The Power Of Video Creation with Jason Hsiao
I want to start the show with a question. Have you ever made a video for your company, product or services? If so, you already know the power of video and the effect it can have on your company. If not, you will after you read this. My guest has worked as a producer for MTV Studios and the Comedy Central’s Showbiz Show. He realized that there was a huge opportunity waiting for him to seize, so he did. Back in 2006, which in internet years is the Stone Age, he and some friends started Animoto. It’s a video creation platform that has amassed over a million users. He went forward to acquire partnerships with YouTube, Instagram, Facebook and many others. He’s here to show you how you can build a marketing machine around videos. Welcome, Jason Hsiao, to the show.
Thanks, Mitch. It’s a real pleasure to be part of the show.
I’m glad you’re here. You definitely qualify for Your First Thousand Clients. As soon as you hit that million mark I said, “I want to speak to this guy.” We’ve got a lot of people reading who would love to find out how they can get a million people buying their software, buying their services or using their products. Why don’t we start, Jason, with how you started? How did this all come about for you? Are you a native of the United States? Tell us that story as well.
We’ve been at this for many years now. My co-founders and I were working in the TV and film industry. We grew up in the Seattle area. We went to high school together and we went to college together at Dartmouth College back in the day. That’s fun that we started Animoto as friends and two of the guys are brothers. When we were working on TV, this was the early 2000s. While on one hand, we were working at our dream jobs, getting to work in entertainment was super fascinating. We saw how fast everything around us was changing. This was before the iPhone and before the hay days of Facebook and all that. Already you’re seeing these phones are getting smaller and smaller to the point where you can almost fit them in your pocket. It seemed inevitable that these things were going to have an internet connection and maybe even a camera one day. The excitement around social platforms was emerging.You can't build a product and think about the business stuff later. Click To Tweet
Back then it started with Myspace and then cloud computing, which from my nerdy technology standpoint opened up all sorts of possibilities. We could not stop thinking about how everything felt it was about to change. Our entire lives being fans of video, always creating videos and loving the magic of video. We knew video had to be a part of this big new future. We started working on this idea nights and weekends. We thought it was going to take a few months, but it took over a year to prove out this technology of rendering custom video frame for frame in the cloud. We eventually got it working and that convinced us, “We should quit our jobs and give this a shot.” Here we are many years later and certainly everything has changed in the last several years and video is everywhere. It could not be a more exciting time to be in. Things continue to change and video only seems to grow in importance. We are super excited to be part of this.
Let’s take a little time here to unpack what you said because you didn’t do it the way I would advise my clients to go about it. Here’s why. Number one, you identified a need for sure. Did you test the market? Did you try to sell this before you went and spent a year building this software? How did you decide that this was what you were going to do? How did you know that people were going to want it and even buy it?
We started this as total technology and product nerd. We were locked in the room seven days a week, building amazing cool technology that we got patents for and everything. It turns out half the stuff we built no one cared about. What happened when we launched was we started to have a little bit of everyone using us. To us, it felt super exciting because we didn’t even know exactly who was going to use this video-making technology. In the beginning, it ended up being a little bit of everyone. There were parents, businesses, photographers, travelers, realtors, churches, students, nonprofits, a little bit of everyone. It was super exciting in the beginning. It sounded like we’re onto something. When a little bit of everyone is using you, in some ways, it means no one is using you. Where that became painful for us is we felt without having that specific focus or that specific direction, we were being pulled in twenty different directions. In terms of running a company, building a product, not only was that challenging, “How do we prioritize our efforts when we’re getting many different requests and being pulled in many different ways?” It ended up manifesting itself into the product experience too where it became a bit of a patchwork quilt of a Frankenstein-type mess.
At some point, we had to step back and say, “Would we rather be good at a lot of things or should we try to be the best in the world at one thing?” The latter sounded much more appealing to us. As it turns out, to run a successful business that’s the type of focus you need to have. Those early days, I’d say we had a lot of false success because while we had a lot of people using us, we didn’t know what we were going after it. In some ways, it took us those years for the market to even shape itself. It ended up being great timing for us and that what we ended up picking and what we saw as the big wave coming is in a market that we could grow a business around.
We feel passionate about small businesses in particular needing video as part of their marketing strategy. How can we figure out how to empower small businesses to grow their businesses with video in particular on social media? That’s what we decided. We are going to be the best in the world in that. We not only said that but we literally built a whole new product from scratch with that focus. That we thought was going to take a year, it took us two of years. We built the product that we always joked like, “If anyone else built this product and we woke up one day and saw this, we would cry.” In some ways, it was the product that we thought would disrupt us if anyone else did it. That was what we thought was the video creation tool of the future based on drag and drop building blocks and starter templates that we call storyboards. It’s very much inspired by website builders, these graphic design templates like Canva and email creation tools like AWeber.
You did what I would call early market experimenting. It’s more like flinging spaghetti against the wall. You saw what was sticking and what was falling away and that’s when you formulated the idea to build this one very powerful platform. That is more common. That is the typical path that many of us as entrepreneurs take. The confirmation, how did that arrive? Is it when you finally released this thing that you had received much feedback on from other people? Did you feel as if you, as a team, knew exactly finally what the market wanted?
It required a lot of actual conversations with actual customers or prospects. That was a big learning along the way too. It’s easy for anyone to say, “We need to be customer-centric,” but for us to grow up from being obsessed with our own product and technology. To understand the day-to-day challenges of an actual customer, their needs and the jobs they’re trying to get done. We had hundreds of conversations, sitting down and understanding the world, the pains and the challenges of our customers before even starting to build anything. We took a lot of inspiration from these sister industries like websites and emails and stuff to guide our product vision. To understand how to best serve our customers, it was a ton of conversation. We continue to have them now in all different facets. We continue to do surveys and all sorts of focus groups. It was a lot of in-person conversations in the beginning. Making sure that we weren’t assuming we knew what they needed, but making sure that we heard from them what they needed.
I’m glad that we were able to get into this a bit because that’s the part that everyone needs to hear. It’s not as simple as, “I have a great idea. Let’s build it and make $1 billion.” It requires that constant churning and constant feedback. You guys certainly went through enough of that to get a good feel for what to do. Let’s talk about pricing. How did you start pricing the system once you first released it?Everything starts in a place that’s sometimes different than where it ends up. Click To Tweet
The one thing we did get right, in the beginning, is because a few of us, including myself, we were a product of the first dot-com boom and bust in the late ‘90s. The big lesson from that is you can’t build a product and think about the business stuff later. We did start with an actual business model and it was $3 per video and $30 for unlimited videos. What basically happened is we started to get more and more professional photographers are a proxy for businesses starting to use us. They started demanding all these things like, “We don’t want the Animoto logo. We need higher resolutions. We need commercially-licensed music and white label,” all these more commercial things, business-oriented features.
Back then, not that many people were charging for stuff on the internet. A lot of people told us, “Look at Google, look at Yahoo. Everything’s free. You guys would be stupid to charge for anything.” We had to have confidence in ourselves that if we build something of quality, people would pay for it. We saw SmugMug and Flickr had a $30 a year type thing. We knew we were in the ballpark and then we started looking around at some other more business-oriented products. For small businesses, they were in the $200 or $300. It was a little bit of thumb and finger in the air. It was enough to get us going to make sure that we are making real money in the beginning. Over the years, we’ve certainly done all sorts of price tests and stuff like that. Now, it’s $264 a year. When we started, it was $249. It hasn’t deviated that much. In some ways, we had a sense of what people might be willing to pay for something like this. We’re regularly doing tests and trying to optimize what we’re offering.
When you were starting out and one of the benefits of starting with a group of friends and starting when you’re young is that you don’t generally have a lot of fixed expenses. You probably don’t have children or you didn’t then. You probably didn’t have a wife. Nowadays, as we get older our life becomes more expensive. How did you manage your money back then? Did you raise money to build this business? Did you do it as you could on a shoestring?
We started off the latter on because we knew that even to be able to raise money, you have to have something to show for. We knew we were diving in something that was a pretty technically complex technology. To even start showing any type of traction, we had to have something built. To get that early prototype going, we spent nights and weekends while having a day job trying to get the technology proven. How we got through our first year once we convinced ourselves we were onto something is we each put in a chunk of money ourselves to pay us back over that year. It was a way to make sure that all four of us would remain accountable to each other. No one was doing anything stupid. Everyone was getting enough to pay rent, feed themselves a little bit, get some coffee here and there. It was minimum but it made us all feel good that we had a little bit of money, that everyone was taken care of. No one was not paying rent or something like that.
We gave ourselves a year to say, “Let’s see how far we can get in a year. Hopefully, we’ll have some traction and then when we go out and try to raise some money, we can say that this thing is of value.” In the subsequent years, we did a couple rounds of fundraising. We even got Amazon as an investor. All along the way, it was giving us one or two-year window and see how far we can get. I know a lot of folks I talk to they’re like, “Try to raise as much money as you can.” We were trying to raise the least amount we needed to get through those next few years because the more money you tried to raise, the bigger chunk of your company they want to take. We were pretty prudent along the way and we gave ourselves these windows of one or two years to take things to the next stage. Ultimately at some point, we made enough that we basically could continue to grow and run a cashflow neutral business. We weren’t dependent on funding except for if we saw opportunities to spend a bit more to grow faster. That’s basically how we started things on the financial front.
You did a great job and you did it the way I would have done it and the way I have done it. It’s exactly the formula that you said. I invested my own money to build Timeslips Corporation. My partner and I put in enough money to get to the point where we had a viable product. At that point, we cashflowed the entire business ourselves. We used debt financing to grow the company because we didn’t give up any equity at all that way. We worked with a local bank and we were able to get $500,000 of credit line. That credit line went up and down and up and down, but the bottom line is we never had an investor. For us it was great.
I love the way you think about it because now when I work with companies, one of the things I try to tell people is that investors don’t want to put their money into your company to pay you a salary. They want to put their money into your company so that you could grow the market. That’s what I see. I see people who say, “I can’t quit my job if you can’t pay me $150,000 a year,” and I walk away from those types of things. That to me simply means that guy doesn’t have any skin in the game at all. Let him take a mortgage on his house. Let him get his family to kick in some money before we put our money in. Let’s shift gears once again and let’s talk about technology. Back in 2006, the technology systems were so much different. Before we do, Jason, I want to note to readers. Jason, in 2006, server technology, rendering video on servers, those were hard drives back then. How did that go?
When we first built the original prototype of Animoto of being able to render custom video, these are 24 frames or 30 frames of custom frames of video a second. We did it on our own server, our own computer in the closet. We were like, “This is amazing,” and then we suddenly panicked because we were like, “This is great if one person wants to make a video, what happens if five people, ten people or 100 people?” We figured out how to do real-time rendering. Back then it would take an hour to render a video. If five or ten people all wanted to make a video at the same time, suddenly they’re waiting around five, ten hours. That’s not going to be a great business. Along then came cloud computing and we dove into that and learned everything we could. Luckily, we found Amazon as a partner. It’s not cloud computing in terms of storage, which is what a lot of companies use it for storing data or storing photos or stuff like that. We’re leveraging that compute power and rendering, putting to use the computational power of these servers. In those early days, we would sometimes scale and this is on Amazon Web Services. What folks might not know is a part of Amazon’s business is they offer a bunch of great tools for businesses, one of which is basically server capacity and/or you can pay for computers like electricity instead of having to have them yourself in your company.If you say and believe you're going to get something done, you're going to get it done. Click To Tweet
We had weeks where we would sometimes go from 30 servers to 3,000 or 50 to 5,000. There is no way a small company, in terms of a capital expense, would be able to afford 5,000 servers to keep in some room in their back office. It would be financially stupid too because you’re never using those 5,000 servers all the time. How amazing was it that right when we’re trying to figure out how to scale this business, this whole concept of scalable cloud computing came along? We could scale up and down by thousands of servers or computers as much as we needed and pay for it like electricity. That ended up how Amazon became an investor is they became such a great partner. For us, we were such a great case study of like, “Here’s exactly how a small business can scale and focus on what they should be focusing on, which is what they do best at in their business, not figuring out how to run servers in the back closet.” It all sounds a little bit nerdy and technical but for us, those were formative years and certainly to have the support of Amazon. It’s not like Jeff Bezos is hanging out with us every day having lunch, but the fact that they’re an investor feels great.
The prestige of having Amazon as an investor, that is super. It’s a big deal. The interesting thing though is about the fact that Amazon wanted to make you the poster child for cloud computing. Nowadays, they have plenty of others that they could have chosen. They could choose from thousands of people. My little company, we even host in AWS as well with one of our applications. Anybody could be that poster child now, but back then the timing was right. You seized the opportunity and congratulations on making that happen. Let’s also talk a little bit about the amount of power that 5,000 computers might potentially use. When I was venture-funded with one of my companies, we had a full server facility. We owned all of the hardware and we had all of the routers and the load balancers. We had guys that are running around in the middle of the night because something crashed and they had to go restore it and all that. Give us a feel for what it would have cost if you tried to do it the more conventional way.
If we’re scaling from any particular week from dozens of computers to potentially thousands, for your first, “Would you want to support those peak cases of thousands?” If you’re thinking of buying thousands of computers or servers, those are various degrees. We’re talking about an investment of hundreds of thousands of dollars and potentially into the millions if you’re trying to support some of those peaks. This is in the early days of Animoto. We didn’t have that money sitting around. We would have had to go find that money someplace and to raise that money in those early days we’re talking probably people taking a pretty healthy chunk of your company. It could have run up into the millions.
The fact that we could pay for exactly what we need, there’s always a little bit of buffer of anticipating for some of the high-time but we get smart with all that. The fact that we could pay for all that as we needed, meant that over those early years we’re probably putting hundreds of thousands if not millions of dollars towards things like smart people that build our team. Great developers and marketers instead of clunky server equipment that always seem to go out of fashion, out of date in a year or two and which always have technical issues and problems failing and all that stuff. The fact that we could focus on what we do best, which is the video side and growing our business and not having to have teams of people trying to maintain a server farm. That without that whole advent of cloud computing, we would not be here now.
For readers, Amazon went into the business of having a web hosting facility because they needed to prepare for Black Friday. It started out by Amazon saying, “Black Friday is our single biggest day of the year for selling. If people have to wait, they’re not going to buy from us. We have to invest in enough computing power to handle peak load on Black Friday at 12:00 PM.” That’s possibly the worst condition of all. Once they decided to do that, they realized that for the rest of the year for 364 other days, most of that gear was idle. That’s when they got the bright idea of, “Why don’t we rent out space in our virtual hotel to people who’d love to come and occupy bandwidth and get out there on the web?” Later on, the suite of apps started to develop and a whole operating system around AWS came about as well. Everything starts in a place that’s sometimes different than where it ends up.
We’re going to talk about marketing. That’s what you’re all about. Let’s begin with our readers. If somebody’s listening to this show and let’s say they have a small consulting company or a coaching company. They offer services to clients. They already know that they could record videos and that they can either turn them into courses or put them on Facebook or something like that. Where does the power of Animoto come in? Why should they even bother with your tool if they could turn on their iPhone and record as much video as they want?
Certainly, we see videos everywhere. Especially in the last couple of years, there have been many great studies and stats and tests to understand the exact power and the results of a video. Off the top of my head, there are some great stats like people recall six times the amount of information from a video than from text. After watching a video, 64% are more likely to buy a product online. What we’re talking about here in the world of Animoto is what we hear is the biggest need now is businesses are trying to figure out how to stand out on social media with video. If you’re producing your own content to sell or to educate, you can certainly turn on the camera.
When you’re trying to grow your business from a marketing perspective and to reach new audiences so that you can get new customers, find new prospects that is what we’re talking about. Those are the types of videos. Those videos that you see on social media, those are the types of videos that we’re talking about those businesses are telling us they need. These videos might have some photos, some text and they might have your logo. They represent your colors and your font. They showcase you, your company and your brand. Let me give you an example of the type of videos. These are not just company overviews, but they’re product demos, testimonial videos or event recaps. It may be an announcement of some sort, a newsletter or how-to videos. It may be a blog teaser or if you have a podcast, if you have a new episode like an episode teaser. There are many different ways that people can and want to be using video to educate, to explain, to announce, to reveal, to invite and to inspire. These are all the types of videos you’re seeing on social media. It’s not just that you talking about and explaining something off your camera. These are marketing videos.You may not get everything right along the way to success, but at least you are making stuff happen. Click To Tweet
I clearly understand the difference between a marketing video and one that is focused on trying to help somebody learn something. My question when it comes down to for me is that what would make a video created with your platform different than another marketing video?
Our whole world at Animoto is we’re about empowering folks with the power of video. A lot of the folks, particularly small businesses that we talked to, they’re saying, “I see video everywhere. I want to catch this video wave. I don’t have any experience and I don’t have any time. I also don’t have extravagant budgets like these big companies do.” Where we come in is we basically give folks this tool, which is a drag and drop, easy video creation tool to create professional videos. You don’t have to have any experience with creating videos. There are a couple of aspects of this. One is unlike a lot of other video editing tools out there, this is based on building blocks and drag and drop building. There’s no way to create a failed video. You’re dragging around these building blocks and moving stuff around. It’s almost like a toy, there’s no way to create a failed experience.
The other thing that we’ve done which is unique and inspired by the great companies like Squarespace and Wix, is we’ve created a whole collection of starter templates that we call storyboards. What we’ve been able to do is take all of our learning over the many years. All of our studying in what makes for successful video and pour all that wisdom and knowledge into these templates. A lot of businesses, if they had to create a video from scratch, they might not know where to start. We give them these off the shelf templates where they can say, “I love that video.” They open it up. They drag and drop, replace a few images with their own or replace the logo, change up some of the colors. In a few minutes, you have a video ready to go. That’s the difference is making it super simple. Drag and drop simple, having this whole collection of templates. It has all the best practices and what we see successful already baked into these templates. We’ve optimized for ease and optimized for success.
Templates are great. The problem with templates is that pretty soon if everyone is using them, they all start to look the same. The videos start to look the same. There’s another video with the same effects I saw on the ad I clicked on five minutes ago. How do we get to the point where we’re truly differentiating ourselves when it comes to marketing and particularly marketing videos?
Where we’ve separated ourselves, where we’ve looked at other template-based type products and industries. What we learned in talking to businesses is the way that you make sure that those videos all don’t look the same is you make sure that you build in that flexibility and that customizability. One of the most important things for businesses is to make sure the videos look like it came from them. It’s being able to make the videos longer or shorter so it exactly represents the content or the message that you’re trying to deliver. Making sure that it can capture the colors and the fonts that match your brand, that you can have your logo at the beginning or end of the video or in the corner of the entire video. You might be able to leverage it. You might be able to use a top five list of a template that maybe another company is. Once you start replacing it with your own brand image and your own content, it doesn’t look like anyone else’s video. Very quickly it can start to look like a video that’s unique to you and your business.
I will admit that I’ve had a chance to do a little playing around with your platform and I found it easy to use. I didn’t create any videos, I played around with the platform because I didn’t have the need, but I am going to go back and try it and I do want to try and create some as well. This has been informative, Jason. I want to thank you so far for all the information that you’ve provided. The next segment of the show is all about the way that you interact with us as people and as a company. What I’d like to do at this point is shift gears and talk a little bit about you. You’re a driven guy and you love what you do apparently. You clearly have been successful and you’ve made a future for yourself. You’ve created a future for yourself. What advice would you give others who are feeling like they keep struggling and are not making it? They try things and they work sometimes and mostly don’t. What advice would you give people that are in that place where they haven’t figured out how to make it happen yet?
There’s one theme that keeps coming up over and over in all the various chapters of my life and career and that’s this idea of reliability and dependability. What I’ve realized is where I was fortunate, lucky maybe, in my partners, my co-founders and in my coworkers is being surrounded by people that you can depend on, that you can trust. What I’ve learned is there are a lot of people out there who have ideas and who are super gifted at talking the talk, but at the end of the day, ideas can be a dime a dozen. What separates those the people with the ideas from the people who make stuff happen is the people who if they say they’re going to do something, it doesn’t take them saying it twice to make it happen.
I would say my piece of advice is if you can be that type of person where you are a person of your word, where you are dependable, reliable. Where you can be trustworthy and if you say you’re going to get something done, you’re going to get it done. You will also attract those types of people. Once you are surrounded by those types of people who are dependable, reliable and know how to get stuff done, then you’re doing stuff. You’re not going to get everything right but at least you are making stuff happen and you’re doing stuff. You’re not just talking. To me, that’s the best advice I can give. Think about reliability, dependability. Surround yourself with those people that you can trust who are the people of their word and can get stuff done. The flywheel, the momentum will all start happening when you are making stuff happen.The flywheel or the momentum will all start happening when you are making stuff happen. Click To Tweet
Readers, Jason says show up like a pro. Show people you’re reliable. Let people count on you and come through for them and you’re on the right path. This is a question about you and this is about some of the people in the world that you admire. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch or intense conversation with?
If I could take you up on that space and time dimension, I’m guessing most people would pick some super-accomplished or famous person in history. I would love to talk to my great, great grandson or great, great granddaughter because I’m interested in what the future is going to be like. I always think to myself, “Think how much has changed in the last years. Imagine what the next years are going to be like.” I would love to fast forward 100 years and I would love to ask my great, great grandson or great, great granddaughter like, “Tell me how your day is like. How has technology changed things? Have we cured cancer? What do you do at your job? How does it work? I’m fascinated. Is the world a better place, hopefully?” I am always fascinated by how things are going to change. 100 years in the future, I’d love to talk to my great grandson or great granddaughter.
What a great position to take. In fact, you’re the only one who’s ever done that. I love that you did it. On top of that, wouldn’t that be better than any conversation of a dead person?
I promise not to come back and take advantage of any stock investing tips or sport gambling things. I’m curious. I’m such a technology nerd. I want to know all the things that have changed in 100 years.
Onto the grand finale question, this is the change the world question, Jason. What is it that you are doing or would like to do that truly has the potential to literally change the world?
This is the theme of a lot of things I’ve talked about. Why I love how we’re focused on small businesses and I get to talk to entrepreneurs and stuff. There’s nothing more exciting for me than to see people with ideas and to see them make that idea happen. Whatever it is, a TV show, a business, a nonprofit, whatever gadget or anything. It frustrates me to no end when I see people with amazing ideas that can’t make it happen because I’m like, “That idea deserves to come to life.” If I had any legacy it’s being a part of as many people’s big ideas and adventures as possible so that all these great ideas that people have come to life. That’s the most exciting part of life to me is ideas becoming reality.
Jason Hsiao, The Enabler, has arrived. He is here to help all your ideas come alive. The way to do that is to go to Animoto.com and download the software and build the video to showcase your amazing idea. Jason, it’s been a pleasure having you on the show. I enjoyed our conversation. Thank you for appearing and I can’t wait until we get a chance to talk again.
Thank you so much, Mitch. It’s been a real pleasure.
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