The Exchanges

Q managing burn. Give us some insight into that, right? So we only have maybe a handful, I want to say maybe 20 or 30 CEOs That have raised, you know, a hundred million bucks or they're definitely on the IPO track. And so when I have a chance to talk about things like burn at that scale, I do it. How do you, I mean, how do you manage that?

A Yeah. So first of all, uh, your CFO has to become what we call the house of no. And so you get to a phase where as you bring in experienced executives and individuals who've been a part of bigger businesses, they want to spend a lot of money. They know there's a big balance sheet. Uh, they want to hire a really valuable executives, uh, Um, they want to spend lots of money on campaigns. You know, maybe they want to do a Super Bowl commercial, which everybody knows is an awful idea. And so, A, the CFO is, is final approval on anything over a certain amount of money. You have to put these policies and parameters in place. You have to hold everybody accountable to budgets. We have a very strict budgeting process, which starts about three months before our year end. We use a platform called adaptive insights, where we allocate budgets according to the board rollout plan. And then the final thing is, um, it's based on your values. So one of our values is to be relentlessly resourceful. That's a value that we carried forward from YC. It's something that Paul Graham wrote an essay about a very long time ago. Um, and through that mindset being a value of the company, it means we hire against that mindset. We fire against that mindset. Um, and people are, are applauded and rewarded for doing big things with as little money as possible. Because at the end of the day, this company dies if …

AI assessment note: “your CFO has to become what we call the house of no”

Q That's one-to-one though, Michael, right? Like you have, I imagine, BDRs for the account executives filtering down, because they can't make, they can't make a thousand of those videos a day, right?

A No, I mean, the, the way to do it one to many is obviously use, uh, if you want to do it with videos, use a more personalized, um, tool, but yes, that is absolutely one to one, and, and, uh, you know, it's interesting. As the rest of your day gets automated with sales enablement and sales automation type software, um, the only thing that's left for the rep is, is truly to be human and build rapport with someone on the other end of the line, right? You're not really doing anything else ideally, and anything else you're doing is kind of wasting your time. So, You know, we're finding that with a lot of these technologies bringing the business or reps are actually more productive at one-to-one communications, which, which absolutely work because people are so used to being automated to. Um, but the big question is how do you get those names and those companies in the first place? And, um, one of the things we did, which I think is a more, you know, effective practice these days is we outlined a list of all of the propensity triggers that would indicate that someone is potentially ready to buy an aspect of our technology. And for us, that was, A company that had north of 50 employees, was located in North America, was in high-tech.

AI assessment note: “yes, that is absolutely one to one”

Q I mean, video on homepage is like an obvious, right? They're using video, they have a need for video. Is there anything weird, though, that you discovered?

A One of the interesting things we often see is if there's a new leader in a business, um, often, especially a new CMO, they know that their success is based on finding that new opportunity to scale their business, scale pipeline in a as low cost way possible. And we've had a few CMOs through my tenure here, um, at Midyard, and the shelf life of, of a CMO is generally 18 to 24 months. And so, When there is someone new coming into business, it's a great opportunity to target them, because they're looking for that new exciting thing, um, and that was maybe not as much of a surprise when you contextually list it out, but it's often a very difficult thing to identify, but companies are generally very public when they have senior and new leaders join their business, and so one of the things we started looking for was announcements of CMOs joining companies.

AI assessment note: “one of the things we started looking for was announcements of CMOs joining companies.”

Q Well, so let me dive into one of those numbers if you can chat about it. So video, the first thing I think about is streaming costs. I mean, are you able to stay in the 85 to 90% gross margin range? And if so, how have you figured out to stay away from high, high, high streaming costs?

A Yeah, so, um, streaming costs are an interesting thing, right? Because like anything, there's economies of scale based on the amount of content that you publish. So, um, we're streaming in excess of fifty million videos a day, um, and we, we subscribe to the Netflix model of throttling our CDN and, and serving, or service providers based on the latency of loading an asset. So when you click play, it needs to be within A certain threshold, ah, to fetch that video from the service. Otherwise, we're moving the content and the bandwidth to another CDN provider. And over time, things get cheaper. Each new customer you add, ah, decreases the cost of serving all of your customers, ah, as you negotiate economies of scale downward. Um, now that's, that works for us today. Initially, the way we developed a high gross margin was by, um, making sure that we provisioned a ton of value in the services and features and functionality Around the basic hosting of the video, because again, if you're just hosting video for a company, um, you're, you're competing against status quo, which is YouTube or Vimeo, which is free and monetized based on ads. And so there needs to be a whole bunch more in the package that justifies value beyond just video hosting anyways. Um, and so because of that, it kind of shifted our mindset from a product development perspective to make sure that we were delivering va…

AI assessment note: “we subscribe to the Netflix model of throttling our CDN”

Q Yep, very cool. So what is the, I noticed, like, when I look at what you've done, you also have to Some other things in here, like co-founder of Redwoods Media, things like that. Did you use the agency to kind of identify what you should build video software around?

A Yeah. So, uh, through the co-op program, working at Blackberry, working at Cypress Semiconductor, I had contracted a bunch of businesses to produce video for those companies to help explain our products. For installation tutorials, for marketing videos, for sales content, and it was very clear that there was a need for this in the industry, and I had some contacts, so we decided, let's build this company, let's create some videos for these businesses, and, you know, we can live happily ever after and be entrepreneurs. We were both passionate about video. I had made a bunch of video in high school, um, as a freestyle skier to try to gather sponsorships, and so we had the skill set, and that's what we set up to do. So Redwoods Media was that First company. We started that during my fourth and final year of university. Um, again, that was actually my sixth year given the co-op program. And, uh, we were off to the races. We set a target of 50,000 dollars in sales by Christmas Eve, that was project Christmas. We barely scraped that together, but since we hit that goal, we knew that we didn't have to go look for jobs. Yep.

AI assessment note: “So Redwoods Media was that First company. We started that during my fourth”

Q Do you guys celebrate Christmas at the office?

A Go ahead. Uh, we have a holiday party, as is, you know, uh, modern to the point, but, uh, you know, I grew up celebrating Christmas, and so, you know, for us, for, for Devin, my co-founder and I, Uh, project Christmas is, is, is a very meaningful thing that we always reflect on, and interestingly enough, um, that period of time is always a big time for us. We raised our series A just before Christmas. It literally closed on Christmas Eve. Our series B also closed on Christmas Eve, and our series C Interestingly enough, closed on January fourth, which is Christmas, which really sucked because we were sitting on pins and needles and obviously the economy and the public markets were doing really crazy stuff during that time. And so that period of time, you know, which is another kind of key lesson learned is, is if you're raising money, doing it in the fall is a really great period of time because investors think on an annual basis, they have a certain amount of deals they want to do. And if they haven't done deals, they want to get them done before their vacations, right?

AI assessment note: “we have a holiday party... that period of time is always a big time for us. We raised”