April 9, 2020
The startup success story behind Vidyard – Small Empires Ep. 5

The startup success story behind Vidyard – Small Empires Ep. 5

We’re here in the
Waterloo region, which you may not
have heard of before. But if you have,
it’s because you know that this is the
tech hub of Canada. It’s home to BlackBerry,
The University of Waterloo, and scores of startups. We’re going to get to know
one in particular that’s doing something pretty unsexy,
but whose technology is vital to the way we’ll
consume video online. But it also doesn’t
hurt that this is home to the largest Octoberfest
outside of Germany. I’m Alexis Ohanian,
Startup founder and Y Combinator partner. Over the last year, I went
on a 200 event book tour. I met people building
small empires all across North America. Now I’m back with a
new season, revisiting some of my favorite
stops from the tour. It’s really hard to start
a company in a vacuum. That’s why so many entrepreneurs
flock to Silicon Valley. It’s where all the other
people working on startups are. However, there are small
cities all over North America where one massively successful
company can cause droves of like-minded
people and companies to flock there, like
Waterloo, Ontario, where BlackBerry, formally
RIM’s, headquarters are. The problem is, sometimes
that huge company’s business can go south, causing the
local economy to suffer. There’s a phrase
for this, boom bust. But the bust mostly
refers to when natural resources disappear. So what happens when the
boom is in technology? Do all the engineers
and entrepreneurs leave? Or do they build something
new in the shadow of a tumbling colossus? My name is Michael Litt. I’m one of the
co-founders of Vidyard. And Vidyard is a video
marketing platform. So, very high level. What we do is we take
people’s video assets. We encode them for
playback on all devices. We track how every single
person views that content, and we give that data to their
sales people, their marketers, so that they can
use that information to make better videos. But also to have
relevant conversations with people that have
interacted with their content on the website. Mm hm. Now you didn’t
start out this way. Nope. What was the original
company like? The original company
was something called Redwoods Media. And the idea was that we would
help companies make videos. And so we’d go in and make
these videos, learn the business and produce an asset,
or a series of assets, for a company to put
on their website. And what would happen was they
were looking for a technology to easily host those videos. And they also wanted some
light-weight analytics to figure out how
many views they got. Because their CMO, or the person
that kind of drove business decision, said, OK if we’re
spending $10,000 or $20,000 on these videos, how do we
ultimately track the ROI. How do we know that
these videos did anything to improve performance
of our web destination? How did that turn into video? So we were looking for a way
to differentiate ourselves. Again, we were making
videos for clients. Does not scale. Yeah. No, it doesn’t. It was a lifestyle
business, but it was something to not
be working for the man. It was pretty cool and that
was what we got into it for. Then we were looking
to differentiate roads media a little bit. So we said, how can we offer
video content with a guarantee? So we’re going to produce
a video for your business, and then we’re
going to guarantee that a certain part
of the audience will make it all
the way through. And being able to offer
that kind of a contract was really attractive
to clients, so it helped us
close some deals. And then, based on
that, we obviously had to have a platform
to physically track that. And ultimately, I
think, both Mike and I were probably better engineers
than we were creatives in the first place, so we built
this tracking platform to track the videos we were
producing for clients. And quickly the demand
for that product superseded our ability
to create videos. How would you
guarantee that people would watch all the way
to the end of the video? So we couldn’t
actually guarantee that that would
happen, but it was more that, if it didn’t
happen, we would reproduce the video for them. So I guess it was more
like a warranty in that, if the first video we produce
didn’t meet that goal, then we would produce
another version. Our producers,
incidentally, guarantee that people watch to the end of
every episode of Small Empires. Yeah. I’m sure it’ll be true. But wait, so you’re now
getting some traction. You’re realizing your
software, the platform– which will scale– is
getting some interesting. When did you decide to
apply to Y Combinator? So we were doing both at
the time we applied to YC. We applied to Y Combinator with
the Vidyard vision, obviously. I don’t think the consultancy
was a fit for their model, obviously. But we applied with
the Vidyard vision. We got that interview. We were able to show
them that the application reviewers didn’t watch
our application video. And I think that that kind of
surprised them a little bit. And we got it. And so from there, from
our first meeting with PG it was stop working
on this other thing and let’s focus on Vidyard. This is all happening
while you’re at university. Then it’s time to graduate. What was the decision there? Was it a no-brainer? You had co-op jobs. Yeah. That’s a very good question. So we had this thing
called Project Christmas. And Project
Christmas was that we needed to make $50,000 selling
videos and platform licenses, which at the time
were only $20 a month, prior to Christmas 2010. And if we hit that
goal we would not go out and pursue opportunities
with other companies. We hit that revenue
goal on Christmas Eve. The goal was by Christmas, and
we hit it on Christmas Eve. And from there it
was, let’s go for it. Historically, the
best data you could get for things like film or
television was pretty awful. It was Nielsen ratings
or test screenings, none of which were
terribly helpful, but it was the
best you could do. Now, thanks to the internet,
thanks to software, we can get real time analytics
about what parts of our videos you loved or hated. Even an episode of Small
Empires, like this. We could learn at exactly
what moment you clicked Stop. Please don’t. That means we can try
harder the next time and maybe do less of
the stuff you don’t like and more the stuff you do. So you can continue to go
about watching your videos and we, as video
producers, can learn how to make them even better. My name is Wes Alkin. I’m the marketing manager
here at Athena Software. We develop a
web-based application that’s used by social service
agencies throughout the world. So for example,
groups like United Way would be using a
system like ours. Vidyard allows us, basically,
to take somebody who’s knows nothing about our company,
they click on our video, they watch it. They now know who we are, where
we’re from, where we’re at, and where we’re going
within two minutes. Then the next part
of the journey is Vidyard delivers them
at our case studies page. Now they can read about clients
that are similar to themselves and how they’ve used our
software and system to really transform their organization. If you can go into
a bit of detail, how has Vidyard helped
you make a video like that more effective? Ah. Cool. So with that type of video,
for example, normally you’d have a video on your
website sitting there. And people would view it. And you know people have
viewed it by the views. But what happens next? And that’s where
Vidyard really steps in and it helps deliver
the next step, makes them go to the
next step of the journey. The other side is the data
on the back end of Vidyard allows us to actually improve
those types of videos. So we’re able to go and
see how much of the video is being digest,
and at what point. And when people
start dropping off, we can go back,
re-edit that video, see where they’re dropping
off and make the corrections, and ultimately get a
higher completion rates through the video. Surely this is technology
that other pure video hosting companies wish they could either
emulate, or maybe even acquire. And that would have been a
very different trajectory for the company. Why have you chosen this one? During our [? seed ?]
round, when we were fund raising one of
the big video platforms said, hey wouldn’t it be cool
if all of you guys that are working on this
technology came and worked on our technology? And that was a pretty
attractive offer because we’re right out of school,
we had no money, and this was life-changing
money, potentially, in front of us. But the problem was we felt
like we were on to something. And Y Combinator had
validated our idea, and we had customers
validating our idea. And we were also
pretty young, and it felt like an opportunity
and experience that would be stupid to miss out on. And we wanted to
build a big company. We wanted to change the
world to some effect. And going and being an engineer
on an already existing product or existing platform,
you have a small change and a small impact on that. But it’s not the impact we
ultimately wanted to have, and not the experience we
ultimately wanted to have. So it was very
experience-driven. Another reason, which
is kind of interesting, is we came back to this region
for personal reasons as well. Family was here. And taking that offer
from this organization would have made us have
to live in Silicon Valley. And so it was kind
of a myriad of things that drove us to that decision. But because we
had customers that were willing to spend
money on the technology, and there was only a
handful of the time– quick back of the
napkin math would indicate that– if this is
growing, and it is growing, and I can’t see any reason
why it would stop growing, this is not the
right time to sell. So the decision was
kind of made out of where we’re at, who’s
using the technology, and what we want to do
in our personal lives. And we always put the way we
feel about that stuff first. And I’m very happy
we made that decision because I’ve learned so much. We’ve had so much fun
building this business that I don’t think
we would have had if we had taken that
acquisition offer. There comes a time in every
early stage startups life when they get an
acquisition offer from some large competitor. This is usually referred
to as aqua hires, because they’re essentially
a signing bonus. And the employees
and the technology all get gobbled up
by that big company. It is a significant amount of
money, and plenty of founders do accept it. The fact is, though, as soon
as they sign those documents, they go from being the
boss of their own startup to just being an employee
in a large company. So what was it like watching
the rise and then fall of RIM, or BlackBerry? I remember, so Devon didn’t tell
the story, but his mom would. Devon wanted to
come to work with me and wanted to do the
Redwoods media thing. And he mentioned he
was at RIM at the time. And his mom didn’t
want him to go because RIM was such
a stable company. And that was the idea, is you
graduate, you get a job at RIM. All the smart people go
worked at RIM/BlackBerry and you’ll be set for life. That company is a steamroller. Look how big it is and how
many people work there. And Larry Smith told me, when
I was starting this thing– and I was struggling with that
in my own way with my parents. A lot of university grad
startup founders feel this way. They have pressure from their
parents to go work for Google. And he said, there
is no more stability in going to work for
BlackBerry or RIM than there is in going
to work for yourself. Because the BlackBerry/RIM,
you are basically a function of someone
else’s destiny. And when you start your
own thing, it is all you. And the only person you blame
for failure is yourself. And if you are not someone who
likes failure you won’t fail. You will find a way
to ultimately succeed. That’s what I told my mom. And she was like, you’re right. This is the time
to do this thing. This is cool. And that’s what I tried
to tell Devon’s mom. And, you know, she didn’t
like me for a little while. But eventually we got to a
point where there was revenue and there was stability in our
business that it made sense. And he jumped ship,
and he did it early. And he wanted it and
he pushed for it. And that’s when, ultimately,
the company started. That was the place to work. That was the hot thing
for me for a number of years back in the
early 2000s, late ’90s. And that made it, I think,
as another startup coming up at that time, it would’ve been
awful tough to get talent. But we’re fortunate
now that that spotlight is a little bit off
them and can start looking at the great companies
that are forming here locally. You have incredible talent
coming out of there. Our CMO was a senior
guy at BlackBerry. He was the youngest
VP in their history. And he’s joined us now. He’s just a super
intelligent guy that BlackBerry went
through and trained him up. It’s incredible to
have talent like that, that’s very hard
to find, be local. We’re here at the
University of Waterloo in front of Engineering
5, which is not the most creative
name for a building, but it is the hub for
all those amazing co-op students we’ve
been hearing about. I’m gonna sit down with
the Dean of Engineering to talk to her about what
it is about this place and about this curriculum
that makes it so special. Could you break down for me
what the co-op program is? The co-op education, or
the cooperative education, is a structured system of
combining classroom learning with practical work experience. So how it is structured is,
when the student comes in on the fall term,
they will complete four months of school work. And then half of
them will go out to work for another four months. And it alternates school
and work, school and work, until they graduate. And students can
also use that time to start a startup as well? Yes. So co-op itself, the
structure remains the same. We have evolved over time. The innovation of co-op is to
see what the students aspire to, what are they
interested in doing? And we’re finding that
increasingly number of the students are interested
in starting up they’re companies. So what we do is we have a
Enterprise Co-op, or the E Co-op program, which
started about 6-7 years ago. And the students, rather than
going out to work for industry, they will start
their own companies. So they will register
with a [INAUDIBLE] center and have a mentor to
help them make sure that they’re spending
time starting the company. And they will check
in every two weeks to make sure that
they’re making progress, and and to get also a lot
of advice and mentoring from venture capitalists in the
area, angel investors, and also the professors at the
[INAUDIBLE] center. What did you do for your co-op? I did some management
consulting. I did some pure engineering,
software development type stuff, and project
management stuff as well. So I was at RIM, locally,
which is obviously a big part of the
local community here. And then I spent some time
in Toronto and in St. Luis, as well. What was that portion of your
work experience at RIM like? So you just graduated. You had relationships
from the co-op. And then you were just
like, hey guys I’m back. Nothing really changed
from co-op to full time. I think that’s the huge
benefit of a co-op experience is that you can come in being
a very ready to go employees. Like, I’d already
worked there for a year in basically the same job. And that’s why we hire
co-ops at Vidyard today, too, is the ultimate
goal is to recruit them after they graduate. Let’s see there’s a
student here right now and she’s working on
brilliant technology. Who owns that
intellectual property? Well that is one of the
interesting and important starting points of the
University of Waterloo, in that these create their
own intellectual property. So when you have an idea and
you create it, you own it. The Dean of
Engineering have no– You don’t even get
a little taste? No, not a little taste. You know, when you
feel and you know that you own the intellectual
property, you have freedom. You have the freedom to speak. You have the freedom
to talk about it. You have a freedom to
build it, and the freedom to know that you can
walk away with it. Gives them the confidence
they can walk out of here and start a company. And this is great
for the nation. It’s really good
for the country. I do think that there
is quite a bit of talk about the decline of BlackBerry. Well the founder of
BlackBerry was a student at electrical engineering here
at Waterloo, Mike Lazaridis. And then when you
think about the guts he had to start a
company and, you know, when he was very
young, and to develop the idea of a smartphone. Right? And that kind of
confidence and guts made a difference
for this region. Blackberry may have contracted
in size a little bit, but that they are still the
largest tech company in Canada. So it grew very quickly. It had to contract a bit. But it’s still the largest. And it has provide
the sentiment that we have the talent and the guts to
move in the area of technology. We are the technological
hub, I believe, of Canada. Do you think maybe it even
helped motivate founders even more, knowing that this
once titan had fallen and there was an opportunity? I don’t doubt it. Because now there’s the whole
velocity scene happening of the garage, with all
sorts of companies in there. It’s always handy to have that
one trailblazer, that one idol, I guess, to starting
something up. So Mike can be that idol to
other founders that potentially are considering it. There’s an example of
it going and succeeding. And so everybody thought
that about BlackBerry. There wasn’t a day that
went by that the front page of the Record had something
about BlackBerry in it. So when BlackBerry
started to flounder, people started to
get very worried. Is this community
going to be screwed? And the important
thing to remember is there are 600,000
people in this community. I think there’s actually
750 in Kitchener Waterloo, and 10,000 of them
worked at BlackBerry. So it wasn’t like a
huge number of people, but it was a huge number
of knowledge workers. And BlackBerry cast
such a huge shadow on everything that was
happening, technology wise, in this community for
so long that nobody even knew that startups existed. And BlackBerry did lay
off a ton of people, but they all got displaced. And a ton of those people
were commuting in from Toronto and just found jobs at
Oracle or other businesses that have big offices there. And so I haven’t actually
seen the impact of that other than the fact that we have
a number of great people and really smart people that
left BlackBerry when that started happening in
search of greener pastures. So it hasn’t been a bad
thing for any reason. And what do you hope Vidyard
is doing years from now? It’s hard to imagine. But I think we’re going to
build a really great technology powerhouse. And I think that we do
it for the team members, we do it for Kitchener
Waterloo, we do it for Canada, and we do it for
just being really passionate about
what we’re building And you’ll continue
to, I presume, poach talent from BlackBerry
and from the University here? Oh absolutely. This is our headquarters. This is our home. And again, there’s
so much great talent, whether it be coming out of
companies like BlackBerry, or whether it be
straight out of school, or folks we have to import. And I think we’re at
the scale now where we can attract folks
from the bigger cities, from the Silicon
Valley, from Toronto. And Waterloo’s got a great brand
and it’s a very exciting place. We’re going to grow into it. We’re here in anechoic chamber
at the University of Waterloo. There is no noise
here, just signal. That’s what you need when you
want to take a longer term perspective on things. It’s exactly what the
university has done with regard to intellectual property. Instead of obsessing
over every idea in the head of their
students, they’re trying to give them freedom
so they can go off and create amazing things
that only benefits the university long term. Likewise, when a
founder has a decision to take an early acquisition
and she decides not to, she’s doubling down on herself. She’s taking that
longer term perspective on what that startup
can one day be. It’s that same mentality
that has allowed the region of
Waterloo to not look at the decline of BlackBerry as
the decline of their community. Instead, it just means a
richer, more diverse ecosystem. Many many more startups
now that, if anything, have just made it
a stronger place. Vidyard Data Analytics show
that more customers than ever are opting for a
mobile experience. But mobile apps
can do so much more than order food
or book massages. Mobile point of sale
apps like Vantiv allow small businesses to accept
credit and debit as payment. The system also ties in
with your inventory system so you always know when
you’re low on something. Health tracking
apps allow patients to monitor their heart rate
and send the results directly to their doctors. Companies are even
using mobile apps to make it easy for employees
to clock in and supervisors to manage their reports. How can a mobile app
help your business? For more business advice,
visit AT&T’s business circle. (SINGING) Oh Canada! Our home and native land! That’s all I know. That’s all I know.

34 thoughts on “The startup success story behind Vidyard – Small Empires Ep. 5

  1. Seeing all the shots of projects at the University of Waterloo reminds me so much of the University of Michigan. We seem to have all the same project teams.

  2. Thanks for sharing, Have a look on https://youtu.be/OfKoWCRdgVQ Biggest Reason why Businesses/ startups Fail. It may help others.

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