A VC - Latest Comments in Thoughts On Online Video

Re: Thoughts On Online Video

pmukherjee — Sun, 06 Apr 2008 12:44:17 -0000

Hey guys,

Great post and some excellent comments.
I am in the online video space. We're working on two things: a pure tech play(marcellus-saas video platform) and a content play(weareindia.tv- a paltform for film), the latter currently in beta.

Let me start with mirroring: "I think online video continues to be a very difficult place to be an entrepreneur..".
Yes, it is.

If you are an amateur(either producing amateur content, or with an amateurish attitude towards online video distribution), you go to YouTube.
If you are a rich pocket publisher, and you want to build your own platform, you go to Brightcove.
The problem is that these platforms solve the problem of publishing, not monetizable distribution, and definitely not attention allocation. YouTube, in fact, works against the principles of hyper-efficient attention allocation....56 million videos....do you spend your time searching, or watching?
Likewise, folks like Brightcove do a super job of delivering high quality video, but then delivering high quality video is not really a challenge anymore. We do it, and we do it very cheap.

I'm not sure that heading to Etsy et al. solves the problem. There is no dearth of eyeballs on the web- there is a dearth of understanding on how to reach out to those eyeballs, and how to ensure retention of those eyeballs.
To me/us, the answer lies in deep engagement. The whole promise of the Internet was that it claimed to re-define interactive television. And we haven't really seen any re-definition. Ratings/sharing/commenting is somewhat passe.

Deep engagement involves helping the user take your content, establish a personal context with it, and then share that {content context} construct on a number of different places she visits.
A simple example: users create playlists on a number of different video web sites, but no one's really made full use of the nascent potential that exists when a user pro-actively chooses videos she enjoys, creates and defines a very personal meaning around them, and places them on very specific destinations where she knows that content will be well received.
(A user heads to WeareIndia.TV, creates a "Human Rights Issues for Immigrant Indians" playlist, shares the playlist on Blogger, a Facebook page on the same subject, and on her MySpace page as well. Without copying and pasting code. And without having to re-do the integration every time she adds a new clip to the playlist. This new (player playlist) construct should then be re-distributable, monetizable(say with overlay text/video ads) wherever it travels, and fully trackable during its journeys across the edge network.)

No one's really into this stuff. We did a lot of work researching the efficacies and nuances of social behavior in my days at Garage Cinema, UC Berkeley, but unfortunately, I don't see any folks in the marketplace(and I'm sorry to report, not a whole lot of venture capitalists either) that seem to have given too much thought on how fundamentally different Internet TV is from regular TV. You can't really build a business model without a solid understanding of the value chain, economics and behavioral patterns of the 10-inch experience. The last mile problem, which used to be the challenge of efficiently delivering content to the home at a price point better than say 5 other competitors, has now evolved into the last foot problem, which is the challenge of delivering content to each individual user, while competing with, say, a thousand other competitors, at minimum.

There is some higher-than-usual noise(well, hype) about keywords like "economics", "transformation", and heavily funded companies like Brightcove are very guilty of it. For those that look to Brightcove as the de facto online video play(and there's no end to that list), releases like these: http://brightcove.com/about_brightcove/press_re... are very misleading. I wish adding google-adsense could transform the economics of online video(because we've done it too), but it doesn't.

I have 3 perspectives on success in this space, and what might actually transform the business of Internet video:

- sustainability: you need to be able to demonstrate profitability from low audience volumes. Before you scale your offering, you need to have your operational and financial strategy down. It's basic, but unfortunately not what a lot of startups focus on. Instead, the conversation goes something like : "let's pretty it up, get it out in front of as many people as possible, build a decent registered-user base, and sell."

- elasticity: content may be king, but we are now dealing with over a million kingdoms(fragmented mass markets). As a content owner, you need to be able to create frameworks so that your users can take your king and rule their own little kingdom with it. That's the democratization we've been talking about- enabling consumers turn into distributors, and producers.

- personalization: not collaborative filtering, but actual personalization. Make it opt-in(so people don't slit your throat for violating their privacy), understand the context (who/where/when/why) of content consumption for each individual user, and deliver personalized recommendations with natural learning systems built it. It worked for Amazon and e-commerce, it worked for Netflix and online DVD rentals, and it has to work for Internet video platforms. The approach needs to be different, specific to the meta-structure used to describe different sets of media, but that's about it. No one's really done anything about this either.

Okay- didn't mean for this to be so long. But I was (pleasantly) provoked, so thought this'd be a good place to say hello, we're going to be looking for venture capital soon, and Fred..I hope you find in us the inspiration you seek.

Re: Thoughts On Online Video

MMG — Fri, 04 Apr 2008 17:16:31 -0000

Great thread. As a TV/Web exec producer going back to the "1.0" days I completely agree with Fred that is has never been cheaper to produce and distribute video than now. Just the other day, I ran some numbers regarding live streaming and it is almost free thanks to the crop of new companies offering those services.

The problem I forsee is a lack of understanding: tech heads understand distribution and UI but don't really understand "old school" television technique. It's all about platforms and "scale" but rarely entertainment value. TV guys, on the other hand, have the discipline required to create great storytelling and so forth, but seldom understand how to leverage the cost-effective nature of "web 2.0" tech.

Lucky for us, we're in the business of bridging both and I'm sure many others are doing the same. It's just a matter of time before a bonafide hit opens up the floodgates.

MMG

Re: Thoughts On Online Video

fredwilson — Tue, 01 Apr 2008 14:44:03 -0000

Here here Adam

Anyone who works with Ricky Gervais is a very welcome guest (maybe permanent
member?) of this community. I'll be in London later this year. I'd love to
meet. If you come to NYC, please look me up.

Let's go and create some, indeed

Fred

Re: Thoughts On Online Video

adammartin — Mon, 31 Mar 2008 12:06:30 -0000

Anyone in London and wants to talk further about the online video space, I'll shout them a fruity herbal beverage and wheat based side order. amartin {at} unitedagents.co.uk.

Re: Thoughts On Online Video

Adam Martin — Mon, 31 Mar 2008 11:40:41 -0000

Jeff & Co.

I'm Head of Interactive at Ricky Gervais' agency in London and currently looking to leverage top tier talent and create and distribute new content online. I go to VC's (well 2 VC's!) and pitch creating a fund for developing online IP around the brand talent we manage and the have access to, they say 'we can do this without the brands', I go to the brand managers and they say 'we can do this without the VC's' - the content is the same, the packaging and deal structure is different, do we create Funny or Die vacuum packed into a widget or an advert with original shortform content for Brand X - the later has an immediate financial pay off, the former is a longer term play and requires on going production and management and thus investment. But we could get bought by CBS or cursed by AOL, I say!

I liked Rob's comments earlier about finding video online as 'like taking a drink from a firehouse' (do you mean firehose?), the dump it on You Tube and expect people to find it is no business model at all. As evinced by Will Ferrell, leveraging top tier talent and associating it with a micro-network is one way to get the audiences attention.

We watch a terrestrial channel because it reflects our content aesthetic, BBC Three is Watch Me Shoot My Overweight Cat and Loose 30 Pounds etc etc type of programming, I know where I am with it when I switch it on - so where are the video channels replicating that viewer/content interaction? Revision3, for beer swilling geeks, sure... but that's it, that and How To - in a time of mass production, we need filtered viewing and beyond secret sauce algorithms reading my social stream and telling me what an ex-girlfriend I really shouldn't be friends with on Facebook is watching with her budgie Tony - I want a human editor, I want a trusted voice, so let's go and create some.

Re: Thoughts On Online Video

isayusay — Sun, 30 Mar 2008 01:30:44 -0000

I went to the apple SDK party in Boston last week. It's still buggy.

Re: Thoughts On Online Video

fredwilson — Sat, 29 Mar 2008 18:13:03 -0000

To be honest, I am not sure about any of this stuff.

I am one of those vcs that someone mentioned earlier in this discussion that
³has been burned by content²

But I also enjoyed the wallstrip experience and have had some success
investing personally on a very small scale in content.

I am sure that union square ventures won't be investing in pure content any
time soon but that doesn't mean its not a worthwhile endeavor if done in the
right way by the right people

My friend steve greenburg who runs S-Curve Records is someone who knows how
to do it and he's doing great right now.

fred

Re: Thoughts On Online Video

fredwilson — Sat, 29 Mar 2008 06:51:03 -0000

the web is open and apple is closed. open is going to win

Re: Thoughts On Online Video

howardlindzon — Sat, 29 Mar 2008 01:46:15 -0000

wow - great conversation. Glad I helped get it started and fred was goodd enough to continue it. I have much more to say on it.

Need to be clear about a few things.

I don't believe in luck, but sometimes good things happen if you position yourself properly. Web video is a tidal wave. You position yourself propely and you can get swept along. I think if you swim with the big streams long enough, you come out ahead. Salmon swim upstream just to die. Does not seem to pay to be a salmon.

Content s the most wicked hard thing I have ever done. God bless you content creators, but other than my blog I dont think I could do it again.

Just because wallstrip sold and I love it, does not mean I know squat about content, video, or anything. Great team, I think a great idea and a passionate community, and good timing.

Rob Long - excellent stuff. I guess I need to hear your pitch. I cant resist.

Jackson - so right on about location...but you might as well throw in connections and luck than. The web is definitely helping us along with tools and tricks to find the good stuff . The tools are getting us tricked too which I guess is a cost. no free lunch.

Chartreuse - Good to see your face on disqus. I think I took that picture.

Jim Luderback - so right. When I was in the computer software business, shmoozing the comp usa buyer was WHAT YOU DID! The iTunes people loved wallstrip and it helped. period! It's stuff like you are saying though that they can't teach you in school. It's called moxy and hustle and common sense.

Re: Thoughts On Online Video

rseidman — Fri, 28 Mar 2008 22:46:27 -0000

the macmini is a better deal but there a lot of things that itunes/appletv don't do right now that they probably will do in the future:

-DVR functionality
-Slingbox functionality
-optimized video for your computer or big screen tv or iphone/ipod

once it all gets to be pushbutton simple, the world changes. the world changes much more still if regulation causes the availability of a la carte cable channels and Apple can get access to all that content plus the broadcast nets and sell subscriptions to it on an a la carte basis (NBC will be back...someday)

Watching what you want when you want where you want it trumps all...at the end of the day.

Re: Thoughts On Online Video

jeffmarks7 — Fri, 28 Mar 2008 22:05:29 -0000

Not easy for sure, but I think success can be found if the venture is really focused. You're not investing in the next Rick Gervais, you're investing in the next Ricky Gervais movie per se. I think a web show can be an investment opportunity like an independent film can be. The medium is certainly new, but there are enough similarities to more traditional entertainment ventures, that it's possible to execute a deal that has success artistically, and in terms of return for the investors. But there are also plenty of movies that go to Sundance every year that never return for the people who put their money in, so I think the investors must realize that they are investing in more expensive "art" which is a newer paradigm for the web. You're not investing in a turn-key technology, more like an indie tv-show (in overly simplistic terms). And if the concept and the talent takes off - the return is definitely there for the people putting the money up. But desire for involvement in something really cool (again in overly simplistic terms) with plenty of cache is key, because the returns will be smaller margins no matter what. Also with regards to cpm - a $25 cpm will not work right now. I don't think there are enough total views at the moment, rather there are rabid, focused, very upwardly mobile audiences/communities. You've got to be able to tell that story to advertisers from the beginning. If there's one thing I learned from Wallstrip is that it would have been incredible to have a sales person as part of the team from very early on that could have told that story. It would have made us that much more valuable to CBS when the time came.

Re: Thoughts On Online Video

chartreuse — Fri, 28 Mar 2008 21:22:49 -0000

exactly! :)

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 21:19:36 -0000

"video is the new FM"

i hope you enjoyed my of montreal vide steve

Re: Thoughts On Online Video

andrewbaron — Fri, 28 Mar 2008 18:13:26 -0000

I wasn't talking about a Wallstrip "deal". Im talking about something different. It requires a real desire to want to get involved and participate.

I actually think of David Karp (who you mentioned above) as an artist. Its the same. Its about the talented people and their foresight, drive and capability.

I assumed you were interested in the question of how to invest in content creators (you mentioned ricky gervais and kate nash), but it sounds like you are actually asking a different question: How can you invest in a content network business. Well, for starters, make sure it has good content ;)

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 17:27:02 -0000

I did exactly that with wallstrip

I would do the same with blogotheque but they are in france and for all I know they don't need someone like me at this point

And your last point is partially why our fund, which doesn't need billion dollar exits, but does need hundred million dollar exits, largely avoids content

Fred

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 17:22:02 -0000

Your buddy george's songs are great

I posted on on my blog and it was better received than many more popular artists

Maybe we should try to break him in the music blogs

Fred

Re: Thoughts On Online Video

andrewbaron — Fri, 28 Mar 2008 17:13:05 -0000

Historically, some of the most moving arts were underwritten by philanthropists who believed in the value art brings to culture. Maybe you could get your feet wet by taking this approach. Find a "small company" (your words) - one that has already created a spark online and is growing on their own, but creates content that you actually really love yourself, personally.

Underwrite the show/company for one year.

Get to know the show and how it works. Get involved to figure it out, just like you do with blogging, for instance. Get your feet wet as much as you want to. If nothing comes of it in one year, write it off like you would a painting. At the end of a year, you will have enriched the lives of many, including yourself. You will have allowed great art to flow, at least in your mind and the minds of many other very appreciative and likely inspired people.

Who knows, maybe the same "small company" will start to see their numbers/value grow to sustain themselves on their own eventually.

While $1.2M annual rev might be considered a small company value, maybe the next year their audience will double. Or triple perhaps.

Its all about your perspective. If you need to make a 100x valuation on a $1B sale, then I would say you are misunderstanding the value of content.

Re: Thoughts On Online Video

jackson — Fri, 28 Mar 2008 17:08:36 -0000

"hundreds of new online video companies have launched with thousands of programs, business models, tools and services. The result…it has never been cheaper to make, distribute and analyze video content, BUT, never been harder to get attention."

The same can be said of music.

Nothing has really changed, it's still all about location. If you can manage to get your content on a hot property you have a much better chance than simply having a myspace page.

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 16:45:02 -0000

Maybe

But I have an appletv and a macmini in my media center and the macmini is way more popular because it has safari on it

The web trumps all at the end of the day

Fred

Re: Thoughts On Online Video

Steve Rosenbaum — Fri, 28 Mar 2008 16:01:43 -0000

it's really interesting to read both your quotes and Howard Lindzen's about video. Both smart guys. Both early in video. Both had some early success. And now the future seems to be blurry.

Here's my take.

You're both right.

The space is getting bigger, video is quickly being glued on to social networks, mobile devices, flat screen TV's, ecommerce... the list goes on and on.

So - looking for the 'killer app' gets harder and harder to do. At the same time, we've all got TV and the model we've grown up with looming in front of us. So trying to figure out how to make Ustream or Kyte or Seesmic into TV is daunting. Because it can't be done.

But that's good. It shouldn't be done.

TV sucks. It's slow, mass-media, one-size fits all media that is going to either evolve or die. Web video does however rock. And will only rock more as the tools get easier, the bandwidth more ubiquitous and the devices that play nice more and more friendly with each other.

Here's why you need to stay engaged in video Fred. 1). it needs you. - it can be used for good or evil. 2). It's a huge business that needs innovation to be rewarded 3). The good ideas aren't all gone, they're just getting started. 4). We're all in this together.

Video is the new FM radio before music was bought up by conglomerates. Rock on.

Re: Thoughts On Online Video

rseidman — Fri, 28 Mar 2008 15:51:40 -0000

About this, I think you're both right and wrong. Apple does represent the OLD model, but it will (in my opinion) wind up competing with the big cabe companies and others in terms of being a big distributer. While viewing outside big distribution will certainly grow, I think it is you (not Apple) who doesn't get that the need for big distribution is important.

Nobody has black boxed "wherever you want it, whenever you want it" media. There will be a demand for this and a few years down the road Apple is in a very good position vs. the field.

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 15:05:02 -0000

Jim

Of course you are right that itunes distribution is important but its just another variation of the old model where one or two big companies controlled the means of distribution

We are moving past that as hard as apple tries to ignore it

I think the views an obama speech gets on youtube is at least an order of magnitude what it would get on itunes

The new media model is audience based not distribution channel based

Fred

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 14:48:02 -0000

How many video startups have done that?

And 25k per week is great for a small company but not a way to make a big hit

Fred

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 14:45:09 -0000

I know I already replied ;) but if you cannot get your audience to be your distribution, you won't succeed in the new media model

Of course you know that chartreuse

Fred

Re: Thoughts On Online Video

fredwilson — Fri, 28 Mar 2008 14:41:03 -0000

Politics is media