“Fash­ion doesn’t come out of San Fran­cisco. Google has no sense of cool”

GI­PHY IS WIN­NING THE IN­TER­NET. DEAL WITH IT BY ADAM SATAR­I­ANO

Bloomberg Businessweek (North America) - - Contents -

“YOU NEVER GET TO DO SOME­THING FIRST ON THE IN­TER­NET. EV­ERY­THING HAS BEEN DONE”

One af­ter­noon in De­cem­ber, Gi­phy’s two dozen staff mem­bers gath­ered around a long pic­nic ta­ble in their Lower East Side Man­hat­tan of­fice for a year-in-re­view meet­ing. The mul­ti­col­ored Christ­mas lights and six packs of Shiner Bock in the spa­cious, ninth-floor room made for a fes­tive vibe—as did the 3D poster of a cat dan­gling from a wine bot­tle. Alex Chung, the 40-year-old co-founder and chief ex­ec­u­tive of­fi­cer, stood next to a white­board, scrawl­ing num­bers chart­ing the com­pany’s growth. “We’re the big­gest In­ter­net startup peo­ple are see­ing right now,” he said. “We, like, did it.”

Gi­phy—that’s a hard “G”—re­ally, like, did do it. It’s be­come the go-to li­brary for GIFS, the sec­onds-long, loop­ing video clips that peo­ple text when words are too hard to con­jure or quick shots of a shiv­er­ing Leonardo Dicaprio in The Revenant just bet­ter con­vey how cold you are; the startup reached 95 mil­lion unique vis­i­tors per month in 2015, quadru­ple what it did in 2014. And Gi­phy has be­come an ad­viser to movie stu­dios and TV pro­duc­ers who want your texts to in­clude their con­tent, which they are turn­ing over to edi­tors to splice into a mil­lion lit­tle pieces. Ad­ver­tis­ers and political cam­paigns are ask­ing for ad­vice, too, on us­ing the tech­nol­ogy to sell prod­ucts and can­di­dates. Gi­phy closed the year with a deal that lets users cre­ate Star Wars- themed GIFS, and it’s fi­nal­iz­ing plans to live-gif the Os­cars and the Su­per Bowl.

The com­pany’s rise has helped make the for­mat a cul­tur­ally rel­e­vant (some might say vi­tal) com­mu­ni­ca­tion tool—a mostly word­less way to emote via text, Snapchat, Gchat, or e-mail. Search the data­base, and you can ex­press sad­ness with a wist­ful Homer Simp­son; an “OH. HELL. NO!” with a wide-eyed Jen­nifer Lawrence; and if you’ve com­pletely lost your mind, there’s al­ways the de­monic cat shoot­ing laser beams out of its eye­balls at fly­ing cu­cum­bers. “It’s com­mu­ni­ca­tion with a wink,” says Marc Si­mons, co-founder of New York and Los An­ge­les ad­ver­tis­ing agency Gi­ant Spoon.

The abil­ity to find all of this in one place is par­tially the re­sult, of course, of al­co­hol. Over drinks in the win­ter of 2012, Chung and a friend, Gi­phy co-founder Jace Cooke, 34, ex­tolled the power of GIFS in a post lit­er­ate so­ci­ety, when tech­nol­ogy will ad­vance so far that read­ing and writ­ing won’t be nec­es­sary. Chung spent the next few days see­ing if there was a tool to cre­ate and share the clips, but it didn’t ex­ist. “That’s when I got ex­cited,” he says. “You never get to do some­thing first on the In­ter­net. Ev­ery­thing has been done.” At the time, Chung was tak­ing a sab­bat­i­cal. He’d founded sev­eral star­tups, in­clud­ing a so­cial net­work called Fridge that Google ac­quired, and had de­vel­oped soft­ware for MTV and hard­ware for In­tel. Af­ter years of jump­ing from gig to gig, he needed some rest; that meant train­ing in Brazil­ian ji­u­jitsu, in which he holds a se­cond-de­gree black belt. When he wasn’t kick­ing ass, he was writ­ing code, cre­at­ing soft­ware that could comb Tum­blr, Imgur, and other web­sites and or­ga­nize the videos un­der search­able key­words such as “cat” or “puppy.”

Once he had a work­ing pro­to­type, Chung sent a link to a few friends—who sent it to a few friends, who sent it to a few friends. Within hours, Gi­phy had more than 30,000 page views, and tech sites such as Giz­modo and Mashable were writ­ing about it. (All press is good press: Giz­modo’s head­line was “The First GIF Search En­gine Is Hi­lar­i­ously Bad.”) “Peo­ple were yelling at me be­cause the site was so slow, but it was just a silly hack,” Chung says. “We thought it was some­thing that was go­ing to make us In­ter­net-fa­mous for a day. But by 5 p. m., we had mul­ti­ple of­fers for in­vest­ments.” The ridicu­lous­ness of build­ing a busi­ness on loops of a Teenage Mu­tant Ninja Tur­tle in­hal­ing pizza wasn’t lost on Chung. But now he had a not-so-silly $1 mil­lion from Beta­works, which had also in­vested in name brands such as Kick­starter.

One of the first peo­ple Chung called to join Gi­phy was Adam Leib­sohn, an Amherst Col­lege phi­los­o­phy ma­jor and ten­nis star. Leib­sohn, 34, was work­ing at an ad agency when he met Chung through a mu­tual friend; now he’s Gi­phy’s chief op­er­at­ing of­fi­cer. Over a Jame­son and a Guin­ness, he echoes Chung’s orig­i­nal brain­storm, at­tempt­ing to ex­plain the com­pany’s mis­sion by in­vok­ing Lud­wig Wittgen­stein, the Aus­trian-bri­tish philoso­pher who died in 1951, well be­fore GIFS were in­vented. (GIFS

have been around since the ’80s and gained pop­u­lar­ity more than a decade ago as a way to per­son­al­ize a Mys­pace page. The for­mat fell out of fa­vor along with the doomed so­cial net­work, but breezy, im­age-driven sites such as Buz­zfeed have given them a se­cond life.) Wittgen­stein be­lieved that writ­ten lan­guage leaves too much open to in­ter­pre­ta­tion. GIFS are more ef­fi­cient, Leib­sohn says, be­cause they fill in in­ter­pre­tive gaps. He leans back on his bar stool, like a grad­u­ate stu­dent sat­is­fied with his ex­pla­na­tion, and it isn’t clear to what ex­tent he’s jok­ing. “I’m com­pletely se­ri­ous!” he says.

Gi­phy creates clips in- house, but it also re­lies on its al­go­rithm to bring them into its data­base. Edi­tors are con­stantly comb­ing through them, mak­ing sure there are no glitches or porn and that the col­lec­tion is up to date. ( Keep­ing sex and nu­dity off the site is a tough job, they say.) “There isn’t a 1980s re­boot se­ries, or a new al­bum that drops, or a Kylie Jen­ner mo­ment that hap­pens that some­body at Gi­phy doesn’t see,” Leib­sohn says. Some em­ploy­ees say they can’t go a few min­utes with­out watch­ing video that makes them think, That would make a great GIF. “My at­ten­tion span has been de­mol­ished,” says Tyler Men­zel, Gi­phy’s edi­to­rial di­rec­tor, who de­ter­mines what goes on the home page.

Right now the busi­ness is fo­cused on growth, not rev­enue. Leib­sohn and Chung say they could gen­er­ate cash by al­low­ing ad­ver­tis­ers to tar­get peo­ple based on what im­ages they’re hunt­ing for, the most com­mon busi­ness model for In­ter­net com­pa­nies from Google to Snapchat to Twit­ter, but the two worry it would turn off fickle users. “There’s a lot of ways for us to make a lot of money, but in­stead of spin­ning our wheels do­ing it, we’re try­ing to get re­ally big,” Leib­sohn says. They’ve got the run­way to give it a go: Gi­phy has raised $24 mil­lion, and an­other siz­able in­vest­ment round is in progress.

You don’t have to be an Aus­trian-bri­tish philoso­pher to get why the money’s pour­ing in. Big brands, such as Sub­way and the NBA, are seek­ing ad­vice; Vic­to­ria’s Se­cret had Gi­phy reps on hand to live-gif its most re­cent run­way show, get­ting back­stage clips of Ken­dall Jen­ner tak­ing a selfie and lin­gerie-clad mod­els danc­ing; and HBO tapped Gi­phy to help with a Game of Thrones con­test. (Gi­phy has dis­cussed be­com­ing a stu­dio for com­pa­nies that want GIFS for prod­uct pitches.) Even staff mem­bers from Hil­lary Clin­ton’s cam­paign stopped by the of­fice not long ago for point­ers on what makes a com­pelling clip—soon af­ter, Hil­lary for Amer­ica shared GIFS of the can­di­date do­ing a blasé shoul­der dust at a Beng­hazi hear­ing.

Gi­phy hasn’ t cor­nered the GIF mar­ket. San Fran­cisco startup Riffsy, which sim­pli­fies adding GIFS to texts, has at­tracted mil­lions of users. Giffage in­tro­duced a GIF “key­board,” and even Google has taken stabs at build­ing a search tool. But Chung isn’t wor­ried. “You need to be a part of pop cul­ture, and when we look at San Fran­cisco, most of those star­tups just don’t get it,” he says. “That’s why fash­ion doesn’t come out of San Fran­cisco. Google has no sense of cool.”

Gi­phy cer­tainly strives to hone its main point of dif­fer­en­ti­a­tion. Ev­ery July the staff goes to Los An­ge­les for the month, rent­ing a house with a pool for the team to live and work in—but mostly live. Not shock­ingly, this isn’t Gi­phy’s most pro­duc­tive stretch. Dur­ing the year- in- re­view meet­ing, Chung showed a growth chart track­ing back to 2013. He pointed to ar­eas each year where ex­pan­sion flat­lined. “This is July,” he said. Or to Gif-ify what he was get­ting at: Pop­si­cle with sun­glasses, Will Fer­rell can­non­ball, danc­ing back­ward-hat guy. <BW>

How do you pro­nounce “GIF”? The ma­jor­ity fa­vors a hard “G” sound, as in “good,” but a vo­cal mi­nor­ity, in­clud­ing the in­ven­tor, in­sists the “G” is soft, as in Jif peanut but­ter. The Ox­ford English

Dic­tio­nary says ei­ther is fine.

PHO­TO­GRAPHS BY DAVID BRAN­DON GEET­ING

Selections from Gi­phy’s top 20 most pop­u­larGIFS of 2015

Leib­sohn (left) and Chung in the Gi­phy of­fice

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