Allen Lau is a name synonymous with storytelling, innovation, and entrepreneurship. As the co-founder of Wattpad, a global entertainment platform for user-generated content, he helped reshape digital storytelling. Beyond Wattpad, Lau and his wife, Eva Lau, established Two Small Fish Ventures, a venture capital firm supporting early-stage startups. In this interview-style piece, we explore Allen Lau’s entrepreneurship journey, the challenges faced by Wattpad in its early days, and the valuable startup lessons that founders can learn from his experiences.
The Early Days of Wattpad & Overcoming Challenges
When Allen Lau co-founded Wattpad in 2006 with Ivan Yuen, digital storytelling was still in its infancy. The mobile internet lacked sophistication, and skeptics questioned the feasibility of reading and writing stories on small screens. Even Eva Lau, Allen’s wife and now business partner, was skeptical of Wattpad’s potential.
“Why Would Anyone Read on a Flip Phone?”
In the early 2000s, before the rise of smartphones, the idea of reading fiction on a tiny flip phone screen seemed far-fetched. “I remember thinking, ‘Why would people want to read on a flip phone?’” Eva Lau recalled. However, Allen and Ivan believed in their vision. They persevered despite slow initial growth, with the platform struggling to attract writers. “We had less than a thousand readers, and no one was uploading stories,” Allen recounted. The uncertainty led to moments where they nearly gave up.
The Key to Perseverance – Optionality Mindset
Instead of shutting Wattpad down, the founders decided to keep it afloat because their operational costs were incredibly low. “We realized our hosting cost was just $5 a month,” Allen said. That realization changed everything. By keeping costs minimal, they reduced downside risks and allowed time for traction to build. Slowly, more stories appeared on the platform, and user engagement surged. It was a lesson in resilience – success often requires the patience to wait for the right market conditions.
Scaling Wattpad & Revolutionizing Digital Storytelling
Wattpad’s transformation from a niche site to a storytelling powerhouse didn’t happen overnight. The platform embraced user-generated content, allowing writers to share their stories freely. This model attracted aspiring authors, who saw Wattpad as an opportunity to get discovered. Eventually, the company leveraged AI to elevate storytelling, recommending stories to users based on reading habits.
The Impact of Wattpad’s Growth
Under Allen Lau’s leadership, Wattpad amassed nearly 100 million users, with over a billion uploads. Many stories on the platform turned into bestsellers and even films. The company caught the attention of major media players, leading to its acquisition in 2021 by Naver for over $600 million—one of Canada’s largest tech acquisitions.
Wattpad’s Role in the Entertainment Industry
The entertainment industry took notice of Wattpad’s data-driven storytelling approach. Media giants like Netflix and Hulu tapped into Wattpad’s IP for fresh content, realizing the value of its community-driven stories. Today, Wattpad Studios partners with production companies to bring digital stories to the big screen, proving that user-generated content can drive major entertainment deals.
Lessons for Startup Founders from Allen Lau’s Journey
Entrepreneurship is rife with challenges, but Allen Lau's experiences with Wattpad offer valuable lessons for aspiring founders.
1. Turning Naysayers into Believers
Many entrepreneurs face skepticism, often from those closest to them. Eva Lau’s initial doubts about Wattpad didn’t stop Allen from pursuing his vision. Instead of dismissing skepticism, he addressed concerns with strategy and transparency. Founders must be open about their risks but also clearly communicate their commitment.
2. The Importance of Persistence in Tough Times
Success rarely follows a straight path. For Wattpad, the early years were painful, with minimal traction and doubts creeping in. But instead of quitting, Lau focused on incremental progress. His story underscores a crucial lesson—if your costs are manageable and you see potential, keeping your startup alive long enough can make all the difference.
3. Leveraging Community & User-generated Content
Wattpad thrived because it empowered writers and readers to shape the platform. Engaging users early and giving them ownership over the experience helped the platform scale organically. Entrepreneurs looking to build an engaged user base should focus on community-building and customer-driven innovation.
Eva and Allen Lau’s Investment Philosophy at Two Small Fish Ventures
Beyond Wattpad, Allen and Eva Lau now invest in startups through their venture capital firm, Two Small Fish Ventures. They focus on category-defining companies that leverage network effects to scale.
What Makes a Startup Investment-Worthy?
According to Eva Lau, they look for founders who exhibit resilience, openness to feedback, and the ability to navigate uncertainty. “We want founders who are not shy about criticism,” Eva explained. They emphasize the importance of founders learning from past mistakes and demonstrating adaptability.
Encouraging Innovation & Thinking Big
Successful startups don’t just iterate on existing ideas—they define new categories. Eva and Allen encourage tech founders to think big and build groundbreaking solutions. At Two Small Fish Ventures, they back entrepreneurs who see beyond current market trends and bring visionary ideas to life.
Balancing Startup Life & Personal Relationships
Entrepreneurship is demanding, and maintaining a healthy work-life balance is one of the biggest challenges startup founders face.
The Emotional Toll of Startup Life
Startup founders often take risks that impact not only their careers but also their personal lives. At one point, financial struggles led the Laus to discuss selling their home. “It was an incredibly stressful period,” Eva said. Their story highlights why open communication with family members is essential for entrepreneurs.
Maintaining Relationships While Building a Business
When work consumes every waking hour, personal relationships can suffer. One strategy that founders can adopt is treating their personal relationships with the same level of priority as investor meetings—scheduling dedicated time with loved ones to ensure work doesn’t completely overtake personal life.
Conclusion
Allen Lau’s startup journey is a testament to persistence, adaptability, and the power of storytelling. Wattpad grew from a struggling startup to a global platform, revolutionizing user-generated content in the entertainment industry. Today, through Two Small Fish Ventures, Allen and Eva Lau support the next generation of tech innovators. Their insights offer invaluable lessons for startup founders navigating the challenges of building a business.
For aspiring entrepreneurs, the key takeaways from Allen Lau’s success story are clear—believe in your vision, build with community in mind, and always be prepared to adapt and pivot. Whether you’re launching a new venture or scaling an existing one, persistence and innovation will be your greatest assets.
Every great startup story begins with a strong vision and the right community—let us help you connect with your audience through authentic storytelling and strategic content marketing.