UPDATE

Michael let me know that Moshi Monsters reached breakeven in May 2009, five months after launching their subscription service in January 2009. The company has been increasingly profitable in every month since.

He also added that the company was not just *happy* with its CPA for television advertising; it was *very happy*.

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At the Games Gone Wild event earlier this year, Michael Acton Smith of Mind Candy showed a pretty amazing slide.

Mind Candy are the team behind Moshi Monsters which has well and truly reached its tipping point.

The beta launched in March 2008, It reached one million users (no mean feat) in November, seven months later. It took about the same time to reach two million users in around April 2009.

But then the magic happened.

As the chart above shows, Moshi Monsters has suddenly hit the upwards part of its “hockey-stick”.

I caught up with Michael at the recent Cabinet Forum event to see what we could learn about how to hit that all-important tipping point. Michael credited three things with the sudden growth.

Two million is a magic number

“Two million seems to be a magic number” says Michael. “I’ve heard it from a number of other people and somehow when you reach that critical mass, word of mouth really takes off.”

It’s hard to know how to apply this advice to a startup. But it’s useful to know that sometimes, all you have to do is persevere, grow your audience to that key figure of 2 million and suddenly it will explode.

TV advertising

Moshi Monsters bravely launched a television advertising campaign for Moshi Monsters. I say bravely because television has an amazing ability to absorb huge advertising budgets with very little visibility of effectiveness.

“It worked very well for us,” says Michael “We created a separate URL for the TV ads and were able to track its conversion. We were very happy with our CPA.”

Focus on the product, especially social features

“Startups should focus obsessively on the product,” says Michael. “We were really focused on social features for Moshi Monsters – making it easy to find friends, to engage with friends and to invite friends. That coincided with the marketing push and the two worked well together.”

Feeding the funnel

This combination – scale, marketing and a polished product – is a perfect funnel. Moshi Monsters seems to have worked out how to get users to the site and how to convert them effectively.

I haven’t seen their revenue/profit figures, but my guess is that Michael and his team are now busy fine-tuning how to turn 6 million users (and growing) into a thriving, profitable business.