This case study is part of Inc's Reinvention Central Special Report.

The Dilema: Which audience, and how big?

Company: FEM

Founded: 2012 

Location: Los Angeles

Co-Founders: Rachel Payne, Meghana Bhatt, and Natasha Mohanty

Fem is a media-technology company that has built a "video discovery" platform that clients can quickly embed into their websites or apps and which then recommends videos likely to interest site visitors. FEM uses proprietary algorithms to serve up video content tailored to a client's audience; it's particularly strong on content geared to women. The goal is to help clients monetize their sites (people stay longer to watch more videos), while also enhancing site visitors' experience by highlighting videos likely to appeal to them.

Founded in 2012 by Rachel Payne (CEO), Meghana Bhatt (VP, data science), and Natasha Mohanty (VP, technology), FEM has landed several high-profile clients, but aside from Google, it has yet to convert free-trial users (one of which is to paying clients. Many of these trial arrangements expire this summer, at which point FEM will learn just how willing companies are to pay for its technology. Payne is optimistic that FEM can, as she says, "help end users feel more empowered through their viewing experiences, with an emphasis on girls and women," but says that its technology can serve other audiences as well.

"This summer will be a moment of truth, as free-trial clients decide whether to pay."Rachel Payne

Meanwhile, FEM has been approached by potential partners interested in embedding its technology into set-top boxes, gaming platforms, and other devices. That market will probably skyrocket, but it presents a difficult choice: Should FEM sell its technology directly to customers, or license it to other companies that will build it into their products? Does the company have the resources to pursue both paths, or should it pick just one? 

The Experts:

Brent Hill, Principal with Origin Ventures; board member for six tech companies; a former executive at Google and Twitter.

"FEM needs a strategy to get to the end result, which is video ad distribution. It can start with specific niches, like women's fitness, and expand."



Barry Schuler, Managing director of DFJ Growth and former chairman and CEO of America Online; chairman of NewTech Network.

"The company sees a chance to grab a first-mover advantage in a new space, but it's a very nascent category, and other big players could jump into it at any time."


The Advice:

Both Schuler and Hill caution against any major pivot. Instead, they say FEM needs to focus more intently on what it's already doing. "It faces strong contenders in Outbrain and Taboola," Schuler says, "so it needs to woo clients by focusing on what differentiates it. In this case, it's a focus on 'good content for women,' but while Rachel is a very strong evangelist for this, FEM's website doesn't communicate it well, and there is also the larger issue of just how big a market there could be for such a specialization." Hill agrees, adding that FEM needs to "be really good at something--its video recommendation engine has to work very, very well. It has to be best in class."

Schuler recommends that FEM forgo any deals with set-top box makers or similar partners. "I understand the appeal," he says. "It's new; there are no incumbents. But it's a very nascent category, which is a dangerous place for a startup with limited money."

Hill sees an opportunity for FEM to aggregate an audience and then connect it with online video advertising, a $4 billion market expected to double by 2016. "In the short term, FEM should focus on adoption of the core technology," he says. "It needs to be running on as many large-audience sites as possible."

"Rachel speaks with the passion of someone who has a cause," Schuler says. "Every aspect of the business must align with that. Passion is a huge asset, but she has to connect it to FEM's strategy."