Tagged CEO Greg Tseng On Accountability, TechCrunch and Leading the Third Biggest Social Networking Site in the U.S.


Earlier this week, I reported that Tagged, a social networking service that began life as a Facebook for teenagers, has reportedly evolved into a spam machine. I also noted that when I approached the company to chat about dubious recruiting processes, my press requests were handled very poorly. I concluded that, between the two, its high-profile investors had reason for concern.

Yesterday, TechCrunch published a related story, saying I’d been overly “harsh” and that I’d managed to draw a line “practically putting the company in the deadpool,” when the company is “actually humming along quite nicely.”

I finally caught up with Tagged’s CEO, Greg Tseng, this morning, and we chatted about the chatter, as well as what’s really going on at the four-year-old company.

To begin, I never suggested that Tagged was at death’s door. I addressed the overly-aggressive user recruitment tactics it’s been accused of employing.

Yeah, I know. Mike [Arrington] called me, asking for my side of the story, but I think he was also looking for a sensationalistic headline.

Why didn’t someone from the company talk with me or with the Ventura County Star when asked about users’ accusations that Tagged was spamming them?

Regarding your request, [my team] knew I was heading back [from a trip to the Philippines] and wanted to wait. As for the newspaper, I’ve checked and we never received any email or voicemail requests from them. Of course we would have talked with them.

Since TechCrunch has posted its piece about Tagged, a surprising percentage of the reader comments have centered on how they met their girlfriend or boyfriend on the site. Is that the company’s core focus now, matchmaking?

We started as a social network focused on U.S. teens and executed on that strategy for about a year, getting about 10% of U.S. high school students. But by then, Facebook had launched its high school product, so in October 2006, we opened to all countries and all ages above 13. What we discovered is that, by 2007, most of the connections happening were between people who met each other on Tagged. Unlike Facebook, which is focused on preexisting relationships, Tagged became about future relationships. About half of that is flirting and dating and half of it is platonic. We’re about helping you to find new social relationships.

After a few negative reactions to Tagged, the hundreds of comments that followed looked awfully spammy, with an inordinate amount of “I love Tagged — LOL” type postings.

When the [TechCrunch] article came out, I posted an announcement on Tagged, saying, “Go show your love on the site.” I left it on for half an hour, at 11 p.m. I didn’t expect it to generate over 100 comments. I did the same thing yesterday around noon for 15 minutes and got another 100 or so comments. I was up front with Arrington that I was doing this and he loved that I was directing Tagged users to TechCrunch.

I’m not sure if I’m impressed or what you did completely undermined his point or both, but let’s move on and talk about your growth rate and user base.

Well, in just the last 18 months, we’ve grown traffic by page views by 10x. When [you and I] last talked three years ago, we were getting 200 million page views per month. Now we get over 7 billion page views per month, have 80 million registered users, and 16 million actively monthly users. According to ComScore and HitWise, we’re the third biggest social network in the U.S. in terms of usage metrics, and we have just 38 full-time employees, unlike Facebook and MySpace, which both have staffs of around 1,000 people.

We’ve been quietly executing for the last few years and doing a really good job. We’ve been profitable for five consecutive quarters on a net income basis, with 70 percent of our revenue coming from advertising and 30 percent coming from features like micropayments and a partnership with [the fast-growing games startup] Zynga, where we integrate their social games and have a revenue share.

This recent issue has forced us back into the spotlight.

But this recent issue is a big deal. If things are going so well, why risk everything by going overboard to recruit people, including, according to some, extracting their address books even as they are backing out of the registration process?

For at least four or five years, we’ve let users who register check their email address book to see which of their contacts are on the site and which aren’t, as a way for them to instantly connect with people they know and start building their network.

Which is a standard practice across most social networks these days. Yet there are undeniably problems with Tagged’s process.

We had an issue in early ‘07, when we started registering lots of complaints that “Tagged is stealing my address book and spamming my friends.” We wondered if we had a bug in our process but it was really users going through the process too fast, and not reading the headers and helper facts that we’d laid out in all these pages, and inadvertently inviting their contacts and being embarrassed about it afterward.

That seems a little unfair. Couldn’t it have been a user interface problem?

Well, we agreed that it didn’t matter whose fault it was, that it was problem, so in June of that year, we introduced this warning pop-up, so that if you go through the process blindly and wind up inviting 100 percent of your contacts, it’ll say, “Do you really want to invite all your contacts?” And it’s only after you click “OK” that we move forward. That dramatically cut down on these inadvertent invitations.

Why are people complaining about Tagged again now?

So from June 2007 until earlier this month, it’d been smooth sailing. But in Silicon Valley, we have an engineering and iterative culture, so we’re constantly trying out new ways to do things and to tweak the process, and in the first week of June, we were inspired by Facebook to try something new. Facebook’s current subject line is “Check out my photos on Facebook.” We thought maybe we could do something with that as part of the registration process, but we wound up being surprised both by the uptick in usage, and the uptick in complaints.

What happened exactly?

What probably occurred this time is that even though we have this very clear process before people invite all their contacts, I think that even with the multiple steps, people still went through blindly and got embarrassed and complained afterward.

People were being invited to join Tagged by viewing the photos of people they barely know and you’re saying this was all the inadvertent work of people who were baffled when you combined the registration and photo sharing process?

Yes.

What about California Lutheran University, which says it blocked 1,500 Tagged emails in the first two weeks of June?

A lot of people registered during that period and invited other people — 3 million, in fact — so for [the school] to receive emails at a high volume, that doesn’t raise a red flag for me.

It’s also worth noting that most of complaints started occurring around June 4 or 5 — it takes a little while after we do something before we get complaints — and we made a decision on Sunday, June 7, to shut off the process. We said, it doesn’t matter whose fault it is, we just need to shut it off.

So you never intentionally extracted the contact lists of people who backed out of the registration process during that first week of June?

Users need to click a button to invite all their contacts and all these pages are optional and have skip buttons. We want to make it easy for people to quickly build a network but we probably made it it too easy in this case.

You say Tagged registered 3 million people in that experiment. Typically how many people are you registering per month?

Between 2 and 3 million.

[That attraction owes in part to ] our platform, which doesn’t feature tens of thousand of applications that you need to find and install. Rather, we’re just taking what are the best applications on MySpace and Facebook and doing direct deals with applications makers and integrating them as full features on Tagged. We think it’s a much more seamless experience for the user.

How many people cancel their accounts each month?

I don’t know off the top of my head what that monthly percentage is.

Find new deal opportunities, super-charge your fundraising efforts and track top managers with VCJ. Get your FREE trial! Or subscribe now!