Mr. Media Interviews by Bob Andelman
Sunday, March 23, 2008
Stephen Chao, WonderHowTo.com web entrepreneur, former Fox TV president: Mr. Media Interview, Part 2
Return to Part One!
BOB ANDELMAN/Mr. MEDIA: Let’s make you more comfortable, and let’s talk about wonderhowto.com.
STEPHEN CHAO: Great.
ANDELMAN: And I’ll repeat it – wonderhowto.com. How did you get involved in this site?
CHAO: Well, about 2 years ago, I started with my partner, a guy named Mike Goedecke, and we were kind of all very amused, as you probably were, by the advent of pretty decent streaming as it was represented by YouTube, and I guess there’s now 250 other video streaming sites out there, 400. But it really seemed to cause a shift. Namely, “Wow, it’s not a bad experience.”
I don’t know how much you remember what it was like to download a file and play it back and go search for that file if you could -- it wasn’t very easy for me, and I’m okay at the computer. And it was a very painful experience. And around that same time, it was the tail end of when cable had said, “Video on demand, it’s the future. You’re going to be able to use your remote control and see anything you want.” And so as that kind of started to fade and then as the idea of streaming video started to happen, it was like, “Wow, there’s really something here that’s very exciting that really augurs toward something new. Who knows what it is?”
I happen to really enjoy YouTube, but I think it has its limitations for me as a television viewer, a media viewer, or an ex-programmer. Once I’ve exhausted the most viewed, most popular kind of sorting mechanisms, I run out of things to do. There’s no further place for me to go. And so Mike and I were kind of at this place looking and really loving streaming video on the Internet, and we said you know, the place that we just always spent our time with or without streaming video is in this strange area of instructional tutorials. We’ve just had this kind of little love affair privately with this category. For example, I happen to have bought six years ago, “Darren’s Dance Grooves,” if you happen to remember that. It was $19.99, and you could learn how to lock, pop, and something or other like ‘N Sync. And I did that for a summer with my kids, and we had some friends who were really good hip-hop choreographers, and we kind of did that. But that’s the kind of thing that I used to do in my spare time because it was video. It was fun and allowed me to get up and do something as opposed to not do something. Like with television, you kind of sit there, and you don’t move. And I just thought this active experience of instructional tutorials was always kind of fun. And obviously, if you’ve done workouts like the “Jane Fonda Workout” or something, everybody’s actually probably tried that once or twice in their life, you go this is kind of fun. You do something. It’s watching TV, but it makes you active. So two years ago, we said, “This is just really great.” Bob, do you ever play Sudoku or anything like that?
ANDELMAN: My daughter does and my wife, too.
CHAO: I see. Well, it’s a strange experience because on the one hand, you’re wasting time. On the other hand, you’re going “This is kind of fun, and maybe my brain’s getting a little bit better than it was before.” So that odd combination of being able to waste time and actually being able to educate yourself or think you’re educating yourself or actually educating yourself is a great experience for me. It’s a really odd sweet spot in my mind where I go, “Gosh, how great, I waste time, and I learn.” And you can take that either way. Again, you can choose to just waste time, or you can choose to really learn something, and you can choose to learn something and do something like dance like Darren or dance like Solja Boy, who does Superman, or you can learn to teach your cat how to poop in the toilet, or you can do anything that you want out there that’s only limited by your imagination. So once we said, “That’s an interesting category,” we said, “We really need to find everything out there.” I’m anticipating probably what your question is. We originally were going to produce a lot of how-to videos because I come from television, Mike comes from advertising, but we started looking around, and we found out there were really odd, eccentric, long-tail things in places that we never believed were possible.
ANDELMAN: You’re thinking of things like, “Make a Cat Hair Cat Toy at Home,” things like that?
CHAO: Ah, that would be “Clip of the Day,” yeah. Like that or “How to Taxidermy a Mouse or a Squirrel.” Those would be things that Mike and I would never choose to spend $600 to produce and edit and post up onto our site, but those were the things that were just endlessly long tail fascinating. So we quickly decided that we would be silly to try to out-produce the Internet, the web, the collective imagination of production that exists on the Internet across the whole world because the likelihood is somebody’s doing it interestingly and well. So we said, “Let’s search and index absolutely every single how-to in the solar system, and that’s what we’ll present.” So instead of saying we’re going to be a walled garden that’s going to make 2,000 a year or whatever number of videos we thought that we could do, we said our particular fascination would be to index and search everything. And so that’s really the definition of what we do. There’s certainly other sites out there who are how-to sites, and they’re making great how-to videos, but there isn’t any other site out there that searches and indexes every single thing, this walled garden, that walled garden, that walled garden, and more. So we cover the entire world of how-to. If it’s a how-to that’s free, we have it indexed, and we’re just really trying to create the perfect.
We’re just really trying to create perfect information in this niche space of how-to for the user. That’s really what our goal is, and we’re about to hit 100,000 videos indexed. Sometime this month we’re going to do that. And it’s onward and upward.
ANDELMAN: I have to say that, and it’s on the hot videos today if people listening want to check it out, the one that made me laugh out loud, probably not surprisingly, was “Make People Naked with Photoshop,” and it’s just amazing.
CHAO: It’s kind of weird. I have to tell you that one I look at practically everyday because it cycles up into the hot algorithm. It’s not something that I have ever showcased in “Pick of the Day.” It’s not something that we’ve editorially pushed or featured forward. It is something that people have found, and they keep viewing that darn video. It’s just amazing to me. So this is part of it which is what I love about, well, it’s true of TV, but what I love about the web and video experience on the web, you’ve got your Nielsen ratings right there. The Google Analytics is going to tell you how many people watched that video that you just cited today or in the last 30 days and the amount of time they spent on it and if they exited. So from a programming standpoint, it’s kind of thrilling to be able to program something and just watch it happen like make a toy out of cat hair, which is the featured “Pick of the Day.” I’ll be able to see what people thought right away. I can go to Google Analytics right now and find out the answer. It’s amazing.
ANDELMAN: Some of them are very funny. I have a question that came from the web chat. I’m going to paraphrase this a little bit.
CHAO: Sure.
ANDELMAN: Coll wants to know if there had ever been a time that you didn’t know how to do something, and how did you eventually find the solution? And I guess that would be before wonderhowto.com.
CHAO: That’s a good question. I’m a guy who’s got kids, and I’m from New Hampshire. A potato gun is something that is really a phenomenon from farms. So if you’re raised on a farm, you know how to build a potato gun. The potato gun is a very simple concept. It’s PVC pipe that you stick a potato into, and it’s got a chamber. You stick hairspray into it, and you ignite it with a barbecue lighter, and it shoots out a potato at 200 to 300 miles an hour. And it’s kind of a thing that farm kids do. I was raised in rural New Hampshire. It’s what you do. It’s not akin to NRA gunmanship. It’s just kind of a toy that you build that’s very fast and could be very damaging, but it’s kind of a toy that you build when you’re 13 or 14. So the answer to your question is when I was 13 or 14, there was barely television, but there certainly wasn’t Internet video, and there certainly wasn’t a robust kind of DVD tutorial market of DVDs for sale. So I had to go and track down friends who knew about the potato gun because while I’d seen it demonstrated, I didn’t know how to build it, and I had to do it the old-fashioned way. I had to call friends and say, “Hey, who’s built a potato gun?” And then I had to go to the dad, and the dad would tell me how to do it. And that is the normal process in life. On the other hand, these days you could look up potato gun on wonderhowto.com, and you’d have an answer and not have to go ask the dad, I suppose.
ANDELMAN: Eric Smith in the web chat has a question: “With the advent of so many video-centric web sites, both entertainment and now how-to sites, how do you plan on marketing your site so that it stands out from the crowd?”
CHAO: Eric, that’s a very good question. It’s kind of the challenge in the next year for me.
ANDELMAN: Well, your first answer, of course, is “I’m going to go on Mr. Media and have a live conversation.”
CHAO: That is absolutely correct! There’s no way to get around the fact that the best publicity and the best marketing is actually non-paid marketing. It just has the most integrity to it. It’s the fastest. It’s the most credible. It’s your default choice. Even if you had a billion dollars, you wouldn’t say, “I want to spend a billion dollars.” You want to say, “I want to create a really good product that people pass around, that people want to write about.”
So to answer your question, Eric, the first stop is to be able to get to the chatter class, which are people like Bob or The New York Times or BoingBoing or whatever it is, the people who control the media. And now the great thing is the media is more diffused. It’s not just The New York Times and The Wall Street Journal. There’s a number of influential people out there like BoingBoing, like Mr. Media, etc., etc.
The first trick or task is really to, of course, make a good product. And the second thing is to really work on issues of publicity and press and spread the word that way. As an example, there was a New York Times piece on January 31, and then that one was picked up by BoingBoing the next day, and a press release followed. So that’s really the start of it. And then there are all these tools. You could buy links, you can buy traffic, you can create stunts that get publicity, you can have a very smart advisor like Todd Beck and then he’ll help you figure it out, you can write to blogs, you can make playlists for the person who runs Technorati. So I guess the choice, because there’s a lot of ways that you can pay for traffic and marketing, the choice is really to talk to the people through the different media, whether it’s blogs or hard copy in old media, and get the word out. That’s probably the best way.
ANDELMAN: What’s the start-up investment dollar-wise between you and your partners? And I know you have a venture capital firm that’s behind you.
CHAO: Right.
ANDELMAN: How much are we talking, Stephen?
CHAO: Okay. Well, I won’t disclose the amount that the venture capital firm put in only just cause I choose not to. But I will tell you that never having previously invested in a start-up Internet site, I thought it was really kind of interesting. Namely, we had spent approximately $500,000 to start up the site. Now that means we had two full-time programmers going probably for a year. We had really researched the world of how-to. Before we opened up, we had found tens of thousands of videos on 600 to 700 different servers. So in terms of walled gardens, we had sourced 600 to 700 walled gardens who really had true expertise in how-to. So we had kind of done our market research, and we really had kind of really well done our programming, our coding, and stuff like that. This was before we had a marketing plan. This was before we actually launched it live without password. We did launch it under our own funds. It was before we bought all the traditional kind of things that cost money like E & O insurance and stuff like that and heavy legal stuff that you need to do to be properly protected.
We spent half a million dollars to start up the business. We had not marketed. We had not done all of the things to be entirely street legal, but the great thing about that is, while that is a lot of money, it’s not a lot of money considering the fact that you can, if you build a smart business model, you can scale up, and the sky’s the limit. It’s the kind of really wonderful thing about the media, which is that if you build it properly, your ability to scale is kind of unlimited, and the Internet is a form of the media or certainly this particular wonderhowto.com. So the answer is probably a little bit more than it takes to open a restaurant or a dry cleaner but less than it costs to open a brick and mortar business by a country mile. It’s really been a fascinating process. It’s not horribly expensive to start an Internet business, which is why there are so many competitors out there cause the barriers to entry, at least in terms of capital, are pretty small.
ANDELMAN: I have to say I was stunned to hear that you had spent $500,000, pre-launch. That’s astounding to me.
CHAO: Astounding a lot or little?
ANDELMAN: It sounds like a lot.
CHAO: It is a lot.
ANDELMAN: It is a lot. I think if somebody invested $5,000 in Mr. Media, we’d probably own Microsoft. So if you guys are looking to invest further…
CHAO: To speak to that point, $500,000 in truth is more than most entrepreneurs will invest. I think that the standard number that you hear is anywhere between $150,000 and $300,000. We decided to go over that only because we were extremely picky about certain things, and we went through fully three redesigns, soup-to-nuts redesign, before we were ready to open it. There’s some pickiness to what we did that we didn’t have to spend that much. But again, in the scheme of things, we’re pretty happy with the product, and we’re very happy with the wonderhowto product. So we’ll see what happens, but we just said, “That’s the threshold. We’re going to spend that much money before, and we’ll spend as much as we need to be really happy that when we’re ready to open, it’s a full representation of who we are.”
Click Here to Keep Reading!
© 2008 by Bob Andelman. All rights reserved.
BOB ANDELMAN/Mr. MEDIA: Let’s make you more comfortable, and let’s talk about wonderhowto.com.
STEPHEN CHAO: Great.
ANDELMAN: And I’ll repeat it – wonderhowto.com. How did you get involved in this site?
CHAO: Well, about 2 years ago, I started with my partner, a guy named Mike Goedecke, and we were kind of all very amused, as you probably were, by the advent of pretty decent streaming as it was represented by YouTube, and I guess there’s now 250 other video streaming sites out there, 400. But it really seemed to cause a shift. Namely, “Wow, it’s not a bad experience.”
I don’t know how much you remember what it was like to download a file and play it back and go search for that file if you could -- it wasn’t very easy for me, and I’m okay at the computer. And it was a very painful experience. And around that same time, it was the tail end of when cable had said, “Video on demand, it’s the future. You’re going to be able to use your remote control and see anything you want.” And so as that kind of started to fade and then as the idea of streaming video started to happen, it was like, “Wow, there’s really something here that’s very exciting that really augurs toward something new. Who knows what it is?”
I happen to really enjoy YouTube, but I think it has its limitations for me as a television viewer, a media viewer, or an ex-programmer. Once I’ve exhausted the most viewed, most popular kind of sorting mechanisms, I run out of things to do. There’s no further place for me to go. And so Mike and I were kind of at this place looking and really loving streaming video on the Internet, and we said you know, the place that we just always spent our time with or without streaming video is in this strange area of instructional tutorials. We’ve just had this kind of little love affair privately with this category. For example, I happen to have bought six years ago, “Darren’s Dance Grooves,” if you happen to remember that. It was $19.99, and you could learn how to lock, pop, and something or other like ‘N Sync. And I did that for a summer with my kids, and we had some friends who were really good hip-hop choreographers, and we kind of did that. But that’s the kind of thing that I used to do in my spare time because it was video. It was fun and allowed me to get up and do something as opposed to not do something. Like with television, you kind of sit there, and you don’t move. And I just thought this active experience of instructional tutorials was always kind of fun. And obviously, if you’ve done workouts like the “Jane Fonda Workout” or something, everybody’s actually probably tried that once or twice in their life, you go this is kind of fun. You do something. It’s watching TV, but it makes you active. So two years ago, we said, “This is just really great.” Bob, do you ever play Sudoku or anything like that?
ANDELMAN: My daughter does and my wife, too.
CHAO: I see. Well, it’s a strange experience because on the one hand, you’re wasting time. On the other hand, you’re going “This is kind of fun, and maybe my brain’s getting a little bit better than it was before.” So that odd combination of being able to waste time and actually being able to educate yourself or think you’re educating yourself or actually educating yourself is a great experience for me. It’s a really odd sweet spot in my mind where I go, “Gosh, how great, I waste time, and I learn.” And you can take that either way. Again, you can choose to just waste time, or you can choose to really learn something, and you can choose to learn something and do something like dance like Darren or dance like Solja Boy, who does Superman, or you can learn to teach your cat how to poop in the toilet, or you can do anything that you want out there that’s only limited by your imagination. So once we said, “That’s an interesting category,” we said, “We really need to find everything out there.” I’m anticipating probably what your question is. We originally were going to produce a lot of how-to videos because I come from television, Mike comes from advertising, but we started looking around, and we found out there were really odd, eccentric, long-tail things in places that we never believed were possible.
ANDELMAN: You’re thinking of things like, “Make a Cat Hair Cat Toy at Home,” things like that?
CHAO: Ah, that would be “Clip of the Day,” yeah. Like that or “How to Taxidermy a Mouse or a Squirrel.” Those would be things that Mike and I would never choose to spend $600 to produce and edit and post up onto our site, but those were the things that were just endlessly long tail fascinating. So we quickly decided that we would be silly to try to out-produce the Internet, the web, the collective imagination of production that exists on the Internet across the whole world because the likelihood is somebody’s doing it interestingly and well. So we said, “Let’s search and index absolutely every single how-to in the solar system, and that’s what we’ll present.” So instead of saying we’re going to be a walled garden that’s going to make 2,000 a year or whatever number of videos we thought that we could do, we said our particular fascination would be to index and search everything. And so that’s really the definition of what we do. There’s certainly other sites out there who are how-to sites, and they’re making great how-to videos, but there isn’t any other site out there that searches and indexes every single thing, this walled garden, that walled garden, that walled garden, and more. So we cover the entire world of how-to. If it’s a how-to that’s free, we have it indexed, and we’re just really trying to create the perfect.
We’re just really trying to create perfect information in this niche space of how-to for the user. That’s really what our goal is, and we’re about to hit 100,000 videos indexed. Sometime this month we’re going to do that. And it’s onward and upward.
ANDELMAN: I have to say that, and it’s on the hot videos today if people listening want to check it out, the one that made me laugh out loud, probably not surprisingly, was “Make People Naked with Photoshop,” and it’s just amazing.
CHAO: It’s kind of weird. I have to tell you that one I look at practically everyday because it cycles up into the hot algorithm. It’s not something that I have ever showcased in “Pick of the Day.” It’s not something that we’ve editorially pushed or featured forward. It is something that people have found, and they keep viewing that darn video. It’s just amazing to me. So this is part of it which is what I love about, well, it’s true of TV, but what I love about the web and video experience on the web, you’ve got your Nielsen ratings right there. The Google Analytics is going to tell you how many people watched that video that you just cited today or in the last 30 days and the amount of time they spent on it and if they exited. So from a programming standpoint, it’s kind of thrilling to be able to program something and just watch it happen like make a toy out of cat hair, which is the featured “Pick of the Day.” I’ll be able to see what people thought right away. I can go to Google Analytics right now and find out the answer. It’s amazing.
ANDELMAN: Some of them are very funny. I have a question that came from the web chat. I’m going to paraphrase this a little bit.
CHAO: Sure.
ANDELMAN: Coll wants to know if there had ever been a time that you didn’t know how to do something, and how did you eventually find the solution? And I guess that would be before wonderhowto.com.
CHAO: That’s a good question. I’m a guy who’s got kids, and I’m from New Hampshire. A potato gun is something that is really a phenomenon from farms. So if you’re raised on a farm, you know how to build a potato gun. The potato gun is a very simple concept. It’s PVC pipe that you stick a potato into, and it’s got a chamber. You stick hairspray into it, and you ignite it with a barbecue lighter, and it shoots out a potato at 200 to 300 miles an hour. And it’s kind of a thing that farm kids do. I was raised in rural New Hampshire. It’s what you do. It’s not akin to NRA gunmanship. It’s just kind of a toy that you build that’s very fast and could be very damaging, but it’s kind of a toy that you build when you’re 13 or 14. So the answer to your question is when I was 13 or 14, there was barely television, but there certainly wasn’t Internet video, and there certainly wasn’t a robust kind of DVD tutorial market of DVDs for sale. So I had to go and track down friends who knew about the potato gun because while I’d seen it demonstrated, I didn’t know how to build it, and I had to do it the old-fashioned way. I had to call friends and say, “Hey, who’s built a potato gun?” And then I had to go to the dad, and the dad would tell me how to do it. And that is the normal process in life. On the other hand, these days you could look up potato gun on wonderhowto.com, and you’d have an answer and not have to go ask the dad, I suppose.
ANDELMAN: Eric Smith in the web chat has a question: “With the advent of so many video-centric web sites, both entertainment and now how-to sites, how do you plan on marketing your site so that it stands out from the crowd?”
CHAO: Eric, that’s a very good question. It’s kind of the challenge in the next year for me.
ANDELMAN: Well, your first answer, of course, is “I’m going to go on Mr. Media and have a live conversation.”
CHAO: That is absolutely correct! There’s no way to get around the fact that the best publicity and the best marketing is actually non-paid marketing. It just has the most integrity to it. It’s the fastest. It’s the most credible. It’s your default choice. Even if you had a billion dollars, you wouldn’t say, “I want to spend a billion dollars.” You want to say, “I want to create a really good product that people pass around, that people want to write about.”
So to answer your question, Eric, the first stop is to be able to get to the chatter class, which are people like Bob or The New York Times or BoingBoing or whatever it is, the people who control the media. And now the great thing is the media is more diffused. It’s not just The New York Times and The Wall Street Journal. There’s a number of influential people out there like BoingBoing, like Mr. Media, etc., etc.
The first trick or task is really to, of course, make a good product. And the second thing is to really work on issues of publicity and press and spread the word that way. As an example, there was a New York Times piece on January 31, and then that one was picked up by BoingBoing the next day, and a press release followed. So that’s really the start of it. And then there are all these tools. You could buy links, you can buy traffic, you can create stunts that get publicity, you can have a very smart advisor like Todd Beck and then he’ll help you figure it out, you can write to blogs, you can make playlists for the person who runs Technorati. So I guess the choice, because there’s a lot of ways that you can pay for traffic and marketing, the choice is really to talk to the people through the different media, whether it’s blogs or hard copy in old media, and get the word out. That’s probably the best way.
ANDELMAN: What’s the start-up investment dollar-wise between you and your partners? And I know you have a venture capital firm that’s behind you.
CHAO: Right.
ANDELMAN: How much are we talking, Stephen?
CHAO: Okay. Well, I won’t disclose the amount that the venture capital firm put in only just cause I choose not to. But I will tell you that never having previously invested in a start-up Internet site, I thought it was really kind of interesting. Namely, we had spent approximately $500,000 to start up the site. Now that means we had two full-time programmers going probably for a year. We had really researched the world of how-to. Before we opened up, we had found tens of thousands of videos on 600 to 700 different servers. So in terms of walled gardens, we had sourced 600 to 700 walled gardens who really had true expertise in how-to. So we had kind of done our market research, and we really had kind of really well done our programming, our coding, and stuff like that. This was before we had a marketing plan. This was before we actually launched it live without password. We did launch it under our own funds. It was before we bought all the traditional kind of things that cost money like E & O insurance and stuff like that and heavy legal stuff that you need to do to be properly protected.
We spent half a million dollars to start up the business. We had not marketed. We had not done all of the things to be entirely street legal, but the great thing about that is, while that is a lot of money, it’s not a lot of money considering the fact that you can, if you build a smart business model, you can scale up, and the sky’s the limit. It’s the kind of really wonderful thing about the media, which is that if you build it properly, your ability to scale is kind of unlimited, and the Internet is a form of the media or certainly this particular wonderhowto.com. So the answer is probably a little bit more than it takes to open a restaurant or a dry cleaner but less than it costs to open a brick and mortar business by a country mile. It’s really been a fascinating process. It’s not horribly expensive to start an Internet business, which is why there are so many competitors out there cause the barriers to entry, at least in terms of capital, are pretty small.
ANDELMAN: I have to say I was stunned to hear that you had spent $500,000, pre-launch. That’s astounding to me.
CHAO: Astounding a lot or little?
ANDELMAN: It sounds like a lot.
CHAO: It is a lot.
ANDELMAN: It is a lot. I think if somebody invested $5,000 in Mr. Media, we’d probably own Microsoft. So if you guys are looking to invest further…
CHAO: To speak to that point, $500,000 in truth is more than most entrepreneurs will invest. I think that the standard number that you hear is anywhere between $150,000 and $300,000. We decided to go over that only because we were extremely picky about certain things, and we went through fully three redesigns, soup-to-nuts redesign, before we were ready to open it. There’s some pickiness to what we did that we didn’t have to spend that much. But again, in the scheme of things, we’re pretty happy with the product, and we’re very happy with the wonderhowto product. So we’ll see what happens, but we just said, “That’s the threshold. We’re going to spend that much money before, and we’ll spend as much as we need to be really happy that when we’re ready to open, it’s a full representation of who we are.”
Click Here to Keep Reading!
© 2008 by Bob Andelman. All rights reserved.
Labels: 'N Sync, BoingBoing, Darren's Dance Grooves, Jane Fona Workout, Mike Goedecke, Naked With Photoshop, NRA, potato gun, Stephen Chao, Sudoku, The New York Times, Todd Beck, WonderHowTo.com, YouTube
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Stephen Chao, WonderHowTo.com web entrepreneur, former Fox TV president: Mr. Media Interview, Part 3
Return to Part 1!
Return to Part 2!
BOB ANDELMAN/Mr. MEDIA: Stephen, is there another source of revenue besides the ads on the site?
STEPHEN CHAO: That’s a good question. Yes, our business model is advertising-supported. That said, we need a certain threshold of traffic before we can become profitable. I think that, certainly in making the business plan, we were very much intending to monetize it in a couple of different ways. Namely, the real virtue of the site right now from an advertising perspective is unlike Google AdSense and keywords where you have contextually perfect ad placement in a text-based website, in video sites, you kind of have random tags and nonsense and really kind of unreliable metadata. Because each video that we have is in one of 36 categories and 407 sub-categories and because it’s curated by a human curator you know the video is the real deal as opposed to a piece of junk or spam or a broken link or whatever. An advertiser can specifically buy a sub-category and a sub-category could be cat toys, and they could buy that specific placement with complete precision. That’s somewhat or very rare in the video world right now. So we have that going for us that we’re really contextually perfect information from an advertiser point of view, but beyond that, sorry for this. My long-winded answer is we do have in our business model lead generation, and I think down the road, we’ll be able to have direct e-commerce. So if you’re in the mood for making a cat toy, we’ll be able to link you to whatever. If you want to purchase a cat or a toy or something, we’ll be able to link you to that down the road. But that’s not in the plan for another year or two years.
ANDELMAN: How much time is in the plan to earn back the investment? And we’re talking about more than $500,000 that’s been invested in this.
CHAO: Substantially more.
ANDELMAN: Yes. You didn’t speak to how much the VC firm put in.
CHAO: Right.
ANDELMAN: How much time do you have to start making the investors happy?
CHAO: Start laying off people? Yes. I think if everything went the wrong way and zero revenue came in, we’d have two full years of life. Now, you’d know after a year that things are going pretty badly if you have zero revenue. But I would say that if nothing happened properly, we’d have more than two years of life. And so I think that, in my opinion, and I’m only one person, although the CEO of wonderhowto, in my opinion, I think that we should not have a problem. But to answer your question a second way, which is, “Do you intend to get a second round of funding?” which is kind of traditional in the Internet business, which is you get the first round then the second round, and my choice would be to get one round and call it a day and be cash-flow positive before the end of the funding runs out.
ANDELMAN: I can tell you that I’m following as we’re talking, there’s some discussion in the web chat that accompanies Mr. Media. And Coll says “$500,000 on an Internet site seems kind of high, but that you must know what you’re doing.”
CHAO: Coll, you’re giving me way too much credit. It’s what we were comfortable with. It was simply a gut-check, which is, “Are we happy with the representation of the site? Is it creatively what we want it to be?” Obviously, at the $250, $300, the $400 mark, we said no. We’re not happy with it, and then at the $500 mark, we said, “You know what? We really love this site now.” So there is no right or wrong till it’s over or till it keeps going. So it remains to be seen.
ANDELMAN: And she has another question here. She wonders: “Are you guys selling direct advertising, or are you working with a…”
CHAO: Scripps, which owns Do It Yourself network and Food Channel and HGTV, is actually doing the selling.
ANDELMAN: Coll was asking if you had to convince the advertisers that the site was worth advertising on. It’s like the Internet. It operates in a different way.
CHAO: Well, even if we didn’t have Scripps, there would be just any number of ad networks that would fill in the blanks.
ANDELMAN: Right. I know with Mr. Media, we use Google AdSense. We use Amazon Associates. There are a whole bunch of them out there that are kind of invisible to people who just surf the net, but people who are putting up content and looking to get a return, there are a number of ways to do it. Chris came in a little late, and was asking how you’re distinguishing WonderHowTo. There is a site called monkeysee.com. I think one of the things that’s different between WonderHowTo and MonkeySee.com is that they are creating content as opposed to…
CHAO: That’s correct. We point and link to every site out there. We don’t, ourselves, make how-tos. So, for example, there’s a MonkeySee out there. Last week, I just sat down with the people from ExpertVillage, which is perhaps the biggest or one of the biggest in the how-to space. They produce an enormous number of great how-to videos. So we actually have discussions and agreements and partnerships with all of the people out there that we can possibly get to. So, again, we connect to 600-700 different sites. Monkeysee and ExpertVillage are two of those 600-700.
ANDELMAN: Eric Smith had another question. He says, “I notice that many of the videos on your site take you to a third-party site. How do you monetize that, and how do you address copyright issues?”
CHAO: Some of the sites are very happy to have us embed their video. For example, a number of sites have called us up and said, “Please run our video inside, please carry us because that way we’ll be featured, we’ll get on ‘Pick of the Day,’” stuff like that. And so, for example, Sclipo and 5Minutes.com and ExpertVillage are very comfortable with us embedding it. In some situations, for example, if there is a taxidermy.com or there’s a really good site that one, doesn’t have an embeddable player and two, we just haven’t reached them or connected with them individually, we just connect to them. So you come up with squirrel taxidermy, you click on that, it takes you to a window that allows you to get onto that taxidermy.com third-party site.
To answer your question, if it’s an embedded video, for example, ExpertVillage, who we’re very good friends with, we play their video inside of WonderHowTo because they have a lower third that is a transparency. Each play on WonderHowTo counts as a unique traffic for them and as a view count. So they monetize that piece of traffic when it’s played inside of WonderHowTo, and that’s why people are happy for us to embed their particular video. But to answer your question about the third-party ones, the third-party ones you end up on a third-party site. Would we put pre-rolls in front of somebody else’s video? The answer is no. We happen to make our money very simply from the banners in the frames that are around our site. We don’t invade anybody’s player.
ANDELMAN: See Stephen, when we started out, you probably thought I was going to spend the whole time being salacious and talking about Fox and Murdoch, but I just wanted to get that out of the way.
CHAO: I can respect that.
ANDELMAN: If you had to make a how-to video, what could you teach people to do?
CHAO: Well, let’s see. I haven’t personally made a how-to video. I’ve thought about it because then I’d post it to wonderhowto, and I’d probably give it prominence, but I guess my answer is I show them how to make a really, really first-rate taser-powered potato gun. There is a lot of art and skill to the making of a good potato gun. So I guess that would probably be it, not because there’s a need, because there are a lot of potato gun how-tos out there that we index. It’s mostly just to emotionally get it off my chest. I suppose I’d make it because I want to make the best potato gun tutorial there is. That’s probably what I’d do.
ANDELMAN: I want to say that I’m watching as we talk here. I’m looking at a lot of things on the screen, and it seems like you made the right choice going into online media. I just saw a news flash that the parent company of Variety just put it up for sale. They want to get out of the print business.
CHAO: No kidding.
ANDELMAN: No.
CHAO: How much was the price?
ANDELMAN: It does not say, but it’s interesting that the parent company of Variety also owns Broadcasting & Cable, Multichannel News, and Publisher’s Weekly. So that’s going to be something to really keep an eye on. I don’t want to get off-track here too much, but I was kind of surprised by that.
CHAO: I come from television, of course, and I think that television and cable will have a long, long life, of course, but it’s going to be nibbled away at certainly by the Internet, and I think that the internet experience just keeps getting better everyday, whether it’s from a content website point of view, like, wow, there’s this great WonderHowTo to go to or simply because the technology of the streaming of the parties that we connect to simply gets better, and it becomes high definition, and it’s a lot less time waiting time for something to download, and there’s no jitters and jatters between the streams. It’s just a pretty thrilling experience and kind of the first inning out of nine innings of watching video on the Internet. It’s just really, really good. It’s really good now in the first inning. Just imagine how good it’ll be by the ninth inning, and that’s what is really kind of fun for me.
ANDELMAN: I can remember when it would crash your computer, and it was just terrible.
CHAO: Terrible.
ANDELMAN: A lot of people today don’t really realize how bad it was five years ago, let alone seven years ago.
CHAO: Five years ago. Before YouTube, it was like, okay, I saved the file, where is that file on my hard drive? And you just search, and it’s like horrible. So no, in the last three years, of course, you can witness the transfer in terms of the advertising dollars that go from cable and broadcast to the Internet, but in every direction it’s going that way. Namely, the viewing experience is going to be better, the advertising is going to be better, there’s going to be more Internet broadband connections. It’s just nice. Nothing wrong with television, but it’s awfully fun to have Internet video.
ANDELMAN: Eric Smith has another question. He wants to know if you give users the ability to upload their own video.
CHAO: That’s a very good question. The answer is no. The submission process is it’s kind of like Digg, which is, if there’s a link that you like, submit the link, and we’ll connect to it. We don’t actually choose to allow uploads right now, and I think we will in our future, but right now, there’s a business model issue. The cost of hosting and streaming a video is very, very expensive relative to the revenue you get in for one person or a thousand or a million people viewing that. Although I’m not state of the art, I don’t think YouTube has entirely figured out a way to make their revenues bigger than their costs, and I think this is a basic, basic problem that will be solved by technology and time within a year or two, but right now, our goal is really to provide the best results, and in order to provide the best results, we said, you know what? We’re going to point, search, and index to everything. We’re not going to host and stream. So the answer is right now no, in our future, yes.
ANDELMAN: Is this a full-time gig for you now, and will this company spin off other sites, or is it just going to be this site for the time being?
CHAO: That’s a pretty good question. I thought you were going to frame it as “… and do you have any time to go surfing?”
ANDELMAN: No, no. I try to move on.
CHAO: I don’t let go. I find it to be the most thrilling education for me in a long time. I kind of look at the things that really shocked my brain and made me learn more, and there’s a few steps that have shocked my brain. One was actually going to business school because I didn’t have any idea what accounting was even when I went into it so that kind of shocked my brain in a lovely way. The second was having kids. That completely shocked my brain in a lovely way. And I’d say the third is really starting up an Internet business. It’s just such a refreshing change in all respects in terms of how the medium works, how you get traffic, and all the technology challenges, that I’m just totally happy. So the answer is it’s a full-time job. Is there anything in the future? I kind of really, I guess I’d answer it the way Coach Belichick would answer it, which is, well, when I complete this job, I’ll talk about the next job, but I haven’t completed this job yet.
ANDELMAN: Wouldn’t Belichick answer by putting someone out with a video camera spying on what the other guy is doing? I thought that was his answer.
CHAO: I have so much learning to do. There’s so much fun in this site. There’s so much searching and index, there’s so much community building, there’s so much… Part of the fun of WonderHowTo for me is that it’s just pure intellectual curiosity that’s just unrestrained. The idea that I can do this and maybe get paid and maybe have the company worth a lot is a real gift. This kind of wasting of time watching video is what I do in my spare time so the idea that there’s actually a business behind it is ice cream on top of the pie. It’s just unexpected. So no, I have no plans to do anything but this.
ANDELMAN: I’m laughing. I was about to say goodbye, but I’m laughing because there’s conversation online. Chris has picked up on my comment about Belichick, and he suggests that Bill Belichick should do a “How to Cheat in Football” video.
CHAO: I think the Giants or the NFL should come up with “How to Catch Somebody Who’s Cheating in Football.” I want to know how they caught the guy who was operating the camera. I think that comparing myself to Bill Belichick is probably wrong in so many ways that hubris would strike me dead. So I don’t know. I’d have to pick a different analogy.
© 2008 by Bob Andelman. All rights reserved.
Return to Part 2!
BOB ANDELMAN/Mr. MEDIA: Stephen, is there another source of revenue besides the ads on the site?
STEPHEN CHAO: That’s a good question. Yes, our business model is advertising-supported. That said, we need a certain threshold of traffic before we can become profitable. I think that, certainly in making the business plan, we were very much intending to monetize it in a couple of different ways. Namely, the real virtue of the site right now from an advertising perspective is unlike Google AdSense and keywords where you have contextually perfect ad placement in a text-based website, in video sites, you kind of have random tags and nonsense and really kind of unreliable metadata. Because each video that we have is in one of 36 categories and 407 sub-categories and because it’s curated by a human curator you know the video is the real deal as opposed to a piece of junk or spam or a broken link or whatever. An advertiser can specifically buy a sub-category and a sub-category could be cat toys, and they could buy that specific placement with complete precision. That’s somewhat or very rare in the video world right now. So we have that going for us that we’re really contextually perfect information from an advertiser point of view, but beyond that, sorry for this. My long-winded answer is we do have in our business model lead generation, and I think down the road, we’ll be able to have direct e-commerce. So if you’re in the mood for making a cat toy, we’ll be able to link you to whatever. If you want to purchase a cat or a toy or something, we’ll be able to link you to that down the road. But that’s not in the plan for another year or two years.
ANDELMAN: How much time is in the plan to earn back the investment? And we’re talking about more than $500,000 that’s been invested in this.
CHAO: Substantially more.
ANDELMAN: Yes. You didn’t speak to how much the VC firm put in.
CHAO: Right.
ANDELMAN: How much time do you have to start making the investors happy?
CHAO: Start laying off people? Yes. I think if everything went the wrong way and zero revenue came in, we’d have two full years of life. Now, you’d know after a year that things are going pretty badly if you have zero revenue. But I would say that if nothing happened properly, we’d have more than two years of life. And so I think that, in my opinion, and I’m only one person, although the CEO of wonderhowto, in my opinion, I think that we should not have a problem. But to answer your question a second way, which is, “Do you intend to get a second round of funding?” which is kind of traditional in the Internet business, which is you get the first round then the second round, and my choice would be to get one round and call it a day and be cash-flow positive before the end of the funding runs out.
ANDELMAN: I can tell you that I’m following as we’re talking, there’s some discussion in the web chat that accompanies Mr. Media. And Coll says “$500,000 on an Internet site seems kind of high, but that you must know what you’re doing.”
CHAO: Coll, you’re giving me way too much credit. It’s what we were comfortable with. It was simply a gut-check, which is, “Are we happy with the representation of the site? Is it creatively what we want it to be?” Obviously, at the $250, $300, the $400 mark, we said no. We’re not happy with it, and then at the $500 mark, we said, “You know what? We really love this site now.” So there is no right or wrong till it’s over or till it keeps going. So it remains to be seen.
ANDELMAN: And she has another question here. She wonders: “Are you guys selling direct advertising, or are you working with a…”
CHAO: Scripps, which owns Do It Yourself network and Food Channel and HGTV, is actually doing the selling.
ANDELMAN: Coll was asking if you had to convince the advertisers that the site was worth advertising on. It’s like the Internet. It operates in a different way.
CHAO: Well, even if we didn’t have Scripps, there would be just any number of ad networks that would fill in the blanks.
ANDELMAN: Right. I know with Mr. Media, we use Google AdSense. We use Amazon Associates. There are a whole bunch of them out there that are kind of invisible to people who just surf the net, but people who are putting up content and looking to get a return, there are a number of ways to do it. Chris came in a little late, and was asking how you’re distinguishing WonderHowTo. There is a site called monkeysee.com. I think one of the things that’s different between WonderHowTo and MonkeySee.com is that they are creating content as opposed to…
CHAO: That’s correct. We point and link to every site out there. We don’t, ourselves, make how-tos. So, for example, there’s a MonkeySee out there. Last week, I just sat down with the people from ExpertVillage, which is perhaps the biggest or one of the biggest in the how-to space. They produce an enormous number of great how-to videos. So we actually have discussions and agreements and partnerships with all of the people out there that we can possibly get to. So, again, we connect to 600-700 different sites. Monkeysee and ExpertVillage are two of those 600-700.
ANDELMAN: Eric Smith had another question. He says, “I notice that many of the videos on your site take you to a third-party site. How do you monetize that, and how do you address copyright issues?”
CHAO: Some of the sites are very happy to have us embed their video. For example, a number of sites have called us up and said, “Please run our video inside, please carry us because that way we’ll be featured, we’ll get on ‘Pick of the Day,’” stuff like that. And so, for example, Sclipo and 5Minutes.com and ExpertVillage are very comfortable with us embedding it. In some situations, for example, if there is a taxidermy.com or there’s a really good site that one, doesn’t have an embeddable player and two, we just haven’t reached them or connected with them individually, we just connect to them. So you come up with squirrel taxidermy, you click on that, it takes you to a window that allows you to get onto that taxidermy.com third-party site.
To answer your question, if it’s an embedded video, for example, ExpertVillage, who we’re very good friends with, we play their video inside of WonderHowTo because they have a lower third that is a transparency. Each play on WonderHowTo counts as a unique traffic for them and as a view count. So they monetize that piece of traffic when it’s played inside of WonderHowTo, and that’s why people are happy for us to embed their particular video. But to answer your question about the third-party ones, the third-party ones you end up on a third-party site. Would we put pre-rolls in front of somebody else’s video? The answer is no. We happen to make our money very simply from the banners in the frames that are around our site. We don’t invade anybody’s player.
ANDELMAN: See Stephen, when we started out, you probably thought I was going to spend the whole time being salacious and talking about Fox and Murdoch, but I just wanted to get that out of the way.
CHAO: I can respect that.
ANDELMAN: If you had to make a how-to video, what could you teach people to do?
CHAO: Well, let’s see. I haven’t personally made a how-to video. I’ve thought about it because then I’d post it to wonderhowto, and I’d probably give it prominence, but I guess my answer is I show them how to make a really, really first-rate taser-powered potato gun. There is a lot of art and skill to the making of a good potato gun. So I guess that would probably be it, not because there’s a need, because there are a lot of potato gun how-tos out there that we index. It’s mostly just to emotionally get it off my chest. I suppose I’d make it because I want to make the best potato gun tutorial there is. That’s probably what I’d do.
ANDELMAN: I want to say that I’m watching as we talk here. I’m looking at a lot of things on the screen, and it seems like you made the right choice going into online media. I just saw a news flash that the parent company of Variety just put it up for sale. They want to get out of the print business.
CHAO: No kidding.
ANDELMAN: No.
CHAO: How much was the price?
ANDELMAN: It does not say, but it’s interesting that the parent company of Variety also owns Broadcasting & Cable, Multichannel News, and Publisher’s Weekly. So that’s going to be something to really keep an eye on. I don’t want to get off-track here too much, but I was kind of surprised by that.
CHAO: I come from television, of course, and I think that television and cable will have a long, long life, of course, but it’s going to be nibbled away at certainly by the Internet, and I think that the internet experience just keeps getting better everyday, whether it’s from a content website point of view, like, wow, there’s this great WonderHowTo to go to or simply because the technology of the streaming of the parties that we connect to simply gets better, and it becomes high definition, and it’s a lot less time waiting time for something to download, and there’s no jitters and jatters between the streams. It’s just a pretty thrilling experience and kind of the first inning out of nine innings of watching video on the Internet. It’s just really, really good. It’s really good now in the first inning. Just imagine how good it’ll be by the ninth inning, and that’s what is really kind of fun for me.
ANDELMAN: I can remember when it would crash your computer, and it was just terrible.
CHAO: Terrible.
ANDELMAN: A lot of people today don’t really realize how bad it was five years ago, let alone seven years ago.
CHAO: Five years ago. Before YouTube, it was like, okay, I saved the file, where is that file on my hard drive? And you just search, and it’s like horrible. So no, in the last three years, of course, you can witness the transfer in terms of the advertising dollars that go from cable and broadcast to the Internet, but in every direction it’s going that way. Namely, the viewing experience is going to be better, the advertising is going to be better, there’s going to be more Internet broadband connections. It’s just nice. Nothing wrong with television, but it’s awfully fun to have Internet video.
ANDELMAN: Eric Smith has another question. He wants to know if you give users the ability to upload their own video.
CHAO: That’s a very good question. The answer is no. The submission process is it’s kind of like Digg, which is, if there’s a link that you like, submit the link, and we’ll connect to it. We don’t actually choose to allow uploads right now, and I think we will in our future, but right now, there’s a business model issue. The cost of hosting and streaming a video is very, very expensive relative to the revenue you get in for one person or a thousand or a million people viewing that. Although I’m not state of the art, I don’t think YouTube has entirely figured out a way to make their revenues bigger than their costs, and I think this is a basic, basic problem that will be solved by technology and time within a year or two, but right now, our goal is really to provide the best results, and in order to provide the best results, we said, you know what? We’re going to point, search, and index to everything. We’re not going to host and stream. So the answer is right now no, in our future, yes.
ANDELMAN: Is this a full-time gig for you now, and will this company spin off other sites, or is it just going to be this site for the time being?
CHAO: That’s a pretty good question. I thought you were going to frame it as “… and do you have any time to go surfing?”
ANDELMAN: No, no. I try to move on.
CHAO: I don’t let go. I find it to be the most thrilling education for me in a long time. I kind of look at the things that really shocked my brain and made me learn more, and there’s a few steps that have shocked my brain. One was actually going to business school because I didn’t have any idea what accounting was even when I went into it so that kind of shocked my brain in a lovely way. The second was having kids. That completely shocked my brain in a lovely way. And I’d say the third is really starting up an Internet business. It’s just such a refreshing change in all respects in terms of how the medium works, how you get traffic, and all the technology challenges, that I’m just totally happy. So the answer is it’s a full-time job. Is there anything in the future? I kind of really, I guess I’d answer it the way Coach Belichick would answer it, which is, well, when I complete this job, I’ll talk about the next job, but I haven’t completed this job yet.
ANDELMAN: Wouldn’t Belichick answer by putting someone out with a video camera spying on what the other guy is doing? I thought that was his answer.
CHAO: I have so much learning to do. There’s so much fun in this site. There’s so much searching and index, there’s so much community building, there’s so much… Part of the fun of WonderHowTo for me is that it’s just pure intellectual curiosity that’s just unrestrained. The idea that I can do this and maybe get paid and maybe have the company worth a lot is a real gift. This kind of wasting of time watching video is what I do in my spare time so the idea that there’s actually a business behind it is ice cream on top of the pie. It’s just unexpected. So no, I have no plans to do anything but this.
ANDELMAN: I’m laughing. I was about to say goodbye, but I’m laughing because there’s conversation online. Chris has picked up on my comment about Belichick, and he suggests that Bill Belichick should do a “How to Cheat in Football” video.
CHAO: I think the Giants or the NFL should come up with “How to Catch Somebody Who’s Cheating in Football.” I want to know how they caught the guy who was operating the camera. I think that comparing myself to Bill Belichick is probably wrong in so many ways that hubris would strike me dead. So I don’t know. I’d have to pick a different analogy.
© 2008 by Bob Andelman. All rights reserved.
Labels: 5Minutes.com, Broadcasting and Cable, cheating in football, Coach Bill Belichick, Digg.com, Do It Yourself Network, do-it-yourself, ExpertVillage.com, MonkeySee.com, Multichannel News, potato gun, Sclipo.com, Scripps, Stephen Chao, Variety, venture capitalists, WonderHowTo.com, YouTube
¶ 10:43 PM 1 Comments Links to this post
Sunday, March 11, 2007
30 Rock: Alec Baldwin's YouTube Panda Moment
Labels: 30 Rock, Alec Baldwin, Panda, YouTube
¶ 3:22 PM 0 Comments Links to this post
Seed Newsvine
