David Segura is the founder and CEO of Venice-based Giant Media. The company, founded in late 2009, is responsible for some of the internet’s most viral branded video content, including for Honda (Matthew’s Day Off – Ferris Bueller Super Bowl commercial), Dollar Shave Club (Our Blades are F*cking Great), and Air New Zealand (The Hobbit – An Unexpected Briefing). Giant Media has seen explosive growth since it’s inception: revenues in 2013 are set to triple last year’s already impressive $8 million haul. Previously, David served as the Director of Business Development at Comedy.com, an online publisher where he managed business development, partnerships, and traffic acquisition strategies. 

Tell us how you started Giant Media.

By the time I left Comedy.com I had spent a lot of time studying the content marketing space. This was not about how to create great content, but how to market long form or non-traditional video, ie, content that at least 30 seconds or longer. So that is the type of content that we’re really focusing on. It sounds funny, but most forms of online video spends are focused around pre-roll, which are snippets or commercials that run before the content you actually want to see. The most practical example is when you want to watch the NFL Super Bowl highlights and instead you have to endure an ad from some brand that you don’t really have the affinity for. I believe it has its place in the market, but it’s really outdated and is just a relic of the past.

So the way we’ve designed our product is that the video runs as a standalone placement that’s entirely user initiated and is very much choice based. So the whole concept is that you’d watch and consume an ad because you actually like the brand or you find the content to be favorable. That in turn requires the advertiser to create something that is actually entertaining, meaning that it is typically going to be longer than a 10 or 15 second spot that they’re forced to run against pre-roll.

Does it look like a traditional ad?

It looks more like content because there is no other form of monetization other than the ad itself. The business model on our side is cost per view (CPV), as opposed to cost per impressions. We’re trying to tie the billing back to engagement, which we think is more of a representation of what’s actually going on.

So do you track engagement by the length of time the user watches the video?

Yes, exactly. So what we do is we fire off a pixel when you click play, then we fire off another pixel at the 20 second marker. Only if you actually watch the content for at least 20 seconds does it become billable to the advertiser. We think that’s fair given that they’re trying to guesstimate not only whether this is something that people will watch, but also whether they’ll share it. Hence why billing should really be tied to those things.

What has the response been from the users?

It’s been great, mainly because its not being forced upon the user. The reality is we’ve been able to get quite a bit of scale and get video out there. It’s been a pretty instrumental part of many advertisers’ tool kits now.

Where do you distribute the video?

Across both mobile and desktop/internet. The way to think about it is that a YouTube embed may be wrapped around our technology and distributed and consumed across various websites.

How did you get the agencies interested in this?

What’s unique about Giant Media is that unlike some competitors in this space we actually have two forms of revenue. One is pretty straight forward, working with agencies and brands. Meaning that most of the big brands in the world, especially the Fortune 1000 that are our bedrock, want to work with an agency on record that handles all their media spending. The same thing applies to their creative concepts, such as commercials. So we obviously work with them. On the flip side, we’ve also built an API so that a media company could go to their clients and say that they have a social video product that is selling on CPV. Given where the market is and that people are obviously interested in social video and native advertising, it pretty much sells itself. What’s actually happening behind the scenes is that we’re fulfilling those orders for them unbeknownst to their clients. So the former is a direct sales channel, whereas the latter is white labeled. We support both.

Where are most of your clients based?

They’re global. For example, we work with Air New Zealand and we’ve done work in the UK too. Domestically there is a heavy LA concentration because our headquarters are here in Venice, but we work with a lot of folks in different markets too, such as New York and Detroit.

What did you do for Air New Zealand?

We do a lot of work for Air New Zealand and they spend quite a lot on social video. They like off the wall concepts, in other words, they do a lot of work with David Hasselhoff, Lindsey Lohan, Richard Simmons and just recently we did a campaign for one of their safety videos starring Peter Jackson and the Hobbit franchise. So that was pretty cool.  Sometimes it’s not even a safety video that they do, such as their recent video introducing the Skycouch to people. Our responsibility is to make sure that they get out of the gates strong and that they have enough momentum to sustain what they want to do. What Air New Zealand brings to the table is their own culturally zany perspective on things and obviously great content. They’re always trying to bring something new to the table, and that’s true for a lot of our clients.

Often, it’s not always celebrity integrations or comedy-based sketches. We’ve also done some dramatic and formulaic advertising that is more about the product. It really depends on the situation. We really see this as a broader market, rather than a niche where the brand is looking to get a celebrity involved or that is inherently funny.

How do you get people to watch the video?

We just make sure that the video is available. We use native placements on the mobile and desktop environments so that it is pretty hard to ignore. But we keep it choice based, meaning that we put it in front of as many people as we have to and get the click-to-plays to generate the minimum guarantee. If people like it enough, they will naturally share the video.

What are some of the lessons you’ve learned as an entrepreneur?

One of the things I’ve had to just get personally stronger in is that, although the fun side for me is sales, meeting clients, being in the road etc., the harder part has been managing folks. The most important asset we have in the company are our people, and so it’s been something I’ve had to learn over time – to really push ourselves and get the most out of folks, but also to keep it sustainable. One of our greatest challenges here is that on the upside we’re youthful, very aggressive and motivated to succeed. On the flipside, we’re youthful, aggressive and may not have all the experiences more traditional companies have had. So we’re just trying to figure out the best way to tap into those skills.

Raad is the CEO and co-founder of Lettuce, a simple and intuitive cloud-based order management system that enables small businesses to capture, track, and process orders in real-time. He is an expert in design and user behavior. His products, ranging from consumer goods to software, are award winning and top sellers in their respected markets. Lettuce is his second venture after successfully exiting his first startup. Check out Lettuce at www.lettuceapps.com. Raad can be followed @raadmobrem.

What inspired you to create Lettuce?

Originally my cofounder and I had a socially conscious dog toy company. It took off way faster than we thought it would and we were getting anywhere from 10-500 orders a day. This turned out to be quite challenging for us since we had a finite amount of cash and we needed to figure out how to scale and manage the orders in an efficient way. The first thing we did was hire people, which helped, but we realized we needed software technology to streamline the whole process. The biggest issue we had was that for each order we received, we spent about an hour per order just inputting the order information into our various systems, such as accounting, CRM, credit card processing, shipping etc. In effect, this meant retyping information six times, and with hundreds of orders a day, you’re basically screwed.

So we looked at solutions available to us, such as SAP, Oracle and NetSuite, but they were all beyond expensive. We also looked at other cheaper versions but they proved to be totally inadequate. Since we had a technical and design background, we decided to build the solution for ourselves. We spent about three months building the MVP for us internally. The system had two parts: the first was an order management system that would connect to the services we were already using, such as QuickBooks, CRM, inventory, FedEx, USPS, UPS, and credit card processing.  The second part was an iPad app so that instead of taking orders at trade shows using paper, we could process the orders in real time through the app. This reduced the entire order process from an hour per order to about two seconds. It was just glorious!

How did the other trade show exhibitors react to this?

They began to notice that our booth had no paper and started to look like a colorful Apple store with long tables and iPads. When they saw that we had automated the backend process, their reaction was pure shock. Then they would ask us to build them the same solution but we couldn’t since this wasn’t designed to be customizable. It was built internally for us, and it was also part of our competitive advantage. A month later, we started getting phone calls from people in different verticals, like the shoe or fashion industry, and they asked if we could make the software for them.

So all this got me thinking whether we were on to something. We did a lot of research, including going to trade shows guerilla-style as an attendee, talked to the exhibitors and ask them if they had this problem and how much they would pay for it. At that time we had our MVP and we showed them what we could do. They were blown away and I could see the pain in the businesses eyes. It was so frustrating for them and I wanted to change that.

That’s when we started to realize that this market was pretty big. I’ve always wanted to do something that would help others, which is why our toy company was socially conscious, and this was a bigger way to do that. Small businesses are the core of our economy and we need to build technology that empowers them.

How did you get your first customers?

That wasn’t too hard since we already had the relationships and a product. Since we built the product for ourselves, we had already found the product market fit. However, since this was just an MVP for us, we had to rewrite it in order to be customizable and scalable. We spent about a year on this process, and finished the base in January 2012, and launched in September 2012.

How was your experience at Launchpad LA?

Amazing! It was everything we could want and more. They would provide introductions and meetings with investors and mentors where we could gauge their interest. The best part was that we were in an environment with other startups and like-minded people, and the two of us were not alone. It was inspirational. They gave us great office space, they opened up their unbelievable network, and they gave us a lot of advice on things we were unsure about, like fundraising. Although we had an idea of how to fundraise, we had never done it before and they really honed that down to an art.

What things did you learn about fundraising?

Have a simple deck and understand what investors are really looking for in your slides. If you create a deck that is creative in everything but is out of order, investors won’t like that. You want to make it so easy for them so that it’s not a pain point to get to the next level. You don’t want slide seven to be in slide two. Also, I learned what a proper email should be. If your email is too long, they won’t read it. So you have to make it nice, short and sweet, which is really hard. And I get it now. These people are really busy and they get 150+ emails a day. It’s unbearable.

Finally, they are investing in the founders…granted the product and market is great. The investors “read” the founders to make sure we can grow a really big company. Be professional, be unique, make them like you, and know your stuff. If you don’t know your numbers or business, you will not get funded.

Well it must have worked since you raised a $2.1 million seed round.

Yes. CrossCut led, along with Double M Partners, Baroda Ventures, Zelkova Ventures, 500 Startups and a handful of angel investors, including Tom McInerney and Clark Landry. Our big focus right now is on testing. We told our investors that this stage is all an experiment and we’re going to do a ton of tests on things like which sector to target, what distribution models work the best, and how to tweak our product for more growth.

So do you see the startup journey being very experiment driven?

It depends on what stage you’re at and what type of company you want to be. Our goal is to be a very large company, and so at this stage we can afford to be very experimental. If we wanted to be a $50million company, we would have a shorter runway. But since we want to be large, our seed round is primarily focused on experimenting. So then when the time comes for our next round, we can say we tested 200 ways of acquiring a customer, 20 different markets, these are the top three markets to go after, this is our sales and marketing process etc. It has all been tested, analyzed and we just take the best of the best and we put more money towards that.

What have you learned as an entrepreneur so far?

None of this is really difficult. It’s not brain surgery. It’s a bunch of little things that you need to focus on. It’s like a golf. When I used to play golf, every time I played poorly it was because I would say to myself “I want to shoot par” or “I want to shoot 72” and I would think about that. Then whenever I did a bad shot, I would think “damn it, now I have to try so much harder to get to 72!” Then I started thinking about golf in terms of every individual shot, not even every hole. I just want to hit that shot really well, then I’d focus on the next shot, and I would get par or birdie. By the time I go through the whole course, I was shooting even or a little above or under par. It is the same thing with startups. You have all these big tasks you have to do. Break them down into the small little tasks and focus on those. You have one little thing done, and then another, and soon enough you’ll have the big thing done. When you focus on the details that way, you can really move at a fast pace. You obviously still have to think about the big strategy, but once you have the task to do, you go shot by shot.

Lastly, what inspired the name Lettuce?

It’s a pun: “Lettuce (as in let us) do it for you”. Plus everyone knows what Lettuce is and it actually symbolizes being fresh, growth, and good for you.

Jonathan is the founder / CEO of RadPad, an Amplify backed startup that is shaking up the rental market. He is a product guy with a strong intuition for building simple, easy to use mobile and web experiences. Jonathan has been part of teams that worked on very complex product features while working for MySpace, Edelman and eHarmony. Product’s he’s played an integral part of building have been used by more than 450 million users. RadPad is Jonathan’s second startup. Check it out at www.onradpad.com and on the App Store. Jonathan can be followed @jonathaneppers. 

Tell us about RadPad and how you came across the idea.

I’m a product guy, and have I’ve been building consumer web and mobile experiences for about five to six years. I had the privilege to work on some very complex product features at MySpace back in the good days when everyone had a MySpace account.While there though, I got the itch to start something so I left MySpace in 2008 to start a company for high school athletes. Unfortunately the idea was a little ahead of its time and we struggled to gain traction so I went back to the 9/5 world and took a job with Edelman Digital, where I worked on web and mobile apps. Then eHarmony called me one day asking if I was interested in helping them redesign their entire desktop product so I left Edelman because it was a challenge I just couldn’t turn down

So about a year ago I decided I wanted to change up my life a little and thought moving would help bring some needed change.. I started looking on Craigslist but it was such a scattered mess it made my head hurt. I looked on Westside Rentals but they charge $60 just to use their site. The other alternative was to hire someone to help me find a place. I was really frustrated at how much time and work it required just to find a decent looking place. I actually got mad.. I started thinking about what sort of experience I would want if I could build my perfect rental app. I had to be mobile focused because a lot of times when I’m out looking for apartments, I only have my phone with me. I also wanted photos – lot’s of photos. Why waste my time checking out a place that didn’t have a photo? So I got some of the smartest people I know together and in July 2012 we launched the started building our mobile app. In October, the three of us quietly launched our mobile app by announcing it to our friends on Facebook. By the beginning of January, we had hit 10,000 downloads.. We were getting a ton of feedback from people saying they had found their place through the app and were moving in. It was incredible having these success stories so early on.

This must have gotten the attention of partners and competitors.

It did. Almost immediately we got an acquisition offer from a competitor that we turned down because we felt like we would be selling out and what got us excited was hearing from people when they found their pad on RadPad. We quit our full time jobs, and raised some money in late 2012 from two really great investors, Tom McInerney and Chris Ovitz. Around the same time, we were getting interest from the guys over at Launchpad and Amplify. We took about a month to think about it but ultimately decided we’d join Amplify. We just really got a long great with Paul, Kris and Jeff.

What does RadPad offer landlords?

After meeting with a lot of local landlords we decided to focus on the small to medium sized guys. We identified three types of listers we think can really benefit from using RadPad. The first are listers who own rental properties, but also have fulltime jobs and manage the rentals they own themselves. The second are those who own multiple buildings and have a few hundred units but a small, in-house management team. The third are those people who are simply looking for a roommate. For all three, we found that the process of finding a great tenant was a real pain in the you know what.. Landlords get bombarded with emails from potential renters and the process is so inefficient. The landlord has no idea who the renter is, especially when it’s off Craigslist and the transparency between the landlord and renter doesn’t really become personal until they meet in person; and just to get to that point is a lot of work. Landlords will go through a mountain of emails and copy the same reply to almost everyone who sends them an email.

RadPad is focused on creating an incredible experience for listers from the moment they list a pad on the market to the day a great renter moves in. We make it very easy to create a listing using our mobile or desktop application, while also allowing listers to syndicate their place to other rental services. But what’s more exciting is what we do for listers once their pad hits the market. We help them identify and than qualify the best renters who have applied to their listing.

And how does RadPad make life easier for the renter?

One the biggest problems for a renter is that just finding an awesome place. They have to spend a lot of time looking through listings or getting in their car and driving around. This is work! This isn’t fun or easy. It’s an emotional experience. We looked at the biggest hassle for renters outside of finding a place and it came down to filling out rental and credit applications.

As anyone who has rented knows, the process of running the credit check, reviewing the application, and calling references normally takes a few days. We’re working on a very innovative way to improve this entire process and expedite the time it takes once you find a place to actually get it and move in. Did I mention we’ve filed a patent on this feature because we feel it could be a game changer.

How do you generate revenue?

There are a couple of revenue streams. First, it currently costs about $25 – $40 for a landlord to run a credit check and often, the credit check is non-refundable. Instead of asking listers to run the credit, which is how it’s currently done, we’re arming renters with the ability to run their own credit and share it with a lister once they find a place they want.. Second, in competitive rental markets like Los Angeles, knowing about a pad the second it comes on the market is a huge advantage. We’re going give renters who want this advantage a feature that will notify them the second a pad that matches exactly what they want comes on the market. They’ll have a time advantage over other renters.

For listers, we have a product feature that allows them to qualify and manage active renters who show an interest in their pad. It’s going to reduce the time and effort involved in managing their active rentals by making it more transparent, streamlined and efficient.

Tell us a little about RadPad’s syndication feature.

This is one of the features we’re most excited about. We noticed that for a lot of landlords, a point of friction was just listing creation. Most of them typically list on 2-3 sites. So we said, if you’ll list on RadPad, we’ll autocreate and syndicate your listing for you to these other sites for you. List once and be done!

It sounds like RadPad will be collecting some very valuable data on the local and national rental market. Do you have plans on using that data?

I’m glad you brought that up. On the new site we’re launching, we have a feature called price analysis. Many of the small and medium sized landlords have no idea how to price their place. We found that most go on Craigslist and look at listings in their neighborhood and get a sense for what other apartments in their neighborhood are renting for. So we give listers current market rental rates for 1, 2 and 3 bedroom apartments in their neighborhoods when they’re listing their pad. This feature is also going to help renters who have no idea what apartments are going for in areas they are looking.

 How do you maintain the quality of the listings?

To get a listing on RadPad we require a few, what we consider must have details about the listing. This includes a minimum of three photos, the address, price, bed & bath info as well as the listers name and contact info. You’ll never see a listing on RadPad without three photos. We’ve also started verifying listers who list on RadPad so renters feel more confident they’re talking to a real person, not a scammer.

A big thing we’re doing is allowing renters to easily self-report listings they don’t like, are misrepresented or have already rented.  It’s very important to us that our listings are updated, accurate and are in fact, still available to rent. We have an algorithm that runs daily and determines how to handle these listings and removes them immediately. We also force listers to renew a listing or we pull it down. This is only going to get better and better over time. We’re learning every day.

So currently you’re focused on the Los Angeles market?

Yes, we’re focused on LA right now. It’s important we get it right in our own city first before we start opening up in other markets. We do have listings in San Francisco but we haven’t done anything yet to officially launch there. Did you know LA is the second biggest rental market in the country? Just over 63% of our renters!

The rental season starts in February and really heats up by mid-May continuing in to September. We want RadPad to be in shape by end of April so that in the heart of the rental season we will have a solid product that is market tested. Thereafter we can take it to other cities across the country. LA is a great place to start because it’s one of the biggest rental markets in the country with 64% of households being renters. We couldn’t be luckier to be starting in this city. Once we get it right here we can scale out.

Have you developed any unique user acquisition strategies?

In Los Angeles, a lot of renters will get in their car and drive down streets in neighborhoods that they want to live in. Lawn signs are really a great way for listers to advertise their pad.

However, today’s lawn signs are a little more than a cheap, static piece of plastic with a  name and number. You still have a to call. What if we could build a yard sign that was not only ‘sexy’ and made of quality, durable materials but also allowed a renter to get all the info they needed before wasting time investing time in to calling the lister?

What’s really cool about RadPad’s mobile app is that it’s location based and anytime you see one our lawn signs, the pad will appear at the top of your feed. Since it has three photos and the required details to make a call on the listing, you can quickly decide whether or not it’s right for you. Listers also aren’t getting calls anymore from renters looking for a one bedroom when they’re offering a two bedroom.

We’re doing other things too but they’re super secret for now.

How have you enjoyed your experience at Amplify?

It took some time to convince me that the accelerator model was right for us. Mainly because I didn’t know if giving up stock to join was the right decision for us. I guess I had a preconceived view of what accelerators do for startups. I got a all from one of our investors and someone I have immense respect for Tom McInerney and he encouraged me to go over and meet with both Amplify and LaunchPad. I spent a good amount of time getting to know the teams that run both accelerators and I really connected well with the Amplify guys. I felt they had the strengths that I was looking for, which included the backgrounds of their partners and companies they had created We’ve only been part of Amplify for three weeks, but in that time I’ve never met so many investors, mentors and people wanting to help us. Everyday someone comes through here that we can meet, which is an opportunity I wouldn’t have had if we were still working out of my living room. So far I would say it’s definitely been worth it.

Brian Norgard is one of the pillars of the Southern California startup community. He has co-founded a number of successful companies, including Newroo (acquired by Fox Interactive Media), Adly, and now Chill, which have received millions in funding. He is an expert in building great internet products, assembling winning teams, and understanding user behavior. Follow him at @BrianNorgard.

Let’s start by outlining what you’re seeing and how it influenced the creation of Chill Direct.

Sure. First, thank you for your time. It’s always humbling when someone takes an interest in your work.

So there are really four factors right now that have influenced our thinking for Chill Direct.

First, we’re seeing social as a real distribution opportunity. We’ve had six+ years of Twitter and almost ten years of Facebook, and we’re finally starting to see how powerful social can be.  Not everyone has this power, but people those with organic voices are able to speak to audiences and really drive interaction.

Second, it is really getting cheaper and cheaper to create high quality content. The cost and quality of cameras and editing equipment is falling rapidly. The knowledge of how to create premium content is also improving largely because of the Internet.

It used to cost something like $30,000 a minute to shoot television. With the right crew and attention to detail, people can now shoot for far less than $1000 a minute. And that’s significant because it used to be only the folks who had access to big budgets and studio financing and fancy cameras ould make premium quality content.  But that’s quickly changing. I was at Warner Bros. a few weeks ago and was told about a project that was shot on an iPhone by a bunch young filmmakers and one of the studio executives said the quality was as good as some of the stuff they’ve financed not that long ago. So it’s a really really interesting time from a production standpoint. That’s hugely important.

Third, and probably the most dramatic shift in the landscape is the growth of Internet connected devices—tablets, phones, etc. And don’t forget connected televisions which are basically big tablets that will soon have gestural and haptic interfaces that actually work. Soon enough, this will radically change interaction and consumption patterns in the livingroom and beyond.

So if you look at distribution over the last one hundred years, we started with analog theatre and then moved into technologies with images and then moving images hence the motion pictures framing. In the 1950s broadcast exploded which gave way to cable’s zenith of the late 1990s. We’re now entering the digital age. Creators have a whole new set of opportunities thanks to Internet connected devices and distribution. And therein lies a secondary distribution change. We’re moving away from a scarcity model where there are only 150 channels run by a handful of multi-national media companies. Channels? What are channels? Those days are are dying. That’s like counting the number of Web pages. Nonsense. We’re talking about infinite opportunity. The true challenges will arise around the aggregation of attention.

The fourth change that we see is the emergence of communities in the participatory entertainment process. What I mean by that is we’re really starting to see that super fans have leverage in the entertainment process. This is affecting production as you’re starting to see communities emerge around funding, distribution and more. I am a huge believer in the power of communities. One of my angel investments AngelList is changing the venture capital through community. The power is immense.

How does Chill Direct fold into this evolution of entertainment?

Chill Direct is a community that gives filmmakers, comedians, musicians the ability to distribute and monetize premium video content direct to fans. We’re giving them full creative, pricing and rights control while at the same time giving them access to real-time data about everything impacting their project such as who is buying, where are they from, traffic conversion and more.

A real world example of this is how in 2011 the comedian Louis C.K. decided to sell his comedy special directly to his audience. It’s been reported that he made well into seven figures on downloads yet it cost him something like around $250,00 to setup, shoot and distribute the content. After looking at his special and talking to tons and tons of creators, we sort of through happenstance figured out a couple of things. The first thing, the advertising supported model for monetizing entertainment video is not the panacea.

There are certain classes of content it works extremely well for, but long-form content frankly suffers in this environment today. If you’ve just spent two years of your life shooting a film or documentary, where do you go if it didn’t get picked up by a traditional distributor or streaming provider? The answer is no one knows. There are a lot of people that may just put it up on a free streaming site but then realize that it depresses the overall value rather quickly.

So what we wanted to do is create an incredible product for creators that allows them to put their content in our blossoming community, price it, and retain full rights control. They own the content. It is their content. Then we integrate it into social through the Facebook Open Graph and build this beautiful story page for them. It’s a community page where people can interact, comment, share the trailer, purchase bundles of digital or physical experiences tied to the project, and participate in the story.

And I’m assuming you’ve built a powerful analytics tool for the creator?

Yes. The data is probably one of the most exciting parts of this. Studio executives for years have been paying millions of dollars for really rich demographic and cybergraphic information about audiences and how they consume the content and merchandise. We all know how important marketing is so we’re providing really rich analytics for the creators to have an edge.

What’s the business model?

We act as a partner in profit and have a very simple 70/30 split. No hidden fees.

 So what content on Chill Direct are you most excited about?

It’s hard to pick a favorite but we recently worked with an incredibly brilliant comedian, Maria Bamford. She’s doing a comedy special but wanted to do it on her terms, not on the terms the networks offered her. So she did a comedy special in her living room for her parents. It’s called “Maria Bamford: Special Special Special”. This gave her complete creative control which is a factor that’s becoming increasingly important amongst creators.

Another is a documentary called “Please Subscribe”, which looks at the story of YouTube yet isn’t available on YouTube. It’s a really interesting story about the career arc of a YouTuber.

Michael Urie from Ugly Betty and Partners is also doing a documentary. Another one that I love is the documentary called “Battlefield of the Mind” about soldiers returning from war with PTSD. It discusses the support, or lack thereof, they receive back home. It’s executive produced by the lead singer of Staind Aaron Lewis.

All these amazing projects are coming to us because the creators want a viable model. The audience is now everywhere – they could be in Sydney or Jakarta, plug in their credit card, and enjoy the content.

So a couple of product questions. Where is the content hosted?

We built all our technology from the ground up, and the creators would be uploading their content onto Chill Direct. The videos are embeddable and each video has a call to action around payment that can be embedded into your site, whether Tumblr, WordPress etc.

Does Chill Direct reserve any approval rights when distributing the content or is it an open marketplace?

It’s an open marketplace, but of course the conditions are that the creators own or have cleared all the rights – like any other user-generated video site.

Tell me about the merchandise sales that you support.

We call those bundles. These are both physical merchandise and digital experiences. Physical merchandise includes t-shirts, posters etc. Creators can pick a price, delivery date and clearly explain what it is that they’re offering. The fulfilment for these orders lie in the creators hands. Digital experiences would be skype chats, phone calls etc. to bring passionate fans closer to the experience. We really wanted to integrate these digital experience because Chill Direct is ultimately a support platform. There’s tremendous power in bringing the superfans involved in the process and bringing them closer.

How can entrepreneurship be taught?

From my perspective it comes down to three or four core skills. At the foundational level is the mindset. Part of this is to be observant. You have to be acutely aware of problems and pain points in the world around you. This allows you to spot opportunities and inefficiencies. In my class, I require the students to submit three problems every week. After a while they see how this is really just a muscle. The more they do it the better they get. By the end of the semester, after having submitted 50-60 ideas total, there are often some seeds for great businesses. So being observant is all about identifying those problems on a daily basis. It requires you to be mindful.

The other part of the mindset is to be self-aware. Ask yourself, “who am I as an entrepreneur?” “what are my skills, strengths, weaknesses, network, access to resources etc?”. Also, since at the early stages you’ll probably be relying on your own money to fund the project, you also need to consider what your risk threshold is. This is known as the ‘affordable loss principle’ and it essentially requires you to consider how much money you’re willing to lose if you fail. That will be different for every entrepreneur. So knowing your own risk tolerance and what your skills, network and access level is, helps you identify which route to go and where the probability of success is higher.

Once you’ve identified the problem and you understand what you bring to the table, the second step is all about process. You have to be able to do a feasibility analysis to determine which idea has the greatest odds of success. This can be quick and purely about analyzing the market size, whether there is demand, what the risks are (technology, financial, people risk) etc. This doesn’t have to be extremely intense because in the tech world things change rapidly. So a quick and dirty analysis is sufficient.

Thereafter, the third step focuses on execution, customer discovery, and doing a business model analysis to identify the key elements of the business. Consider questions like what kind of technology, people, money, business partners etc. will be needed to succeed? This is where you do customer discovery and get feedback from real world customers. Then you go build a product plan. In some teams that have engineers they can go out and build the thing.

What are the qualities for successful entrepreneurship?

Well the first, as mentioned earlier, is to be observant and self-aware. You have to be able to find the ideas and know your strengths and weaknesses.

The second is to persevere and be resilient. The Wall Street Journal recently did an analysis of a broad range of companies over the last 25-30 years and how long it took for the top companies to reach a $100 million valuation. On average it took seven years. Of course there are some outliers, like YouTube, Instagram etc. But if you take those black swans out of the picture, on average it takes seven years. It’s not something that happens overnight and you need to be able to be resilient over the long haul.

Thirdly, you need to have an open mind. You have to be able to stick with something but at the same time be open to change. This is where iterative thinking is critical.

Fourthly, you have to have a capacity to execute. You need to either be detail-oriented yourself or put together a team of people that are. Some entrepreneurs simply are not detail-oriented and so you need to know what type you are.

Finally, being able to connect with people is big. So much of innovation is a social craft so the capacity to be social is important. You don’t have to be an extrovert but you need to be able to build and sustain your social capital. You cannot be a lone wolf. Most big ideas were not solo efforts. They were sold that way for PR purposes.

Entrepreneurs often model themselves after the outliers like Zuckerberg, Jobs, Musk and Gates. But if they are outliers, is that a healthy goal

If people focus on the dollar value or the goal of running a public company they’ll never get there. They should rather be focusing on solving really big problems that can change the world. Jobs never cared so much about the money. It was more about his legacy and the product. Really successful people don’t think so much about the money. They think about how to allow what they’re doing to make an impact on the world. A lot of people chase the next startup idea for the money and raising capital when in fact there is no idea behind the scenes that is worth solving. There are so many problems in healthcare, education, poverty, the environment etc. that people are not being tackled and the focus is rather on something that is somewhat insignificant in comparison. I like to teach my students how to think. Go collect data on what the big societal problems are. You can approach it from demographic perspective, baby-boomer problems, energy etc. For example in Arizona there’s a great company called O Power. It’s a digital technology company based on research from Arizona State University psychology professor. They used mobile devices to reduce energy consumption. When you get a bill, it shows a happy face meter which shows how your energy bill compares to your neighbors. So it’s peer pressure! In one month consumption dropped 60%! There are so many ways to solve problems. That’s how new ideas will come forward. The key is to focus on real problems you care about and big ideas that have big markets.

What role does failure have for the entrepreneur?

I have mixed thoughts on failure and the current trend of ‘fail fast’. What I teach my students is that there are no rules. There are so many opinions and perspectives and every context and scenario is different. When people say fail fast, you want to take that with a grain of salt. Startups and entrepreneurship requires you to be in it for the long haul. If you don’t win, you’ll be disappointed and second guess yourself. If you fail repeatedly you risk planting the seed of doubt in your mind. You need some wins to build confidence. Some interesting research recently showed that you need about a 3:1 ratio of positive to negative thoughts. Otherwise you risk going into a downward spiral which leads to more toxic thoughts and further failure. However, you can’t be delusional and just think positively. You need results to back it up. Otherwise you’ll give up on yourself and others may give up on you too. It’s all a confidence game. This is a perspective I learned from a good friend and very successful serial entrepreneur, Jake Winebaum who is currently the CEO of Brighter.com.

What do your think of the current renaissance in entrepreneurship and how will it play out?

It’s partly driven by the current economy where younger people are having a harder time finding jobs but also because we’re in a new era of innovation. When you look at what has led to large revolutions in the past, such as the telephone, railroad, steam engine, and semi-conductor, there have been key technologies at the core of the disruption that have led to a huge spike of innovation around that. For example, with railroads, there’s the maintenance, support, servicing, train lines, food etc. So if you look at the entire ecosystem that was built around that single innovation, we can see that we’re in a similar stage now because of low-cost cloud, mobile, social, the SDKs, APIs etc. These tools are relatively so cheap that the engineer can build a product with a limited upfront investment. That opportunity has never existed before! Also, consider the new modes of instantaneous distribution. In the past you needed to get past gatekeepers to be successful. Today, although we still have gatekeepers like Google and Apple, there is still a relatively even playing field compared to historical times. Once you’re through something like the App Store, you suddenly have access to hundreds of millions of users. Also, the tools to build products are so readily available. If I want a map for my app, I can drop Google Maps in it. I don’t have to build that part. Having such basic building blocks makes getting off the ground not very difficult. The focus now is on solving a real problem, which is very exciting.

Tell us what you’re doing at USC.

Right now I’m the executive director of digital innovation at the USC Viterbi School of Engineering. So I’m co-leading the effort to create more startups out of our engineering school. We’re the second largest engineering school in the country and have approximately 6,000 engineering students and approximately 200 faculty / scientists in the school. We’re creating an Innovation Institute to offer programs and support for our students and faculty to create and launch startups.

What is the institute that you’re co-leading?

The institute is currently being setup and is designed to plant the seeds of entrepreneurship and innovation in all our students and interested faculty, educate them and provide the necessary resources and connections. Not all of the students want to be entrepreneurs and some will want to work for a Microsoft, Google etc. But by exposing every student to the fundamentals of entrepreneurship it allows them to decide whether it is something that interests them. So we’re bringing in rockstar guest speakers who have an engineering background and who have founded some of the largest tech companies in the world to come in and inspire the students. We will also offer the students a series of courses, workshops, summer bootcamps etc. where they learn how to execute their idea. From there, we provide resources for implementation and execution. We will offer support infrastructure with our own incubator and accelerator, and connect them with mentors, the local ecosystem, VCs, experts in marketing, legal and so forth. These are people who have done it several times and are able to give a few hours a month with students to give them feedback. Finally, all startups need early adopters so we help them boost their startups with the local USC ecosystem.

We feel pretty strongly that we have some of the smartest students and faculty in the world and if we can support them then the next big things that change the world can come out of USC.

David Carter is the co-founder of the Los Angeles-based startup accelerator, Amplify. As an entrepreneur, he has founded a number of successful companies, including Vertical Technologies (acquired by Zebra), Throughstar (acquired by iManage) and S5 Wireless. Along with other top tier venture funds and angel investors, David has also invested in various startups. He serves as an advisor and mentor to students at USC and the Entrepreneurship Advisory Board at Chapman University. David can be followed on Twitter at @_davidcarter. 

Tell us about your background and how you founded Amplify.

I’m a serial entrepreneur who has founded three tech companies, two of which were sold to NASDAQ listed companies. I also worked as an entrepreneur-in-residence for a Draper Fisher Jurvetson affiliated venture fund, and I have been active as an angel investor having made around 15 investments so far.

I’m somewhat new to LA, having lived here for two years and recognized LA definitely has something unique to offer. The media and entertainment industries and the ecosystems built around them are unmatched. During that time, I was introduced to Paul Bricault, who led the formation of Amplify. Paul is deeply connected to LA and has an impressive background that allows him to bridge the gap between entertainment and tech. He worked for many years at William Morris as Executive Vice President and Member of the Board of Directors, founded the Mailroom Fund and is a Venture Partner at Greycroft. So it was a natural fit for me to connect with Paul and eventually Richard Wolpert, Oded Noy, and Jeff Solomon as co-founders of Amplify,

What specific industries excite you the most?

I’m interested in mobile and businesses that are disrupting media and entertainment. There’s a lot to be done in those industries. Also, I’m extremely excited about next-gen small business finance. This space is so ripe for disruption. The internet, the recent crowdfunding bill, the loosening of regulations, and the access to cloud apps, are finally creating a system that allows for small transactions to flow efficiently. Small businesses can capitalize on this. Currently, the financial system is built to serve large corporations, not the small businesses. So I think over the next few years we’ll see more media, entertainment and venture capital leverage crowdfunding to raise capital. They will operate more as curators who deploy the capital to great projects. Fast-forward 10 years and I think the financing landscape will be so different from what it is today. You’ll be able to take some ownership in your neighborhood store, help fund them and share in the profit. This will unlock a lot of creative entrepreneurship that’s sitting dormant in society.

 Is Amplify playing in this space?

Yes. One of our companies, Invested.in, provides a white label crowdfunding platform. They’re doing a fantastic job. In the funding space there are a number of established big funding sites that have been very successful, but we need more. Each can serve a specific vertical. For example, Kickstarter has distinguished itself with media and entertainment and half of their projects come from those industries. Indiegogo is similar. But Invested.in provides the backend platform for anyone to create their own funding site. It’s really quite revolutionary.

 So who does Amplify like to fund?

We’ve done well with mobile and next-gen e-commerce, media, entertainment, web-service, and finance. But Amplify is not just consumer focused. One of our recent investments was for a startup that has created a bidding process for auto body shops. They’ve raised $100,000 purely off winning various business plan competitions around the country. They have a very compelling business model.

 What are Amplify’s typical investment terms?

For a company with two or more cofounders, we take 8% for a $50,000 investment. If it’s a single founder, it’s $35,000 for 8%. Interestingly, a lot of companies that are now seeking funding are already in revenue, have customers and traction.

 How easy is it for companies to get funding beyond the seed round?

Well competition for the Series A has increased dramatically. There are now many accelerators and angel funds who are doing seed rounds, and a large number of companies have been created over the last year or two. Meanwhile, venture capital has shrunk and so the pool of available funds for the Series A is much smaller with more companies competing and trying to raise together. I witnessed the dotcom days and it’s crash, 2008 and the current growth, and you can see how the pendulum swings. Right now it seems like it’s swung a little high but it’s not as reckless as in the past. It’s a more pragmatic approach but also a more competitive environment.

Lee Essner is an Entrepreneur-in-Residence at Idealab in Pasadena, California. Working with the legendary Bill Gross and Idealab’s Prototype Group, he is on the front lines building the next generation of internet companies. He is a startup advisor and serves as a mentor at Los Angeles-based accelerator Start Engine. Prior to Idealab, Lee founded AccessDNA (acquired by Informed Medical Decisions, Inc. in April 2011) and was the #2 executive at WeddingChannel.com (acquired by TheKnot.com in September 2006). Lee is an attorney, having worked for a number of years in the Corporate Finance and Mergers & Acquisitions Group at Skadden Arps as well as serving as the Assistant General Counsel for Mattel Inc. Lee can be followed on Twitter at @LeeEssner. 

Tell me about the role as an Entrepreneur-in-Residence at Idealab?

As many people know, Idealab has a strong history of creating and operating innovative tech companies. To date, they have been enormously successful, with about 100 companies started and about 30 exits.  So, as you can imagine, new company generation is a pretty critical thing around here and this is usually driven by an EIR, with lots of support and thinking from Idealab.  Historically, EIRs will work on internal ideas, which are mainly Bill Gross’ ideas. Bill founded Idealab in 1996 and he has a vast list of ideas for new companies. He’s an enormously creative guy and has a lot of ideas, many of which revolve around problems he encounters in his own life or things he truly thinks will leave the world in a better place than he found it.  So most EIR’s will focus on Bill’s list of ideas to help identify which have the greatest potential and then help to get them from ideation to an actual business. In my case, I am fortunate to be able to spend some of the time on my own ideas and some of the time on Bill’s ideas.

 What’s the process used to build the business?

The process of getting from an idea to a viable company starts with our Prototype Group, which is made up of a bunch of hackers and designers who love to build stuff fast.  They are people who are great at taking a vision for a product or company, conceptualizing it, and getting it into the form of a prototype, which can then be put in front of real users to learn and test the core hypotheses which need to prove true for there to be a viable business.  Rather than first raising a bunch of money, spending 6 months building it and then figuring out if it works, we seek to build small tests that essentially mimic the important functionality of a full-featured product and then watch how they interface with it.  So the Prototype Group is really great at coming up with those tests to see if our vision can be a reality.

Once we get past a threshold to prove the concept, Idealab would typically fund the business with seed capital and we would become an incubated company, with the EIR serving as a founder and the founding CEO.  As an incubated company, we also get to take advantage of Idealab’s company building infrastructure and support services, such office space, finance, HR, legal, and PR.  The great thing about that is they can focus on these more administrative things and really free up the EIR to focus on the product and the customer.

Do you also work with companies Idealab is investing in?

Most of Idealab’s companies are based on internally-generated ideas, but we do invest in select seed stage companies that are started by others when they’re working in areas synergistic with Idealab’s network and skills.  We really focus on Southern California based digital media companies and I spend some of my time evaluating those opportunities.  We work closely with the founders, give them access to the full range of Idealab support, our business contacts, and other Idealab companies.  I have brought in a number of deals and definitely enjoy hearing other entrepreneurs pitch their vision.

In addition, I spend a good amount of time with the other EIR’s helping them think about their ideas and businesses.  We are a really tight group and it is great to have other entrepreneurs internally to lean on for my own ideas and issues.

What key factors does Idealab look out for in new companies?

Generally, we look for the same things whether the company is based on an internally generated idea or an outside entrepreneur’s idea.  Over time, we’ve definitely learned that successful companies are built by strong teams going after big addressable markets.  As a result, we are always looking for good people.  However, it is also really critical that they can show they understand all the drivers in their business.  Things like how they drive user acquisition and get users to engage with and use the product, and how that translates into revenue, which is hopefully at the end of the day more than the cost of acquiring that user.  It really helps to be able to show some element of proof that this is really happening.  The great thing about that is that you don’t have to have a million users if you can show that at a micro-level you were able to bring in 1,000 users that cost you, let’s say, $10 each and that you are able to monetize them to the tune of $14 each. Showing that you can make $4 per acquired user with 1,000 users tells us that once we put some capital towards acquiring a larger number of users, we could have a really big business assuming there are enough of those users out there. Then your odds of getting funded go way up.

What excites you about startups?

There are a few things. One of the most exciting things is the unintended consequence of getting a prototype or product in front of people and really seeing what they do and learning what they want. Usually, this is often very different than what you were initially expecting to see and that’s how the big ideas get discovered. There’s incredible learning and power that comes from that.  Look at Twitter, which has had a number of powerful unintended consequences including the toppling of governments. You only really have the opportunity to discover such unintended consequences by getting the product out there and seeing what happens.

Another thing I love is the idea of starting with a blank sheet of paper, identifying a problem somebody has and providing them with a solution that did not exist or is an improvement on an existing solution.  Also, the process of sitting down with customers, learning from them and watching them is really cool.

More generally, I love being part of the startup ecosystem in Los Angeles.  There is a lot of passion and energy in town right now and it’s really fun to be a part of that.  So many people were so generous with their time and help when I was building my last company that it feels really good to be able to return the favor with other entrepreneurs trying to do great things.  I am currently a mentor at Start Engine, which is the local accelerator headed by Howard Marks and I am advising two of their companies, PageWoo and Merge Local, which both have great teams going after big problems.

On the topic of accelerators and incubators, one thing I would like to mention is that, while there is a lot of talk and excitement about them these days, they are not the only options for entrepreneurs.  If you can get into one of them, then great, go for it.  However, it is not quite as easy as people think and there are some other good options.  I think a key value of being in an accelerator or incubator is actually being in that environment with other entrepreneurs going through what you are going through and receiving the mentorship and guidance these programs offer.  But you can get some of that by checking out the co-working facilities like Coloft, Cross Campus and Next Space.  You will be surrounded by other entrepreneurs who are dealing with many of the same challenges and who are using many of the same resources you will need. You can’t replicate that by sitting at a Starbucks.

You’ve built and sold a number of successful startups. What lessons have you learned?

Well that’s a long list!  I’ll try to cut it down.

Firstly, it’s important to focus on problems, not just ideas.  Don’t build a solution that is chasing a problem.  Focus on real problems shared by many and then design a solution that solves that problem.  Try to avoid making yourself believe there is a problem when one doesn’t really exist.

Secondly, get a prototype in front of people ASAP.  There is often a massive disconnect between people saying to my face that something is a great idea and people actually opening their wallets or using the product.  Force people to vote with their wallet and/or actions and get them to actually use it.  If they do use it, and they are delighted, then you are definitely on to something. There’s only one way to bridge that gap and that’s putting something in front of them.  The great thing is that today, it has never been cheaper or easier to get a functional, but basic prototype in front of people.  In the old days, the price of admission was like $5mm just for servers.  With open source and Amazon Web Services, you can probably do that today for under $10K.

Thirdly, think about the revenue model from day one and make sure you can see a clear path to profitability. It’s very easy when you’re building a startup to not be honest with yourself about how many people might use your product, or how much they will pay, or how much it will cost you to acquire them.  Hope is a really bad strategy. You have to have some element of reasonable proof that the math could work based on very reasonable assumptions or even a little actual usage data or traction.

Fourth, and this is an important one for me, treat your partners really well.  I spent the bulk of the last 12 years doing two startups before I came to Idealab. In both cases, we were able to sell the company thanks to the really strong relationships we had with our strategic partners.  In both cases, even though we were the smaller company, we bent over backwards, went beyond contract, and made sure they understood that the value we provided went beyond just our business terms. It’s very easy to look at a partnership as just a revenue opportunity and that’s really bad.  Your partners are often the ones who will reference you, buy you, or refer you to other opportunities.  It goes beyond just having the business development guy knock on the door, sell them, and then never to be heard of again after the deal closes.  The CEO must recognize the strategic importance of those relationships and act accordingly.  This point has had more impact on my career than any other over the last decade.

What opportunities do you see right now?

I certainly veer towards consumer Internet, partly because I’m a consumer and I like to think about problems from my perspective. I wouldn’t rule out an enterprise opportunity if I got comfortable that I was solving a real company problem. Mobile and ecommerce are going nuts, which makes sense given that we’re all carrying these little super computers in our pockets that are vastly more powerful than the boxes we had sitting on our desks during the first dotcom boom.  This constant connectivity across an ever-larger portion of our world’s population will lead to a lot of exciting opportunities.  With that said, I think it’s hard to build a big business by selling a 99cent app.  Unless you’re a top app on someone’s phone it’s hard to get the kind of constant engagement and usage that could drive a business.   Also, advertising doesn’t seem to work on mobile right now and the click-throughs and conversions are atrocious. I think that’s a really big opportunity for someone to figure out.

What is Surf Air?

We are an all-you-can-fly private airline for members.

What inspired you to start the company?

I was the press advance representative for VP Cheney.  That meant that I was flying up to 27 days a month. Flying last minute, flying one-way, etc, and going through TSA’s “random” screening on every flight.  Here I was, I could walk up and talk to the Vice President of the US, but I couldn’t get on a plane without two screenings.  It didn’t make any sense.  At the same time, my brother was starting out his career as a commercial pilot. He was worried that there weren’t enough good jobs for pilots.  He called me up and said, ‘I love flying, but there are no jobs.  Should I do something else?’  I asked what it would take to keep him in the air.  Sarcastically, he responded, “I dunno.  Buy a plane.  Start an airline.”  I took him a bit more seriously than he thought and said, “I’ll look into it.” 6 or 7 years later…here we are.

What market are you chasing and how big is it?

Frequent, short-haul domestic US travel.  Massive.  The FAA estimates that domestic demand for air travel will double in the next 20 years.  We literally have to add the capacity of an entire new JetBlue airline every 10 months.  Airfares are up 15% year over year, and the price of oil is down!  The thing driving the cost is demand, pure and simple.

Couple that demand with an industry (air travel) that ranks 47th out of 47 for customer satisfaction, and you have a market desperate for disruption.   The market is literally growing despite itself.

You’ve been part of of Muckerlab in Santa Monica. What was that experience like?

Amazing.  Best thing we could have done.  It professionalized us, helped us get the advice and counsel we needed and put us on the path to raise the right the money that lets us succeed. The guys who run Mucker, (Will Hsu, Eric Rannala, Yanda Erlich, and Greg Bettinelli) are incredible.  Need help setting pricing strategies?  Eric did that at eBay.  Choosing between building a business or attending Stanford for an MBA?  Yanda faced the same choice.  On and on.  From professional counsel, to making leaders out of you Mucker Lab was incredible.  They opened every door for us.  Like all incubators, they helped us hone our pitch.  But the pitch is not the business.  The biggest value add from Mucker is that they really dug in and helped us build our business; hire the right people, refine the model, and execute.  They gave us mentors who have done, and are doing just the things we’re looking for.

One example?  Adam Nash from Greylock Partners.  Since he helped run social sharing at LinkedIn he came in and gave us a great presentation on building, tracking, and improving your viral coefficient.  Then, he took another hour or two with us in particular.  We’re not a technology company, we’re an airline.  So how does a viral coefficient apply to a company that doesn’t scale with server boxes? His advice helped change the direction of some of our most critical community building efforts.  And we had that sort of experience every day.

How does your business model work?

It’s a flat fee subscription for all-you-can-fly access to a private airline.  Airlines have historically operated like short-term flying time-shares.  They’re selling real estate over time.  So, they’re goal is to keep you on the plane and get you to fly as far and as long as possible.  A passenger’s goal is the opposite.  Unlike traditional commercial carriers, our revenue isn’t tied to keeping you on the plane as long as possible. It’s directly tied to keeping you happy.  Every month you’re going to ask yourself, “Am I happy with my experience?”  That means, “Did I fly enough”, “Was my life made easier enough,” and “Am I happy enough to continue flying with Surf Air?”  So our goal is more in-line with providing you a top notch experience, and that’s what makes our business model work.

How many subscribers do you need?

Luckily we’ve got 4 applications now for every spot we’ll start with.  We’re opening with 500 members, and we now have more than 2,000 applicants. Subscribers isn’t our challenge.  Keeping them satisfied is.  That’s why we spend every day working to make the experience something that each one of those members will be proud to tell their friends about.

How many flights are you estimating the average subscriber would take during a month?

A frequent flier today flies an average of 2.5 round trips, or 5 flights.  A super traveler…think of a Bain Consultant, or other true “road warrior”…flies 4 roundtrips a month.  They’re usually out on Monday and back on Thursday.  So, that’s a good range for you to look at.  5-8 flights a month.

How do you manage variables, such as oil prices?

Oil gets too much credit for airline price fluctuations.  Demand plays a much greater role.  (An example:  Oil prices are down from last year.  Prices are up 15%.)  But in our case, since we can predict pretty accurately how  much fuel we will use, we’ll contract for future fuel delivery at today’s price.

What additional routes are you considering?

There are 25 routes in the country that we’ve identified where we think this model will work.  A good shortcut to see what would work is the Obama administration’s high speed rail map.  Anywhere high speed rail could be justified – we work, and the infrastructure is already in place.

Are temporary shuttle services on the cards? Such as, Los Angeles to Park City during Sundance.

We’ve talked a lot about this.  There’s nothing to announce here, but we certainly have an opportunity to be responsive to our community in ways that a traditional airline (that sells one-off tickets) can’t be.  I can imagine polling our 500 founding members and discovering that 50 of them are all going to Coachella or Burning Man one weekend.  It’s possible we could put a plan in service to meet that demand, therefor responding to our community of members in a unique way.  It’s exciting to examine the possibilities.

How much have you raised?

We’ve raised enough to get us through our proving period and into profitability.  We ended up turning down an awful lot of money, and there were some potential investors who we felt had a lot to offer.  We may revisit fundraising at some point to see if we can’t bring some of those talented opinions into the fold, so to speak, but for now we’re happy with what we’ve raised.

What round and who invested?

Series A. We’ve got some great partners.  Anthem Venture Partners and NEA both stood up very quickly to invest, and we’ve been thrilled with both of them.  Siemer Ventures, Baroda Ventures, Jared Leto, and others have signed on and been very supportive.

 How big is your team?

We’ve got 12-15 in the office most days, and a handful of folks working remotely.

When do you launch the first flights?

We believe we’ll be operating by the end of the year.

George Strompolos is the founder and CEO of Los Angeles based Fullscreen, a digital media company that has created an online video network built upon the YouTube platform. Prior to this, George was the strategic partnerships manager at YouTube where he helped create and manage YouTube’s Partner Program. In 2008 the Hollywood Reporter listed him as one of the top 35 executives under 35. He is a graduate of the University of California Berkeley and can be followed at @gstrompolos.  

Tell us about your background and what inspired you to start Fullscreen?

I have always been fascinated by the intersection of media and technology. My career path ultimately lead me to Google where I helped create YouTube’s partner monetization program. As YouTube matured over the years, the online video industry was maturing in parallel. Some people have compared it to the evolution of cable television. I was convinced that this massive shift in the media industry would bring about a handful of great new companies. I was inspired to create one, and that is Fullscreen.

What does Fullscreen offer and how do you work with YouTube channels?

Fullscreen is the most advanced company working in the YouTube space today. We offer a range of tools and services to YouTube creators worldwide which help them develop and monetize an audience. We also work with several major brands and media companies to help them harness YouTube, the world’s third largest website. Our network of channels generates well over a billion views every month. That kind of scale enables us to create network effects to cross-promote channels and help them grow.

How do you work with the brands?

We provide a truly turnkey YouTube solution for brands, from channel management and metadata optimization to talent integrations and targeted media packages. In short, Fullscreen helps brands win at YouTube.

Where do you see online video heading over the next 1-3 years?

A lot will change, simply because the industry is evolving so rapidly. Some key trends I see are the importance of audience data, the rise of talent as distributor, and the return of destination sites. I also think there are a handful of new media companies being born right now that will become mainstays in the coming decades, which is exciting.

Will online video and traditional television coexist, merge or will one displace the other?

I think they’ll coexist for years to come. Broadcasting, narrowcasting, and social video are all fairly different ideas.

What are the biggest challenges in this space?

We’ve shifted to a world of infinite channels. Having a channel is no longer special. YouTube solved that for everyone. Now, the biggest challenge (and opportunity) is one of audience development. How can you build an audience in a world of infinite choice? It’s an exciting challenge.

Matthew Pierce is the Vice President of Product Innovation at Originate in Los Angeles. Originate is a value-added venture firm which provides technical, strategic, and capital resources to a broad variety of companies, from startups to the Fortune 500. Matthew formerly worked for Warner Bros. in digital distribution, and prior to that was a consultant at the Boston Consulting Group. He has an MBA from the UCLA Anderson School of Business and a BA from Stanford University.

Tell us about the deal process at Originate.

There isn’t really one kind of deal process at Originate. We’re flexible in that we can look at a wide variety of deals, whether companies are in their infancy, in the Fortune 500, or developed internally. In the case of the latter, we have a team of 70+ engineers, so if any of them develops an idea for a company, our rich entrepreneurs-in-residence program helps them foster and grow their businesses.

On top of that, Originate has partnered with Fortune 500 firms to develop their software. Having that kind of scope and understanding of what the giants of industry want, gives us perspective and allows us to look at every deal on its own merit.

For entrepreneurs, we can work with them anywhere along the chain. We consider ourselves “Value Added Venture”, and we play in different stages of the startup lifecycle. But I’d say our sweet spot is between the alpha stage and the A round. This is where we can add a tremendous amount of value with the quality of our engineers. It’s a nice spot in the LA venture ecosystem too as we have a lot of incubators and accelerators in the area, so when startups graduate from their classes, we can help their companies scale and get from pre-MVP/MVP to a robust, scalable commercial product.

What sets Originate apart from the other accelerators?

Our real strength is the technical resources we can deploy. We have engineers in Los Angeles, San Francisco, New York, China and we’re building a team in Sweden. The quality of the engineering work being done at Originate is very high. Our feeling is that one of the difficulties startups face is sourcing quality engineering talent. So on top of capital, we offer developers, designers, and strategists who have worked together and understand process. We have a broad variety of engineers which allows our companies to have access to whatever technology stacks, languages, and expertise they need, whether it be Ruby, Android, iOS, back-end systems integration, etc.

Do those engineers become co-founders in the startups they work on?

Not directly. We offer them an incentive structure that we call “innovation equity”. So the profits and equity stakes from our projects go into a pool, and that pool is distributed within Originate with a significant portion going to the engineers working on that project. This plan means that when Originate does well, everyone does well. This structure aligns the whole team and encourages the best engineers to come and work for us.

How do you evaluate which startups to invest in?

There is no magic formula, but there are certain things that we look for that every VC looks for. You want there to be a great team working on a clear pain point with the ability to monetize. Ultimately you’re investing in people. This is nothing revolutionary.

Are the deals always structured on an equity basis?

Not always. Sometimes we do all-cash deals or cash+equity deals where we take a certain amount of money up front in exchange for engineering on specific projects. Deals like this limit Originate’s equity position, but they allow us to come in and add value right away, helping to launch products or develop new pieces of software. It allows us to hedge our risk, and it allows partner companies to get great talent while giving up less equity.

Where do you see Los Angeles and funding heading over the next 2-5 years?

I really like what’s happening in Los Angeles right now. I came up in the Bay Area in the late 90s, and that was a very exciting place to be. And right now, Los Angeles is a very exciting place to be. I like how much talent there is in Southern California. We have world class universities here and world class companies that are being built here. I think we’re all figuring out how to make that ecosystem work in a way that is very different than they’re doing in San Francisco, New York and Boston. I think one of the key differences in LA is that the sources of funding are different here. The accelerator, incubator, angel, and seed-stage investors are a bigger part of what we do in Los Angeles. Whether that will continue or whether there will be a smaller number of bigger players remains to be seen. Those sorts of cycles are pretty standard in any industry where you have a huge explosion in X and then you end up with a smaller number of X. What we do have though is a tremendous amount of money out there with a desire for outsized returns. People want to put their money into something that’ll be the next big thing. Our hope is that Originate can play a role in that ecosystem. We’re excited about our relationships with the universities, industry, VCs, Tech Coast Angels, and the incubators/accelerators.  We feel that our value is separate from that chain and that it adds to the whole community.