IQ Interactive Special Report: IQ Q & A With Bolt.com's Dan Pelson

Bolt.com's Gen-Y members have created an influential online community that expresses more than simply teen spirit. For anyone accustomed to old media, the idea of a "content-free" Web site seems a contradiction in terms. Why would anyone (except, perhaps, Jerry Seinfeld) seek out something providing no content? Yet in just three years, three million users, 70 percent of them in the United States, have registered with Bolt.com, which exists purely as a community-a platform for older teenagers (15-20) to meet and exchange opinions. They have created 50,000 clubs and thousands of message boards, organized into topic pages ranging from "Sex and Dating" to "Mystic" to "Poetry," pass "Bolt Notes" to each other and generate poll questions for each other, tallying responses in personal "tagbooks." It's become a self-perpetuating behemoth. A year ago, there were only a million users. Every day, up to 15,000 new users sign up, mostly by word of mouth. "It's viral," marvels cofounder Dan Pelson. The commerce aspect is also unusual: Bolt intends to let the teens dictate much of what is being sold to them. For instance, Pelson claims the site will only sell items once the members have clamored for them and, in some cases, even created the items themselves. The site's first such foray into this territory is its ongoing "tenbuckettee," a T-shirt design contest, for which the site manufactures winning entries, submitted and voted on by members, and pays the creator a $1-per-shirt royalty. The site's actual revenue model, however, is less visible to the naked eye. An ongoing accumulation of data about those 3 million users, including their preferences on everything from popular music to shampoo, is sold to corporations-including Ford, Pepsi, Adidas, Procter & Gamble and the U.S. Navy-who heretofore had been stymied in their efforts to access these hard-to-reach teens. For instance, Pepsi, which has its logo on Bolt's music page to affirm that brand's connection to music, can now learn its target audience's preferences in music. While the teens are voting on each other's mixes or commenting on Britney Spears' trendy, trashy outfits, "it's Pepsi that is in their faces-in a subtle way," says Pelson. Nestle; has promoted its Spree candy on Bolt as well, and Johnson & Johnson turned to Bolt to raise awareness for its Clean & Clear skin cleansing products, Neutrogena line and other products. Bolt.com was co-founded by Pelson, a former Sun Microsystems executive who created the early online magazine Word, Jane Mount, who was design director at Word, and Aaron Cohen, now the CEO of Concrete Inc. and formerly Word's marketing director. Bolt's success is such that even America Online bowed, enlisting the company, in essence, to take over AOL's teen community. The company's Soho offices are, like most Internet offices, bursting at the seams with employees (some 200). Pelson's is the only one with a door; even co-founder Mount shares a space back-to-back with another employee. The walls are lined with giant posters of various "Members of the Day"-Bolt teens who the site has featured. Pelson meets me in a conference room in which a computer is logged onto the site; he types in one of his screen names, admitting, "I'm always a little nervous about visiting; you never know what's going to be in here..." Today's front page, for instance, happens to have a discussion about masturbation "for girls only." IQ: Where did the concept of Bolt.com come from? Dan Pelson: There was clearly a void. No one was really reaching teens on a global basis nor did anyone have a really deep brand relationship with them. Even MTV still has a long way to go. And we saw other trends. Number one, teens and young people seem to be fleeing traditional media: newsstand sales are down to this audience, they watch less television than any other consumer segment. They're difficult to reach. The second trend is that they're flocking to empowering media-the Internet, wireless, two-way paging. They are the early adopters; they're hyper-communicators. All they want is to say, "Here's what I think. What do you think?" and create dialog. We [give them] the ability to do it in an anonymous way. If you want to stand up and say "I love poetry, what do you think?" there's a big difference between doing it in your high school cafeteria and doing it at Bolt. And there were other trends. It's a huge audience globally. The world is getting younger, children of baby boomers have tremendous spending capital and influence on other people's spending. So we said, let's create a business that serves this audience's need because we know there will be revenue based on marketers who are out there thinking, "This is our audience and we're having a really hard time reaching them with traditional means." How did you decide what age range to focus on? We focus on 15 to 20 because globally that's the transitional period in life. They're making their first brand decisions, having their first experience driving a car. Everyone talks about the Internet being this global medium, but very few companies have been able to take advantage of that fact. They just naturally get overseas traffic. We would argue that teens are probably the one consumer segment that is very similar on a global basis-an 18-year-old in the U.K. is pretty similar to one in the United States or Japan or Poland. They're going through a transition to adulthood: They're maturing physically and emotionally, they either just moved out of the house for their first job or into college or into the armed forces. Do you think this cross-cultural similarity is a recent development? Because of the Internet, TV and these kinds of things, culturally there's a lot more similarities now, but I think it's been this way for thousands of years. Teens are the epitome of a disenfranchised community. "Mom and Dad are hard to talk to, don't understand me, I can't talk to my teachers, I don't talk to my guidance counselors or mentors." They need a voice. And this medium is awesome for empowering disenfranchised communities. Add to that the fact that the world is getting much more multicultural, and this audience in particular is much more accepting of foreign cultural influences than their parents-that has created an awesome opportunity for us. Why did you name it Bolt? I wish I had some really fascinating story. We just wanted a four-letter URL-something easy to remember and easy to type. It's amazing how many sites are being launched with a 15-letter URL. If I can't spell it, how's the teen going to spell it? And we didn't want it to have a lot of meaning. When you're creating a new brand, the best-case scenario is that the name doesn't hurt you. It's hard to have it help you, because it's not going to have a lot of meaning until people start using the product. If you called it anything "teen" then you're going to get 12-year-olds, like Seventeen magazine, and we didn't want that. We also wanted something that really didn't have a lot of meaning globally, so we looked into "What does Bolt mean in French? Does it mean kill your mother?" You can apply meaning to Bolt-"out of here," like bolting out of here, "lightning bolt"-but if anything, it's a sound. How did you attract your earliest users? The most important distribution deal we did was with Hotmail in early 1998, before it was bought by Microsoft. Teens saw it as a portal. And for us at that time it was basically at no cost. Hotmail [wanted our platform] because they realized they needed to add value to the e-mail. People started clicking through. [Our presence] is still there. Most sites tend to skew male or female, but you decided early on to serve both audiences. Why? If you're a traditional media company that creates content, you probably have to split a segment or audience. But we don't create content here. Our model is communication; we provide context. People say content is king-well, context is queen and we know who rules in those situations. Our job is to provide the framework. This audience is creating the content that they want to consume. They're a hell of a lot smarter then we are when it comes to what's on their minds, and we're not going to try to guess. Because of that we can do dual audience. And we found out something fascinating: If you have a lot of women there, you'll have a lot of guys, and if you have a lot of guys there, you'll have a lot of women. Shocking! We have a little bit more women registered, probably because women are a little more apt to making a commitment to the site then guys are-another little thing we discovered. So 40 percent guys with 3 million users, that's a heck of a lot of guys. There's very few media properties out there, with the exception of ESPN, that are reaching this many guys. Can you contrast Bolt with some other teen-specific sites? ITurf and Alloy grew out of being early entrants in the catalog business. They really focus on the commerce aspect of having teen girls buy apparel on their sites. Snowball took an ad-network approach and offers lots of visitors on hundreds of different sites to advertisers. These approaches aren't necessarily wrong, but they are very different from Bolt. We believe that by offering a single registration process that gives our audience access to over a dozen tools in a similar fashion to Yahoo! and AOL, we create tremendously loyal members and we're able to offer our partners access to this audience in a multitude of ways. How did you hit upon the content-free idea? The people who founded the company-myself and Jane Mount and Aaron Cohen-came out of the Internet, which makes us really old-timers. We knew that communication tools were going to be critical to our success. However, we did start with a relatively traditional approach. We had writers, editors, people who were trying to write cool content, and what we found relatively quickly was that the stuff that we were creating was getting some activity, but it wasn't justifying the cost of creating it. The stuff that our audience was creating was really low-cost because they were creating it-and that's what was keeping people on the site. So we empower this audience, and they reward [us] with loyalty, and then they tell their friends about it. They couldn't care less what some 28-year-old has to say about Eminem or dating, I mean, God forbid. They care what their peers have to say. So over the course of that first year we started focusing on other tools to communicate, like Bolt Notes, which are what you did in class-it's passing a note back and forth on a one-to-one basis. Like an instant message? Yes, but the difference is you can leave a note for someone and they don't have to be there [online] to receive it. If they want to just send a quick message to somebody on the phone or pager or on the Web site, boom, there it is. I'd like to tell you that we were so brilliant as to [anticipate] WAP [wireless application protocol] and SMS [short message services]. But it just turns out it works really well in this new empowerment medium. Three years ago we weren't thinking about that. But when everyone started focusing on WAP, we just converted all our tools to WAP. Why are the tagbook polls so popular? It's extraordinarily personal. You can ask the question and have a couple hundred peers respond. Being a teen you say, "Here's what I think, what do you think?" Now, I'm not going to be doing a lot of this online, but to a 16-year-old this is relevant. People find each other through tagbooks. How do you define "the Bolt Economy," and what is the strategy? The Bolt economy is about empowering teens to not just spend their money online-which everyone else is focused on-but also empowering [the teens] to make money. We believe we have enough of a global reach and our growth is fast enough that we can create a global youth economy where they're creating products and services. We've already started to implement that [with] "tenbucktees." Instead of us trying to guess what T-shirts they want to buy, we say, "You guys try to design them yourself, we'll put them up, let people vote on them." We get thousands of submissions every week. One of our biggest selling T-shirts is a Braille shirt. I think it says "Braille" in Braille. It has sold nearly a thousand, so there's some 18-year-old out there who is making a thousand bucks. The idea is we're not taking risks because we know who wants them, how many we should order. You look at the voting and you use the data. It took us time to develop and understand this process, but now we can apply it to other products and services: jewelry, hats. You've said that you wait for them to tell you what to sell them. How does that work? The same way: by having a communications platform. When you register to become a member, those 3 million users represent a couple of hundred data points. You're really telling each other what kind of music you're into, your favorite television shows, other things going on in your life. And if you respond to certain polls, that gets added to your profile. Are they aware of that? Absolutely. They're not only aware, they love it. The ultimate reason they're doing this is so [the world] can know who these teens are. Again, you and I are not going to do this. A 17-year-old wants people to know who he is and what he's all about, what he likes and what he doesn't like. You hear people talking about how these kids don't like being sold something, are very hyper-aware of being marketed to, yet here they are volunteering their entire... People say teens don't like to be sold to, but they forget to end that sentence with "teens don't like to be sold things that are irrelevant in their lives." This audience wants things that are relevant in their lives, whether it's people that they're meeting, ads they're seeing, or commerce opportunities. If this 19-year-old guy is into snowboarding and lives in New York and you put an ad up in front of him that if you go to this store in New York you get a 30 percent discount, not only do they not mind it, that's valuable. By the way, they're all anonymous too-it's not like we're sending it to their home addresses. This is just a user profile that we're sending it to. What is the most popular topic-"Sex and Dating?" Of course. Also, the cultural things, music and television, movies. "Dealing" [as in "coping"] gets tremendous activity. "Cars" gets a lot of guys. You have one of the stickiest sites on the Web-the eighth stickiest site for 13-17 year olds, according to Media Metrix figures. (And with 44.7 minutes logged per visitor.) Did you design it with that in mind or is that a happy by-product that you now try to keep going? Frankly, it's more the latter. Three years ago, no one was saying the word "stickiness"; we were saying "repeat"-we need to get people to come back to the site. Now the buzzword is stickiness. From the beginning we were [asking], "What's going to keep people coming back?" You build barriers to exit. They meet a lot of people, they have a lot of friends, they're using it for their e-mail and voicemail and their Bolt Notes and the tagbooks, and they're getting other people to the site. If somebody replicated Bolt exactly and called it "Blot" and put it up tomorrow, they're going to have a really hard time. Why? Because the thing that ultimately makes this sticky is the 3 million members that are on the site. I think being there first was a big part of it, but now we've also spent three years developing technologies and a communication platform that really work for this audience. With so much being posted every day, how much control do you have on improper conduct? We get probably a million communications every day, way more then we can read, so you obviously can't screen everyone. And that's not our intention because if you're going to empower this audience you have to allow them to talk. If we censor the word "shit," when someone said Eminem is "da shit," they're going to go somewhere else. We do eliminate certain things-violent speech, racist speech, sexist or bigoted speech. Why? Because that's what the community wants. Adults don't give this audience enough respect and trust. The vast majority of this audience is a hell of a lot more mature and intelligent then you'd expect. One percent of people can cause a lot of problems and we handle those people. How? We terminate their account. If they come back and sign in as someone else, we'll know because we can look at the user code from the person's ISP. The most important thing to us is allowing members to control their privacy. Users can block [their own accounts from seeing] certain people's notes or posts on the site. That's the best way to allow our audience to censor: If you're a religious teen and you don't want to see kids using that language, just block them. Can you explain the partnership with Ford, which seems unusual for this age group? Ford realized that it had to establish a relationship with teens. They're driving for the first time, making those early decisions. But Ford realized it wasn't in a position to start pounding marketing at them because they didn't have a relationship established. So we launched Cars.Bolt.com. Does Ford create this content? No, we do. In fact, we don't, the teens do. Ford needed to get preference information, so [the logo is on the main car page, which asks questions like] Kia versus Toyota. Isn't that kind of weird, that Ford would want to be the sponsor of something that allows you to talk about a Japanese car company? They realize that to reach this audience you have to allow them to have a say in your marketing message. You make them part of it, you've won the game. Because the audience is so savvy and so aware of marketing that they realize that Ford is the one that allows them to say that Chevy has a cooler look then a Ford. Do you understand how valuable it is for Ford to know that the audience may think that? That goes completely against the grain of traditional marketing. Exactly. And this audience goes against the grain in terms of how you have to reach them. In what form does Ford get the feedback? We have a car analyst who sits there and looks at as many of the posts as he humanly can. He'll do word searches for certain things-how often Ford is mentioned, say-summarize results, and then give them to Ford on a weekly and monthly basis. The only way to get closer to this audience is to tap their phones. Beyond that, we have a panel of more than 200,000 teens who have said they want to be part of surveys and will go to a deeper level of preferences. [The "Bolt Bus," a proprietary omnibus survey.] We get their member name, their ethnicity, geography and age, in addition to detailed attitudes and behaviors. You're trying to prevent under-15s from joining, but how do you prevent the kids from typing in a fake birth date? This audience actually tells the truth. Can someone re-log in and enter a different age? Yes, of course. Can some 15-year-old go out and buy a pack of cigarettes? Yes, of course. What we've found is that in this environment this audience tends to be more truthful about themselves than in the real world. When you're a teen, that's when you really have your mask on. If you're walking through high school and you're the jock that happens to be into poetry, are you going to let all your friends know about that? Probably not, but here you will. Why? Because you're anonymous. You've said that this age group has loyalty but it's fleeting-that it can turn over every eight months. That's why it's impossible to create content for this audience-because they're constantly changing. And that's why we didn't want to be in that business. Certain brands come and go, and for this consumer segment it's probably going to happen a lot faster. The challenge is, how do you to adapt? The Bolt business model is, pay attention to what's going on here, listen to what they're saying-they're going to tell you how to adapt. They want you to know, they want Ford to know what they're into. How do you track the 100,000 posts a day and make sense of them for your clients? It's all done by computer software. The bulk of it is data warehousing and data mining, and I would guess that we're years ahead of companies that are a heck of a lot bigger than us. We have a bunch of Ph.D.s focused on understanding the data and able to communicate the data to our clients and to us. Then we have a business intelligence group that's doing surveys with our panel and then combining it with the analysts' findings and creating reports. It really is about the data. Data is kind of a scary word for saying their likes and dislikes. It's taken us four years to get there, but it's extraordinarily valuable. Is there any risk in places like record companies going on the site pretending to be kids to stir up interest in one of their acts? Sometimes. But they take a risk. Because if everyone says "She sucks, she's awful," you're done. If someone does that, it's not going to make or break that performer, and it certainly will come down to the quality of the product. But it's certainly cheaper then trying to find the e-mail addresses of people in your audience. That's true. If you're blatantly promoting something, it gets deleted. What tends to happen is if someone wants to promote something for free on the site, they'll post it 200 times in all these boards. We have the ability in about two seconds to find that post, click a button and [delete it]. But if one person gets in there and says, "What do you guys think about Christina Aguilera? I think she's pretty cool," it's going to stay up. What do you do when members turn 20? Are you going to try to expand to hold their interest, or create a different site? First of all, people don't necessarily leave when they're 20. It's not like we suddenly delete them. But the reality is, a 22-year-old has very different interests because at that stage in life they're graduating from college, they're getting their first job. They have very different needs. Because of the nature of this medium our first goal is to be the largest global communications platform for teens. You're going to see us expanding in certain parts of the world before we focus on expanding the demographic. There's about a billion people out there that are in that older teen audience, and when we hit some significantly large percentage of those people every day then we'll start worrying about other demographics. Short answer: Yeah, some people will leave the site. Do you think you could put market research firms out of business? How do I answer that one? It's not our intention to put anyone out of business. We work with a lot of market research firms that have great reputations and kind of traditional market research processes. A lot of them realize that they don't have access to the audience. Maybe the way to answer is to say that market research firms that adapt to the Internet are going to do well and those that don't won't. How does direct e-mail for your sponsors work? Do you give them a list of people? We control it internally because we're not selling e-mail addresses. That's not ultimately what [our clients] want. During the registration process, [members] are presented a list of our partners and it says if you want information about, say, BMG Music Club, click here. Our database segments those people and we work with BMG to tweak what its response will be. Then we deliver the e-mail for them. What's involved with the new wireless deals you just struck with Arch and AT&T? The real key is using our communication tools on pagers and cell phones. Have Bolt Notes sent to me, my tagbook responses, my horoscope, "What's Cool," music reviews, movie reviews. Wireless is going to be absolutely massive for this audience. It is already. What made you decide which things, like the Gravity Games-the extreme sports showcase in Providence, R.I.-Bolt would put its money behind? It's the efficiency of the event. We tend to be extraordinarily efficient in how we reach this audience. Our cost of acquiring a member is a few bucks and is, I would guess, the lowest in the industry by far. There are other sites that focus on a particular consumer segment spending 15, 20, 25 bucks. There are certain events for which we want to have a real-world presence. We use the Internet pretty heavily because that's where this audience is. We use our partnership with AOL. Can you describe that partnership? Since February, we've been managing AOL's teen community. AOL realized that they were becoming their father's Oldsmobile-it may have a lot of teens, but its teen's parents are also using the service, and AOL was not addressing the needs of its teens as well as we could. So, AOL came to us and said "Create AOL.Bolt.com." It's basically our platform integrated into the AOL environment. We've mutually found a way to combine our respective value-AOL's reach and Bolt's platform-to better serve this audience. What have been the biggest surprises? I would have never guessed how viral marketing can really grow the site. When we have a 15,000 person day it's not solely because of our marketing team-something's going on out there beyond our control. The other thing is how they take ownership. Our goal is not to be cool with this audience, and we've learned this over time. I think if you were talking to me two years ago, I would have said we want to be the coolest brand. Reality is, we just want to work for them, and we've learned that from dealing with this audience. We want to be about as cool as AT&T is cool when you make a long-distance phone call. It's not really cool at all-unless you think it's cool that you just made a long-distance phone call. It just works for this audience. And they really have controlled it. If there is something they think could be better about the site, if they feel it's their responsibility to talk about something and talk to each other about it, we'll listen. Finally, the stickiness number-people who have actually become members spend over four hours a month on this site. That's really surprising to me. That's an incredible indication of loyalty not just to Bolt per se, but to each other. What do you think this generation is going to be like as adults? Is all this going to change? I think a lot of things will change. The Internet shifts power quickly, from the seller to the consumer. That's what's going on in Bolt. There will be a dramatic impact on media companies because this audience wants to control the content, they want to create it. Using us [30-somethings] as the counter-example to teens, if I want information about what movie to see, I may watch Roger Ebert. [My generation] is coming from a world where this authoritative voice dictates to its reader or its viewer what they need to know. For better or for worse, this audience doesn't want to be dictated to, and it's not just a teen thing; the Internet has a lot to do with it. They've got the bug and as they get older and older it's going to impact how media is consumed. Look at the popular shows on TV: Cops, Survivor-it's real people. People are more fascinated by each other then they're fascinated by what the "experts" have to tell them. The brands, the P&Gs, the Fords that are tapping into that are going to be tremendously successful because they realize the shift has occurred and will change the way companies market forever. The cat's out of the bag. n

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IQ Interactive Special Report: IQ Q & A With Bolt.com's Dan Pelson

David Handelman

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