Getting to Know Maker Studios

Posted on Dec 25, 2011 | 28 comments


A year ago I invested, along with Dana Settle at Greycroft Partners, in a startup company called Maker Studios.

What excited me was that they had an immensely talented team that understood how to produce & distribute low-cost videos, initially via YouTube. It was founded by Danny Zappin, Lisa Donovan & Ben Donovan (along with several creative talent like Shaycarl, KassemG and others).

They know this model of YouTube production & distribution better than anybody else that I’ve met in my 5 years in Los Angeles.

And anybody who follows this blog knows that I believe television disruption has already begun and it is more likely to resemble Internet content than streaming long-form content to our living rooms.

As I talked about this model with several friends in Silicon Valley I always heard the same refrain, “we don’t invest in content business – they are ‘hits driven’.”

I had to laugh a bit at at the irony of this. For one, the consumer-driven startup world has become immensely hits driven. You need star power of entrepreneurs surrounded by star power angels & VCs who in turn get tons of press from adoring journalists who are insiders amongst this crowd of tech cognoscenti.

And this is at the same time that content has become more predictable. Sure, you need to start with talent. But when you produce on Internet you can test your content in the same way that Silicon Valley firms test early versions of their software.

You can get feedback from your audience and adjust based on their feedback. You can get subscribers who receive every version of your content that you release. You can monetize via Google Ad Sales before you have enough revenue to build your own sales team.

Sound familiar?

Maker Studios is the ultimate “lean startup.”

And then you can build email lists and market video content to your fans in the same way Gilt Groupe markets its clothes to its end consumers, making it an insanely scalable business.

In the era of the Internet video is not a one-way medium. Content producers can have direct relationships with end viewers that serve as feedback loops & direct marketing vehicles.

And nobody knows how to do this better on the Internet than Maker Studios. They are now the largest independent network who produce in-house videos and distribute them.

Maker Studios is dedicated to working with “talent” in the same way that Silicon Valley is dedicated to working with engineers. Our talent includes writers, directors, actors, singers, post-production professionals, costume designers, lighting professionals, sound mixers, show runners and so on.

This kind of business will not easily be replicated in Silicon Valley precisely because the skills are different.

We are now attracting serious management talent, having recently brought in the venerable Courtney Holt as the COO. And I’m excited to say that we’ve poached a major technologist from Silicon Valley who will move down to Los Angeles join as CTO in January. More on this soon.

But I really couldn’t do an overview of Maker Studios justice. I’ll leave that to Carson Daly who interviews Danny, Lise & Ben for Last Call in this great piece that describes what they do and why I’m privileged to watch them continue to build out their vision.

And if you happen to be “talent” (including tech engineers!) make sure to reach out to team Maker. There isn’t a more talent-friendly Internet video network out there.

  • Andrew

    What a team. I’ve been watching some of the founders’ online progress and videos since 2006. Definitely a great investment. Not only for a return but the disruption and value they’ll bring to the entertainment industry. What we see today is definitely only the start. 

    Happy Holidays Mark. 

  • http://www.alearningaday.com Rohan

    All the best with Maker Studios..

    ..and Happy holidays Mark!

  • http://bothsidesofthetable.com msuster

    Thanks, Andrew. I agree. Their channel producers are amazingly talented. My favorite is Epic Rap Battles of History by Nice Peter. But of course there is Ray William Johnson, Shay Carl, Kasem G and so many more.

  • http://twitter.com/ScotchGuyDan Dan Bowen

    “For one, the consumer-driven startup world has become immensely hits driven. You need star power of entrepreneurs surrounded by star power angels & VCs who in turn get tons of press from adoring journalists who are insiders amongst this crowd of tech cognoscenti.”
     
    Thanks for answering this lingering question for me as I’ve wondered regularly if that first 500K downloads of the next fly-by-night-me-too are the exact same ones that downloaded the previous TechCrunch hyped product of the hour because ‘X’ VC and ‘Y’ previous founder of ‘Z’ got together to change some nuanced piece of the social world.

  • http://bothsidesofthetable.com msuster

    In the old days it was 50k and people called it, “the TechCrunch bounce” because you got 50k users over night but within weeks you were back to 2k.

  • http://twitter.com/ScotchGuyDan Dan Bowen

    In reference to Maker: I’m actually close to killing my cable TV and just using the XBox 360′s I already have all over the house for media distribution as they have a pretty amazing channel lineup now with Hulu, ESPN, Comcast etc…

    Do you see Maker eventually having their own dedicated channel/network that is outside of YouTube one would eventually subscribe to or is there no reason to leave the YouTube ecosystem?

  • MargieAtPolitiChicks

    I really can’t imagine a better investment. The talent at Maker blows my mind. The content never gets boring or repetitive unlike T.V. and movies. Simply amazing.
    I was privileged to write Shay Butler’s bio for our Church Wiki with his blessing and final review. In the bio,  I cite Shay as one of the founders of Maker but here and elsewhere, it lists the Donovan siblings and Zappin as founders. What am I missing?

  • http://web-promo.com.ua/ webpromo

    I will recommend my friends to read this.I will bookmark your blog and have my children check up here often.

  • ashkan karbasfrooshan

    I wonder if other VCs will eventually “get this”.  I don’t think so, but since 2006 I’ve been saying that video content is the new software, and you outline the parallels pretty well in your post.  With cheap hardware and open source software, the right low-cost content catalog and production capability is even more defensive than technology…

  • Jhe Barnes

    Hi Mark,  great post.  I can’t get enough of your blog – amazing insights into the world of biz and VC.  I’m also a video producer for SampleSimple, an Interactive Music Edutainment Series on YouTube http://youtube.com/samplesimple
     
    I agree with the power of low-cost video content production, as we’ve primarily produced screen-captured video and don’t require a great amount of overhead for production.  Since we’ve broke 1 Million+ views, I couldn’t help but to feed my desire to venture out and create related content and properties of interests for the musician community and have since created pay-per-view content properties as well as developing web-based apps in this space which I’m very excited about.   

    The parent company is SoundVolution at http://soundvolution.com  -  I also reached out to you via email but I do understand that you are a busy guy.  I have been in talks with a variety music industry people and only about 5-10% of them have caught on to the power of video online.  Well I hope to connect with you someday as I’m planning to be based in LA.  

    Thanks again for a great blog!  

    Jhe

  • http://twitter.com/andrewcassetti Andrew Cassetti

    It seems the apps and software products in general are becoming engineered more for consumers’ personal preferences rather than true innovation to the technology. 

  • http://www.nowiknow.com/ Dan Lewis

    The irony is that a solid media company *isn’t* hits driven.  That’s very old media thinking, and for that matter, very traditional TV thinking.  

    When your cost structure is in the $100,000s per minute, yeah you need a hit.  There’s no way around it. (But you knew this already; http://www.bothsidesofthetable.com/2011/11/14/future-of-tv-the-quick-version/)  But when you’re down to the $500/minute, it’s a brand new ballgame.  A 20 minute episode of a show costs $100k?  That doesn’t require a multi-million person prime time audience.

    Given how few consumer Internet VCs have blogs and/or online followings, I’m not surprised that they don’t get this.  Content producers, even today, typically sell their content to a company which handles distribution and marketing — writers to book publishers and newspapers, actors and screen writers to movie studios, musicians to record labels, etc.   That’s all changing, and really, marketing yourself as a VC should change with it.  You get it because you live it.

  • http://www.ibla.us/ Meganlisa

    My eight year old knows all the lyrics to all Epic Rap battles of history (no, the language isn’t appropriate but as my kids point out it isn’t as if they haven’t heard the words before).  I’m mid-point writing a post on how like the 1970s punk rock scene the online content world is (www.ibla.us – holiday interrupted!).  Fresher, creative, more audience driven (directly, and not through marketing or studies) I watch as my kids shun television for the online world.  
    As a writer with a tech industry background I can’t believe how many opportunities exist today!  Digital books for $16!  Really?  When producing and distributing competing products costs a nominal amount?
    So glad to see you investing in online content.  I agree with your points across the board.  Fresh, original and accessible, (cheap to produce) and responsive.  People can and do pay for content….
    Happy holidays!

  • http://www.bluecoastrecords.com/ Cookie Marenco

    Happy Holidays, Mark, and
    thanks for being prolific during the holidays!

     

    I can’t agree with you more
    about YouTube and the power it has for content creators.  There is a thirst for information from the content
    consumers that YouTube can quench.  The advertising
    mechanism and ability to educate fans on one’s product is the most exciting
    tool for startup content creators since the “Buy” button from paypal and
    “notifications”.  

     

    Your points about the Silicon Valley really hit home.  Tired content, boring PR, boom then bust,
    S.O.S. (same ol’ s*&^). 

     

    For 25 years, I’ve enjoyed a relatively
    successful career in the music business in the Silicon Valley creating unusual content not widely accepted by the
    masses.  While it seemed crazy to my
    peers not to move to LA, during our 25 years in SV we were allowed access to
    companies developing digital technologies from Apple to Lucas to Dyaxis to
    Digidesign to Liquid Audio and all the other early internet audio companies. It
    was like having the future thrown in our lap. 
    Silicon Valley was great until about 5 years ago. 

     

    Now, the Silicon Valley is a horse race. 
    “Hit driven” seems to apply more to the technology startups
    than to the content creators they point fingers at, even though many of the
    technology companies rely on the content creators to exist. Then, once acquired
    (take MySpace or LaLa, for example) suddenly all the work content creators have
    done to build their brand is down the drain after acquisition.

     

    YouTube
    brings customers to us where Facebook and iTunes takes them away.  For niche markets with small budgets it’s a
    no brainer.

     

    I have never felt more
    positive about the potential of Los Angeles and New York with the talent, media, advertising and understanding
    how to manage those assets. YouTube’s channels are incredibly exciting. 

     

    I hope to be contacting Maker
    Studios soon.  Thanks again, Mark, for
    supporting these kinds of businesses and speaking candidly.

     

    By the way, my nieces and
    nephews of college age go to YouTube for their music and convert to
    downloads.  Half of them never heard of
    Spotify and the one that did, don’t use it. 
    Spotify is old, tired industry leftovers as are most of the tech startups spending $30 Million to license industry catalog.

  • Jorge

    Great coverage of Maker on @wired http://wrdm.ag/s6boV9 too. Happy holidays and keep writing Mark

  • Guest

    My take away point is this: I’d like more steak and less sizzle on this blog. And steak once every couple/few months would be just peachy for me (sorry to mix the savory and sweet metaphors but they simply leapt to my mind). 

    I enjoy many of your posts on this blog very much. I have learned a great deal reading this blog. I find it chock full of
    valuable information But sometimes it contains what I think of as fluff. In particular, your last few blog posts have struck me as a bit fluffy. 
    Let’s review: 

    Direct feedback

    Um, well, yes, sure we can all use constructive criticism but most people are worried they’ll upset us therefore they “play it safe” by telling us a polite lie. A blog post on that? Really? How about just saying, “We all need some tough love sometimes.” Wouldn’t something that have sufficed for your audience?

    CEO and founder of Forrester 

    I felt *very* bad for the  CEO and founder of Forrester after I watched the link to the video that Fred Wilson at http://www.avc.com posted. To be blunt, it seems to me that the CEO of Forrester made an utter fool of himself. I honestly hope he is not suffering from some sort of physical or mental disorder. I’m being serious. I hope his board discretely replaces him with someone more capable of doing his job.

    It almost seemed like I was watching some hokey Saturday Night Live sketch gone terribly wrong. Fred didn’t even bother to “damn him with faint praise” but watching the video still felt to me like Fred was pillorying the guy merely by linking to the video in the first place. And then you wrote a blog post, which to me, felt like you were piling on the guy. Except in the cast of politicians, when someone makes an utter fool of themselves I don’t like them to be publicly denounced. I mostly shake my head an feel sorry for them thinking, “That poor guy is going to have to live with the fallout from this. Ugh. I sure hope it doesn’t tear him apart.” To watching me the CEO of Forrester reminded me of watching Robert McNamara in the movie called “The Fog of War” discussing his role in the Vietnam War. With it’s current “leadership” in this environment, Forrester seems like a dying company much like Siebel about a decade ago but Forrester’s products aren’t just remarkably over-priced, they may even actually harm the companies that purchase them.

    I wish you had written something like, “Just like most of us simply plug into to a wall socket to get electricity or turn on the tap to get water, we’ll simply connect over the web to access applications and data.” What was the point of explaining to your audience how their electricity is generated or how their water is sourced? I assume that those is your who care about the technical mumbo-jumbo already know this stuff; and those who don’t know about it already, don’t actually care about it. But hey, maybe I’m wrong about what your audience wants.

    I remember when the guy who runs Oracle pushed the concept of thin clients- before his protege founded Salesforce.com. I remember talking with many people in which we had conversations that went something like, “Of course, we are simply returning to green screens but they won’t be green they’ll be in color. All we need now is cheap, ubiquitous high speed internet and more sophisticated browsers.” I don’t remember a single person I discussed this with disagreeing with the basic concept. Today it’s like saying we need to transition from dirty fossil fuels to clean renewable energy. Is this really a concept worth discussing more than merely in passing?

    The ASP (Application Service Provider) notion, which some of your readers might not be familiar with, is now called SaaS was obvious too, most importantly because when you give away intellectual property it’s awfully difficult to prevent piracy but also because from the customers’ perspective it’s often easier and cheaper to outsource “back office” functions such as what came to be known as management information systems. (I’m thinking of Peter Drucker’s concept of “front office” and “back office” functions). Let’s think of the classic “Buy vs Build” decision that organizations often face. Customers (or clients or users) would generally rather buy (or rent) than build those things which are  “back office” functions to them  (but, of course, are “front office” functions to another firm).

    Maker Studios

    Your current blog post seems to me to be an ad for one of your investments couched as if it were an insight into how the internet is revolutionizing the television/movie business. Um. Well. Yes. Sure, I agree that the internet is revolutionizing the television/movie business. 15 years ago that insight might have been worth a brief mention, but nowadays it’s sort of like saying water is wet.

    Here’s my suggestion: at the top of each article give a very brief synopsis of your article such as  “Just like most of us simply plug into to a wall socket to get electricity or turn on the tap to get water, we’ll simply connect over the web to access applications and data.” That way folks who already agree with your premise can say to themselves, “I don’t need to bother reading the article.”

    As much as I think Fred Wilson’s blog is a gem, personally I like Paul Graham’s approach over Fred’s approach: post infrequently but make your posts very meaty and well-thought out. For me at least, I’d be glad to read one great blog post from you every couple of months than deal with sorting through fluffy posts that seem like you are  preaching to the choir and publicizing your investments via product placement. As readers of this blog must all know, reading online is a bit like trying to get a sip of water by sticking your head into Niagra Falls during a once every hundred years flood: there’s far more out there than anyone of us could possibly consume even if we were to live a million lifetimes.

    When Paul Graham posts on his site (it’s not a blog, is it?) I am sure to read his stuff. I disagree with much of what he writes, but I still find virtually all of his posts very worthwhile. But Fred Wilson’s MBA and movie advice “cheapen his brand” in my mind. (I dislike talking about people or their work as if they or it were something as impersonal as a brand but hey, that’s the vernacular for this blog). I get tired of separating what- for me- is the wheat from what- for me- is the chaff on http://www.avc.com You and Fred may think you are creating communities (hey Fred seems to fashion his role Sam Malone from Cheers) but I think you aren’t. (That’s some tough love. I’m not trying bust your chops. Ok?). 

    I think your blogs are simply engaging ways to communicate ideas. I think they are the current iteration of BBS’s or Compuserve chat rooms. I am convinced that they not ways to form authentic lasting communities which I am convinced are built upon extended families living physically very close to one another and observing the same religion. (I’m talking about Authentic tribes or clans, not “tribes” in the nonsensical way that Seth Godin has often referred to what I think are more correctly seen as customers, followers, associates, etc.). I don’t need a “daily dialogue” with you; sheesh, I don’t even want one! What I want are sources of valuable analysis and insight to replace the nauseating mass produced drivel (mass media) we’ve been subjected to for close to 200 years.

    Besides, the idea of you sitting in bed with your laptop at 11pm feverishly churning out yet another blog post makes me sad. I wish you’d spend more time sleeping, with your family, or exercising your body rather than posting to this blog. I don’t have the heart to watch you on This Week In because you look way too tired and, um, pasty white and pudgy. I think to myself: I wish Marc would do this show less often and go for a run on the soft sand at the beach more often. What’s the point of living by the beach in LA if you don’t get outside during the day to enjoy it? Although his claimed he didn’t want to end up as the richest man in cemetery, Steve Jobs sure acted like that’s what he wanted. You’ve busted your tail making a name for yourself. You’ve made your name. Congratulations. I think it’s time to sit back and reap some of the rewards. Sometimes more is more but sometimes less if more. And sometimes more is less. I’m guessing if you ask those who know you well, they well tend to agree that you and your family would be better off if you “dialed it down” a bit on the work side so you could dial it up on the family/personal side. I’d be very surprised if you wife wanted her husband typing on his laptop while she lay next to him in bed.

    My “tough love” notwithstanding, I think very highly of this blog. Keep up the good work. I wouldn’t have taken the time to write this long comment if I didn’t think as highly of this blog as I do.

  • Eric Page

    Love it. I’ve lived in both LA and Silicon Valley (used to hang out at your GRP office periodically, before you were there) and you’ve succinctly summarized what friends and I have been discussing: Silicon Valley is the new Hollywood. People are moving here more for the glitz and glamour and less for the substance. Good to hear that LA is, perhaps, trending in the other direction. Perhaps it’s time to move back!

  • https://plus.google.com/u/0/b/114718778524214371963/114718778524214371963/posts kidmercury

    fits the framework of disruptive theory very nicely. they deserve a badge. 

  • http://www.bluecoastrecords.com/ Cookie Marenco

    Call me selfish, but I’m glad Mark writes as he does, whether it happens at 11pm every day or 9am every month, I don’t really care.  If he’s inspired, let the man write!  I have found no other VC blog as honest or informative.  I cancelled my RSS to the others.

    It seems he loves what he does and I admire that.

  • http://austinclements.me/ Austin Clements

    I’ve got to imagine that Maker has plans to move outside of youtube as well. However I think it would be unlikely they would abandon youtube altogether because it serves as such an excellent platform to expose new viewers to their content. 

    I think Makers’ relationship with Youtube has many similarities to Zynga’s relationship with Facebook. My guess is over the next year Maker will face a lot of competition from both larger media companies as well as video content startups with the same idea, similar to the environment Zynga faced this year in gaming. The ‘hits driven’ challenge of this business isn’t in creating new channels that stick, clearly Maker has that down, but instead it’s about sustaining viewer interest in the face of similar competition.

    So far they have built what seems to be a solid business. Considering they are a content company that attracted VC money, I have no doubt they have thought about a longer term plan to make it defensible.

  • Guest

    Please don’t take this as a nasty rebuke but I do think that in this case you are acting selfishly. 

    Actually I’m very close to canceling my RSS to this blog.

    I don’t like watching people harm themselves (Mark seems like a workaholic to me); the signal to noise ratio in the posts is getting too high (too much fluff, not enough steak); and the comments are becoming less and less interesting. (“Hey Mark, great job!” or “I’ve just reworded what you wrote Mark to show you I’m on the same wavelength as you!”).

    I’ve seen these same phenomena on other blogs as well. For example, the http://www.irvinehousingblog.com/ used to be excellent, on par with this blog. If you read stuff on that blog from a couple of years ago and today, you’ll see how it deteriorated. Sheesh, for that matter a couple of years ago TechCrunch actually had many very good articles. Look at what it’s become today. 

    I wish the blog postings on BothSidesOfTheTable.com (but not the comments) were more like CalculatedRiskBlog.com which I seldom read because I’m not much interested in “deep dives” into macroeconomic issues.

    But hey, these are merely my opinions. I suppose I’m probably not in the audience that Mark is targeting.

  • http://gordonmattey.com/ gordonmattey

    Mark

    On the surface, you’ve invested in what is economically the wrong side of the chain.  The supply side.

    For viewers, there’s already an overwhelming array of choice, investing in a business that gives people more access to tools (cash and tech)  to produce content simply increases the amount of content, but it doesn’t change the equation.

    Individual content producers suffer from a lack of demand.

    Viewer attention is relatively scarce.

    Maker is clearly investing in talent which on the surface seems awesome, but like any other media publishers (record labels, book publishers etc), digital disintermediation is knocking at their door, and the publishing game is now one of thin margins, where there is still huge risk.  In fact it’s even more risky than before because of the lack of ability for marketing and distribution to directly control sales like it did before (physical theaters, million dollar marketing budgets, end caps on shelves, radio chart rigging etc).

    The opportunity for an internet business with internet scale (as you would coin it), is to invest in platforms that match viewer demand to content supply in a way that is efficient and meaningful to the producers and the viewers (and of course the advertisers, assuming they are the primary source of funding).

    The sad truth is that still many of the most talented individuals will continue to be unknown.

    Maker doesn’t help with this. Presumably they are centralizing ad sales, and helping distribute outside of YouTube.  But then they aren’t really a pure production studio.

    And if that is the case, they want to be able to maximize distribution and ad sales, which will inevitably mean locking up the rights to the programming.  Which is exactly how the old studios work today.  I pay you for the rights up front so I can maximize my profits = arbitraging talent.

    It is not revolutionary.

    Of course I could be making many incorrect assumptions here as to Maker’s vision and principles…

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