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Wajam founder and CEO Martin-Luc Archambault (Magali Janvier)
Wajam founder and CEO Martin-Luc Archambault (Magali Janvier)

How to give an app away and still make money Add to ...

­THE CHALLENGE

Serial entrepreneur Martin-Luc Archambault has found a solid niche in the online world of social searching with Montreal-based Wajam Inc.

The company he founded in 2009 created a browser plug-in that automatically shows recommendations from users’ Facebook, Twitter, Google+ (and, soon to come, LinkedIn), friends when they conduct an online search.

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The browser plug-in was quickly adopted by users who appreciated the ability to see relevant recommendations from friends whenever they searched on numerous sites ranging from Amazon to Trip Advisor.

 However, while Wajam quickly generated a user base, its novel way of delivering search results did not immediately translate into revenues..

So Wajam needed to develop a business model that would allow its users to enjoy the application free of charge while, at the same time, provide the privately funded startup with much-needed revenues to help grow its business.

THE BACKGROUND

Mr. Archambault is a serial entrepreneur and angel investor who has created more than 10 businesses since he was in his teens. He sold out his last venture in 2005, and, after working for it for another three years, began to search for his next business idea.

During that search, he discovered that when he and his business advisers were browsing the Web, they repeatedly found the same websites and links. This duplication of effort made him realize that there was an opportunity to save time and make social sharing of knowledge easier.

The initial idea was to create a browser plug-in that would allow users to bookmark Web pages they had found. This bookmarking tool indexed favourite sites so that they could be easily shared with friends on Wajam.

The company released a prototype, but the initial plugin did not get much traction.“Too many people were already sharing on social platforms like Facebook and Twitter. Who needed yet another platform?” asks Mr. Archambault, Wajam’s chief executive officer.

So he began to look at how people shared information on existing social networks, thinking there must be a way to tap into the billion bits of wisdom that had already been circulated on them.

“We came up with the concept of using the links already shared on Facebook, Twitter, & Google+ so your friends on these three social networks could see what links you had already shared,” Mr. Archambault says.

Wajam then turned its attention to developing a social search engine that brought together recommendations from friends across all social platforms. It indexed Facebook, Twitter and Google+ status updates (also known as posts) and showed the results in users’ favourite search engines or websites.

For example, when Wajam users used Google to search for a restaurant in Toronto, Wajam would also show its users the restaurants their friends had mentioned on Facebook, Twitter and Google+, and what they had to say about these restaurants.

In under a year, Wajam indexed more than a billion pieces of social content.

The new version of Wajam quickly generated a loyal and growing user base, but that did not translate into revenue. The company had to find a model that would generate funds needed to market its browser plug-in and grow its users into the millions, while still allowing them to use the service free of charge.

THE SOLUTION

Mr. Archambault came up with a business model that he calls “social advertising:" displaying ads that are matched to your friends' recommendations.

The notion: Wajam needed to find an adverting partner that already had thousands of advertisers on board and would share revenues generated by advertising click-throughs.

“Since Wajam was already providing product recommendations for users directly from product mentions on Facebook, Twitter and Google+, it made perfect sense to show both what your friends thought of a product as well as shopping comparisons from different retailers,” Mr. Archambault says.

“For users, it was a win-win situation. You could see what your friends said about a particular product you were considering, and you could also find out what the best price was and where to buy it.”

The search led to Shopping.com, a shopping-comparison site that is a subsidiary of San Jose, Calif.-based eBay Inc.

Mr. Archambault saw this as a “dream partnership,” but getting a public company to work with a start-up took persistence and time.“You need to show the big players that you’re serious, ambitious, and that you’re worth taking a risk on,” Mr. Archambault says.

Over several months, he courted this potential partner. The persistence paid off: After six months of back and forth, the advertising partnership became official in July, and Wajam added comparison-shopping to its social-search results, and a monetized model to its business.

THE RESULT

The partnership is working well for Wajam, which has spent a portion of its newfound revenues on marketing. That has helped to grow its user base at a current monthly rate of 25 per cent. It has also now become profitable.

The company has also doubled in size, growing to 25 employees in the months since creating the partnership. Wajam has also now indiexed nearly five billion pieces of social data, up from one billion just before the agreement was signed. In August, it introduced its first mobile-enhanced version of its plug-in.

“The team is now looking forward to improving the social search engine by adding more sources, starting with LinkedIn, and also expanding its mobile offering,”, says Mr. Archambault, whose company has been recognized with several awards, including Stevie Awards for most innovative company of the year and best social app, and an appearance on Red Herring’s list of most promising private technology ventures . Mr. Archambault has also been recognized, including being a finalist for Ernst & Young’s entrepreneur of the year award.

Special to The Globe and Mail

Craig Elias is the founder of Shift Selling Inc. and an entrepreneurship instructor at the Haskayne School of Business at the University of Calgary.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.

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