Jeremy Allaire: Yes, that very is cool. And you're also involved in the Online Video Platform Summit.
LK: Yes, I'm Co-chair of the event with Eric Schumacher-Rasmussen.
JA: We're super excited that there is an online video platform summit. We've been promoting space for years and now. It's really emerging and we'll be doing a lot activities around the event and have some important announcements too. We're definitely trying to crank up the level of market education activity. As this becomes a category that people are looking at, there's an opportunity to get leaders together to help promote the category.
LK: Brightcove does so much education around the space with the webinars, blogs and white papers so it will be great to see what you have planned for the Online Video Platform Summit. It's also a great segue into our conversation. So, could you tell me about Brightcove's vision at the inception of the company, how it's evolved since you launched it in 2004?
JA: That's a great question, and I'd like to go back even further before Brightcove was even started. I think the most immediate thing was that prior to Brightcove, I was the head of technology and CTO at Macromedia and we launched the MX platform. In March of 2002 we introduced video into Flash player as part of a broader initiative to transform Flash into the next generation rich client of choice for the broadband Internet. And that overall initiative has been very successful but video specifically when we put it in, it was very exciting and not a lot of people were really paying attention to the fact that Flash had video at that time. But it became very clear to me that within several years there would be a ubiquitous run-time for video on the Internet and a lot of other convergent trends - Wifi, broadband adoption, the improvement of media capabilities of all PC devices - all these other converging trends would come together and drive exponential growth in video publishing.
At the time, I really thought to myself that video would become as ubiquitous as text on the web. I looked at pursuing that idea inside Macromedia by building an online service to help with that, but it wasn't really something the company wanted to pursue. So I left and spent a little bit of time at a venture capital firm looking broadly at the market and also incubating this company in 2004. So really at the inception when I incorporated and started to talk to people about joining, the vision was very much that - that video would become as ubiquitous as text on the web - and if you have a professional Web site of some sort, and it was important for us very early on that we focus on professional side of things we really weren't thinking about user generated content at all. But if you were if you are using the Web as a professional organization, whether you were a media company or a corporation or a university or a nonprofit, that video was going to become central to what you do.
When the company really got started in January 2005, when I first started hiring people we made a decision - this is the broad vision of ultimately the democratization of video as a medium and a format - let's start by focusing on that part of the world which benefit most from this, which was the media industry, specifically. Companies whose business was focused on media where video was going to become a central part of the mix of what they used, whether it was traditional TV companies or non-TV companies, and there was an immense amount of pressure for them to build out their digital media businesses specifically. So we focused very very aggressively on that particular vertical. We went very deep on that for our first in a couple of years and did a very good job of designing an online platform, that really was the first I think, on an end-to-end basis to make it relatively easy for a media publisher operate on an online video business.
We learned an immense amount through that and also really battle tested our technology, which allowed us to really expand the scope of what we do in some interesting ways. But what's really happened in how the business has evolved, which really gets to the core of your question, is that original vision is now starting to play out I think much more fully. Over the last year and a half we've seen online video within the professional media certainly continue to have robust adoption and that's in every corner of the world wherever there's really broadband. But with all other types of organizations like corporations, enterprises, government agencies, universities all these other types of our organizations are really now starting to embrace video as a key part of how they market and communicate over the web.
We're seeing quite a bit of activity now coming from those arenas and we really can see a world where within a few years, every single professional web site on the planet is both producing and distributing video. We certainly want to be the software subscription platform that all the organizations take advantage of.
LK: That's a great overview. I have couple ideas questions I have in regards to Brightcove's origin and how you got started in video from your work at Macromedia. It seems like such a passion of yours.
JA: I should say at this time the way I like to describe it is that video is really sort of an evolution of the broader deeper theme that I've been pursuing since 1990 or so. In 1990-91 got exposed to the Internet in college and I won't go through all the details of that but what really captured my imagination was here's was this open technology network that went all around the world and where really anyone could publish information and interact through this medium in a highly decentralized system.
And it was really really transformative for me personally and it really became the center of focus and investment of my time and energy at that point. So really when I graduated college the only thing that I was really passionate about was - how can the Internet be applied to transform media and communications. That was really at the end of the day was driving my energy at the time. This was before the web was really available, before Mosiac, and as the web emerged it was immediately apparent that now there was a user experience that you can put on top of the global decentralized network benchmark that could really enable this distributed publishing world to emerge. To enable a global medium in communication and interactive services around those to emerge and that ended up leading to projects that were really envisioned as ways to build interactive media experience that brought together dynamic content time and end user interaction and communications. At the time, I was in Minnesota at relatively small magazines and newspapers, and that work actually led to a collaboration with my brother and in turn, the creation of Coldfusion, a product really from its inception was was designed to make it easy for really anyone with an idea and $1,000 to build a global online dynamic content service.
That ended up being a business that had a great deal of success and grew to a lot of scale. So my path really was, let's go build this mass market software platform for building web sites and web content content and interactive experiences on the web. I had a passion for the deeper possibilities of media and communications but really during that phase of Internet it was really constrained in terms of what you can do, the kind of media you can use was just images and text and it was really limited but still really powerful especially when combined with the openness and global reach the web.
Over that time, I started to collaborate with more with Macromedia and we started doing work together with our products and we found that we were really complimentary in terms of the business we were in. So in late 2000, we got together and we saw that we could pursue a joint vision for the next generation of the Internet that would be really centered on these richer applications that really brought together all forms of media, including multimedia, as well as interactive applications and back-end services and all the stuff you need to make really rich applications. We could do that as a business.
For me personally, I was very excited about... if you want to call it moving up the stack towards the the rich client towards the real advanced media format... because I saw that those were going to be the transformative format in the next phase in the Internet. So putting those companies together was really an opportunity for me that furthered a passion that I had early on, and to work on the MX platform and in transforming Flash and introducing a whole new stack of software for how you build locations on the Internet.
Video had been on the web a long time and my first company collaborated a lot with companies like RealNetworks and so on. But it was really when we put video in Flash specifically in early 2002, that was really when you saw that it could put in a ubiquitous runtime and you could build really interesting interactions around it. For me, it was the big "aha" and it was almost like when I first saw a web browser and I thought, "This was really going to be everywhere." That really became a focal point in my work and obviously and ultimately led to creating Brightcove.
LK: So where did the name Brightcove come from?
JA: Names in the age of Web 2.0 Internet are really hard to come by because there are so many registered trademarks and domains encumbrances and so on. We had a hard time coming up with the name. We knew we didn't want the name to have a "v" in it, and that we didn't want to be one of the video companies because there are a lot of those. The most important criteria was when you typed the string into Google that it would produce zero results. That was the case at the time. So we could own the Internet name space for it and we had a lot of different names we came up with.
One of the other criteria was that it be composed of actual words as opposed to making up a word. There are so many of these companies with the names that don't really mean anything or they're incredibly obtuse or difficult to understand - and I think just in general, customers want words that whether they mean something to them or not - that you can read and you can pronounce that they're normal words. It needed to be internationally friendly so in different parts of the world it wouldn't man "dead man" or something like that or whatever it was. So it met all the criteria and the domains were available. But in actuality though, there's a small village with a similar name on Cape Cod which is near where we are and that's how it got on the list
LK: I thought it came from a place because it reminds me of a place that you'd go to for inspiration. So moving forward to today into Brightcove's open platform what's exciting for the Brightcove platform which integrates web sites, iPhone apps, set tops and many other rich applications?
JA: In general, I think we made a lot of progress with the launch of Brightcove 3.0 last October and as you noted, one of the major underlying themes was really opening it up as a platform that other people can build on top of. So developers can build on top of it whether they were inside of our customers or independent developers or third parties. But also that we could really build a broad ecosystem around what we're doing and we made a huge amount of progress with that with hundreds of companies now that are technology companies and professional services companies and others that have joined an alliance with us and have begun to build add-ons and other applications .
In general, I think it's been a very well received product and it's helped drive a lot of financial success for the company. And it's really that openness and getting that ecosystem around it that has also been incredibly exciting. As a service company, we're constantly putting out new features and technology. We've got some very very exciting things in the pipeline that we'll talk more about later this year as well.
LK: Could you talk about growth you've see with your company with a 300% growth, global expansion, strong balance sheet, hiring of new positions and its place as leader market and the first online video platform?
JA: It's been exciting, and our growth just really mirrors the growth of the market in some respects. I think we're pacing it nicely and I can give you some of the key metrics that I think would be helpful. We've only been really commercial for just about three and half years. We didn't launch our first 1.0 commercial product really until the end of Q1 2006, barely three and half years ago. Everything single year we've seen really robust growth and adoption including the first several years being meaningful triple digit growth every year.
This year, which is during "The Great Recession" as people like to call it, we're going to grow top-line revenue year-over-year about 50%, which is good growth this year in high tech if you're a public company where it's been 0%. So we feel really good about that, and that growth is attributed to as well, overall just a strong financial performance. We've actually been profitable the prior year. We've been cash flow positive now, so we've built a business that really is a sustainable, predictable business and with that it's allowed us to continue to invest. We walked into this year looking through Q4, where everything was falling off a cliff, with a very conservative posture in terms of managing expenses and tightening the belt to make sure that we protected our balance sheet. Fortunately, I think Brightcove 3 has been very successful and that's contributed to the growth and the financial performance that we're seeing and has allowed us to keep investing.
So now we're in the process of adding 30 or 40 people the company. That's itself a 25-30% growth just in that head count investment and that's across every geography we're in and every major function. So it's just overall expansion, and we think that that's going to set us up for a very strong 2010. So we think we can continue to grow that. Our service is very widely deployed with over 700 corporations and organizations that work with us and that really is spanning thousands of different properties and web sites across these corporations and media companies, universities and government agencies and so forth. It really is multiple thousands of accounts that use Brightcove so that's been very very encouraging. So we're very pleased with that growth. We're starting to really try and get a handle on how big is this market and how do we ensure that our product or service is something that is accessible to any professional organization that's looking at online video. That's what we're doing going forward.
LK: I spoke with Bismarck from Ooyala recently and one of things he noted that just within the space, which everybody uses the term it's a very nascent space, he seemed to think that there was some 300,000 customers at play that would be looking to sign up with an online video platform whether they're self-service publishers for large media companies. What's your thoughts on that?
JA: I think that that may be a conservative estimate, in fact. I think that when you look at the web as a whole, virtually every professional organizations whether you're a small business, a college, a government agency, a major corporation or media publisher, every organization is investing in their web sites. And in fact, most organizations whether you're a small medium-sized business or Procter and Gamble, you're pouring more of your overall marketing dollars into the web. It's because it is the most effective medium for interacting with customers in the history of the world and so that's a meta-shift that is taking place. So what's happening, is all of these organizations are starting to realize that video is one of the most effective mediums for their marketing and communication and education objectives.
So that's just going to drive more and more demand for easy to adopt software applications to run and manage all of that. That's in parallel with this trend toward cloud computing where people don't want to run a lot of technology, they just want to license it as a subscription and pay based on the capacity they're using. That model is enabling companies of all sizes to use this kind of technology. You know Salesforce.com is really the pinnacle of this model. They've figured out a way to make a very powerful technology accessible to types of organizations and we think that opportunity exists in the online video world. So the total addressable market here we think is all the millions of web sites and that's going to take time and take years and years for that to happen.
I think, yes it is a nascent space, but at the same time as we talked about earlier, OVPs are becoming a category that technology buyers and digital marketing buyers identify with and understand. So I think it's emerging to be a mainstream category and as that happens that will just fuel faster adoption and that's what we're targeting and looking forward to.