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Viddy: 40 million registered. 650k monthly active users. Ouch.

Viddy 40 million registered 650k monthly active users Ouch


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Ouch say the investors who piled in with $30 million at a $370 million valuation in May when Viddy had 31 million monthly active users. It now has under a million monthly actives.

Facebook Open Graph gave Viddy exponential growth and then exponential decay.

Be careful with the growth hacks because they CAN turn against you:

The roller coaster for Viddy Inc. Chief Executive Brett O'Brien began in March. His Venice, Calif., startup, which launched last year, was steadily growing its user base for a free app that lets people enhance, edit and share videos on their iPhones. Viddy, with about 10 employees at the time, was "pretty much heads down," Mr. O'Brien said.

Then Viddy connected its app to Facebook's Open Graph platform in March, enabling people to automatically share their Viddy activity in their friends' Facebook news feeds. That raised Viddy's profile.

The number of monthly active users connecting to the app through Facebook quickly soared—to 890,000 by late March, up from 60,000 in January, according to AppData. By late May, the number skyrocketed to 31.1 million.

At the same time, Facebook in April said it was acquiring mobile photo-sharing app Instagram for $1 billion, spurring investors to hunt for the next mobile hit. Though it was producing no revenue, Viddy was inundated with investment offers. In May, Viddy announced it had raised $30 million. The company's valuation was pegged at $370 million, said people familiar with the matter.

All of that "brought a spotlight to this category that I don't think anyone expected," said Mr. O'Brien, 46 years old. "That brought issues and challenges, as well as opportunities."

Among the problems: The user influx strained Viddy's technology so some people were unable to get onto the app on their first try, or they found the app operated slowly. Some consumers vented their frustrations about the app in emails and online posts.

"We were getting distracted just trying to deal with all that," said Mr. O'Brien.

Viddy's user growth through Facebook started cooling off. By July, the number of active monthly users connecting to Viddy through Facebook had fallen to 10.9 million; by November, that amount was down to 650,000, said AppData.

"The hype helped Viddy, and it hurt them," said Battery Ventures' Mr. O'Malley, who is a Viddy board member. The startup now has enough capital for several years, has built out its back-end technology, and today counts 40 million registered users, up 10 times from the start of the year. But "the hype also changed the bar and [Viddy] lost focus on some things," he said.

For Mr. O'Brien, it's now back to the basics of improving the app. Viddy is hiring and currently has about 30 employees. This month, it released an app for devices powered by Google's Android. The company also plans to launch a new version of its app early next year.

Mr. O'Brien said he isn't "hung up" on all the ups and downs, and Viddy has "learned a lot."

The hype "was a moment in time," he added. "We're fortunate we got to spend the last six months without the noise."

The Wall Street Journal article has two similar momentum-lost stories: Living Social and Kabam.

It also blames John Doerr for hyping SoLoMo and three stocks (Facebook, Groupon, Zynga) that rode that wave up and then tanked after going public.

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