How chat fiction app Hooked got 20M teens reading on their phone

Hooked is a “chat fiction” app that has gotten 20 million teens to collectively read over 10 billion fictional text messages in the past six months. Hooked co-founder and CEO Prerna Gupta says reading isn’t dead for millennials — it’s just that fiction needs to evolve with the times. She thinks it’s a billion dollar opportunity.

In this interview with Prerna, we get her perspective on how Hooked is changing the way we read:

• Prerna thinks chat fiction is the gateway drug to get teens hooked on multi-media, mobile-first stories.
• The secret sauce to getting to #1 in the App Store is… Perseverance.
• Raising money with Shawn Merani on AngelList was game-changing: “Suddenly all these investors came out of the woodwork and wanted to understand what we were doing.”

Julie Ruvolo: You and your husband Parag Chordia are serial music entrepreneurs. After you sold your last startup to Smule in 2011, you got rid of your worldy belongings and took off to Costa Rica to surf and write a fiction novel. How did you get from there to Hooked?

Prerna Gupta: It was the end of 2013, and as we started writing, something just felt wrong about how we were approaching it. We were spending all this time creating this huge project on our own, without having a sense of whether it would resonate.

We started asking ourselves: How do you actually get a book in front of a young person today? If we were to launch this novel as an app, what would that look like? We realized there was potentially a much bigger business opportunity in answering these questions.

So how do you get a book in front of a young person today?

Reader behavior is changing rapidly and dramatically, especially in younger generations. If you look at books, 80% of young adults who read are reading on digital devices, and the first touch point for almost any piece of media is increasingly happening on mobile.

Behavior is changing, but the way we think about the novel format hasn’t really changed in hundreds of years. Traditional novels are broken into chapters that can take up to an hour to read. But the average mobile session length is 2.5 to five minutes.

I don’t believe the demand for reading is dying, I just think that reading has to change, and the way we’re creating stories has to make sense for how we live our lives today. We started Hooked with the goal of rethinking storytelling from the ground up for the younger generations.

I don’t believe the demand for reading is dying, I just think that reading has to change, and the way that we’re creating stories has to make sense for how we live our lives today.

You started with an experiment into how teens are reading on mobile. You took the first 1,000 words of the fifty best-selling YA (young adult) novels to see how many teens actually read to the end of the excerpts. What did you find?

In the very best cases, only about a third of readers made it all the way to the end. In other words, the majority of teen readers were not even completing the first five minutes of best-selling YA novels when reading them on mobile. Then we tested out a story written as an exchange of text messages between the characters, and almost everyone finished reading it in the first session. That was the thing that actually got teenagers to read.

You’ve launched over 2,000 professionally written chat fiction stories (mostly horror/thrillers) and 1M user-generated stories. Is chat fiction a starting point in terms of where the content can go, or is this the format you want to scale?

This is the starting point, the gateway drug. Ultimately, we want to tell rich stories that can transcend the medium and incorporate all of the ways teenagers are communicating with each other on mobile: images, videos, GIFs, audio, whatever it is.

I see our stories getting more multimedia over time, but the key point is that it really all starts with the story. And the story, in its simplest form, is essentially crisp dialogue. We don’t want add all this stuff on top and try to dress up a story that isn’t fully baked yet.

Who’s reading chat fiction on Hooked?

Our early readers were 80% females, ages 13–17, mostly in the US. Since things started taking off in 2016 — we crossed 10M readers in April, and 20M readers in May — the demographic has broadened. The gender split is now 60/40, and the age range is more like 13–35.

Any plans to move into text-based romance? Erotic fiction has the single largest share of the fiction market, print or digital, as of 2011. 50 Shades of Grey is an obvious example, which originated as Twilight fan fiction.

It’s a great question, and one that we have thought a lot about. In purely business terms, it’s the easiest way to make money in fiction, and it gets women hooked. We will be launching non-explicit romance very soon, but erotic fiction feels like more of an expansion opportunity than the core, and we would need to be careful about how to do it with our younger audience.

Hooked has attracted an A-list of investors. Walk me through your disclosed funding to date.

In the seed stage, we raised $5M over three different KISS notes.

We started the first round in November 2014 and raised $650K, mostly from people who had invested in us previously, including Pat Matthews, who used to be at RackSpace; some folks from Smule, including CEO Jeff Smith; Tom Ryan, who does PlutoTV; Mark Thompson, an executive coach; Eric Ries of The Lean Startup; Jens Christensen, founder of Jaunt VR; and Dave McClure at 500, who was our first check into Hooked, and also invested in Khush, our last startup. Dave was the first one who said, “This is crazy, but it sounds cool. Here’s some money. Go figure it out.”

Our pitch was kind of insane at that point. We had no idea what we were going to build. We said we were going to use data to make mobile stories.

In 2015 we had the insight around the text message story format, got ready to launch the Hooked beta, and raised $1.5M in our second KISS note, led by 500 Startups. That was when Shawn Merani got involved — we gave him a $250K allocation for his Flight.vc syndicate on AngelList.

Greylock, Foundation Capital, Rivet Ventures, Ludlow Ventures, Cowboy Ventures and SV Angel also participated in the second note, as did a bunch of angels: Rick Marini, Maneesh Arora, Bart Decrem, Justin Waldron from Zynga, Doug Feirstein, a founder of Hired, and Julian Farrior, CEO of Backflip Studios. They were all people we had connected with at some point along our entrepreneurial journey who took a chance on us.

The second note was a turning point for us as a company, in terms of fundraising. Up to that point, we were in territory that was very familiar to us, which is this crazy founder couple that does these weird art apps, basically. Fundraising was always hard for us.

But last September, a couple of things changed. We had a product and real metrics that showed that people were actually reading the stories. We had metrics on cost to acquire a customer and what percentage were converting to subscriptions, using the same premium subscription business model that we had used in our previous music apps with a similar demographic. Suddenly, our story was a lot stronger.

How did you meet Shawn?

One of our advisors, Sunil Rajaraman from Scripted, introduced us. Shawn had a personal passion for what we were doing, came on as an investor, and introduced us to angel investors and strategically helpful funds and industry contacts. Sunil and Shawn really made the round come together for us.

How did the conversation go when Shawn said he wanted to raise his allocation on AngelList?

I was already sold on the concept. Shawn had invested in Sunil’s previous company Scripted on AngelList, and Sunil told me what to expect. It helped a lot to hear him say it was great and worth it and frictionless. I also really liked Shawn and thought he would be great for us to have involved.

How has Shawn helped you so far?

He’s been so supportive. It hasn’t just all been good times. We had a full year where we were testing and iterating and getting user feedback — in other words, nothing was working. He stuck by us and would regularly collaborate with us as we were changing and making strategic decisions on monetizing and UGC content.

He also opened up his entire network to us. The individual backers in the Flight.vc syndicate are amazing, because whenever we have an investor update, or an article comes out, they’re a megaphone, amplifying the good stuff that’s happening, and that’s so valuable.

How did your third note come together, and who participated?

The AngelList syndicate changed everything for us. Suddenly all these investors came out of the woodwork and wanted to understand what we were doing. It really put us on the map.

The AngelList syndicate changed everything for us. Suddenly all these investors came out of the woodwork and wanted to understand what we were doing. It really put us on the map.

Shawn’s syndicate ended up taking a big chunk of the third note — $1.35M of a $3M raise. Greylock followed on, and Foundation Capital, Founders Fund, SV Angel, and Sweet Capital (the Candy Crush family) all joined. I think we were Cyan Banister’s first investment after she joined Founders Fund; she also invested personally. So did Anjula Acharia at Trinity Ventures, Greg Silverman at Warner Bros, Charles King, a longtime agent at WME who now runs Macro, as well as WME’s fund. And Kevin Spacey.

Also, the timing was crazy, because we opened the third note over Thanksgiving 2016, and the next week, we had a story go viral and went to #1 in the App Store.

There is something mysterious about launching something new from the ground, on day one. It tends to get mythologized by startups who’ve already cracked that viral barrier. Is it secret sauce, or strategic work?

We’ve launched or helped launch 10–15 apps since 2009, and the things that work and don’t work have changed dramatically over that time.

It’s a lot harder than it was at our last startup, Khush. You don’t just do a big launch and suddenly get millions of downloads. There were all these little things that just worked like magic back then: PR or a big viral video or an app store feature would get you a bunch of downloads.

The trope is that nobody downloads apps anymore, because there is too much noise. That’s obviously not true, but it’s become much harder to convince somebody to download a new app than it was back in the early days of the iPhone. To come back from that and start from scratch, we had to mentally prepare ourselves for a slog.

So what’s in the secret sauce? How do you get to #1 in the App Store?

This is going to seem like a non-answer, but I promise it’s not: The most important thing is perseverance. No one thing is guaranteed to work and it just depends — on the time period, on your product, on your personal relationships. There’s always a little bit of magic in the whole thing. That’s why perseverance matters, because maybe your launch sucks, but you can’t give up and you have to just keep hammering, and trying and trying until something starts to click.

With Hooked, it took a full year for any traction to start building. Then, when we had the story go viral last December, everything started to take off.

Our goal is to build the next Netflix. We want to be a mobile first destination for truly great stories in every medium.

What does the competitive landscape look like right now?

In the broadest sense, our competitors are anyone capturing a teenager’s attention on a phone: SnapChat, Instagram, Facebook. We’re trying to take the mobile screen time away from them.

More recently, we’re starting to see several direct competitors that are actually clones of Hooked. Last fall, Amazon launched Amazon Rapids, which is clearly a response to Hooked, but focused on a younger demographic, eight to twelve year olds. So the customer is really the parent who is making the decision on whether to download.

Then in February, Wattpad launched an exact clone of Hooked called Tap. Initially they even put “hooked” in their name. It was like, “Tap — read to get hooked,” or something like that. Luckily, we have the trademark, so we asked them kindly to please remove it, and they did. Then Science Mobile launched one called Yarn. Those are the two most serious teams.

These initial clone products are making one thing clear: Chat fiction has come of age. Hooked will not be the only one telling stories in this format, and that’s a good thing. It means we are succeeding in our mission to get teenagers to read more fiction.

Biz Carson describes the opportunity as follows: “No one has really mastered creating a narrative in a new form, native to mobile and designed to capture a person’s short attention span.” Where do you go from here?

Our goal is to build the next Netflix. We want to be a mobile first destination for truly great stories in every medium.

My personal goal with all of that is to not just discover, but really to help create the next Harry Potter. Everyone is chasing the billion-dollar unicorn status, but that’s supposed to be a result of building something real — not the goal. It’s hard to not get caught up in that. It helps remembering we are just a quirky couple building an art app. Because ultimately, this all started with a novel.

Originally published at blog.angel.co on June 13, 2017.