SideReel – Zach Larson – 1 of 2

"The road to success is littered with lots of bodies and failure." SideReel is the largest independent web TV platform, helping users find and watch shows online.

Matthew: Hi, this is Matthew Wise with FounderLY. We empower entrepreneurs to have a voice and share their story with the world, enabling others to learn about building products and starting companies.

It is with great pleasure that I’m here today with Zach Larson, who is the founder of SideReel. SideReel is a web service that enables users to find, track and watch television shows online. With that said, Zach, we’d love for you to give our audience a brief bio.

Zach: Sure, yeah. Like Matt said, I’m Zach Larson. We founded SideReel on December 26th of 2006 and exited it on March 1st of 2011. I moved out to the Bay Area in ’99 after college, kind of during the first boom. Kind of lived through the crazy times there and worked at a variety of startups. So, I worked at things like OpenTable and in the early days I worked at a company called the Perks at Work and it became Abilizer Solutions, where they took an insane amount of money and spent it all on McKinsey Consultants and then died. You know, a variety of medical IT, legal ITs, all sorts of stuff. Then decided to start SideReel with some of my friends and co-workers at the time, and now just kind of living the dream.

Matthew: What makes SideReel unique? Who is it for, and why are you so passionate about it?

Zach: That’s a good question. The thing that SideReel is really good at is that it’s like Comcast for the web. Users don’t know where to find all the content online. There’s a lot of TV shows online in lots of different places. Do you buy it on iTunes? Do you buy it on Amazon? Do you stream it from Netflix if you can? Do you watch it on Hulu? All that stuff. There’s a lot of places, users don’t know where to find it. It’s hard to do. It changes a lot.

So, SideReel is platform and network agnostic. We’re not owned or influenced by any of the networks, and even after acquisition that’s still the case. We maintain links without any sort of affiliation to the content providers, and we just tell users where they are and give users a way to keep track of when new episodes are coming on, which episodes they last watched and also share that stuff with their social network.

That’s kind of what SideReel does for people, and it’s doing pretty well. We just crossed 14 million uniques, 3.5 million registered users. It’s something that people really like. It’s about half U.S., half international, but people love it and they keep coming back.

Matthew: That’s great. What are some of the technology and market trends that currently exist, and where do you see things developing in the future for your space?

Zach: Technology and market trends are two separate things, obviously. The market trends for entertainment are mostly going to be around content providing. People who make the content, it’s going to get democratized. Hardware is cheap, filming, audio equipment, all cheap.

SideReel now does its own video productions that we started to do a couple years ago. Primarily, it was meant to start selling video ads, but we discovered real easily that it’s easy to find really high quality talent who make great short-form web content. I mean, FounderLY is a great example for that actually, right?

And people love that stuff. It’s easy to do. You’re going to see a lot of, I think, movement in the market as more people start producing their own content. Sure, there’s been talks of companies like Google and Facebook getting into the content production angle themselves so that they can sell that stuff. But I’m sure there’s going to be further movement away from NBC, ABC, CBS, you know, Warner, all those things. Now, realistically there’s still going to be a peak of that pyramid of people who are going to make the really best stuff and that’s still going to exist, but there’s just going to be more niche content coming to the web.

Technology-wise, like I said, video production is getting cheaper, and I think that’s a big part of it. The ability to make decisions on the fly about which ad network you want to use to make the most maximum revenue, that’s constantly evolving and I think that that market-based economy is a really interesting place to watch.

Then, as HTML5 takes over and people start to get…other web services get more access to time codes, video details, that kind of thing, you’ll see people be able to build more interesting stuff by having deeper knowledge of the video they’re actually linking to it without having to host it. Hosting video’s a hard problem to solve, and not everyone wants to solve that problem.

Matthew: We covered your background and an overview of your market. Now, we’d like to dig into the details of the SideReel story. What inspired you to launch SideReel? Was there an ‘Aha!’ moment, or were there a series of events that led you to launch SideReel?

Zach: It’s a good thing to ask about. There’s two different answers to that. There’s the way that our founders got together and decided to do it, and then there’s the market opportunity that led us, that we figured out to capitalize on. The founders, we’ll talk about a little bit later. But primarily we all worked at the same place before and had encountered some problems there, chiefly around how to negotiate licenses with content providers. No one wants to buy a movie for $14.99 to rent for one day online. One of our founders had negotiated that deal at a previous company.

And so we said, “Clearly, people want to find ways to make this choice. There’s lots of choices. Why don’t we make that easy for people?” and that was kind of the ‘Aha!’ moment that led us to say, “Let’s got start SideReel.” We know there’s some linking up of metadata and content about a show or a movie or whatever with the actual way to consume it. That is a really key hook for people’s entertainment experience.

They were all willing to be just crazy as I was and going to quit our jobs and start a new company. That was, like, you’ve got to have people who are willing to go crazy because what we’re doing is something crazy. But, I knew these guys. One of the co-founders, he and I have been friends since we were 18 in college. We’ve known each other for a long time by this point. Another one of our founders who was our CEO, he was a family friend of my friend from college’s wife. So, I’d known him for a while, we went to Burning Man together, that was cool.

One of the other founders was his little brother who was also a friend of mine outside of work, so there’s that. Then one of the other guys was a guy that I worked with for 8 to 10 years. That last founder wasn’t with the company when we exited, but he was with us for the first couple years. Knowing each other, knowing that we can trust each other and knowing that we already work together was a big deal in being able to start a company together, but we didn’t start cold. It wasn’t like walking into a new job that you’ve just been hired at having to figure out how everybody works and what to do. We all knew each other.

Matthew: So, that was a relatively large founding team.

Zach: Yeah. Yeah.

Matthew: There were five of you.

Zach: For the first six weeks we had another friend who was with us too, but we really covered all the bases. Our CEO was an IP lawyer in a previous life and had negotiated content deals. Our COO was a business analytics guy who’d spent time doing that at other places. He built video sharing platforms before. I’d been doing product management; and I was the chief product officer. I’d been product management and release management for a long time. I’d built other engineering teams. And then, the other two guys were developers. We had two guys who were good developers and the third one who helped us out for the first six weeks.

And it was great, we really had everything that we needed in the team, and we even had overlap so that if somebody had an issue for whatever reason, or some spike in work came up, people were able to offload it really well. Even in the early days, me and the COO, we did a lot of not very good development. Our COO did the original CSS style sheet for the site. It wasn’t pretty, but it worked just fine.

Matthew: From idea to product launch, how long did it take. and when did you actually launch?

Zach: We started working on it, we all quit our jobs and the first day of working on this full time was December 26th, 2006. That’s when we first wrote code. The first line of code we wrote happened that morning. We launched April 19th, 2007. So, really not very long, just about four months. It was fast and when we launched it, it was ugly and people didn’t like it very much. But enough people did for us to get feedback. We knew to keep iterating on it and getting something out right away.

Matthew: And so, what was your development timeline like? Did you guys bootstrap for a long time?

Zach: Yeah.

Matthew: And then raise capital? I know that you recently had an exit, congratulations.

Zach: Thank you.

Matthew: Can you . . .

Zach: Yeah.

Matthew: . . . dig into the details of that?

Zach: Yeah, sure. So, we never took institutional funding. We bootstrapped for a long time. We took some friends and family, parents and friends who were very generous with us and willing to help us be crazy. And then later on, we took a little bit of angel money, chiefly from one guy. It worked out really well for us. It made us hungry. It made us really hungry. Two of us were married when we started. Our wives supported us and our expenses and so that made us really want to work really hard. We didn’t have a bankroll of a couple million bucks to try to figure out what we were trying to do. We literally had no money.

The first two months, I think we literally lived on, the company existed on $2,000 that we collected from the founders. Most of that went to, like, “Let’s buy a new hard drive for Zach’s old computer so it can be our first web server,” and that kind of stuff. It was just getting along, and that worked out really well for us. What it meant is when we exited we were to able to retain a lot of the equity for the people who worked on it. Not just for the founders but, we believed very strongly all along with being able to retain equity inside the company for the people who are actually working on the project.

Not just for people who give money. People who give money are working on the project too, but it’s really different from somebody who you’re asking to come in every day and to pour their heart and soul into that computer to build something. It’s just different. So, we liked giving whole percentage points, multiple whole percentage points of equity to engineers and other key contributors because that was just important.

We were only able to do that because we didn’t take institutional money. It was a really good choice for us. It turned out to have been a good choice exit-wise, too. It was a nice efficient capital structure. It was great.

 
 

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