My Summer Starting Activid – Part I

This summer, I have been working full time on my video editing startup Activid.  It has been an unusual summer for me – for the first time, I’ve needed to set my own hours, make my own deadlines, and define my own objectives.  None of it has come easy, but each challenge has helped teach me something new.  I’ve learned just as much about myself and how I work as I have about starting a business.

It wasn’t the easiest decision to work full time on Activid this summer.  At business school, there is a very structured process in which students recruit for internships, work at a large company over the summer, and either accept a full-time offer or re-recruit the following year.  I watched all my friends go through traditional MBA recruiting while I sat on the sidelines, knowing I wanted to follow a different path.  At times, I even felt irresponsible not taking advantage of Booth’s Career Services, effectively foregoing the one resource students value most.  But then I would remind myself, that’s not why I came back to school.  My goal upon entering Booth was to learn some new skills, meet smart and interesting people, take advantage of Booth’s entrepreneurial resources, and use the summer to try my hand at starting a business.  Thus far, I’ve accomplished all four, so I feel like I’m off to a good start.

More than anything, this summer has taught me that it’s hard to work by yourself for 10 hours a day.  When you have no one else to share the burden of starting a company with, or even to bounce ideas off of, it can get lonely.  In the future, I’d like to find at least one other person to work with who shares my excitement in living through the ups and downs of entrepreneurship.

Of course, I learned a whole lot about starting a company, too.  My college friend Dru subletted one of our bedrooms this summer, and every night for the first two weeks, he asked me “What did you do today?”  He meant it as a half-joke, but he really did want to know.  In the next few posts, I’ll try to answer Dru’s question and describe my summer experience.  My plan is to break it into separate functions, including business strategy, product development, sales and marketing, employee management, and customer service.  Most importantly, I’ll show how all this work led to one of the greatest days of my life – the day Activid got its first real customer.

Video Editing Company

Whenever I go on vacation with family or friends, I usually shoot video of our trip with a GoPro camera.  I use iMovie to make a short highlights film after the vacation is over that I can then post online and send to my friends.  As I mentioned in an earlier post, I believe that video relates an experience much better than a photo album.  Even though it takes me a solid two days to create a good movie, I enjoy the finished product enough that I am willing to dedicate the time to make it.

However, there’s a reason why most people still choose to take pictures over video.  Watching raw, unedited video is awkward, and the process of editing video to create an entertaining 4-5 minute movie is extremely time consuming.  Most people are unwilling to dedicate the time it takes to parse through hours of footage, find the best clips, sequence those clips into an engaging story, and overlay music that sets the right mood.  As a result, the overwhelming majority of vacations/activities/experiences are still documented with pictures.

A New Market is Emerging

Over the last few years, the demand for action sports video cameras has exploded.  GoPro possesses a near-monopoly on this market and is growing at an extraordinary rate.  In 2011, GoPro’s estimated revenue was ~$250 million; in 2013, they may crack $1 billion.  GoPros are selling like crazy, but for the aforementioned reasons, I would speculate that only a fraction of users actually take the time to edit and upload their video to YouTube.  During a conversation I had with a GoPro employee, he told me that GoPro’s biggest long-term focus is getting video off of users’ cameras and onto the internet.  The more content that makes it’s way to YouTube, the more other people will see viral videos shot with a GoPro and want one for themselves.

Does GoPro eventually want to provide video editing services that eliminate the barrier to creating awesome video content?  Maybe.  They’ve already developed GoPro Studio, an application akin to iMovie that offers pre-loaded template themes that allow users to drop video clips into a prebuilt movie with music, titles, and other visual effects.  It’s clear GoPro understands their users’ pain points, but given the speed at which the company is growing, they may not have enough dedicated resources to tackle this problem now.

A Business Opportunity Awaits

I’d like to create a video editing company that addresses this problem.  I envision a service where people can upload their raw footage to a website, and experienced editors will turn that content into a beautiful short film.  Pricing might depend on the number of hours of raw footage uploaded, as well as the length of the final video.

I searched around the internet for competitors and discovered Videopixie and Viedit, online marketplaces that connect video takers with video editors.  In the case of Videopixie, users upload their raw footage to the site, and Videopixie’s network of freelance editors will edit the video for them.  The upside to this business model is scalability – Videopixie isn’t actually hiring any of its own editors, and instead takes a percentage fee from the transaction.  However, the downside of the business model (and one that outweighs the upside in my opinion) is Videopixie’s lack of quality control over edited videos.  Because Videopixie outsources the editing to freelancers, Videopixie customers may experience varying levels of quality depending on what editor they choose.  In addition, Videopixie is attempting to serve the entire spectrum of video categories, including action videos, music videos, customer interviews, game trailers, and so on.

If I started a video editing outsourcing company, I would do a couple things differently.  First, I would focus solely on action sports videos and other vacation videos shot with a GoPro.  Second, I would hire editors and train them on how to edit this type of footage so that all final videos achieve the same high standard.  By focusing on a particular type of video (action sports), it will be easier to train editors in a specific editing style, which will in turn help them edit videos faster.

I’m really excited about the idea, and I truly believe that there’s a market for this type of service.  I’m a big skier, and five years ago, no one was wearing mountable cameras.  Today, they’re all over the mountain. Five-year-olds, teenagers, dads – they’re all using GoPros.  I think that creating a service that caters to an unmet need in an exploding market is a good move.  My biggest question is – can the business model work?  That’s what I’m going to find out.

(If anyone reading this post has ideas, suggestions, or relevant business experience, please shoot me an e-mail or post a comment.  I’d really like to hear what other people think about the concept.)

A New Online Bank

I am obsessive about tracking my finances.  When I graduated from college and started working, I created a spreadsheet to record my monthly income, pre-tax deductions, tax withholdings, 401-K contributions, and expenses by category.  Every month or so, I’d review my online credit card statements and input each transaction into Excel, which would then flow into a monthly summary tab.  I continue to track my expenses like this today.

I set up an account with Mint.com but rarely use it.  In my opinion, the Mint platform has several shortcomings that render it unusable for me – namely their inability to accurately categorize a significant portion of my transactions.  Mint also has trouble distinguishing cash transfers between accounts from actual spending, so when I transfer $1,000 from Schwab to Ally, Mint thinks I’ve spent $1,000 somewhere.  Their advertisements for various financial products don’t do much for me, either.

The one Mint feature I do like is the ability to see a real-time snapshot of all my accounts in one place.  If an online bank offered all the services I use (which aren’t very many), then I’d just keep all my money with them and avoid Mint as an intermediary.  I keep most of my money in Schwab checking and brokerage accounts, but since they don’t offer a very good rate on their savings account, I use Ally instead.  I recently opened an account with Betterment.com to easily invest money in a diversified market portfolio without having to choose the various ETF funds myself.  And I’ve also been using LendingClub.com to invest in consumer debt the same way a traditional bank would.

Which led me to thinking – why not create an online bank that offers all of these products?  Even if you ignore Lending Club, an online bank that combines the same automated stock/bond investment tool as Betterment with a traditional high yield checking and savings account would be very appealing.  I believe that a service like this would be sufficient for most people who want to keep their spending money with an online bank and also invest in a diverse portfolio without having to choose individual stocks, bonds, or ETFs themselves.

If an online bank offered me a checking account, savings account, automated investing account, credit and debit card, and reasonably powerful expense tracking tools, I would keep 100% of my money with them.  So why doesn’t a bank like this exist?

Maybe I should create one.