I live in Los Angeles and fund startups. So you can imagine that I see a lot of video startups. Most will fail.
I repeat the same mantra to every one I see: You can't build a large online video company. You have to build a large online tech company that distributes video.
I'm not being flippant. What most people never understood about Maker Studios is that much of their growth came through technology innovation and advantages on our backend that most people didn't even know about. There's a reason that Maker pulled away while most online video companies did not. And it's not about aggregating traffic better.
Online technology company that distributes video.
I have seen every form of former Discovery or Nat Geo producer who has access to a few famous people with whom they will partner and create online videos. They will partner with every producer of online video software. In my mind they are building the same business as their offline counterparts just with lower CPMs and margins.
I've written before about why I believe most Hollywood online video startups don't get the future (and why most Silicon Valley startups don't get online video). The former thinks it's all about the content and the latter thinks it's all about the tech.
So my advice to many is to study online companies that understand how to use technology for audience development, engagement, viral distribution and subscriptions. Usually I tell them to study Upworthy and Buzzfeed.
Here is an example.
This morning I logged into Facebook. I saw a post from Upworthy about a video showing a dance troop in Australia for large-sized people.
I was seeing the video because I had previously liked Upworthy. I'm not an investor, but truthfully I love Upworthy and its goal is distributing content with a social mission to educate people on complex social issues.
1. Online video companies need to know how to get social followings inside and outside of YouTube.
2. They must know how to a/b test headlines to know what is likely to drive clicks. You can't leave this to chance.
3. They also know how to a/b test images. Some images will draw in viewers more than others, and, as it turns out, the headlines and images that convert at different numbers in each social network or distribution partner.
As a result of one, two and three, I clicked. I hate weightism. It's one of those things that even smart, socially-liberal people fall prey to. They assume that weight is "the person's fault" and that anybody could choose to be skinny and that this is the only worthy goal. I have huge sympathy for those with weight issues because they receive so much negative bias from society that they are subjected to daily insults and ridicule. So I wanted to see what this was all about.
When you click on the link you realize the magic of Upworthy.
4. They multipurpose video into different formats to make the video consumable for the masses. Let's face it -- not everybody wants to sit through a five-minute video. So if you clicked on the link above you'd find that they have summarized the video by creating still images of the video and a few GIFs (not pronounced like the peanut butter, no matter what he says) and a summary of the story. They thus massively increase the reach of the video and create more inventory than just the video on YouTube.
5. At the start of the article they encourage you to subscribe to Upworthy. Their goal isn't to have you as a one-time viewer as is often the case on YouTube. And while a YouTube subscriber is useful, it is still trapped inside the platform. When they get your email they earn the right to share more videos with you in the future and they already know something about your interests.
It's why I keep telling people that moving videos online is more like Gilt Groupe selling clothes than like trying to build audiences on traditional TV. Most traditional video producers don't get this. And if they can't get you to give up your email address they will encourage you to share the video on Facebook or Twitter.
6. They have a curator. In this case Matt Orr. And he has curated many stories. I don't know whether he is paid or not or employed by Upworthy or not. My guess is not, but who knows. When you think Huffington Post you realize that many people will create content for the masses to see or read for free. This is simply no different than curating on Pinterest, tweeting interesting stories, editing on Wikipedia or blogging. Each does it for building an online community either for personal or professional utility. If they got no utility they simply wouldn't do it.
7. In the end they show you a video. You can watch it natively on Upworthy or click through to YouTube to watch it. Either way it doesn't matter to Upworthy probably. In fact, it's not even likely a video produced by Upworthy. But if you ARE a online video producer wouldn't you want to be able to engage your audience the same way that Upworthy does? In this case I recommend watching the video. It's nearly six minutes but it will help you understand a different perspective than you're used to -- that all dancers must be waifs.
8. And when all else seems lost they make the last appeal to get you. They pop up a modal, block out your attention from anything else and ask for the order. In this case your email. They do it in a friendly, cheeky way that isn't too offensive. And since you clicked on this article you've at least shown intent to be interested in Upworthy. And they know -- just like a gym salesman knows -- that if you walk out that door, it's much harder to get you back unless they sign you up now, now, now. Always ask for the order.
Ninety percent of the online video businesses that pitch me do none of these things. It's why most will grow some revenue but will never truly build large online businesses. They want to be media companies that use the Internet rather than tech companies that distribute video.
This article was originally published on Mark Suster's blog, Both Sides of the Table.