Tuesday, January 6, 2009

Guilty as charged

During the past year I have been somewhat negative about the ability for young companies to build serious stakeholder value in the segment of internet video space so visibly pioneered by YouTube. My concern is that, despite plummeting costs, the value-add of recycling someone's proprietary content, or running adds against yet another silly pet trick was limited in an era of surging page inventory and limited innovation.

Yesterday, at Techaviv a gathering of Israeli entrepreneurs heard 3 companies present their offerings to a physical audience of nearly 50 people, plus a global audience of Techaviv members. One of the firms, Boxee, recently funded by Spark Ventures and Union Square Ventures, (HQ in NY and R&D in Israel) presented an innovative approach that automatically merges your personal digital assets with content available over the internet to present on your TV a greatly enhanced user experience. Complementing the merging of your data with external content is a social aspect where you are able to invite/follow your friends' media experiences.

The user experience seems neat in the demo (I have signed up for the alpha but not yet installed the service, so can't say for sure), but what really attracts me are three other attributes that are integral to building a wonderful business. The IP is built on top of the XBMC active open source community that minimizes core development expense, so they can devote their resources towards the application and UI (and license agreements with MP3 and other folk). Second, the company seems to be executing quite well on a low-cost viral seeding strategy hitting many influencer's and speaking at industry forums large and small. Finally, the small team seems totally driven and comes highly recommended.

I am not sure if this company will ultimately be successful. However, for a relatively modest amount of capital deployed against quite a large market opportunity, that interests many deep pocketed companies, it seems to be just the type of venture bet that the asset class should make.

One company is not enough to reform a skeptic; two though gives great pause. SundaySky is two year old company which has just released its initial product (company also started in Israel, and is moving HQ to NY), an infrastructure platform that enables a site to generate dynamic video on the fly. The promise is that professional quality video can be created for your site with no human intervention(other than professional services when you deploy the platform)...if this works, it will enable sites to substantially increase monetization of content or conversion rates for commerce; while lowering the costs associated with doing this. I am not yet sure if the business behind SundaySky will conform to the capital efficient model that is core to giving customers a true disruptive value proposition that I'm convinced will be embraced by true disruptor's, but at the next Techaviv session, the team will be presenting their solution and answering questions. SundaySky is funded by my friends over at Globespan Capital Partners and Carmel Ventures.

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