Andrew: Hey there, freedom fighters. My name is Andrew Warner, I’m the founder of Mixergy where I interview entrepreneurs about how they built the businesses for an audience that’s looking for, yes, inspiration, but also a few ideas that they could use to grow their businesses.
One of the things that I’ve noticed is that when I started doing these interviews, blogging was a big thing and text ads on Google were a big thing. We’re talking a while ago. But more and more when I look at my consumption, it’s video. I’m looking at video on Instagram in their stories. I’m addicted to it to the point where I know it’s not useful. I’m looking at YouTube videos. When I go to The Verge to see what the latest piece of technology is that came out, I can’t help but go over to the video on Verge instead of reading their article to just say, “Is there a video here?” And if there is, I’m just going to go watch that and have that go on in the background. I am obviously not the only one, businesses are noticing that people are switching to video from text, they have to find a way to be in video. The problem with video is that it’s hard, it’s hard to create. And it’s not just hard to create, but it’s now you need to create it en masse and understand that part of it is disposable. You’re just creating Instagram story, it’s got to look great, but you got to do it fast because there’s another one that needs to get created super fast after that and you know that maybe it won’t last a year, maybe it won’t last a month.
Alex, I’m looking at you just to get a read if this is the vision that you had. Whether I’ve expressed it exactly as you expressed it or not, I want to be clear. Alex Collmer is a guy who saw this transition happen, and we’re going to understand how he saw it happen and what he sees here. And he said, “I’m going to create a solution for.” His solution is a company called VidMob. What they do is help brands, help all these businesses that see the shift happen, they help brands dramatically scale the amount video that they’re creating, do it right, and then use data to inform how they’re doing it. I’ve not seen a company that does this as a service at the scale that they are doing it. They are working with all the big companies that you guys know in this, all the big platforms you guys know. I want to find out how he came up with this idea, how he shifted it in some ways dramatically away from how he started and in other ways he’s still in line with the vision that he had. And then I want to know how he’s getting customers and growing his business.
We can do it all thanks to a great sponsor, brand-new company for me as a sponsor, it’s RingCentral. If you need a phone number for your company, if you need a way of getting text messages in from your clients, listen to what I have to say about RingCentral, this could be the solution for you.
Alex, good to see you here.
Alex: Good to see you, as well. Thanks for having me.
Andrew: What’s your revenue right now?
Alex: So we are, you know, over $10 million and less than $100 million, is what I would say.
Andrew: Perfectly . . . I just want to get a sense of where you guys are and that gives me a sense. You said that before we talked you were at the offices of one of the platforms. Can you say which one?
Alex: Sure, yeah. I was just up at Snapchat a few hours ago.
Andrew: So what are you doing with Snapchat, what’s your connection to them?
Alex: You know, it’s actually sort of a perfect place to start because they were actually our first major partner. So we started working with Snapchat in the fall of 2016, so this was before they were public and really like, I think, weeks in the wake of when they sort of opened up the platform for advertising. And they had a really simple problem in that they had an incredible platform, they’d had, you know, millions, hundreds of millions of highly engaged users, and they were opening it up for advertising and they had advertisers who were really interested in communicating with those hundreds of millions of highly engaged users, but because there were no vertical formats anywhere at the time no advertisers had vertical ads.
And so this became a real barrier to revenue. You know, you’d have sort of marketer X, you know, sort of pick a big brand, who was ready to go on a, you know, million-dollar campaign and, you know, the seller at Snap is ready to get, you know, his or her commission check, but there was no ad, and so there was no revenue.
Andrew: And so what did they expect that companies would do, what was their vision of the world?
Alex: So what they were doing was, you know, they were sort of relying on the company to come up with the solution, or they, you know, then they started to then turn to, I guess, kind of like traditional agency partners. And, you know, I think you sort of alluded to this a little bit in your opening message, which was a perfect articulation, by the way. So I have a meeting later today if you want to come and join me and help with the pitch.
Andrew: I’m in.
Alex: But, you know, they would sort of turn to kind of traditional systems. And what they found was that it would take, you know, many weeks, in some cases months, to get that sort of blockage resolved and that, you know, the budgets tended to look more like TV budgets than they did sort of digital media budgets. And so they came on our platform and they found that they could find people who actually really sort of were expert in digital communications and that they could get it done in a couple of days and get it done for, you know, at least one, if not two, orders of magnitude less than they were sort of use to previously.
And so we became pretty popular, you know, not surprisingly, with Snap over the course of the last months of 2016, and then we ended up actually building, and this is sort of a funny story which I’d be happy to tell you, but we ended up building the only way to buy ads on Snap for about nine months.
Andrew: Was through you?
Alex: Yeah. So we were with them at CES, so early January of 2017, and they said, you know, “Lately you guys have been, you know, a great help to us. How can we help you?” And one of the things that sort of, you know, popped into my head was, “Well, today we’re working primarily with very large brands, but at some point you’re going to open up self-service. And when you do, there should be a button in there to sort of remove that creative friction for the many tens of thousands, hundreds of thousands, millions of marketers who are going to have this very same creative friction problem.” And they said, “Well, you know, we’re pretty busy right now working on a bunch of other initiatives, why don’t you build the way to buy ads on Snapchat. And if you build it, you can put that button wherever you want.”
Andrew: Really? They literally just outsourced that to you?
Alex: So I literally ran, you know, basically to my hotel room, called our CTO at, you know, like 1:00 in the morning, you know, Vegas time, and a week later we flew out to Venice and presented a fully designed campaign manager. They loved it and in a month we built it. And, you know, for basically six to nine months while they were building their sort of much more professional and built-out version we were the way that you would . . . that any sort of self-service buyer could buy ads on Snapchat.
Andrew: And what would a buyer need to send you so that you guys could create an ad?
Alex: So, you know, any marketer, so you can think of as, you know, sort of Budweiser, you know, Adidas, anyone that, you know, we’re sort of all familiar with, all that they need to have is some raw media. So it could be a previously produced television ad, it could be just, you know, a drive that, you know, is sort of held over with, you know, photos and raw video from a shoot. It could be just a logo file, we work with a bunch of, you know, retailers and CBG companies, they’ll give us just, like, sort of circulars. We can work off of pretty much anything and from that create media that’s going to perform on, you know, originally it was social channels, and then that kind of a broadened to mobile at large, and then out to programmatic, and now we’re starting to look even broader than that.
Andrew: And what about company . . . Well, all right, let me go back and understand how you got here. Because your original idea was, “I’m going to do” . . . I think actually it was for people like Andrew. Andrew’s got a GoPro, takes tons of video, but the video goes nowhere. You said, “What if we could offer a service to people like Andrew that would take his videos, take his direction, and then edit it for him so he could put it on YouTube, put it on Instagram stories,” right? That was the original vision.
Alex: Yeah, absolutely. I mean, so, I mean, I think, like, to me it actually almost is even a little bigger than that. Like the way I kind of thought of it was this was essentially a societal shift in the way we communicate, that as a culture we were sort of . . . you know, we sort of communicated orally for, you know, tens of thousands of years, and then Gutenberg comes along and invents the printing press and for the last, you know, sort of 550 years or so communications has, for the most part, been static, so text and images. And we sort of believe that now we are kind of entering into the screen world and that everything is going to be, you know, video, or more and more of communications is going to be video. You know, obviously not just advertising, but, you know, much more broadly than that, like how you purchase homes and how you apply for jobs and how you read about new products that you bought and how to, you know, set them up and use them, etc., etc.
And having sort of come out of the entertainment world previously, I knew firsthand just how hard it is to make quality video. You know, like it’s really hard and it requires great skill. And so I didn’t believe that any sort of pure technology solution was going to come along and solve that problem.
Andrew: And you’re talking about things like Animoto, which were taking on this challenge. And you said, in one article I read that you said, “Animoto could maybe tell you that somebody fell in a video and that might be the action shot, but they might not be able to tell you that your son was the one who was in the background of that video doing something cute and that’s what you want to focus on. And so we need a human being to understand what you’re trying to focus on, what you’re trying to say, and then go grab that.” Am I summing up your point of view?
Alex: It is. I mean, and so, I guess, the way I would sort of . . . the one thing I would say is, like, I’m not here to knock the other services, okay? I do think that for certain use cases Animoto and many other, you know, tools, both at sort of the, like, you know, like, easy bake creator, you know, one end of the spectrum . . .
Andrew: You’re saying, “There’s a place where it makes sense, but we have this other vision.” The other thing that I want to pick up on, sorry, from the origin was I thought of you guys a little bit like 99designs for video. You know, 99designs would be a crowdsourced design, I get to pick the one that I want but it’s a crowd creating it.
Andrew: Aren’t you guys based that way, too, that a crowd would create my videos?
Alex: So no, and I’m really glad you asked. So, and your sort of getting to kind of, like, the root of the founding here. So for me, you know, I had previously started a games business and was sort of, you know, trying to figure out what I wanted to do next. And I had this kind of gnawing thing in the back of my head that I wanted to do something that had more of a mission to it, that had more purpose.
Andrew: I think you said, “More than just entertain 14-year-olds.”
Alex: That is a line I use frequently, yeah.
Alex: And so one of the things that I kept sort of thinking about was that through AI, through automation, through globalization, through all of these kind of big, inexorable forces, labor, basic sort of human labor, was going to come under more and more pressure as we move forward. But creativity to me seems like one of the areas that’s going to be somewhat protected and I think is an area where we’ll see actually, like, a rise in demand as opposed to many other sectors of the economy that sort of index lower on the empathy and creativity scale.
And so it started to occur to me that, hey, there’s going to be a huge demand for video, people are going to need tons of help. And if I could help build a platform that would make that human creativity more scalable and efficient and data-informed, then logically the thing it would have to do as a result would create a lot of jobs. And so we became really interested in this idea that, like, if we built that platform, we could control its rules and how it was designed, and we could design it in a way that was actually positive for human labor, meaning, you know, paying fairly.
Alex: And so here’s where I never frankly agreed with the 99designs model because at its root the idea is 99 people work and one person gets paid.
Alex: And to me that just doesn’t . . . I mean I understand to some extent why that might be a good thing for a business, but it doesn’t make sense to me why it’s a good thing for a creator. And so VidMob was really built around the idea there would be kind of, like, a one-to-one relationship between, you know, someone with a need and someone with a skill. And so no one would ever work on our platform for free.
Andrew: Got it. So it’s more about matchmaking on the back end instead of everybody’s creating for you and only one person gets paid.
Alex: Yeah. So it’s definitely, like, relying on sort of a crowd in the sense that there’s a network or a marketplace there, but it’s not sort of crowdsourced in the kind of traditional sense.
Andrew: All right, let’s understand how you got here, what you built before. I’d actually like to go all the way back, I always like to start back with people’s childhood. And for you something as I looked at my notes from our producer’s conversation with you, something that stood out was your parents asked you when you went to school, “Is this the best use of our life savings?” Why did they ask you that?
Alex: Well, they had good reason to. So let me sort of back up. So I went to Cornell University. And I was 17 when I went to college. I think not because I was some, you know, prodigy, but just because I was born late in the year. And when I got there I think I would have probably defined myself first and foremost as a soccer player, and somewhere kind of way down the list I would have defined myself as a student. And my behavior sort of reflected that. And so, you know, I was . . . I never went to class, or very rarely. And, you know, I was learning some of the other things that college can teach you, but not taking advantage of any of the really wonderful things that Cornell had to offer.
And so I would basically never go to class, I was, you know, smart enough that I could, you know, study hard, you know, the day before the test and sort of blend it all out to a C.
Andrew: Okay. And you were happy with the C? You’re a competitive person.
Alex: No, I probably wasn’t happy with the C, but I was just focused on doing other things.
Andrew: You accepted it because you cared more about soccer.
Alex: Or . . . you know, or socializing or just doing the various things that sort of an immature, you know, 17, 18-year-old kid would do. And so my folks, who are both professors, after my sophomore year, after the first semester of sophomore year, sort of came to me and said, “Hey, like, is this the best that you can do?” And I sort of, you know, being honest, said, “No, I think if I applied myself, I could probably do a fair amount better.” And they kind of looked at me and they’re like, “Well, then does it seem fair that you’re, like, basically burning up our money, you know, doing this?” And I sort of agreed that it wasn’t fair. And so we sort of said, “All right, well, what’s a thing that you . . . what’s a benchmark that, you know, you think you reasonably could hit if you tried?” And I said, “Well, I probably could get a 3.0.” And so we agreed that if I didn’t get a 3.0, I was going to pay my way through school.
So back I went, second semester sophomore year, I was living in a fraternity, I was, you know, sort of still not prepared for this and proceeded to put up a 1.7. So, you know, not just a little shy of the mark, very far shy of the mark. So before the university had a chance to kick me out, I walked up to the registrar and filled out a voluntary leave of absence.
Andrew: Got it. And instead you went on to do what?
Alex: And so yeah, so there I was. I was, you know, basically skill-less, you know, sort of in a position where, you know, a prideful person had now kind of, you know, talked himself into this situation and I needed to come up with, you know, somewhere in the neighborhood of probably $30 grand to go back to school. So I started bouncing at a bar on campus, and then within a few days I ended up, you know, bartending there. And then, you know, Cornell was in the process of transitioning from being a . . . where all of the sort of parties, fraternity/sorority parties, had to be kind of official with, you know, IDs and insurance and liquor licenses and all this. And so I took over a business that was essentially running all of the social events on campus. And so . . . and then through that eventually took over the bar itself.
And so within, you know, probably four or five months of when I had left school I had, you know, these sort of multiple businesses and probably a few hundred people working for me. And I was making a lot of money. And so I worked literally every day for an entire year in a row, so I never had a day off, never wanted a day off. And I would get paid mostly in ones. And I had a . . . I basically punched a hole in my wall in my fraternity room that, you know, sort of is kind of like “The Shawshank Redemption” with the hole behind the poster. And I built a little, like, shelf behind this poster and I would just stack up, you know, ones to, like, the ceiling. And every week I would go and deposit, you know, a few thousand dollars in ones, and I’m sure the local bank in Ithaca thought I was a drug dealer or something.
But so, you know, over the course of a year I saved up, you know, a surprisingly large amount of money and went back in the fall. And now had a very, very different experience as a student where I was writing fairly large checks. And when you do that, you go to class. And when you go to class, they teach you everything you need to know. And so all of a sudden school got very easy for me and I really enjoyed it. And so I had these, like, two very, very different experiences where I was a not-serious student probably focusing on maybe experiences that helped inform being, you know, a salesman and other useful skills later in life, but then on the second part I was a serious student and graduated with a degree in structural engineering, you know, one year later than I should have.
Andrew: Impressive. All right, let me talk about my sponsor, and then we’ll get back into the story and understand what happened at Auto Games . . . excuse me, Autumn Games that led to VidMob.
But my sponsor is a . . . it’s a new sponsor, it’s a company called RingCentral. Like I always do before interviews, I asked you, “Is it okay for me to talk about them? Do you have any conflicts?” And you said, “Actually, we use them.” Why do you and how do you guys use RingCentral?
Alex: So I started using RingCentral, I think, over a decade ago.
Andrew: A what? A decade ago?
Alex: Over a decade ago, yeah.
Andrew: Wow, okay.
Alex: So, you know, we were, you know, interested in IP telephony and the sort of flexibility it afforded you, the ability to sort of unplug a phone and move it to a different office somewhere, to sort of forward things easily and instantly to your cell phone, you know, all of these things. And, you know, I’d kind of been aware of the some of the other companies and we gave RingCentral a try and, you know, 10 years later we’re still a happy customer.
Andrew: And what do you use RingCentral for? And I’ll tell you in a moment what got me to sign up.
Alex: Yeah, we use it for our desk phones in the office. Now not everyone here has one, but a number of people do and, you know, it’s a service that I enjoy every day.
Andrew: Yeah, it’s fantastic for desk phones. It also has a phone-free option, meaning there is no desk phone, you just tell your people, “Look, instead of using your personal phone number to call people, just put this app on your iPhone or on your Android phone and when a call comes into the office, you’ll even have a personal phone number if you want it, or into the main office, it will go to your phone and you could pick it up or you can send it to voice mail or you can text to them and so on. The thing that got me started with . . . And do you guys use that, Alex?
Alex: We do, yeah, absolutely. I use it myself.
Andrew: Yeah, the virtual phone number is super helpful. Here’s my problem. I don’t know if you can see this, but I find that my world is shifting towards this. Do you see that number right there?
Alex: Yeah, I do.
Andrew: 176 unread text messages, that’s huge. And the reason that that happens is for everything I’m finding . . . not for everything, there are certain things that I feel like I need to give a text phone number and have people text me instead of e-mail me. Right? Like you and I couldn’t have connected here today when there was an issue if all I had was your e-mail address. I would have sent you an e-mail saying, “Sorry, it looks like there’s an issue with our Zoom meeting room. How about if you use, like, this other number and let’s figure out how we can connect?” You wouldn’t have checked it until an hour after the interview was over.
And so I take your phone number so I could text you, I give out my phone number to customers so they could text me. The problem is all the text messages go just to me and I can’t keep up with them. Versus e-mail where I’ve got my assistant Andrea for my personal e-mail to help me go through it, our company-wide e-mail I’ve got three different people who go through and answer customer service e-mail. For texts it’s all on me and I can’t keep up with it.
And so what I decided to do was go to RingCentral, get a company-wide phone number, and when somebody texts it anyone at our company can respond to it, it doesn’t have to just be me. And of course I also get . . . if someone wants to dial in, it doesn’t have to just come to me. It could come to me, it could go to Andrea my assistant, it can go to Ari, it could go to Maricella, it could go to any number of people here at the company. And I like that they could all have the app on their phone and if it’s the right . . . if the call is right for them to take, they could pick it up and they could help out.
There’s one other weirdo thing that happens. Sometimes we need to call people who we’re a little bit suspicious of, we don’t know are they scamming us. Like we had this guy yesterday, he got five accounts with us, four different credit card numbers. Is he scamming us or is he someone who’s struggling to log in? So Rebecca said, “I’ll just call him.” And someone on the team said, “Are you going to use your personal number?” And I said, “Why is that an issue?” And Maricella said, “Well, it’s an issue because if he’s a freak, he could take your personal number and who knows what he’s going to do with it.”
Andrew: I said, “You know, we’re going to get a RingCentral system so that you could just call from our main RingCentral number. If he has a problem, he doesn’t have to call her back or text her back, it will come back into the main office.
Anyway, this is one of many uses of RingCentral. I’ve signed up for them, I’ve been loving them, I highly recommend them. If you’re out there and you’re looking for this, there are so many other features. Like this Zoom thing that we’re doing, it could be done in RingCentral. I signed up partially because I wanted that, too. They’ve got so many things, like right down to faxes and integration with Zapier.
Here’s what I’m going to say. If you want to try them, you could go and get started with them right now as low as $19.99. And $19.99 a month, as low as that. And you won’t have to pay anything, not a single penny, until the year 2020. So go to this special URL to get that offer, it’s ringcentral.com/mixergy. That’s R-I-N-G-central.com/mixergy, it’s the only place that they’re making offer available and I highly recommend them. You’ll get fax, phone, videoconferencing. But all I care about is text messaging and phones, I’m exploring the other features.
All right. How did you get into games? And I want to spend a little time on that, but then jump into VidMob. But how did you get into games?
Alex: Yeah, sure. So I had sort of been involved in a company, helped start a company, that was doing some of the early kind of film finance, you know, work when Legendary and, you know, bigger, you know, platforms like that were being put together. And I started to see that some of that sort of new . . . that some of those new financing models could be applied and should be applied in the game space. And what sort of struck me was that the film world itself was really . . . had kind of innovated a great deal already over the course of the last 50, 60 years, but the games world at the time still looked a lot like the film world did back in the ’40s. You know, sort of developers were essentially just sort of nameless, faceless, you know, people and you would identify with a game because it was a EA Sports game, not because it came from some specific creator.
Alex: And it sort of occurred to us that there was a need for a business that could help high-end game developers break out and sort of follow the same path that we’ve seen, you know, with Pixar and Bruckheimer and, you know, Imagine and, you know, all of the sort of, you know, creator-driven vehicles on the film side.
So we started a company called Autumn Games that was really aimed at being sort of like an artist-friendly publisher. So, you know, give artists a way to create new franchises, not just make, you know, sequels, and sort of give them the resources to do, you know, new cool things. And I did that with actually one of my cofounders here at VidMob and another guy named [Inaudible 00:25:01] who had been running the North American studio at Activision prior to that.
Andrew: This is Jason Donnell, right?
Alex: This is Jason Donnell, yeah.
Andrew: How do you know Jason? You worked together for a long time.
Alex: We met socially, I think it must’ve been in 2005 or 2006, and we’ve been working together ever since. And I think that any entrepreneur, you know, it’s really hard to build things on your own and partnerships are also really hard. And, you know, Jason and I are just, you know, we’re different, but different in very, you know, complementary ways and it’s just been a wonderful partnership for now basically going on 15 years.
Andrew: And so the first game that you guys came out with was Def Jam Rapstar. Def Jam is the record company, right?
Alex: Yeah, so this was . . . so the minor nuance there is that we sort of partnered with Def Jam the brand. So, you know, way, way back in the day Lyor Cohen and Russell Simmons and Kevin Liles essentially sold the record part of Def Jam to Universal and they maintained the brand. And so they used the brand for, you know, sort of Def Comedy Tour, and they made a prior videogame called Def Jam Vendetta, and did other things with the brand and they essentially were like licensors of the brand. So we met and became friendly with a couple of the cofounders of Rockstar Games, the makers of, you know, Grand Theft Auto and agreed to basically fund them in the licensing of the Def Jam brand and the creation of a game called Def Jam Rapstar, which was essentially sort of like Guitar Hero and Rock Band but for hip-hop. So we worked very closely with primarily Kevin Liles, but also Russell Simmons to some extent, and tried to build a really high-end kind of triple-A quality, you know, music videogame.
Andrew: And so what you were doing was not creating a game, but bringing together the people who needed to create the game and the brand that needed to sell the game. And all you did was bring them together, bring it to life, right? Like a producer.
Alex: Yeah, so exactly. I mean, listen, if you saw my programming skills, you wouldn’t want me writing the code. And if you saw my art skills, you wouldn’t want me designing the game. So yeah, we helped put the pieces together, but then ultimately we put the capital together and, you know, were responsible for sort of paying for the development of the game.
Andrew: So then what happened to the company?
Alex: So after Def Jam we then partnered with Jimmy Johnson, the sort of, at the time, I think, three or four-time reigning NASCAR champion and helped create a racing franchise with him, and then we started working on this property called Skullgirls. So all of these things were in play and in development. And that’s sort of the thing with games, is that you’re often looking at, at least at the game level that we were making, you’re looking at sort of multi-year commitments. You know, these are big, big projects with, in many cases, hundreds of people working on them.
We released the first game, the Def Jam Rapstar game, in the fall of 2010. And it was a really good game and, you know, sort of quickly generated tens of millions of dollars. What happened was we had a physical distribution partner, and I don’t want to get, you know, too into the details here, but there ended up being sort of a big dispute about the revenues. Suffice it to say the revenues were collected and didn’t make their way to us. And so here we were, a company that was sort of expecting and a sort of banking on having all of, you know, the revenue that was due to it coming to it and all of a sudden that didn’t happen.
And so we ended up kind of in the middle of a multiparty, multidirectional lawsuit which, you know, really took sort of all of the wind out of the sails of a company that had grown up to, you know, being almost a $100 million-dollar business. And so we sort of, you know, let go of all of our employees, helped find jobs for the ones that we could, and Jason and I kind of holed up and, you know, didn’t pay ourself for years and fought our way through the lawsuits to the point where we actually ended up, you know, sort of winning, getting the games back, getting, you know, monies that were owed to us paid through the bank. And in, I guess, 2013 found ourselves essentially back starting from scratch.
And so, you know, we sort of decided to focus on the one game, Skullgirls, which had . . . was our smallest game and one that I think we would have thought at the time was going to be the smallest but ended up becoming sort of a global hit. And, you know, to this day, you know, we sort of, you know, license it all over the place. Actually, last week we announced the launch of a version of it on the Nintendo Switch with Skybound Games.
And, you know, there are many things about that chapter in my life that I’m really proud of. You know, like Skullgirls has been played by, I think, now getting close to 10 million people. And a lot of people it’s their favorite game and I see people wearing T-shirts for it all over the place. And, you know, we helped employ hundreds of people over the course of, you know, that. But to your point from earlier, it wasn’t my passion, right? And it kind of got to the point where, like, “This is definitely someone’s dream job, but it’s not mine.” And doing . . . and spending my whole life just essentially trying and hoping that I can entertain more and more 14-year-old didn’t seem like enough for me.
Andrew: And so you saw the world was shifting to video. You knew that there was a problem there because . . . is it because you were buying ads before for Autumn Games.
Alex: Yeah, I had been on the board of the company called the New York Video School, which, you know, basically was a low-cost school. So, you know, like $9.99 a month to learn how to edit. And so I had seen that we’d educated tens of thousands of people. And the Rapstar game was a video, it filmed you playing, and then broadcast that video out to YouTube and other places.
So I’d been sort of in and around the video thing for, you know, a while and felt very strongly that this transition to a video Web was real. And yeah, we’d seen in our own marketing. Like, you know, with Rapstar it was all, you know, sort of make a TV ad, spend lots of money making a brilliant thing, but then just kind of let it go. And in some ways that was kind of easy. And over time we started doing more and more Facebook and other platforms. And even though those are sort of smaller and cheaper, it was a lot harder. And it sort of dawned on me that, like, “Hey, if here we are, a reasonably well-funded entertainment business, and we’re sort of struggling with this, what are the 8 million advertisers on Facebook going to do?”
Andrew: And was it advertisers at first that you are thinking of or were you taking about regular people who wanted to publish, consumers?
Alex: It’s a really good question. So in our earliest, earliest, you know, business plan decks that I would go, you know, to pitch people in Silicon Valley, and, you know, most of them would laugh me out of the room, you know, one of the first slides was we’re going to create a million jobs and it talked about the mission and sort of all that. And then I had this chart that had sort of three bars and it was the first was consumer, and then kind of, you know, business, and then a third bar that at the time I called VaaS, so, you know, video as a service. In the beginning it was consumer, so we were on mobile devices and the thinking was, “Hey, everyone I know captures video, they have tons of video on their phone. Every time I go skiing it seems like 70% of the people have a GoPro bolted on their helmet. But I’ve never heard of anyone that has ever actually, you know, done anything with those hours and hours of GoPro footage, they don’t even know how to get it off the go GoPro.
And so I just started asking people, I’m like, “Hey, you know, if there was an easy way that you could get, like, really high-quality stuff made with that raw video, would you do that?” And people are like, “Oh my god, yeah.” You know, and we started hearing all these different use cases, like, “Oh, I’d love to make something for my, you know, my classroom. You know, I have videos of all the kids and, you know, at the end of the year I can make something to send out to all the parents.” Or just all these different use cases.
And so, you know, I started the business in 2014, and then proceeded to do what sort of every entrepreneur does where I spent like three months just working on the logo. I mean which was sort of like an easy way to kind of, like, you know, procrastinate and really decide, “All right, is this the thing I’m going to dedicate the next 10 years of my life to?” But more and more I just kept hearing people saying, like, “This is real, it’s a real problem, I need help.”
And so we started on the consumer side and right out the gate Apple named it one of the best apps of the year. And we were like, “All right.” You know, like, “We did it,” like, “We hit it.” And nothing happened, like nothing. You know, we got like a couple thousand dollars in revenue.
Andrew: And then how much were you charging back then, what was the offer?
Alex: And so, I mean, another great question. So we had launched it as it really like a truly open marketplace. So creators could come in and they could charge whatever they wanted, and they would build their profiles. And the sort of client side would come in and browse through and see whose style they liked. And someone might be $20 and someone else might be $20,000. But depending upon the skill, you could choose the one that was right for you. And, you know, I think in retrospect that was just a really poorly designed system. And what we found was that whenever our investors or friends wanted to use the platform, they’d just say, “Hey, you know, can you just make sure I get a great editor?”
Andrew: “I don’t want to pick it.” Yeah, I’m on one of the earlier versions of your website and it’s pick the videos that you want included, and then pick the editor, and then write a note and send it over. And it seems really smooth in this demo that I’m looking at from back then, but I understand now that it is a little bit of a pain to figure out who the editor is and then wait to see if the editor even wants to look at, what in this demo is, my family vacation video, like they may not care about that.
Alex: Absolutely. So I mean, you know, bad idea.
Andrew: And then they say “no.” Right, okay. It’s a first start though. And so you did that, you saw that you guys weren’t using it, your investors even weren’t excited about doing it the way that you set it up. What did it take for you to figure out the next version that?
Alex: So we started seeing businesses use it. And so our third cofounder, a guy named Craig Coblenz who had been one of the, you know, early, you know, employees at Facebook, he, just sort of through sheer force of will, ended up getting a deal with Meredith Corporation, the sort of, you know, female-interest, you know, publications, to start using our platform to make, you know, videos for primarily Facebook.
Andrew: And Meredith wanted videos for what, like what type of videos? This is a publishing company.
Alex: Yeah, yeah, exactly. So they were . . . It was a lot of, like, overhead kind of hands-in-pans cooking videos. So, you know, for, like, EatingWell and for, you know, Shape and other, you know, of their sort of properties.
Andrew: Why were they doing that back then?
Alex: It’s just, like, cost savings. So, you know, they would use our platform to make hundreds of, you know, these sort of, you know, these, you know, hands-in-pans cooking videos and they found that they can get it done more efficiently through us.
Andrew: But then they were [Inaudible 00:36:21]
Alex: They were publishing them out onto Facebook on their own, yeah.
Andrew: So why was Meredith looking to do that?
Alex: So I think, you know, they were going through the beginnings of the same problem that, like, that everyone in the world was going through. They now had all these various social channels that they needed to program with video content. So all of a sudden they had a need for, you know, huge, huge amounts of video content. And it was cost prohibitive to produce it all on their own or to . . .
Andrew: I’m sorry, what I mean is what was their model? Were they running ads on these videos or doing something else?
Alex: They were using these as organic content to put into their Facebook feeds and things like that.
Alex: And then I think, you know, they would sort of monetize those, you know, Facebook properties, you know, however. You know, they’d sort of, you know co-sell ads in there and stuff.
Andrew: Okay, got it. All right, and so they got . . . you got a deal with them, they became a customer of yours, that’s phenomenal.
Alex: Yeah, and so this was still in the mobile app era, so we didn’t have a Web version.
Andrew: Got it.
Alex: And so Meredith was making hundreds of videos a month through the mobile app and it sort of quickly occurred to us that this wasn’t a tenable solution, that we needed to build a Web version of VidMob so it would become more of an enterprise-grade, you know, sort of platform across mobile and Web.
So we built that. And, you know, just to put it all in perspective, like, it was only, I think, about eight months after we launched the mobile app that we launched the Web version. So it wasn’t that long, but it felt like years to us. And so as soon as we launched the Web version, that was when we started working with Snap. And really, like, you know, from then on it’s been very clear what the path of our business is.
Andrew: How did you get Snap as a customer?
Alex: It was, again, you know, Craig. So he knew some folks over there and just started talking to them about our solution. And they had a really acute problem in that, you know, they needed to find a way to make, you know, it easier for folks to have vertical ads and we had kind of a really fit-for-purpose solution. It was one of those things that just was a really lucky fit.
Andrew: I’m looking him up on LinkedIn to get a sense of what he’s doing. For some reason I can’t get it, I guess he doesn’t have that much on LinkedIn. I don’t even think he has his photo up on LinkedIn. Is he a private person?
Alex: Craig Coblenz?
Andrew: Yeah, maybe I’m on the wrong one.
Andrew: Yeah, that’s it.
Alex: Yeah, so he was somewhere around, like, employee 100 at Facebook and had been there through probably the first six years or so and you know, is just a really interesting guy with . . . who’s one of these really sort of gifted communicators. And, you know, did a . . . just was able to think about how VidMob could apply to some of these problems that sort of bigger platforms were starting to see.
And then I think the other thing that really was impactful is that he told us a lot about how, like, in the early days of Facebook there were a number of partners that sort of, you know, were kind of constantly in and around the halls there and that there were some of them that people just liked better than others because they were better people. And that it just so happened that you ended up doing more work with those folks. And, you know, I would hope that we would have gone down this path anyway, but, like, we always as a company have been very careful about who we hire, how we present ourselves, and just, like, the type of people that we are. And I think that framing has hopefully helped us be good partners for a lot of folks because, you know, we try and not just think about what’s good for VidMob, but how are we going to help solve their real problems.
Andrew: I finally got his account properly up on LinkedIn and I can see why he’d be such a good fit for you. He was . . . he did media sales, he was, like you said, one of the first 100 employees at Facebook. And one of the first things he had to do was educate companies, educate brands about how to work with Facebook, educate Fortune 500 brands, basically what you guys are doing.
Alex: Yeah, I mean he tells the story where, you know, I think, you know, either the first day he joined or one of the, you know . . . or shortly thereafter they sold all of their advertising to Microsoft, if you remember that deal. And so he just joined as a salesperson and there was nothing left to sell.
Andrew: So what did he end up doing then?
Alex: Well, I think as a company they ended up . . . that sort of led to the birth of the newsfeed and, you know, sort of the creation of new ad products.
Andrew: Okay. So Microsoft had all the old standardized products. They created the newsfeed, got it, and he was doing that. So I understand why he’d be such an asset to you, what I’m wondering is why did he join your company? He looks like he had been away from Facebook for five years, according to LinkedIn, from what I can see, he wasn’t doing that much, he was basically retired. Why come in and work with you?
Alex: So we actually met through another of our investors, a friend of mine who runs the CA Sports business. And, you know, he sort of is like . . . I think they live near each other and he said, “You should meet my friend Alex, he’s . . . they’re building this tech thing. And you work for Facebook, you’re a tech guy.” And so we sort of met and became friends and Craig, you know, originally actually joined us as an investor, and then sort of shortly thereafter it was like, “You know what? I actually can add a lot of value to what you guys are doing.” And, you know, we knew we needed help. You know, we were good at sort of building technology and sort of, you know, hopefully having a vision for the future, but I don’t think, you know, building sort of scalable platform partnerships and things like that was something that I was probably well positioned to do.
And so it was, again . . . and I think this has been sort of a recurrent theme through VidMob’s history, where we tend to have had . . . we’ve had a number of things kind of fall into place fairly serendipitously, and certainly the meeting of Craig was one of them.
Andrew: It feels like it’s a lot through relationships. Meredith Corporation, for example, that was through a relationship that, I think, your cofounder worked, and then led to Meredith, am I right?
Alex: Yeah. I mean I think, you know, so much in life is relationships, right? And, you know, certainly if you do a good job of taking care of, you know, those relationships, they tend to pop back up, you know, repeatedly over the course of a lifetime.
Andrew: So once you figured out the model, you then went out and you raised money. And you told me before we started that raising money helped you grow tremendously. What was the round that had that huge growth?
Alex: So yeah, I mean there’s a couple things that I think are worth mentioning on the capital side of things because I think, like, for entrepreneurs who are listening to this they’re . . . this, I think, to me is always one of the interesting points. When I went out and started working on raising the capital for the business, the venture community was really not interested. I could sort of get them there on that this video thing was going to be huge and that someone was going to need to build a creative platform. They were on board with that. But then at the end of every meeting they’d always say, “But couldn’t you just build an algorithm for it?”
And my answer always was, “No, because the whole point of communication is developing some sort of, you know, emotionally resonant touchpoint. And you’re not going to do that with an algorithm.” And the second part of that is and even if you could, it wouldn’t be valuable. Because, you know, whatever I can build that’s pure technology, as soon as I get it working to some degree Facebook and their infinite engineering team will build it, Google and their infinite engineering team will build it, Amazon and their engineering . . . Like there’s no value left in that old model. And so we always sort of felt like the messiness of kind of having this hybrid tech/human system was actually what created the moat, that, like, sort of complexity created the moat.
And so, but I couldn’t . . . I didn’t . . . You know, with the exception of Foundation Capital, I really didn’t succeed in getting the venture community interested in our business. They were putting tons of money into template tools and tons of money into algorithmic creators. You know, like tens, hundreds of millions of dollars went into building those things. And, you know, what was lucky for us was that we were right about the opportunity, but the market didn’t want it. And so we were all alone. And because we’d had, you know, some success in the past, we were able to raise the money we needed to build the business. And so I ended up raising about a $6 million-dollar seed round and, you know, used that to kind of, you know, get through the period of, you know, working your way towards product/market fit.
Andrew: Who’d you raise it from? I’m looking at your Crunchbase entry and I don’t see who that was.
Alex: The series A? The seed round?
Andrew: The seed round, yeah, $6 million.
Alex: Yeah, so one of the first investors was, you know, Foundation Capital, the sort of, you know, big, you know, Silicon Valley, you know, venture firm. But then beyond them there were a couple of other funds. So, you know, the WGI guys, you know, Noah and Jonah Goodhart and Mike Walrath, you know, who built Right Media and then Moat.
Andrew: Wait, Noah and Jonah Goodhart are doing what now? I remember them because we used to compete on ads and I guess they became . . . they started investing in a couple of companies.
Alex: Yeah, the do some seed investing. But, you know, they started Moat and, you know, sold that to Oracle. Then, you know, a number of different . . . you know, I think three different, you know, studio heads. You know, a variety of kind of media and, you know, sort of creative executives. And so through that we raised, you know, what became the seed round. Once the Snap relationship, and then on the heels of that the original Facebook and Instagram relationship, started going, at that point it became very clear that there was, like, true product/market fit, like revenue started, you know, growing quite rapidly. And in the summer of 2017 we raised a $7.7 million-dollar series A.
And I think at the time we were 12 people, either 12 or 13. And by the end of that year we were essentially 50 people. And during the course of ’17 and ’18 our business grew by, I think, almost 40X. So you had, you know, just a real focusing in on product/market fit, which was just helping businesses scale and make better creative, primarily for social but ultimately for sort of digital platforms.
Andrew: And you grew that much because of what?
Alex: So twofold, I think the reasons are twofold. One is that it was a problem that everyone was going through. So, you know, like every meeting we went into, you know, basically the brand would say some variant of, “Oh, man, you know, we’ve literally been talking about this all morning.” You know, like, “Thank god you just came in.” And so we formed partnerships with and were working directly with, you know, with Snap originally, and then Facebook and Instagram, and then Pinterest and Twitter and Google and LinkedIn, and, you know, sort of a variety of partners who all had different variants of the same problem. And then we started to build, you know, sort of a direct brand sales team. We hired a woman named Lisa Manowitz who had been part of the early team that turned on monetization at first Twitter, and then Pinterest, and is really just an incredible person. And so she started building out a team to start developing brand direct relationships.
And so that through the course of ’17 the business grew quite well and we sort of found ourselves at the end of ’17 in a position where we were kind of partners with the whole ecosystem. Through that we had built integrations into the ads APIs of all of them. So we originally thinking, “All right, well, we need this so we can push completed media into people’s ad accounts.” But once we did that, then we could pull back performance information. And so this is where we started thinking, “This is actually really interesting. Like we’re partners with everyone, we are working with many of the world’s largest marketers, and we have access to the performance information for broad, broad swaths of the ecosystem. If we could only figure out a way to understand the creative content of this, then we could do something really interesting.”
Andrew: What do you mean by “the creative content of this”?
Alex: So, like, the ads themselves, like what’s happening inside of them. Like, so . . . And so I hired a woman named Joline McGoldrick who had been at Kantar helping to kind of lead their data and insights practice and we started playing around with some of the nascent kind of video computer vision technologies. So Amazon had just taken Amazon Rekognition and turned it . . . and enabled it to start, you know, handling video.
Alex: And, you know, Microsoft Azure was, you know, was developing and Google Cloud Vision was developing. And we sort of played around with all of them and decided that Amazon Rekognition was the one that was sort of noisiest and the best fit for us. And we sort of hacked together a system that enabled us to take files and break out all of the creative attributes of the content on an every, you know, few hundred millisecond basis. And so in, I think, January of 2018 we pushed about 40,000 files through the Amazon Rekognition, you know, API. And I think like an hour later I get a call from the head of Amazon Rekognition and he’s like, “What are you doing?” And, you know, we’d been trying desperately to get on Amazon’s radar for a while and they were the one that was, like, hard for us to, you know, to kind of get interested. And I told them what we were doing and he’s like, “Hey, that’s really cool. Why don’t you come out here?”
And so a week later we were out in Seattle and, you know, spent a great day with, you know, him and his team, and then ended up really sort of partnering with those guys and, you know, sort of collaborating on our engineering roadmaps. And then the latter part of last year going around and giving joint talks where they’d sort of talk about sort of computer vision as a technology, and then we would talk about it as, like, an applied process. And that has now grown into our whole creative intelligence business which, you know, I think is really, like, at the forefront of, you know, kind of an entirely new, you know, category of first-party data for marketers.
Andrew: And what you’re doing is you’re looking at all the content that’s on these platforms, or just the ones that you created, and then analyzing what works well?
Alex: All the content.
Andrew: All the content.
Alex: And so the thing, you know, the obvious and key caveat, is we can’t look at anything unless they hook up their account. So, like, if a brand comes in and say, “Hey, I want to use your service,” what they do is they authenticate the ad accounts that they want to have analyzed. And then that happens, it pulls all the media and, you know, basically processes every single piece of ad media that they have, looks at what sentiments are being exhibited, you know, where and when are trademarks and logos coming in, what’s being spoken, what words are on screen, which direction are people looking.
Alex: On and on and on. And then we pull the corresponding performance information and we cross those two data sets, and then apply machine learning on top of it to look for patterns.
Andrew: And then how do you use it once you understand what’s working?
Alex: Once we understand what’s working, we go back to the client with insights. “Hey, this is working well here, but, you know, this is not working well with this audience. You know, maybe you should try this.” And this is the key to the whole thing, is that the insight is coupled back to the ability to react to it.
The analogy that I always sort of talk about with, you know, clients and, you know, partners and such is if you think about, like, a doctor. You go to the doctor’s office and the first thing that happens is you get an insight. You know, they analyze you and they come back and, like, “All right, you have an infection,” or whatever the problem is. If that were the end of the transaction, no one would ever go to the doctor. There’s a second part where the doctor says, “All right, and here’s a prescription, and you take this and you’re going to get better.”
And so what we do is we take these insights, and then put it back to our creative marketplace so you can have new, optimized media created based on those insights. And so by creating this, like, tight loop of, like, learning and creating, learning and creating, learning and creating, what we see is that people can actually improve media mid-campaign. And when they do that, their ads get better, like really better.
Alex: Hundreds of percents better.
Andrew: Wow. I had no idea. So I was looking at your material on your website and I saw that you were doing something to improve the ads, I didn’t realize it was this in depth, I didn’t realize what you were doing to get there.
Andrew: I could see why you’re so excited now, why you’re confident, why you’re ready to talk about your story. One thing that stuck out for me as I was looking at my notes on you was there was a period there where you were three weeks away from disaster, where the company VidMob had three weeks of cash in the bank. You talked to a potential investor and you were super calm. How do you, when things are at that point, how do you keep from freaking out, how do you stay focused?
Alex: So I think ultimately . . . And this is an experience probably that every entrepreneur will go through, and in many cases you sort of live it as a constant reality for long periods of time. And so, you know, my experience with . . . through the Autumn Games era . . . Because we were starting that business when the financial markets were falling apart, we started that company in essentially 2007. And then you had the years of 2008, 2009 when the world was essentially, you know, seemed like it was disappearing. And through that period we rarely had more than a couple months’ worth of cash, but had, you know, significant commitments on how we were going to, you know, sort of, you know, develop a game. And so we kind of got sort of used to it, both being in that state and knowing that we would always come up with a solution.
And so when I found myself in that same solution in the . . . or the same situation in the VidMob era, I’d been there before and I knew that I was going to solve it and I knew that the team was going to come up with, you know, some sort of solution. And so . . . And we always did. And so when, this was, Jonathan Ehrlich at Foundation Capital sort of asked me, like, you know, “How’s it going?,” and like, “Things are good, you know, we’re moving along.” And he’s like, “How’s capital?” I’m like, “Yeah, we got like three weeks.” And he’s like, “How are you so calm?” And the reason I was calm was because I knew we were going to solve it, and we did. And but I think that, like, it only came through experience. Where, you know, like, I think the one benefit both of my early experience with, you know, with the bar and sort of leaving Cornell, like, and then all my entrepreneur experience was I’ve kind of learned how to, like, lower my heart rate.
Andrew: To not freak out.
Alex: Yeah. And, you know, I think what you find is that frankly there aren’t that many reasons to freak out in life anyway.
Andrew: You know what? I’ve found that the more I remember that I’d been in worse situations before and that I got past them, the less I worry. It doesn’t eliminate it completely, but it does reduce it. I’ve also found that doing these interviews helps. Sometimes I do still go in my head to, “What happens if everything goes to, like, to nothing and I lose it all?” And somehow, without even seeing their faces, I remember the people who I interviewed who had just gone through everything, just bankruptcy, divorce, disaster, and then they were sitting in the chair doing an interview with me about how they figured out the next business and things worked out. I have to just keep remembering that’s just the way it is.
Alex: It’s the way it is. And I think, also, in many times . . . And that’s funny, like, I literally gave a talk on this on Saturday night for an old program I was a part of at Cornell. But I think it’s very difficult to keep score in the middle of life. It’s not like a basketball game where you have, like, an accurate representation. Like for me the worst periods that I went through, you know, the period where I had, you know, sort of left college and was essentially a failure, and then, you know, the period with sort of all the Rapstar stuff, those periods in many ways ended up being the best times of my life. You know, like in the first time at Cornell that’s when I met my wife and sort of learned about responsibility and entrepreneurship for the first time.
Alex: And in the case of the, you know, sort of the Rapstar stuff, you know, I think, like, that sort of helped push me towards being a different kind of leader and understanding that purpose was actually really important to me. And, you know, I’m now so proud of the company that we’re building here and the team and everything that, you know, it’s not that I’m glad that that happened, because it was a really trying time, but, you know, I think I will freak out less when I find myself in this position for a third or fourth time.
Andrew: All right, that is a great place to leave it. The company is VidMob if you want to go check them out. Check out vidmob.com, V-I-D-M-O-B.com. I had no idea you guys were doing so well, I had no idea that you guys were powering Snapchat for so long. I just didn’t realize. I know that there’s a shift happening, I’m just amazed and impressed by what you guys have done to take . . . I was going to say “to take advantage of the shift,” but no, to lead it, to actually make it possible.
Alex: Yeah, I think on our side what we see is that all of these changes, like the sort of rise of data, the increase in the scale of the needs, the changing nature of it all, it’s basically necessitating some sort of an operating system to govern it all, and ultimately that’s what we’re trying to build.
Andrew: I’m going to thank the sponsor who made this interview happen. It’s RingCentral, a company that both of us have used. If you’re out there and you need a phone number for people on your team, go check out ringcentral.com/mixergy. And if you’re like me and you need a way for your team to get text messages in, not just calls, not just faxes, but text messages in, go check out ringcentral.com/mixergy, they’re going to give you an unbelievable offer. You will not have to pay anything, not even a penny, until 2020. And it’s all available at R-I-N-G-C-E-N-T-R-A-L.com/mixergy. And I’m grateful to them for sponsoring. Thank you, Alex.
Alex: Thank you.
Andrew: Thanks. Bye, everyone.