The Problem

In July 2007, software design firm ChipIn launched a Facebook application, a vampires-versus-werewolves widget, to create buzz for its main product -- programs to build and manage widgets. What began as a publicity stunt in which Facebook users "bit" one another soon became a phenomenon, with more than one million users. The advertisers weren't far behind. Lionsgate Entertainment alone was soon spending $15,000 a month to embed a video in the werewolves widget to promote its Skinwalkers werewolf movie. The money was great. But the new business sapped ChipIn's resources. The applications required their own servers, company Web engineers had to constantly keep them from crashing, and the company's core business suffered. In time, ChipIn decided to sell the Facebook business and concentrate solely on the widget-building software. "In the end," said ChipIn co-founder Carnet Williams, "we want to make hundreds of millions of dollars, not millions of dollars."

What the Experts Said

Lee Lorenzen, CEO of Altura Ventures in Monterey, California, wondered whether it made sense to cut the Facebook apps, given the upside. Shellye Archambeau, CEO of MetricStream in Redwood Shores, California, thought it was risky to focus on an unproven business. Steven Carpenter, CEO of San Francisco—based Cake Financial, supported Williams's decision, though he urged Williams to avoid outside funding.

What's Happened Since

In January 2008, ChipIn sold its Facebook apps to New York City—based Buddy Media. ChipIn then unveiled its new widget tool, SproutBuilder, at the prestigious DEMO expo, where it won a DEMOgods award. SproutBuilder has since landed clients as varied as publishers, ad agencies, and events producers, including AEG Live, one of the world's largest tour promoters. ChipIn raised $5 million in financing last April and later phased out introductory free service to help bring in additional revenue.

What's Next

Williams is devoting 2009 to increasing SproutBuilder's customer base and hopes the product will pull in its first million in revenue. "It's like hitting your first home run in Little League," he says. "There's something special about that milestone."