Tagged, a social-networking site that’s struggled to attract users and grow revenue since its founding a decade ago, is changing its name and trying a new approach.
The San Francisco-based company has renamed itself if(we), said Greg Tseng, the company’s co-founder and chief executive. Along with the new corporate moniker, the startup plans to shift its focus away from the Tagged social network and into developing a variety of new mobile and social apps, he said.
“We’re going from just working on Tagged to taking multiple shots,” Tseng said. “We are transforming into more of an incubator.”
Reinvention is common in the world of technology, where a sudden shift in consumer behavior or a swift blow from a bigger rival can render a startup’s business plan obsolete. Many of the most successful ideas of the Internet era – from Twitter to Flickr to Instagram – were initially born out of failures and the ability of their entrepreneurs to quickly pivot in a new direction.
Tagged’s new direction comes after years of trial and error and gradually slowing growth. Founded in 2004 — the same year as Facebook — Tseng’s site struggled to create its own identity as Facebook expanded beyond college campuses to become the de facto social network of the Web.
In 2007, Tagged repositioned itself as a place for meeting and interacting with strangers. The next year it began adding games including “Pets,” in which users “buy” others and own them like pets, then barter them with other players or sell at a set price. The site, which has 10 million monthly users, makes the bulk of its money selling virtual currency, goods and subscriptions with the remainder coming from ads.
Tseng decided to end the company’s focus on Tagged earlier this year, when he realized that his goal of an eventual $1 billion initial public offering was becoming unrealistic on its current trajectory. The company has been profitable every year since 2008, but it expects revenue this year to fall 10% to $51 million, its first year-over-year decline in sales.
“The IPO plan wasn’t working,” Tseng said.
Instead of pouring resources into turning around Tagged, Tseng decided to turn his company into a kind of factory to pump out new apps. He hired Dash Gonipath, an Internet veteran who previously led product development at social-Web pioneers Digg and Badoo, to help reorganize the company into small groups dedicated to projects.
“It’s easier to innovate when you can work with a small group of people and operate independently of the baggage of a larger company,” Gonipath said.
If(we) follows a recent trend of companies putting fewer resources into making lots of small mobile apps rather than dedicating a huge staff to one big one. Kevin Rose, the founder of Digg, this year launched North, a mobile app incubator geared toward producing about four apps per year. Tech companies from Foursquare to Facebook have also broken apart the functionality of their main mobile apps into two or more programs, each with their own dedicated team of developers.
What goes into making a hit mobile app is unpredictable, so it’s wise to try out a variety of things and see what works, Tseng said. The company’s name is meant to look like a line of code, with “if” signifying the many possibilities and “we” the mission of fostering social interactions.
The company is already working on its first new app, which Tseng described as “a new take on messaging” but declined to discuss in more detail. He wants to build social apps for new platforms, such as Apple Watch, and try out new models of human interaction, such as an “Uber for friends,” he said.
Tseng predicts if(we) will turn out two to three new apps a year, and give each project around three to six months before deciding whether to shut it down. Rather than have Tseng dictate those projects, employees in the company will be invited to pitch their own ideas to him and Gonipath.
A large portion of the company’s 140 employees will continue to keep Tagged up and running, Tseng said. The company has raised $12 million from investors including LinkedIn co-founder Reid Hoffman, venture firm Mayfield Fund, Comerica Bank and Lighthouse Capital Partners.
The new goal for the company is to find an app with the best chance of success, and eventually put everything into building it into a service that can attract a billion users.
“Failure can’t be a scary thing; it can’t be depressing,” Tseng said. “It’s part of the process of innovation.”