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Entrepreneurship

An entrepreneur’s vision of online social networking

Kevin Tan |

Currently, Linneberg and his small team of eight people are busy with a new round of fundraising, developing OrSiSo’s advertising platform, and talking to potential advertisers.

Since Aureliant’s incorporation last January, the company has raised about half a million US dollars in two rounds of fundraising, securing grants from Singapore’s Economic Development Board and the Media Development Authority. The company is now seeking to raise another US$1.5 million, and is in talks with seven venture capital firms.
OrSiSo website screenshot - INSEAD Knowledge

According to Linneberg’s financial projections, OrSiSo will achieve a total user base of 82,000 and a loss of US$510,000 in EBITDA (earnings before interest, taxes, depreciation and amortisation) in its first year of operations. But by the third year, Linneberg expects the company to attract 10 million users and achieve EBITDA of US$30 million.

Linneberg says his ambitious projections are realistic as it follows a “hockey stick” growth curve that many popular social networking sites, such as Facebook, have experienced.

“The way we have projected our next four years is that we basically add 15 per cent compound (growth) in users per month,” says Linneberg. “And that makes for a very flat curve initially, but at one point it’s going to start exponentially to grow. That’s why you see this hyper growth after three years.”

“It seems a bit ambitious and maybe a bit weird but this is really typically how these networks they develop. And if you look at all the major social networks in the world, and you look at them when they started and until four years later, the average growth rate was about 22 per cent per month.”

“So we have actually said ‘ok, we want to grow by a little bit less than that, we want to grow by 15 per cent per month’. So the reason we make a little money and then a hell of a lot of money is really just because the users at one point they reach a kind of a tipping point and you’re going to see more exponential growth.”

At the time of INSEAD Knowledge’s interview with Linneberg, OrSiSo had about 5,000 users, which was expanding by around 15 per cent a month, in line with Linneberg’s projection.

In terms of monetising OrSiSo, Linneberg plans to put in place revenue streams including premium subscriptions, in-application banner advertising, media mobile content, mobile application store sales, in-application product placements and revenue-sharing with strategic partners.

Linneberg says OrSiSo will use analytical tools to pick up key words used in online conversations between users and their friends, which will attract advertisers who “want to be part of the social conversation and be relevant”.

“So what we do is, we analyse the social conversation for keywords just like Google does it for Adsense,” says Linneberg. “And when we hit specific words, we will display specific ads based on that.”

Linneberg is also working to develop avatars for users, which are animated and customisable. And when users receive messages from their friends, their avatars can inform them while wearing brand logos (of companies such as Heineken, Federal Express or DHL) that are contextual.

So far Linneberg says advertisers have been showing “a lot of interest” and he is poised to sign agreements with a couple of major brands. (He declined to disclose their identities).

When asked what drives him as an entrepreneur, Linneberg, who has 15 years’ experience working as a country manager in assorted industries (consumer goods, electronic waste recycling, mobile and internet communications), says: “You get an idea out of the blue … and actually having the guts to follow through, raise the money, start the company, hire the people, and see this idea become reality by actually having a product,”

“That is really what drives me. And also the people in the company, the people I work with are very important to me. I’ve always felt like this with all my jobs and I see it as a blessing that now I can mould the company and the culture around my own philosophy of how business should be run. I think that the motivating part is really the creation of something new.”

And his advice to other entrepreneurs trying to break into the social media sector?

“I think you have to be very excited about the idea yourself, because if you are not 100 per cent in belief that you can make this happen, because (for) any start-up and especially internet start-ups, it’s against the odds from day one,”

“Only one in a 100 last in the first 12 months. So you have to believe it yourself, no one else will believe it if you don’t believe it 100 per cent.”

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