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Virool (YC S12) Raises $6.62 Million “Seed” Round To Help Make Videos Go Viral

68 points by adebelov 14y ago

Thun 14y ago
Congrats Alex!
dude_abides 14y ago
Naive question: Is there a technical definition that differentiates a Seed round from Series A? I used to think - Seed round was raised from friends and family - but this one has tonnes of institutional investors. - Seed rounds typically raise <1mm at <10mm valuation - but this one raised 6mm+ (at maybe 50-60mm valuation?) - Seed rounds happen before the business is well defined - also not true in this case. So why is this called a seed round and not a Series A?
- danielpal 14y ago
  It's probably a seed round and not an A round from the terms the round was raised. Typically an A round comes with different terms like boards seats, lead investors, pro-rata right etc. Also A rounds are always priced rounds with stock issued. Seeds are normally not priced and instead debt (convertible note) is issued.
  - dude_abides 14y ago
    I believe board seats and lead investor/pro-rata rights are just negotiation terms and not a must for a Series A. Your other point is a good one. If there was no valuation and only convertible notes were issues, then I understand why this would not be a Series A.
- zaius 14y ago
  Not naive. The terms are in the midst of change. Hence the "quotes" in the article title. Now that convertible notes are the dominant form of financing seed rounds, I usually see money raised with debt as seed, and money raised by issuing stock referred to as the A round.
scep12 14y ago
I would have called it Vireel.
- roberto 14y ago
  Virool sounds like a russian saying "we rule".
vannevar 14y ago
It doesn't seem like the service involves virality at all, they just provide an affiliate network to serve videos on for a fee. Like a video version of AdSense. Am I missing something?
- brandnewlow 14y ago
  "Like a video version of AdSense" No...I think you got it's value pretty dead-on there.
- tinco 14y ago
  The service itself is not about virality, but their customers are people who want their video to become viral, and for a video to become viral it needs exposure to key figures, which you might reach using their 'AdSense' network. Here key figures means people who are interested in your video, have the personality to share videos and are charming enough to have a following that enjoys them (and perhaps includes more key figures). Also there Virool guys seem to have spend a rather large fraction of their seed finance on the video funny that sells their service :P
Irregardless 14y ago
How do you scale something that decreases in value with every new customer it acquires? You can only pump so many fake video promotions into a market before it's completely saturated and people start to resent the constant assault of your ads. Not to mention the fact that every Tom, Dick and Jane with a camera is already pushing their own videos every chance they get. Then there's this: > “All [Jimmy Kimmel] had done was expose [the Double Rainbow] video to a couple hundred million people who would find this video interesting to them,” Debelov says. (Actually, [Kimmel] tweeted it to his 90,000 Twitter followers). “We’ve taken that process, and reversed engineered it. We can’t guarantee your video will go viral because it all depends on your content, but we can get it in front of a million, two million, half a million, whatever your budget is – we can get you in front of that audience.” You've reverse engineered the power of celebrity? Highly doubtful. When a comedian with the clout of Jimmy Kimmel calls something the "funniest video in the world"[1], his fans are going to watch that video. When those same people see a video advertisement at the bottom of a blog post or in one of their mobile apps, they're going to ignore it. Hell, even celebrity has its limits -- Kimmel's suggestions would be ignored if he started posting random videos rather than specific links of his own choosing. Anyone born after 1980 has been conditioned since adolescence to ignore online advertisements. It's gotten to the point where you have two choices: 1.) Make your ad so obtrusive that it might actually cost you users, or 2.) Don't infuriate your users, and settle for a CTR of .01% on a good day. I can only see this service reinforcing that conditioning. [1] http://twitter.com/jimmykimmel/status/17665533038 http://twitter.com/jimmykimmel/status/17665533038
- adebelov 14y ago
  Basically, there's two things at stake in creating a viral video: 1. content 2. distribution We can't help our advertisers create good, engaging content, but we can help with distribution. We can get their video infront of people through our network of publishers, but if their video (content) sucks, it's not going to catch on. We are not looking to become a solution for promoting viral videos. We are building a Google AdWords for video solution with distribution taking place on Facebook, Mobile Apps, blogs and sites.
- vgurgov 14y ago
  disclosure: I am cofounder of virool. So when you talk to journalists you never know what part of whole conversation they will highlight:) I am not a fan of this example too, i dont think it represents well what are we doing as a company, but a lot of them catch this since it corresponds with our catchy name. the idea of our service is simply to get relevant videos in front the right audiences. as someone below correctly commented its essentially AdSense for Videos. since we dont have fixed ad units but rather offer API to developers its up to them how obtrusive/native they want to place it. so far we have seen both very abusive and very nice implementations when video was nicely integrated in some games natively.
ErikAugust 14y ago
"He kept fielding from clients at the time was “can you help me make these videos go viral?” "No... but..." In search marketing, the question is "Can we get to top of Google?" And the answer can be yes if the client is willing to go pay-for-play (AdWords). So these guys basically built their own platform to do pay-for-play, I'm assuming.
martinshen 14y ago
Great job Debelov! Psyched to have Virool going strong
ccarnino 14y ago
I am wondering what kind of valuation this company had got. To raise that amount of money I expect at least $12M post-money valuation (and still they have sold about 50% of the company for a seed round). So, the question is what kind of mind-blowing traction they had?
tferris 14y ago
Anyone with a tl;dr about what they are doing and it differs from Unruly?
- jacquesm 14y ago
  Apart from the tl;dr I was about to ask the same.
jacquesm 14y ago
Virality used to be a mark of excellence for a video, some way of measuring success. Now that success is no longer a symptom but the actual goal the nature of videos and their promotion will change. Just like email could be used to reach large numbers of people in a short time, spam attempted to destroy it. Eventually this will devolve into 'video spam' where you'll be bombarded with links to videos in the hope that they will go viral. Fortunately the cost of producing any video is so large that this will dampen the flood but if there are companies that aim specifically for virality of content then that is a sure sign that we're about to see a shift. Eventually viral videos will die out because too many impulses deaden the nerve and then another useful and nice to have thing will have been murdered. Virality is the mark of excellence of a successful meme, something that should work its own way because you showed it to a small number of people and they decided to reward your work with a reference and so on. Forcing virality by dumping a video in front of a large number of people will simulate the effects of virality by using a starting group large enough that the eventual effect will be indistinguishable from virality. But it is not the same as virality. A viral campaign costs outside of the original production costs next to nothing and is proof you got it right. If you have to force virality you are actually saying that your video is not all that good. So users of services like these should realize that they are essentially admitting their content is not the real thing.
JimWillTri 14y ago
Noticed some pretty bad complaints from customers on Techcrunch seemingly alleging click (or in this case play) fraud. Do you have anything yet in place to prevent play-fraud? "Tried running some videos with Virool. Couple of things I didn't expect: 1. Even with very precise targeting, my entire $100 ad budget was eaten up right away. We're talking seconds - minutes. 2. I was charged for views after just a few seconds of starting the campaign, even though the video is several minutes long. Clearly they are not restricting charging to actual completed views. "
- arbuge 14y ago
  Good point. Google's reputation in part is based on the exhaustive mechanisms they have in place to combat click fraud and assure advertisers they're getting billed for quality. I remember once bringing their wrath down on me because of accidentally clicking on one of my own AdSense ads. Took me 9 months of grovelling to get my AdSense account unsuspended after that.
venomsnake 14y ago
We have a company that enables your videos to go viral ... that don't have their own video that has gone viral to show their company to the world, but instead we learn from techcrunch.
- niggler 14y ago
  Apparently they need that seed money for the product :/ We are definitely in a bubble ...
niggler 14y ago
I wonder if there's a way to hook this with amazon mechanical turk: pay a cent for a person to just open up youtube and watch a video. Then set up a network where people pay money for views, and profit from the spread.
Cardeck 14y ago
I am really sick of people talking about the multitrillion markets they want to conquer. So many startups calling that card.It's ridiculous! "We will be successful because it is a 1000 trillion market".How about being realistic.It's just stupid.We all know nobody will get even close to a damn trillion. I would rather divide 7 mil.$ between 10 good startups instead of 1 like this.
LilValleyBigEgo 14y ago
Videos don't "go viral" anymore and there aren't any "leaks" and there's no "breaking news." This isn't 2002.
JuergenHoebarth 14y ago
It's a nice forced viewing platform making zynga and others very happy ;) view vid for 30sec and get some credits for FarmVille, exactly he audience everyone wants to reach. Typical non viral approach just Deliver numbers for reports ;) but big respect to the guys how they packaged it shiny and positioned it within the whole ecosystem. As filling out surveys or subscribing to newsletters or services like netflix in exchange for credits the user do not like any more...
- JuergenHoebarth 14y ago
  They provide a nice solution to get something out of all this free app users who do not like to pay and this market is large. Something like 90 to 95 percent off all the players...

68 points by adebelov 14y ago

Thun 14y ago

Congrats Alex!

Naive question: Is there a technical definition that differentiates a Seed round from Series A? I used to think - Seed round was raised from friends and family - but this one has tonnes of institutional investors. - Seed rounds typically raise <1mm at <10mm valuation - but this one raised 6mm+ (at maybe 50-60mm valuation?) - Seed rounds happen before the business is well defined - also not true in this case. So why is this called a seed round and not a Series A?

danielpal 14y ago
It's probably a seed round and not an A round from the terms the round was raised. Typically an A round comes with different terms like boards seats, lead investors, pro-rata right etc. Also A rounds are always priced rounds with stock issued. Seeds are normally not priced and instead debt (convertible note) is issued.
- dude_abides 14y ago
  I believe board seats and lead investor/pro-rata rights are just negotiation terms and not a must for a Series A. Your other point is a good one. If there was no valuation and only convertible notes were issues, then I understand why this would not be a Series A.
zaius 14y ago
Not naive. The terms are in the midst of change. Hence the "quotes" in the article title. Now that convertible notes are the dominant form of financing seed rounds, I usually see money raised with debt as seed, and money raised by issuing stock referred to as the A round.

scep12 14y ago

I would have called it Vireel.

roberto 14y ago
Virool sounds like a russian saying "we rule".

vannevar 14y ago

It doesn't seem like the service involves virality at all, they just provide an affiliate network to serve videos on for a fee. Like a video version of AdSense. Am I missing something?

brandnewlow 14y ago
"Like a video version of AdSense" No...I think you got it's value pretty dead-on there.
tinco 14y ago
The service itself is not about virality, but their customers are people who want their video to become viral, and for a video to become viral it needs exposure to key figures, which you might reach using their 'AdSense' network. Here key figures means people who are interested in your video, have the personality to share videos and are charming enough to have a following that enjoys them (and perhaps includes more key figures). Also there Virool guys seem to have spend a rather large fraction of their seed finance on the video funny that sells their service :P

Irregardless 14y ago

How do you scale something that decreases in value with every new customer it acquires? You can only pump so many fake video promotions into a market before it's completely saturated and people start to resent the constant assault of your ads. Not to mention the fact that every Tom, Dick and Jane with a camera is already pushing their own videos every chance they get. Then there's this: > “All [Jimmy Kimmel] had done was expose [the Double Rainbow] video to a couple hundred million people who would find this video interesting to them,” Debelov says. (Actually, [Kimmel] tweeted it to his 90,000 Twitter followers). “We’ve taken that process, and reversed engineered it. We can’t guarantee your video will go viral because it all depends on your content, but we can get it in front of a million, two million, half a million, whatever your budget is – we can get you in front of that audience.” You've reverse engineered the power of celebrity? Highly doubtful. When a comedian with the clout of Jimmy Kimmel calls something the "funniest video in the world"[1], his fans are going to watch that video. When those same people see a video advertisement at the bottom of a blog post or in one of their mobile apps, they're going to ignore it. Hell, even celebrity has its limits -- Kimmel's suggestions would be ignored if he started posting random videos rather than specific links of his own choosing. Anyone born after 1980 has been conditioned since adolescence to ignore online advertisements. It's gotten to the point where you have two choices: 1.) Make your ad so obtrusive that it might actually cost you users, or 2.) Don't infuriate your users, and settle for a CTR of .01% on a good day. I can only see this service reinforcing that conditioning. [1] http://twitter.com/jimmykimmel/status/17665533038 http://twitter.com/jimmykimmel/status/17665533038

adebelov 14y ago
Basically, there's two things at stake in creating a viral video: 1. content 2. distribution We can't help our advertisers create good, engaging content, but we can help with distribution. We can get their video infront of people through our network of publishers, but if their video (content) sucks, it's not going to catch on. We are not looking to become a solution for promoting viral videos. We are building a Google AdWords for video solution with distribution taking place on Facebook, Mobile Apps, blogs and sites.
vgurgov 14y ago
disclosure: I am cofounder of virool. So when you talk to journalists you never know what part of whole conversation they will highlight:) I am not a fan of this example too, i dont think it represents well what are we doing as a company, but a lot of them catch this since it corresponds with our catchy name. the idea of our service is simply to get relevant videos in front the right audiences. as someone below correctly commented its essentially AdSense for Videos. since we dont have fixed ad units but rather offer API to developers its up to them how obtrusive/native they want to place it. so far we have seen both very abusive and very nice implementations when video was nicely integrated in some games natively.

ErikAugust 14y ago

"He kept fielding from clients at the time was “can you help me make these videos go viral?” "No... but..." In search marketing, the question is "Can we get to top of Google?" And the answer can be yes if the client is willing to go pay-for-play (AdWords). So these guys basically built their own platform to do pay-for-play, I'm assuming.

martinshen 14y ago

Great job Debelov! Psyched to have Virool going strong

ccarnino 14y ago

I am wondering what kind of valuation this company had got. To raise that amount of money I expect at least $12M post-money valuation (and still they have sold about 50% of the company for a seed round). So, the question is what kind of mind-blowing traction they had?

tferris 14y ago

Anyone with a tl;dr about what they are doing and it differs from Unruly?

jacquesm 14y ago
Apart from the tl;dr I was about to ask the same.

jacquesm 14y ago

Virality used to be a mark of excellence for a video, some way of measuring success. Now that success is no longer a symptom but the actual goal the nature of videos and their promotion will change. Just like email could be used to reach large numbers of people in a short time, spam attempted to destroy it. Eventually this will devolve into 'video spam' where you'll be bombarded with links to videos in the hope that they will go viral. Fortunately the cost of producing any video is so large that this will dampen the flood but if there are companies that aim specifically for virality of content then that is a sure sign that we're about to see a shift. Eventually viral videos will die out because too many impulses deaden the nerve and then another useful and nice to have thing will have been murdered. Virality is the mark of excellence of a successful meme, something that should work its own way because you showed it to a small number of people and they decided to reward your work with a reference and so on. Forcing virality by dumping a video in front of a large number of people will simulate the effects of virality by using a starting group large enough that the eventual effect will be indistinguishable from virality. But it is not the same as virality. A viral campaign costs outside of the original production costs next to nothing and is proof you got it right. If you have to force virality you are actually saying that your video is not all that good. So users of services like these should realize that they are essentially admitting their content is not the real thing.

JimWillTri 14y ago

Noticed some pretty bad complaints from customers on Techcrunch seemingly alleging click (or in this case play) fraud. Do you have anything yet in place to prevent play-fraud? "Tried running some videos with Virool. Couple of things I didn't expect: 1. Even with very precise targeting, my entire $100 ad budget was eaten up right away. We're talking seconds - minutes. 2. I was charged for views after just a few seconds of starting the campaign, even though the video is several minutes long. Clearly they are not restricting charging to actual completed views. "

arbuge 14y ago
Good point. Google's reputation in part is based on the exhaustive mechanisms they have in place to combat click fraud and assure advertisers they're getting billed for quality. I remember once bringing their wrath down on me because of accidentally clicking on one of my own AdSense ads. Took me 9 months of grovelling to get my AdSense account unsuspended after that.

venomsnake 14y ago

We have a company that enables your videos to go viral ... that don't have their own video that has gone viral to show their company to the world, but instead we learn from techcrunch.

niggler 14y ago
Apparently they need that seed money for the product :/ We are definitely in a bubble ...

niggler 14y ago

I wonder if there's a way to hook this with amazon mechanical turk: pay a cent for a person to just open up youtube and watch a video. Then set up a network where people pay money for views, and profit from the spread.

Cardeck 14y ago

I am really sick of people talking about the multitrillion markets they want to conquer. So many startups calling that card.It's ridiculous! "We will be successful because it is a 1000 trillion market".How about being realistic.It's just stupid.We all know nobody will get even close to a damn trillion. I would rather divide 7 mil.$ between 10 good startups instead of 1 like this.

LilValleyBigEgo 14y ago

Videos don't "go viral" anymore and there aren't any "leaks" and there's no "breaking news." This isn't 2002.

JuergenHoebarth 14y ago

It's a nice forced viewing platform making zynga and others very happy ;) view vid for 30sec and get some credits for FarmVille, exactly he audience everyone wants to reach. Typical non viral approach just Deliver numbers for reports ;) but big respect to the guys how they packaged it shiny and positioned it within the whole ecosystem. As filling out surveys or subscribing to newsletters or services like netflix in exchange for credits the user do not like any more...

JuergenHoebarth 14y ago
They provide a nice solution to get something out of all this free app users who do not like to pay and this market is large. Something like 90 to 95 percent off all the players...