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How Anjali Sud reinvented Vimeo

Anjali Sud on building a profitable video business by moving from streaming to software

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Photo Illustration by Grayson Blackmon / The Verge

Today on Decoder I’m talking to Anjali Sud, the CEO of Vimeo. Now, you probably think of Vimeo as a smaller competitor to YouTube — the company’s been around for 16 years, and that’s what it was for most of that time. But when Anjali took over as CEO, she stopped all that to reinvent Vimeo as a software company that serves video creators. And that market is booming: at the end of 2020, Vimeo had over 1.5 million paying customers generating $83.8 million in revenue in Q4 alone. In fact, Vimeo grew so fast in 2020 that it accidentally turned a profit in the third quarter even as the company was trying to reinvest in growth. Later this year, Vimeo is going to go public in a spinoff from its parent company IAC.

That’s a remarkable success story — all because Anjali decided to stop competing with YouTube, Netflix, and other consumer video companies and find a better market to play in. But it also means that, well, there still aren’t any great competitors to YouTube. I asked Anjali about that, about where Vimeo sits in the creator economy, and how she sees the company growing.

Anjali Sud, CEO of Vimeo. Here we go.

This transcript has been lightly edited for clarity.

There is a lot going on with Vimeo, so I just want to start there. You became the CEO a few years ago. You did a massive pivot away from the Netflix, YouTube, original content model that has been successful. You’re about to go public. 

Just give me the quick background. How’d you become CEO? What are the changes you made? And how are you headed into going public?

Yeah, so probably the most important part of the background is: Vimeo is a 16-year-old video platform, but we’re really three, four years into a very different strategy. And I became CEO to pivot the company, as you said, away from being a viewing destination or media platform, like Facebook or YouTube or Netflix, and really into a video SaaS or software company for businesses. Much more like a Slack or a Dropbox model, but for video. 

And I became CEO — actually, I’m almost hitting four years, which is wild — but I became CEO a little bit randomly. I joined the company about six years ago as a director of marketing. And while doing that job, I developed a point of view, myself and a few others within the company, that we probably weren’t going to compete well with Netflix in original content because we probably weren’t going to have $17 billion to spend on it. 

But we had always catered to filmmakers and professional video creators, and we were seeing this very natural adaption on the platform of video, not just by these professional creators and not just by consumers, but actually by businesses; small businesses, large organizations. The same way every business had a website, it seemed like a lot of businesses now wanted to use video to communicate. So we proved that thesis internally and then ultimately made that the strategy of Vimeo, and our investors and board gave me the opportunity to run it.

So one of the things that’s really interesting about that is you talked about how much money Netflix has to spend on content. It’s a huge number and rising. They’re up against Disney. Warner Media is going to spend all of AT&T’s money on content. I get it. The premium content space is big and rich and difficult.

But YouTube is built on user-generated content. Kind of at the basic level, YouTube doesn’t spend any money on content compared to the amount of content on YouTube. What kept you from competing with that?

I think it’s a really different problem that we’re each trying to solve. Fundamentally, YouTube is still focused on entertainment, and their business model is advertising. So YouTube wants to attract creators and content to their platform. They want to keep eyeballs and time on site up on their platform because that’s how they make money. 

Vimeo has actually never made money from advertising. We’ve always been a subscription product. And specifically, we monetize through the actual creators accessing our tools. And so that’s a very different model. And what it means is that we are not focused on eyeballs and content on Vimeo, and we actually don’t want Vimeo to be an entertainment destination where people come. We want to help businesses and professionals create video content and get it wherever their audience or their customers or their employees are. And that actually, most times, that means it’s off Vimeo.

And we actually build tools to help you put your content on Facebook and YouTube, and in your secure company portal and on your website and on your blog. And that’s actually how we are successful, and then thereby how we make money. So to me, our goal isn’t to entertain and to then monetize through entertainment. Our goal is to help any business or professional or organization, use video the same way that they use text or image as a powerful way to communicate. 

And so it’s just a very different business model, and a very different problem to solve. And I think you could have argued maybe 10 years ago, we could have opened up to ads. We could have competed with YouTube. I have no idea what would have happened. If we had done that early enough, maybe Vimeo would have been another YouTube. But I look at the landscape today and I don’t think the world needs five more YouTubes. But especially since the pandemic, every business, every team I’ve talked to, needs professional-quality video to be easier so that they can use it to communicate.

I guess what I would say is, that is probably correct for Vimeo’s business. But I talk to a lot of creators on the show, and the life cycle of a YouTube creator is the inflection point where they make a video about how they’re mad at YouTube. 

And they’re all like, “Where’s my competitor to YouTube. Where’s the place I could go if I’m this mad at YouTube?” And there isn’t one. And I imagine that pressure for Vimeo, which has the brand recognition, which has the history, remains high, and you’ve kept steering away from it. Why have you kept steering away from it?

Yeah, it’s a fair point. I do think we hear that a lot, and we are steering away from it. And fundamentally, it’s because we don’t believe that we can best serve the creators and businesses in the world if our incentive is advertising and to keep content on our platform. We want our success to be aligned with the success of those creators. And if you actually talk to most of them, the reason they want a competitor to YouTube is because they want to be able to monetize their content in other ways. And I’ll give you, actually, an example of one of the ways we are solving this that’s not competing with YouTube.

We provide a tool set that allows any creator to stand up their own Netflix-like service. They own the brand. They can stand up their own apps, Amazon, Roku, iOS, websites. They can charge whatever they want. They own the customer. They own the email, they own the relationship. And basically, what a lot of YouTube creators are doing is, they reach a certain amount of size and they’re like, “Wow, I can make way more money if I get a subset of my followers on YouTube to actually come and subscribe to my own channel and pay me directly, I can make more money than just purely on an ad model basis.”

And so that’s a great example. That product’s called our Vimeo OTT product. It’s on fire right now. It’s growing incredibly fast. And we’re seeing so many creators and brands, everybody from like the yoga instructor to the church starting to do this, and I think that’s awesome. 

That’s a way you can support creators, put more money in their pockets, help them take their brand and the following they built on YouTube, and turn it into a thriving, sustainable business, but that doesn’t require Vimeo to become a social media platform, which we have no interest in doing.

You’ve gone from being where people distribute and monetize, which is how most people think about YouTube, to a cost for creators that will enable revenue in other ways. Creators don’t love costs. These are pretty low-margin businesses on the whole. How do you make that sale over and over again?

I think it’s really interesting. For the most part, what we’re providing is usually a level of robustness and capabilities that not only don’t exist elsewhere for these creators, but if they try to do it themselves, the costs would be astronomically higher. 

So, I’ll give you an example. If you were like, “I want to build a Netflix service,” you would literally have to hire a set of engineers to build your website and your app and designers to create the template for you. And you would need somebody to answer your customer support calls, and you would need an analytics person to give you a sense of how your business is doing and your reports. And if you took all of the costs of doing that, not just the time, but the money, that’s hundreds of thousands of dollars. And what we’re doing in many ways is radically lowering the barriers through our technology. And the reason we can do that is because we’re doing it at scale.

If we were only serving 100 customers, we would never be able to justify that, but we have 200 million users on our site. We have over 1.5 million paying customers today. And so we are actually offering, I would say, very disruptive pricing for what you can actually do. And by the way, we’re also not in a point of stasis. Our goal is to continue to simplify, simplify, simplify the user experience and the process to creating content and distributing that content, and keep reducing the costs. 

But I would just say, the costs are not just dollars: their time, the complexity, their know-how. And that’s where I think Vimeo is really uniquely positioned because we’ve always been this platform that serves the most discerning of creators — the filmmakers — but also with a really intuitive, friendly consumer UX.

And everything that we hear from users and customers, at least,”Wow. I didn’t even know I could do this. I didn’t even know it was a possibility for me, a one-person yoga instructor, to live stream my classes online and build a whole business.” Or “I’m a dance studio. And now I’m able to go from an audience of 100 in person to hundreds of thousands with a few clicks and a few hours.” So I think the key is really just that we’re offering capabilities that have not been even remotely in the hands of these individuals before. It was always only in the hands of large studios that had huge budgets.

Walk me through what those capabilities are with a little bit more specificity. You can do a lot of things in a lot of places. What are the set of capabilities that Vimeo specifically offers?

So I’ll give you a couple of examples of the capabilities in the context of some of the users. So if you are a flower shop, or a mom-and-pop restaurant, today, you want to drive traffic to your website or to your store. And the way you’re going to do that is probably on Instagram or on social media. Maybe you need to post five times a week. And we all know that social media platforms prioritize video because it’s more engaging and gets higher clicks than image and texts.

But if you asked a mom-and-pop shop, “Hey, like you should hire a crew and write a script and shoot a video and edit it using professional software, and then you get a 20-second video that has a shelf life of a day — and do that five times a week.” That’s really hard. We have an app that does that for you. And literally allows you in a matter of minutes with templates, AI, stock licensed footage, music, all of it. We take it all and boil it down for you so you can create video for social media to drive your customers to your site or your store, in a matter of minutes. That’s one example of the capability.

Another would be the examples I was giving of the yoga instructor or the dance studio that wants to live stream their classes. They want to stand up a video portal. They want to be able to live stream a bunch of classes, put a paywall wherever they want in whatever region they want. They want customer support. They want email support. They want to be able to basically have a video business, and they want to be able to do that without worrying about the cost or the technological implications so that they can focus on the content of their classes. That’s another example.

 

And then the third example would be a large Fortune 500 company, like a Rite Aid or an Amazon or Starbucks. And they’re using us to do things like securely broadcast CEO town halls or HR trainings to their stores all around the world. They want to be able to do that securely in extremely high quality. So don’t think the one-to-one, Zoom experience, but the “this feels like I’m watching a concert.”

And there’s engagement and you’ve got graphics and switching, all happening live. And we’re basically providing that capability that was once a TV studio capability, we’re providing that now in the hands of comms teams and HR professionals. Which, obviously since the pandemic, has been extremely beneficial and needed. But those are all examples of the breadth of what we provide. Our mission is to enable professional-quality video for all. So think of it as like, all of the things that a studio was able to do with video, we’re trying to democratize that for any business or professional.

I feel like I ask a lot of people “future of work” questions, and I’ve never gotten “the future of work is your HR team has a video switcher” before. And yeah, that’s good. That’s a huge range of things that you described. 

There’s a first product that sounds a lot like iMovie for small businesses. And there’s another product at the end, which is you acquired Livestream and they make hardware products and cameras, and you’re selling professional broadcast equipment. 

And somewhere in the middle of that is we do a lot of video and coding and distribution so you don’t have to worry about it. That’s a lot of white-label solutions, but there is still a vimeo.com that is a consumer-facing product that has a rep for being where filmmakers go. How does that all wrap together?

 

If you actually go to our website today, what you will see is a very traditional software, SaaS website, and that’s because it reflects our strategy, which is not to be a consumer destination. You’re absolutely right though, if you ask most people today what Vimeo is, they think we’re the indie version of YouTube because that’s what we were for 10 years. And it’s a challenge for us. It’s something that we have to combat. But what I can tell you is if anyone goes to the site and sees what we are putting out there, we really aren’t trying to be that destination in any way.

And so it’s just something that we, from an awareness perspective — most startups, their challenge is making people aware of what they do. We have the added challenge of actually changing perception, because we shifted our strategy, but we’re known for something very different. And I think that’s just something that is going to take time and we have to get better at. 

But I think to your point on all the breadth of what we do, it is true, if you look at the offering, we’re enabling people to create content, collaborate on content, distribute content, monetize content, see analytics. It’s a very broad offering, and we’re doing it for businesses of all sizes. From the solo entrepreneur or startup, all the way up to a Fortune 500 company. So it is quite broad, but I think that’s because we think the market is huge and we’re ambitious and we’re fortunate in that we have a very broad and deep solution. And we actually think that’s a major competitive advantage.

Since the pandemic, the plus was the demand for video tools and our products exploded. The downside is the secret was out, that this was a great industry. For years, we’ve been like, “This is a thing.” And investors were like, “Is it a thing?” And now, there’s going to be a million startups with funding to come into this space. 

And what I would say is, this is where I believe, if you want to really lower the barriers to professional-quality video, it’s got to be so easy and simple that you can use one software provider. You don’t have to have six different tools, and moving your content from one place to another, to do X, Y, and Z. It just needs to be centralized and simple.

It’s not going to happen in a year. I say, we think of this market in terms of decades, not years. But I do think we’re really, really well-positioned because of that breadth.

So let me ask you about a different competitor; Adobe, right? I mean, you are building a lot of tools that sound an awful lot like Premiere Pro and Adobe’s various distribution pipelines. And Adobe has partnerships. Adobe has a massive ad business that helps people monetize. They’re a huge company. They’re not YouTube. 

I feel very proud of myself for not asking about YouTube anymore. You’re talking about competing with Premiere and iMovie and whatever else video software that people are using, in a different way, in a cloud-based way, which is a shift in work for people. Is that your head-on competitor? Is it Adobe?

Actually not. It’s funny. You would think it would be. But the reality is, if you actually look at Adobe’s tools, and Adobe is an incredibly successful business, and actually, it’s a company we look at often in terms of how they’ve scaled as a model. If you actually look at who uses Adobe Premiere Pro, it is professional video creators, it’s filmmakers; there’s a 500-page training manual for how to use Adobe Premiere Pro.

What we’ve done is build the tool for a pizza shop owner. They’re not a creator, they’re not a storyteller, they’re not a technologist. They’re literally just trying to grow their business. And it’s got to be that simple. And it’s a very different DNA, I would say, to build that kind of a product. And I don’t think that’s where Adobe’s sweet spot has been. And I would also say, there’s other benefits that we have as a platform.

One is the fact that we have this embeddable video player that is out there on millions of sites and on all these social media platforms. We actually collect data around how videos perform everywhere on the web. And we can use that data to better feed our own tool set, so that we can actually say, “Hey, we’re going to help you make better video content because you’re the pizza shop, or the real estate broker, or you’re the yoga instructor.” 

And so, in some ways, it’s not just that we’re serving a different kind of user that needs a different kind of offering, but it’s also that we are a cloud-based video player, that’s all over the web. And so, we kind of have something quite unique, I would say, to Adobe.

Now, it’s totally possible Adobe, by the way, gets into this space in the future. And I think there are going to be a lot of players, I expect, that will get into this space in the future. And then, it’s just on us to have the best product and we have to just keep working. But I think we have a really material headstart, I would say.

Yeah, 16 years is pretty good, a famous brand. Let me push you on data collection. You’ve got a web-based player. I can embed the Vimeo player on theverge.com, and people can hit play, and then you can collect data like “When do people drop off?” “Did purple videos perform better than blue ones?”

There’s a whole data collection conversation I could have about that. But that’s the basics of what you can do. But you’ve also talked about how easy Vimeo makes it to distribute to Facebook and YouTube. Can you collect that same data from those platforms?

So today, we distribute content, to your point, on what you can do on your website using our player. And then also, natively, allow you to publish videos to Facebook, Twitter, LinkedIn, Pinterest, all these players. And we do it through an API with each of them. And each of them allows us to collect certain types of data. And it varies by platform. It’s not as robust. 

We’re always going to be able to collect more information when you use our embeddable player, than if you’re natively publishing through our APIs. But we are still able to collect data around engagement. And so, we do feed that data that happens on social media platforms, into the sort of collection that we’re doing. But it’s at a different level, it’s not the same level of granularity.

And by the way, who knows. Each of those platforms will have their own views, I’m sure, on how much data they will share and how. But what I will tell you is actually, what’s funny is that we used to compete with YouTube, and now we distribute to YouTube and we’re a partner of YouTube’s. And from what I know from the conversations we have with our partners, they want us to be successful in helping creators make content. Because that’s helping them get content onto their platforms. So in many ways, we’re really not competitive. We are complementary. So I think that there’s a real incentive for them. If we can make it easier for great, high-performing, engaging content to get made and put on their site, that is good for those platforms.

Let me ask you a really reductive question: you keep saying content, but then you keep talking about who your customers are. And it feels like what we’re really talking about is making better video ads, right? At the end of the day, the small business, the flower shop that’s making the stock footage, iMovie in your cloud tool, it’s making an ad. And they’re putting it on Instagram to convert into people buying flowers.

I actually have a friend who has a yoga studio and in the pandemic she started streaming on Vimeo. And at the end, that is commercial content. And she had to go market it and get people to pay for it. People don’t love ads, right? The content people go to YouTube for is not necessarily the ads. A little bit of it is, I hope at least, is like artistry. What is the mesh point there?

Yeah, it’s a great question. Two things about it. One, for sure, video ads are one key type of content. It really isn’t the only kind of content. We see tons of businesses, of all sizes, creating brand videos for their website, creating customer support videos, product demos. I think the thing we sort of forget is video as a medium is just so engaging. Think about all the ways we communicate; in-person, voice, text, image. 

Video is so engaging and it should be used in every way we communicate. And actually, the fact that we today think that ads is the main thing is the problem. And that’s what we’re trying to solve, is make it so easy that anyone can create video for everything. So first, I would say our view is that video’s power as a medium is not being tapped to its full potential by most businesses. And we want to make that easier.

Second, I would say, I would rather help a small business, if the right way for them to reach their customers is through advertising, which makes sense. I mean, your customers are on all these social media platforms. We do want to help you do that. What we’re not going to do is focus on one platform. We are going to be agnostic and we are going to help you reach and engage with your customers in whatever format you want. We are not fundamentally or philosophically against advertising. But what we are not going to do is sort of munge the incentives so that we are putting stuff over your own content.

I’ll give you an example. YouTube has an embeddable video player, and it’s free, by the way. So we’re more expensive. But if you use YouTube’s embeddable video player, there is YouTube branding and they control what videos are populated after you watch that content, and they drive people back to YouTube.

And so that’s where I think there’s a big difference, because that’s not in the best interest of that small business. Small businesses want to get customers to their website. They want to own the relationship with the customer. They’re trying to grow their business. And that’s where I think we draw the line. Everything we do has to be aligned with growing that business, not monetizing content on the video.

One of my favorite stories that we ran on The Verge during the pandemic was the explosion of small business TikTok. And it’s just people with pressure washers, and leaf blowers, and people putting in bathroom sinks, and they all go viral. Pressure washer TikTok is amazing. 

I think about TikTok, and I think what kind of goes under-covered with TikTok is that half of the user experience is an enormously powerful video editor with filters, and a huge licensed music library, and the ability to respond to other videos, and on, and on, and on. That’s an entire generation that’s coming up with the language of video editing, just embedded in how they communicate. Is that pushing your team? Are you waking up and being like, “Oh man, we got to add video filters to the Vimeo creation set?”

Absolutely. So I think the point is that the next generation of creators are super savvy, and it’s not even that the tools of what TikTok is offering is advanced. It’s that consumer expectations are changing, right? We now expect, whether it’s from a small brand or Netflix, super engaging content and it needs to be edited in a cool way. And it just has to constantly attract our attention. And so, we do think about that a lot. We acquired a company in Israel last year that was basically the business version of AI video editing. It was founded by PhDs in AI. And they spent 10 years, actually initially from a consumer lens and then moved to the business, like sort of transitioned. How do you make that content super engaging?

So I think the same kind of capabilities, in many ways, those are the capabilities that we’re bringing to businesses. We’re just not only helping them make content for TikTok. We’re also helping them make content for Instagram, and their website, and all these other places. But absolutely, I think everything from filters to different styles and templates, and the kind of music you use, and how videos are optimized by platform, it’s all evolving. And we’re very focused on that. We have partnerships with all of those destinations.

One of the things with those AI tools, and I’ve played with a lot of them, they’re all really focused on, “Go out and shoot a lot of video. And then, we’ll ingest it and the robot will make a video for you. We’ll figure out what’s best about this and do the editing, and selection, and assembly for you.” 

TikTok is way more directed, right? It pushes you towards making a kind of thing. And the norms of the platform of just what goes viral pushes people to copy and make responses, it’s a very different kind of video experience. Is that more of where it’s going? Or is it kind of the, “Just shoot a bunch at your flower shop, and then the robot will make you a video”?

I don’t think it’s either. And I think what you’ll see, and this, again, goes to the point of video is not just going to be in one format for one platform. So the way we thought about our video creation tool is sort of as a spectrum. On one side, yeah, we have templates. We have thousands of templates so that you can literally go in and be like, “I’m a flower shop. I want the flower shop sales template.”

Like a template that just makes it super easy. And it’ll still be customized, and you can make the changes you want to make, and make it your own, but you actually don’t need to provide us with a ton of footage. We’re going to really make it so simple that you can create that content. So that’s one sort of spectrum.

On the other side, we have people creating long-form video content that they have a sense of the story that they want to create, and they’re storytellers, and they want to be able to do that in a very nuanced way. And I think the reality is the technology, the tool itself, can be flexible for that. And actually, where it gets really interesting is our ability to understand what kind of content you’re trying to create, what your end goal is. And then, how do we actually use AI to recommend different ways to optimize that video content?

So maybe it’s a longer-form brand video for your website that you want to chop up into short stories for Instagram, versus TikTok. And you want those to obviously feel different because they’re on different platforms. How do you do that all in one place?

I’ll give you one other example of just the types of video creation we’re playing with. We have an app on Shopify. I think it’s the number one video-making app on Shopify. It’s really popular, but basically allows an e-commerce store to say, “Hey, I have 10,000 products that I’m selling.” Vimeo will ingest all that product detail information for each SKU and automatically create videos for you that you can then edit, or you can just take “as is,” to put on your site. Because video increases conversion. That’s a pretty broad spectrum of ways a video is being used, it’s not just the TikTok example.

But if you think about a business, you want video on your product detail pages, you want TikTok videos, you want Instagram videos, you want video on your website. You want it everywhere. And so, that’s really, I think, the power of the platform we built, is that it’s so flexible based on the types of video content and where you’re distributing it.

You have that parallel uploader tool that lets you go to YouTube and Facebook. Have you talked about sending the video to TikTok, and Instagram Reels, and all those other places as well?

Yeah. We’re actively expanding the number of distribution touchpoints, and it’s not just social media platforms; any marketplace that you might want to put your content on, really any destination. And because we don’t view ourselves as competing with any of those destinations, there’s really no sort of example that I can think of, I mean, unless there’s a platform that’s fundamentally against our values. There’s no platform that we would be like, “Okay,” we wouldn’t want to enable it. The key is, “Is this a platform where businesses need to be in order to reach their customers?”

When you think about that parallel uploader tool and helping creators perform better on all those platforms, the dynamics of those platforms are really different for video.

So just from my own example, we publish to Instagram, we publish to YouTube, we publish to Facebook, I think we publish to Twitter. We have a really big Pinterest page that we don’t know what to do with, if you have any idea what to do with that, please let me know. 

But for a Facebook video, for example, they’re often silent. You have to hook people right away in the first five seconds. A YouTube video — every creator complains about this — that they all have to be 10 minutes long to hit the number of ad breaks that are appropriate, they’re stretched out. TikTok videos are like, there’s a hook and wait for part two.

And the literal algorithmic dynamics of the platforms are different, in a way that literally parallel uploading the same video to all of those places seems like it won’t be optimized. Is that, you’re just going to stick some AI in the middle of that chain and optimize automatically, or is that something you’re pushing on the creators to do?

No, that is a problem we believe we can solve and are working to solve. So today, it’s not totally dynamic. We do know what the best practices are by platform. We share that information with our users and we provide recommendations and insights in the tool. But our goal is that in the future, you would say, “I’m trying to get a message out there. I have a big product launch coming up. I have a new story from The Verge that I want to get out there and I want to use video to do it.” 

And you would provide us with whatever footage or information you have and you would say, “I want to be on these...” You’d check our boxes. “I want to be on these five platforms.” And we should be able to give you a version that is optimized for each, or at least give you why we tried to optimize it and then give you the flexibility to decide what you want to do. But that is 100 percent in the realm of what we’re trying to solve.

And again, it’s exactly to your point, like otherwise, what are you going to do? You’re not going to create bespoke content for every platform because that’s a lot of work. And big companies that have marketing teams and production teams can do that today, small companies cannot. And so you have to make that automated and easy, otherwise it won’t be accessible to all those businesses.

We definitely make bespoke videos for every platform. 

By the way, go to every large company, I think if you talk to most marketing teams, they’d be like, “This seems not super efficient.” And what happens for the smaller companies is then they end up having to choose. Then they choose, “I’m only going to put my content on Facebook and not YouTube.” And that is not in their best interest.

So it strikes me as we’ve been having this conversation that there’s kind of two tracks here. One, most of the video that we’ve talked about in our flower shop example — and honestly, for two people who have almost certainly never sold flowers, we’ve talked about this flower shop a lot. But the flower shop is making video to convert against something else. They’re selling flowers and they’ve got a market for flowers and they want to capture more flower market share. And video is a marketing cost they can use to do that, hopefully in a sustainable way.

Then there’s the creator economy, where they’re trying to monetize the videos and their business is making videos and hopefully making money by making videos. You haven’t really talked about that as much. That is the realm of YouTube and Facebook monetization, TikTok monetization. You can just win the lottery on Snapchat now, which is very funny. Is that an area where you’re trying to help people or is that where you’re pointed at the OTT subscribe-to-videos business?

Yeah, it’s the latter for the most part. We want to help you create great content. And if you choose to monetize it on those platforms, that is a way that we can enable that monetization. But otherwise, our view is that monetization can take a lot of different forms.

It can be ad-based, it can be free to view and then pay later, it can be a subscription, like a Netflix-style subscription service. And so our view is we just want to provide flexible monetization capabilities of all kinds on a white-label basis. And I think that that is good for the creator economy. And again, one of the things that we’ve seen and have been surprised by actually, is how many examples there are of niche content that’s never going to get 10 million followers, but that a small group of people will actually pay to subscribe to because it caters to a need that isn’t being served on these mass platforms.

We have over 1,000 OTT channels today, and you look at some of them and again, it’s like a one- or two-person team making a lot of money creating this content because they found an audience. 

I want to dig on the OTT thing because it’s fascinating, but let me push on that line about a two-person team making a lot of money [as] creators, and we want to give creators monetization options. 

One of the first people I ever interviewed on Decoder was Chris Best, who’s the CEO of Substack, and there’s this huge media conversation about Substack and the passion economy, and OnlyFans, just down the line of new direct monetization for creators.

You’re almost there, but you are not quite over the line to, we enable direct monetization for creators. I do think a lot of YouTubers would just sign up for your service and let you take a cut and monetize a bundle in that way. Is that just not a big enough business for you?

It’s not that it’s not a big enough business. It’s that it’s a different DNA, as a company, to be great at it. And this is something, by the way, I think Vimeo has experience. We did at one time. We had this thing called Vimeo On Demand. We did attempt to kind of go into the space, but it’s building a destination and it means you need to bring audience to you. 

And there are companies that do that exceptionally well because all they do is live and breathe the mechanics of how to do that. Every decision you make on your website is optimized for that to be a destination that brings people in.

I think for us, it’s not that we don’t think it’s an interesting business or it’s not a big enough market, but we do believe that it’s a very different DNA and set of incentives to be a destination versus sort of that white-label tool set.

And at least for us, we just think the opportunity that we are facing now is so exciting and big. We don’t want to deviate from that.

But let me push you. Substack isn’t a destination. Although I think sometimes they’re often confused about what they are. I subscribe to three or four Substack authors. My relationship to Substack is very minimal as a consumer. It’s those people I care about and Substack is their service provider and they could leave. 

You could see that for a YouTube creator that opens a Vimeo channel and I just pay to get it. You can already kind of get there with Vimeo’s existing tools, but is that just not what you want to be out in front with?

No, I think if you frame it that way, you could say we’re already doing that. It’s not the exact same model as what you just described with Substack. But we are basically that central hub, that kind of mission control for the creator where they can create all the content they need to create. They can distribute it on different places and channels and as much as we can be useful to them in doing that, we are. 

And so yes, could we deviate from our subscription model and try and kind of shift the approach? Yes, we could. And actually, I will say on our OTT side, we sort of experimented with models and we do have customers today where we take a dollar per subscriber and that is actually one way in which you can help those businesses where they’re only paying as they grow. So that model does exist.

So that type of thing, I think, makes total sense. What we don’t want to do is tell a creator that the way they’re going to make money is that we are going to bring them the audience. That’s I think the key that we don’t want to do, because we just think that is a hard thing, but can we help them distribute to places where they can get audience? For sure. Can we provide them with tools so that they’re better at attracting and engaging an audience? For sure.

So you’re helping people make subscription video apps for platforms like Apple TV and Roku and Fire TV. At this point, I don’t even know how many subscription services I pay for. 

You’re kind of running into like, you’re helping people address a market that is at once super crowded, but it’s in its infancy, and where consumers already have no idea how much they’re paying for. How big do you think that total market is for just a regular creator who’s like, “I’m sick of YouTube. I’m putting my videos on an app and you can pay me five bucks a month.”

This is the eternal debate we’ve had. Candidly, for a while, I don’t think we thought that market was very big. We assumed that consumers would have sort of a finite number of services and ways in which they’d want to access content. And that there would only be a certain number of companies or content creators that can act like a media brand. And honestly, every single year, we are proven wrong around the size of the market.

I’ll say this. I don’t think the OTT market is Vimeo’s biggest market opportunity or our biggest focus. We have been very clear that we’re really focused on helping large organizations, Fortune 500 companies, use video to communicate internally and externally. And we’re more focused on helping every SMB, every small business, use video. That’s where we see the biggest market opportunity.

But I will also say that I think that the number is much greater than we would have realized. And I think the stat that I read is that there’s over 2 million creators between TikTok and YouTube, and some of these platforms, that are making over six figures in ad revenue today. I would argue every single one of them could have their own OTT channel and probably make more net revenue if they had an ad-based model and a direct-to-consumer subscription service. 

Where they can say things like, “Okay, here are my fans, or followers who are only going to engage in free content. But then I actually drive people into my service for other exclusive content and will they pay five bucks a month?” So I do think that that market is bigger than we realized. And I think we’re in a great position to be able to serve it. But it’s not the main target that we focus on.

Particularly with the TV platforms, they have inverted the relationship between the consumer, their money, and who owns the interface. Before, you would pay your cable company, they give you a cable box, they would then pay Disney and ESPN and all the other channels. Now you get a cable box for free, you pay Disney and then they pay Roku, which is totally backwards in my mind. But that’s how the market works.

Where does Vimeo sit? I run a YouTube channel, I want you to make an app for us, ingest our video. We now have published an app in the Roku store. Roku’s like, “Hey, we want a cut of that.” Is that my deal to make? Do you help me make that deal? Because that dynamic is so complicated right now.

It is complicated. We don’t want to be an economic player in that, but we do facilitate that for the OTT channel, because that’s the part that’s, again, if you’re trying to make it easy for anybody, you can’t have them going and having to negotiate with every single platform. We do take care of that for you. We help you actually create the apps. 

So we kind of manage, I would say, the administrative side, but we are not trying to get in the way of the economic exchange there. And so that’s the position that we’ve taken. It’s really just, how do we make it easy for the less sophisticated content creator to be able to access these platforms? I would love, by the way, to find a way for Vimeo to help these creators get better distribution and visibility on these platforms. But even that is sort of a step removed from really what we’re doing.

That was very much my next question, which shipping an app to the Apple App Store—

Very different than actually getting people to see it.

Is very different than getting people to see it. It is loaded with pitfalls of whether Apple is going to accept your app, whether the ad tracking you want to use is acceptable at this moment in time, whether Apple is making a competing app that might push you down the rankings. 

That just seems like a very difficult business on top of, “Oh, hey, I want Siri to be able to find my content and we need to build the technical hooks into the API.” So if I publish an app with you and Apple releases some update, does my subscription fee just get me an updated binary for free, or do I have to go and ask for it?

You’re absolutely right. My whole team would be nodding their heads right now. We have a solutions team that has to, literally every time there’s an update, go and look at all the customers that we serve and help them navigate that. And the more we do it, we build automated, scalable tools to do this. That’s the art of the platform that we have. 

But for sure, everything is evolving and we do have to then understand it and build ways to serve our customers. But we’re doing it. The reality, as I said, over 1,000 channels, across all these platforms and we are there. We are there making sure that when there’s an update, they’re compliant, they know about it. And that’s sort of more where the enterprise software side of what Vimeo does comes into play.

And again, I thought the Shopify example is the right one. There was a time when if you were like, “Oh, well anyone can have an e-commerce store.” You’d be like, “What? Think of how complicated that is. You have to manage all these SKUs and how are you going to have your small, little store suddenly be able to charge whatever you want, and how are you going to manage the legal issues, and how are you going to manage the email and support that?” It’s a really complicated thing and Shopify solved it, and they made it easy and they made it accessible. And that’s a huge business. I think that’s the kind of opportunity that we have.

Let me ask you, I think, what might be the single weedsiest question I’ve ever asked on Decoder. Who owns the developer account for an app on the tvOS app for the Apple TV? Is it you or is it the small business?

It’s the small business.

So the flower shop has to sign up for the tvOS developer kit.

We facilitate that for them.

Do you send the app update to Apple directly, or do you send code to the flower shop who then has to turn around and upload it to the App Store?

We’re doing it directly, but in partnership with the customer. And honestly, this is an area where things are changing. I think we have to continually look at our processes and how we work, but our goal is to make it super, super simple on the technology side. 

The way I would think of it is like, if you want to have a successful video business, there’s three things you have to do. You have to have the content, you have to have the marketing, and you have to have the technology. Our goal is to basically take the technology piece and take that away so you don’t have to worry about it. We keep it super simple at an accessible price point, so that all you have to focus on is creating great content and then marketing it. You have to be the one to bring the customers and market it yourself. We don’t provide that today, but the technology piece is what we’re trying to basically simplify.

The split here — I’ll come back to this again. We keep talking about commercial content, where you’re making stuff to monetize another market. And then there’s the actual creators, creatives, who are just trying to monetize this stuff directly.

The example I would use is Taylor Swift is re-releasing all of her albums. She just re-released Fearless. And the songs sound exactly the same, but because one is her version, that’s what people are going to listen to. And that’s still not going to make her the money. The Spotify payouts are still going to be small. What makes her money is licensing that song to 50 other platforms.

I keep steering you towards the “how do you make creators more money?” and you keep being like, “That’s great. It’s a small business. We’re working on it. The real thing is commercial content over here for large businesses.” Is that just an accurate summary of what I keep bouncing up against?

Yeah. I think it’s fair to say that our focus is on primarily commercial content, and that our view of how we can help businesses use video is far beyond storytelling or monetizing that content. It is literally the idea of video being used to communicate with your workforce that’s distributed around the world, or share knowledge or train. 

We do think it’s broader than that. And it’s hard to say that there’s one market versus another here because I do think that we are helping support creators in many ways, but we are focused on video as a form of internal and external communication. Not primarily entertainment and not monetization.

And I think that, if anything, the last year has really shown how much need there actually is for that. And so, it’s a choice we’ve made. I think it’s the right one. 

It’s funny. I remember when we started on this SaaS journey, and it was the least sexy thing in the world. You’re like, hey, we’re not going to create original content. We’re going to build the tools for others. Nobody thinks that’s as sexy, but it doesn’t mean it’s not a great business that can really have a positive impact.

So we’re on a podcast. We’ve only talked about video tools. I feel like I have to ask you about audio tools. Today, as we’re talking, we just put up a feature about Clubhouse. There’s Twitter Spaces, there’s Spotify’s podcast ambitions, there’s Apple and Google. 

It’s another huge market where the hashtag people on Twitter will tell you that audio is the future of all marketing. I just call them the hashtag people. That’s my term. The audience is free to take that and run with it. Are you looking at that as well? Or is that market too small for you?

I would say I agree with you. I think that’s a big market. I don’t think it’s a small market. We are not looking at it, and we are not looking at it because we believe in the power of focus. And we think the opportunity in video is huge and very unsolved, and for us to solve it brilliantly, we just gotta be focused on it.

And so, when I think about Vimeo in the future, I think you will see us, we’ll have plenty of these pivot points or decision-making points along the way, and there’s always going to be interesting markets to go after, but for now, I just think the runway is so long on video specifically. And I think to be great at it, you have to live and breathe it. 

And by the way, we’ll always look at partnership opportunities where we think it makes sense, but you gotta build the DNA to be great in an area that you’re obsessed with. And right now, we’re very obsessed with video.

Right now, you’re part of IAC, which insulates you a little bit from external pressure. You are about to spin off. You’re about to become a public company CEO. Public company CEOs historically get a lot of pressure to grow fast into other areas and to take all that capital that is infused by going public into growing really fast. How are you thinking about that shift?

Yeah. I’d say in two ways. One, I think I really do believe that the market for video software is so large, and we are in such early, early, early days that we can absolutely grow fast by penetrating that market. And if we’re not doing that, I think it’s an execution issue. I don’t think it’s an existential strategy issue. 

And again, I think the pandemic has really demonstrated that. Literally, there’s a billion knowledge workers in the world, and every single one of them has now become a creator and the talent, in a way that we never thought would happen. And so, I would say if ever we were in a situation where there’s pressure to grow faster, I would say then let’s accelerate our efforts within video to penetrate that market.

The other thing I’d say is, it’s funny; yes, we’re going public, and for sure there’s differences. Now you’ve got a stock price, and you’ve got quarterly earnings, and that comes with a series of different choices and pressures. But I hope that the people that invest in Vimeo understand that we are “impatient on execution, patient on vision.” 

This is a long-term play, and that’s how we are going to manage the business. We are not planning to be profitable this year. We are focused on really building the best solution and gaining share in the market because we have so much conviction that it is large, and it’s only going to increase from here.

And so look, it’s my job, frankly, as CEO, to make sure that we stay long-term oriented in the decisions that we make.

Usually when a tech company says they’re not planning on being profitable, they just want to build the best thing, what they are talking about is burning cash to establish a moat and preclude competition. 

But you have talked many times in this conversation about how you anticipate a flood of competition. So are you just trying to burn cash right now to build some competitive moat that no one can get over?

No, I think it’s so on point that that is the risk. This is where I would say the IAC discipline has probably served us quite well. We are very disciplined internally, and I’m going to use annoying investor-y terms, but our unit economics, when we spend a dollar on marketing or sales, making sure it’s responsible and efficient, it’s super ingrained in how we operate. 

And I actually think we’ve done a really, really good job in doing that, almost to our detriment. We actually were profitable in Q4, for example, even though we were trying to be aggressive in the market, but we have a high-margin business. We’re improving our margins, we’re spending our dollars more, and we’re building great products. And so sometimes that happens, and that’s a great thing. It’s just not what we optimize for.

And so, I think for sure we will have to be disciplined, but I think there’s examples of companies that have done this really well, where you can be ambitious, and you can try and grow. But what you’re not doing is throwing marketing dollars at a problem. What you’re doing is trying to build a great product that’s going to get natural adoption and organically grow from there. I would say you’ll see our investments be very product-driven. Our biggest investment is in R&D, and ultimately that’s how we think we’re going to win in that sustainable, long-term way.

As you’ve thought about becoming a public company CEO, have you imagined yourself fending off the activist investor? Because I would. I’m just telling you, I’d be like, I’m ready to go up against Starboard Capital, let’s do it.

Well, look, this is an area where we do benefit from the fact that IAC, while they don’t own the company, and we’re spinning off, we just announced our board, and I think we have a really good group of long-term oriented folks on board. And even when we raised capital, we’ve raised capital in the last six months from a variety of investors; very, very long-term horizons, in terms of how they invest.

And I think that’s what helps, is just having the folks, the board, management, everyone around you, holding hands around what success looks like. And success not being optimizing for the highest stock price at the day that you list or in a certain quarter. And so, the way I think of it is less worried about the fending off of the activist. I’ve been through ups and downs at Vimeo. Things are great right now. Things aren’t always going to be great. I know that. 

And what I think about is what are the underlying signals that you’re on the right track? And how do I make sure that I’m always looking at those and keeping everybody, whether it’s investors, our board, or the team, focused on those. And I think for me, those are things like are people engaging with our tools? Are we actually making businesses more successful through video? And are we bringing video to more people? And if those things are happening, I think we can weather any storm. And I’m sure there will be some.

What’s the next storm you think you need to weather?

I think we’re going to see competition, for sure, come in.

Wait, that competition, we’ve talked about it a lot abstractly.

Yeah.

Adam Mosseri was on Decoder a couple months ago. I feel like they just keep missing it. Just build a video creation tool in Instagram that doesn’t suck, and more people will use it. They announced a TikTok clone, and it doesn’t have half the features of TikTok. No wonder people aren’t using it. 

Do you feel that big tech competition, they’re just going to copy you, and it’s 80 percent of the product, but that’s good enough for people not to switch? Or do you perceive the startup competition?

Hard to predict, but my best guess is, I think there’ll be a ton of well-funded startups coming in the space that will try and compete, probably do a lot of aggressive M&A [mergers and acquisitions]. There’s a lot of VC&P [venture capital and private equity] firms, thinking about that, and trying to kind of directly compete. And it’s really just about we have a head start. We have to deliver on the product, it’s all execution. We know exactly what we need to build. We have the team to do it. We just got to do it. We got to do it better than others. So there’s that.

And then I think on the bigger company side, I actually think more of the risk may come on the enterprise software side, because I do think that’s a big market. And there are players that have just significant resources who can definitely throw money and engineers at problems. But I am comforted by the fact that, to your point, you can say you’re going to build a clone or go after something, but the actual institutional knowledge of how to do that well is not easy. And I’ve experienced this myself.

At Vimeo, one of the first things I did as CEO was, we wanted to get into live streaming. We weren’t in live streaming in 2017, and we tried to build it ourselves. And we’re a video company. We’ve been doing this forever. And we were epically not set up to do it as well as a company we ended up acquiring that spent 10 years doing it.

And so, I appreciate that it’s not so simple to just build something. You have to really have empathy and understand the user, there’s so many things you have to get right. You have to have the right go-to-market, there’s all these other pieces. And so I just think we just have to execute better. And luckily, we have the focus, we have the capital, I think we have the patience. So this market is ours to lose.

Decoder with Nilay Patel /

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