The Story of Zopim: Struggle and Sacrifice on the Way to Startup Success

Zopim is six-year old Singaporean startup that provides live chat software for websites. At moment, they have a team of more than 25 members, with around 70,000 businesses actively using their service on websites. More than 200 million web visitors encounter the Zopim chat widget every month. I recently had a chance to meet with Zopim’s founder, Royston Tay, to find out more about his entrepreneurial journey so far.

All their key metrics currently look pretty sexy, but they haven’t arrived at this stage without toil, struggle, and sacrifices in the early days.

Zopim has four co-founders who all met in the bay area while attending the NUS Overseas College Program. Shortly after returning to Singapore, they crashed a networking event where the famous venture capitalist, Tim Draper, was present. An elevator pitch later, Tim was intrigued enough to request a demo of Zopim at his Sandhill office. A prototype was feverishly developed in two months and presented to Tim. While he passed on the opportunity to invest at that early stage, Zopim managed to raise seed funding through the iJam grant, administered by NUS and a Singapore government agency MDA.

School or startup?

At this point, they still had half a year of school left and a major final year project to complete before graduation. With competitors working on similar products, they knew that in order to make the startup work, they had to get it done even while still studying. Knowing full well that their academic results would suffer if they chose Zopim over studies, they still chose to focus on their startup. This is a decision they never regretted.

They worked fourteen to sixteen hours a day and everyone lived on a meagre monthly salary of S$500 (about $410) for two years. Considering the high cost of living in Singapore, that amount is comparable to the weekly expenses for many of their peers who had just graduated. Royston says it was tough but there were necessary sacrifices to be made as none of the founders were born with proverbial silver spoons stuck in their mouths. The team had most of their meals at home, rarely ate at restaurants, and always travelled on public transport. Even though Zopim had a small office granted by their university, the team would often work out in the university’s incubator office because of the well-stocked pantry. Royston says the founders are extremely appreciative of the support and understanding shown by their families and girlfriends, without which they might have given up entirely.

Royston says that maintaining drive and motivation of the team was also an issue in those early years. As Zopim is a very product-centric startup, the first two years saw the team focusing on developing the technology and product on free usage model. There were doubts internally and externally about whether they could eventually monetize it. This near breaking point came in the second year when funds were running low and founders were taking voluntary pay cuts. But the product was still nowhere near monetizable, and morale and determination was at an all-time low. This was when Royston sat everyone down and gave his ultimatum:

Hitting their stride

And so the team regrouped. In 2008 at end of their second year, the team introduced their monthly subscription plan, effectively changing Zopim into a freemium model. To their surprise, the adoption rate for Zopim was faster than when it was totally free. Many of the businesses who were using the free version of Zopim for the past two years took up the paid version readily. In the following months, they scored a few big brands as live chat clients and that helped them record strong growth of paid users. Fast forward to now and we see that 2012, Zopim recorded more than US$1 million in sales revenue. Not bad!

Royston disclosed that the team actually turned down an acquisition bid worth around five to ten million dollars early last year. Internally, he feels that as long as they continue focusing on their strengths, and developing beautiful products, growing the valuation of the company to at least US$50 million is an attainable target in two to three years time.

On top of the live chat services, Zopim is now working on a suite of customer engagement tools for small businesses. I hope their fairy tale journey continues and I look forward to hearing big things from them in the next few years.

Zopim's team during an overseas CSR trip.
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