It's always interesting and enlightening to understand how some of the companies we consider established today have started out. The other day I talked to Mattias Swenson, Bloglovin' co-founder and one of the more energetic and prolific web entrepreneurs in the Swedish startup scene. Here's how their startup came to be.
The team at Bloglovin' started building websites in a garage in Täby, Sweden and before they started Bloglovin´ they were working on their second failed web project, a fashion-community. This happened right after high school, so for Bloglovin' the signal of entrepreneurship was already strong from the early days.
To get feedback on the fashion community the team got help from three fashion-bloggers, one of them was Carolina Engman, who is now Mattias' girlfriend having met him though the project. Somewhere between discussions and coffee breaks she checked if any of her favorite blogs had updated. So she picked up a laptop and started typing in their web addresses. A bunch of new windows flew open in her web-browser. Some blogs were updated and others weren’t. Mattias tells me that they saw it was chaos.
As entrepreneurs do many times when they see an opportunity, the team thought, wouldn’t it be sweet if you had one site that notified you every time one of you favorite bloggers had written something new. Subsequently, the team trashed the fashion-community idea and started over from scratch. Two weeks later they had their first rusty version of Bloglovin´ up and running. One week later, over 1000 people had signed up.
Mattias goes on to tell me that this was the first time the team had built something that facilitated an existing behavior and not just building a bunch of features that nobody would use.
When Bloglovin' launched they did not know anything about how venture capital functioned. The first four to five months after the first release no one in the team ever talked about money. They only cared about the product and the people using it, like good product people do.
Neither did they have any money before starting, so they never felt the lack of it. All the team ate was chicken with spaghetti or meatballs with spaghetti.
At the time, the only known way to make money was by selling ads – however, the team did not have any traffic so they really didn’t bother trying to put up ads. Five months in they started talking to a bunch of blog networks about adding a “follow this blog” icons to all their blogs. It didn’t work until they told the blogs that the other blogs had agreed to do the proposed integrations, so they should get on board too. Consequentially, deals started falling into place almost instantly.
Around that time two media companies noticed Bloglovin', one of them being Wyatt Media Group. They both proposed Seed investments. Wyatt was more keen on helping Bloglovin' to take them international. Mattis told me that it just sounded cool so they went with them.
Dealing term sheets was completely foreign to the guys. They didn’t know anything about such deals so they had to go to the library to translate what the term sheet said, paragraph by paragraph. The team also talked to everyone relevant they knew about helping them out with this.
In the middle of the investment, both Bloglovin' and Wyatt realized that Bloglovin' actually had only one third of the traffic they initially thought they had. As Mattias put it: "Kind of sucked, but they were cool with it."
Once the team raised money and left the garage, they started taking out salaries. This was the first time they started being aware of money and the importance of it when building a company. This made them focus on growing traffic faster and building products that advertisers would want to buy.
Two months after the investment, the economy crashed. CPM prices fell and it changed the company's focus to building services Bloglovin's users would be willing to pay for. An example of the new approach is Spotlight, a service that helps bloggers promote themselves for a small payment made through their cell phones.
This mix of Consumer Revenues and Ad Revenues is what has kept the company alive since.
Mattias tells me that now they are measuring everything. They have a funnel that they want the users to go through to become a sticky members. The team is optimizing everything possible to help the customers to go through it.
Matties further explains that they are now acting like a real business, taking decisions based on real information from their users. 'And with ¼ million users we now hungry for more, and not spaghetti!'
Bloglovin' was founded by Mattias Swenson, Daniel Swenson, Dan Carlberg, Daniel Gren & Patrik Ring. The article was co-edited by Mattias Swenson himself.