A Software Company's Whimsical Widgets Were an Instant Hit. But Its Core Product was Getting Overshadowed.

To embrace or flee Facebook?

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Vampires, werewolves, and...widgets? Don't laugh. That combination of old-world monsters and cutting-edge Web technology created a booming business for Carnet Williams and his fledgling company, ChipIn. But it also presented him with a huge headache and forced him to rethink the very nature and mission of his company. Williams came up with the idea of pitting vampires against werewolves as a tongue-in-cheek way to get an audience for his company's products, programs that companies use to design and control widgets. Widgets are those bite-size packets of software used to spice up websites and blogs with simple interactive icons. They're increasingly of interest to big companies, which like widgets for their ability to help them conduct transactions online without having to build expensive websites. Williams saw a huge opportunity in helping businesses build and manage their widgets.

With his vampires and werewolves, Williams hoped to create some buzz and ultimately draw Facebook's millions of users to his company's signature widget and to its namesake, ChipIn, a software program that lets businesses, nonprofits, and other groups use powerful widgets at a low cost. Williams hired a designer to create evocative monster images. Then he had his coders build those images into two widgets designed to run in Facebook. People were asked if they were werewolves or vampires. Anyone who answered the query was "infected" and could "bite" other Facebook users.

The idea was to spark a viral competition between werewolves and vampires inside the confines of Facebook, with the goal of promoting ChipIn. Within a month, nearly 500,000 Facebook users had downloaded the application. Heated debates over the relative evilness of the monsters sprawled over discussion boards inside Facebook communities. Then the advertisers came calling. Lionsgate Entertainment used the application to promote the werewolf movie Skinwalkers, spending $15,000 a month to embed a promotional video inside the vampires and werewolves widgets.

For a cash-starved start-up, the money was a gift. And all the attention was fun. But keeping up with the new business began to take its toll on ChipIn. Its software developers were finding themselves devoting more and more of their time to coding for Facebook applications.

Before long, the question became clear. Would the success of the monster face-off turn ChipIn into a pure-play Facebook application provider and advertising company? Or would Williams sell off the Facebook offshoot so his company could refocus on building its early technology lead in enterprise widget software? It was a critical juncture. Should he roll the dice on a hot but perhaps short-lived hit? Or should he keep moving toward his original vision of developing his widget product and marketing it to large corporate clients?

This wasn't the first time Williams had been forced to consider a big shift in strategy. ChipIn was launched, in the winter of 2005, by Williams and three friends, in Honolulu. They were hoping to create a Web-based system for coordinating group transactions and payments, putting online the often time-consuming function of collecting money for sports-team uniforms, graduation gifts, or just beer money for the next poker game. Williams, who has spent much of his career working in the nonprofit sector on technology issues, saw ChipIn becoming a powerful way for charities to raise money, with ChipIn taking a small percentage of each transaction. Williams raised $1 million from angel investors to develop the service. It launched in May 2006 but failed to attract enough users. "We got good media coverage, but there wasn't enough interest to justify pushing on with that plan," he says.

Undeterred, Williams turned to Plan B--widgets. He would morph ChipIn into a widget-based fundraising product, making it easy for nonprofits, charities, and other groups to create campaigns using audio and video and then send them over the Internet with cut-and-paste ease. Then he got what he figured was an even better idea: Rather than just sell the widget applications, ChipIn would build tools for creating, tracking, and managing widgets for all sorts of industries. Williams envisioned a broad market that would include industries as diverse as health insurance and ad agencies. Tracking and controlling widgets is complicated and critical for large businesses. For example, if Nike set up a campaign that allowed the masses to upload homemade spots to widgets, it would want to count how many people watched the spots, and it would want to have the ability to shut down inappropriate spots running inside a widget bearing the Nike logo. ChipIn would provide the means for Nike to do all that.

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