Custom module in nodejs returns "cannot find module" error

I've been writing a little prototype app in the cloud9 ide using express and nodejs.

I was going to re-organize some code into a few custom modules but when I attempt to require them I get an error "cannot find module './lib'

The lib folder is in the root of my site directory. I have 1 file in there "test.js" that has a simple demo to try and get this working.

exports.test = function(){
  return 'hello world';  
};

It doesn't matter if I put require('./lib') or require('./lib/test') in my app.js, it always throws the same error.

Any thoughts?