Sequoia. Which is crazy given that it’s a virtual doll site.
Jason: Yeah. What do you attribute that to? I mean they just saw the scale, they saw the growth, they liked the management team, what? Now did they get on a plane ride?
Mattias: Sequoia invested in 2006. At that time I think they wanted to do something in Europe. They wanted to do… You have to ask them. But I think they want to do something in Europe. I think they want to do something with Index who was already a rising star in Europe. We happened to be the company where those intersected.
Jason: Interesting. They come out, they fly to Europe for the board meetings?
Mattias: No. I usually come out. Since we have an office here I usually come out here and I go up to San Francisco.
Jason: So what do you think the eventuality is for this cross media company now that mobile is taking over and sort of going into all these new devices? If we look 5 years from now, part of Disney, is that where you think this is all going? It seems like Disney has been really great at leveraging these brands and building them into like amusement park things. Do you think the Angry Birds sort of approach of making merchandise, etc… is the future?
Mattias: I mean it’s definitely worked for Angry Birds.
Mattias: Another Scandinavian company.
Jason: Exactly. What’s in the water over there?
Mattias: Yeah. We have the company behind the Clash of Clans.
Jason: Oh. Are they from there as well?
Mattias: They’re from Finland. Then we have our swedish friends at king.com and Minecraft.
Jason: Oh. Those are both out of there too.
Mattias: Both swedish. So Sweden and Finland is on a roll right now.
Jason: What do you attribute all that to? Is it… Obviously you have a highly educated population there. You have high affluence but what do you…
Mattias: A lot of smart people have said smart things about this. I think it comes down to, you know, the brain part of me says yes we have a lot of good engineering talent historically in Scandinavia. We have good schools, we have all of that. The hard side of me says, “We have a lot of cold dark nights where there’s nothing to do.”
Mattias: So people spend a lot of time thinking about stuff. When you grow up in Sweden and Finland you know that you’re kind of on the fringe on the world somehow. So you don’t have to follow what everyone else is doing. I think sometimes we allow ourselves to be… to let go of the herd a little bit. We allow ourselves to go…
Jason: And that is cultural?
Mattias: To some degree. Yeah.
Jason: Well I think…
Mattias: I think also if you look at Sweden, for example, Sweden historically has had a lot of great export industries. A lot of great engineering companies, a lot of machinery.
Jason: Yeah. Loved products.
Mattias: Sweden knows that if you’re going to survive you have to make product that ships internationally. Cause their domestic margin is so small.
Jason: Yeah. Low single digit millions. 5 or 10 million people.
Mattias: Nine million people in Sweden. You don’t have to… The market’s so small you have to think internationally. You have to think export. I think part of that is in our blood as well. So when I started Stardoll I immediately didn’t… I had to think international because the portion of swedish 9 million people who are in the target group of playing Stardoll.com would be a couple hundred thousand. Obviously that’s not enough. Maybe if I’d grown up in the US I probably wouldn’t have thought about that. I would have thought about conquering the US market first.
Jason: The happiness level in the Scandinavian countries, amongst the highest in the world. In fact the function of government, the functioning of government, is considered the benchmark. Getting to Denmark is one of those terms of having a high functioning democracy. It’s a pretty amazing place to live in terms of the happiness level of people and how people are taken care of. Do you feel like it’s a society that has figured it out when the rest of the world maybe can’t seem to balance socialism and capitalism. Maybe Scandinavia has sort of balanced those two?
Mattias: I don’t know if it’s up to me to…
Jason: Well you live there.
Mattias: … put a brand on what’s… I definitely think that the work/life balance, the balance between opportunity and society between, you know, chances of making it for yourself versus a just society for everyone is pretty well leveled in Scandinavia. I think it’s a great society to live in. I pay my taxes with pride cause I think I get something for it.
Jason: You pay over 50% taxes. Yeah.
Mattias: I think I get something for it. I think the whole society gets something for it.
Jason: You have things there like very long maternity/paternity leave. Upwards of a year.
Mattias: A year.
Jason: Paid. You pay that or the government pays it?
Mattias: The government pays it. Out of that, one month is dedicated to the dad. So that’s changed a lot in the last 10 years. So when I had my first child it was still not very common amongst dads to take a part of that. Now I would say that 9 out of 10 dads take at least a month paternity leave. If not 2 or 3. You have 12 months. You can split that however you want between the mom and the dad. Except a month that is dedicated to the dad.
Jason: There has to be one month that is dedicated to the dad.
Mattias: They’re talking about making that 2 months now. Which I totally support.
Jason: It’s amazing in your society that you can have these discussions and actually progress and we can’t keep 30 round magazines out of guns. We’re so polarized here it’s unbelievable. I mean it’s extraordinary in a way. I mean does any of this have an adverse effect on your ability to run the companies, I guess is my question? Cause being an american I think I come to it with a bias of no regulation, move fast, you can have employment at will, an employee can leave at any time, an employer can fire… You can’t just let people go can you?
Mattias: Sweden’s changed a lot in the last 15-20 years. In the 70s and 80s Sweden was a terrible country for entrepreneurs. Super high taxes. You had employment laws that made it basically impossible for you to lay off people, you know.
Jason: Similar to France.
Mattias: France is still there.
Jason: Yeah. You have to go to court if you want to fire somebody.
Mattias: Sweden has made a lot of changes in the last 10, 15, 20 years. I would say Sweden is a great country to run the company in. We do still have pretty high taxes when it comes to the social cost that you pay but corporate income tax is now among the lowest in Europe with 23%. It’s easy to set up a company. We have no corruption. We have a great talent pool. Things work. Yadda, yadda. I think it’s a great country to run a company in and set up in it.
Jason: Yeah. I’ve been monitoring. Actually Tyler Crowley, who you know who works with me, is camped out in Sweden.
Mattias: Yeah. I’m going to see him next week.
Jason: You’re going to see him next week?
Jason: There you go. Tell him I said hi and we miss him here. He used to be on every program chiming in from the rafters.
Mattias: But then again I’m here in LA. This is a great place. It snowed in Stockholm yesterday. So there are things…
Jason: The sun is nice.
Mattias: The sun is nice.
Jason: I just think as an american, you know, as I have gotten older and I just look at the disfunction of our society. Some of the things that happen. Some people being left behind and the angry way in which the two ends of the extreme take over the dialog. It’s just severely broken and it doesn’t represent the majority, you know. Well over 90%, for example, in this country want to have background checks on guns. We can’t get them. It’s what the population wants. What the government does is just so out of whack. In getting to Denmark… The whole term getting to Denmark, which I’ve been studying, some of these other countries in Scandinavia just seem like you’re so in sync with what the general population wants. The media seems to be in sync with that as well, is it not?
Mattias: I can’t comment on the US. We’ll do that on another show.
Jason: Well I’m commenting on the US. Yeah. Exactly. Listen. You love the US. Mattias congratulations on all the success. I’m certain you’re hiring. So if people want to move to…
Mattias: If you’re a mobile developer we would love you because they’re scarce in Stockholm as well.
Jason: Yeah. You’ve gotta make them, don’t you?
Jason: You make them.
Jason: That’s what I tell people. If you can’t find the people just make them. You know, support them. Alright. Listen. You’ve been a great guest. Everybody follow Stardoll on Twitter. Everybody go check it out. Look for the iPad app coming when? Soon.
Mattias: In a month.
Jason: OK. In a month. Great. Perfect. Make sure we put a link at the beginning of the episode. Big annotation Brandice. I want a big annotation that links to Stardoll’s… You have a YouTube channel I take it?
Mattias: We have a YouTube channel.
Jason: So I want to link to their YouTube channel when they have they’re video about their iPad app so that we can get people over there. Then put in the description a link to their appstore link. Let’s like, Brandice, to do that for everybody who’s on the show. You know how I give them plugs at the end? I’d like to get some more plugs in the document like in the description on YouTube and the links. This way people really appreciate being on the show and see the power of the audience downloading their apps. Thanks so much to @ShareFile for sponsoring the program. And our other sponsor. Mattias thank you so much for being so honest. Congratulations on all of your success. Good luck on the transition.
Mattias: Who said it was success?
Jason: Oh come on. You’ve got tens of millions of people and you’ve got hundreds of employees.
Mattias: It’s a new start on mobile now. Mobile is totally new for everyone. New rules, new competition, new everything.
Jason: And you have to get the whole company humbled, don’t you? You gotta get everybody hungry and humble again.
Mattias: To be honest we’re kind of starting over, I would say, on mobile. It’s a completely new set of rules.
Jason: Scary and exciting.
Mattias: Scary and exciting. Exactly.
Jason: How do you get the rank and file, the troops, up for that battle? Do you tell them like, “Hey, listen. We’re basically starting over. This is a whole new world. We gotta really kick ass.”
Mattias: Yes. I think everyone sees it. Everyone is a consumer as well. Everyone who has a smart phone knows that that’s where you’re spending your time and or money. Everyone who has a daughter or a son growing up knows that even more.
Jason: God. Daddy can I borrow your iPad?
Mattias: Of course if your company’s directed towards that audience you better be successful on that platform. Because it’s like every other new medium that comes. You know, the users shift first. then comes the money. We have to work things out.
Jason: Yeah. It seems to me, somebody told me one time, if your company is winning in the marketplace you’re going to have great culture at your company. If you’re losing it’s very hard to have good culture or positivity. You’re going to have infighting. That’s just the nature of it. People want to be winning.
Jason: I think going to this platform means a greater chance of winning and they see that. They recognize they want to win.
Mattias: But you also have to realize, you know, for a company like us we’re starting over. We were winning on the web. On mobile now we… you know.
Jason: You’re starting from zero.
Mattias: No. We’re not starting from zero. We have a brand, we have assets, we have a team. There’s a lot of strength.
Jason: You’re starting at second base.
Mattias: Exactly. A very american baseball analogy.
Jason: 50 yard line. How would you say it in soccer or in football rather?
Mattias: Probably start at the midline. The mid field line.
Jason: Yeah. You’re on mid field or something? What’s the red zone called in Europe? Almost about to score.
Mattias: In hockey?
Jason: Yeah. Or a red zone is…
Mattias: Sweden is more hockey.
Jason: Is it hockey really?
Mattias: Yeah. It’s more hockey.
Jason: So you’re on a power play.
Mattias: You’re on the blue line.
Jason: Blue line power play. There you go Stardoll. Good luck with everything Mattias. It’s been a great episode. Follow @jason of course. Follow @mattiasmiksche. Follow @jason. Follow @TWIstartups. And go to twistlist.co if you want to join the secret mailing list. TWiSTlist.co to join the secret back channel mailing list. If you’ve made it to this portion of the program you deserve to know about twistlist.co. We’ll see you next time on ThisWeekIn Startups.
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