Instant replay
SnapStream CEO tunes in to needs of customers as he eyes media expansion
Like a lot of tech companies, Houstonbased SnapStream started out as one thing, then found a better path in the way its own customers were using its product. What started as a better way for consumers to record television programs on their PCs turned into the premier way late-night TV comics find news stories to mock.
Founded in 2000 by Rakesh Agrawal, a Rice University graduate, SnapStream is making a push for growth. Agrawal says the company stayed small but has been on a hiring binge as he refocuses his attention on the business after spending time investing in and mentoring other startups.
SnapStream’s secret sauce is how it searches the closed-caption data embedded in television content, allowing its customers to quickly find the clips it needs. SnapStream also lets its customers quickly dispatch clips into social media, spawning the viral video moments we love to share.
And recently, the company expanded into the business of providing advertisers proof that their commercials have run by taking over an operation previously owned by Verizon.
Agrawal spoke to Texas Inc. about SnapStream’s new trajectory.
Q: Give me a snapshot of SnapStream’s history of how you went from being a consumer product to what you are today.
A: We started out making this product, Beyond TV. I started SnapStream with a friend that I went to high school with. After college we had some ideas around scratching an itch that both of us had. We were traveling a lot for our respective jobs and we both liked to watch TV. We wanted to be able to watch TV while we were traveling, and watch like our TV shows they were airing at home.
Where SnapStream came from was building a consumer product that allowed people to record TV. This friend of mine and I were both computer geeks growing up; we had lots of computers. Why don’t we use the computers we have to make these DVRs? Q: How did it work out in the early days?
A: SnapStream began in the world of home theater. We sold a few hundred thousand copies of our consumer product, BeyondTV. It was the full DVR experience — you could go in and say I want to record the show. We had integrated a program guide into the product.
But around 10 years ago I kind of realized that the sales for this product were going to taper off. We were starting to see TV shows being put online. I had a “Spidey sense” that in general DVRs are being bundled into the cable and satellite service and so aftermarket DVRs were not going to be a big thing. So we said, “Where do we go from here?”
Over the years we had people using this $100 consumer product in their businesses and they would they would call us and they would “Why don’t you do this thing for me and for my business? We run post production at “Saturday Night Live” and for research, we want to be able to, like, record television. And we have a stack of DVRs right now and it’s a pain to manage that and it’s a pain to make it accessible.”
Q: So this request actually came from “Saturday Night Live”?
A: Yes! We also had police departments where their PR departments were using our product to replace a stack of DVRs. Over the years I ignored these people. We were a small company with limited resources. But people are using our product in ways that we hadn’t intended for them to use the product.
We started to ask, “Why are they using it this way?” We met with a bunch of them — we met with the Harris County Sheriff ’s Office over here. After meeting with three or four organizations like this we realized that there was an opportunity right under our noses. Nobody was making a DVR for businesses that had some strategic reliance on television, whether they were a government organization and they want to keep track of what was being said about them, or whether they were an organization that created comedy.
The bigger problem I think we figured out early on was that TV is ephemeral; it gets broadcast and it disappears into the ether. No historical record, it just disappears. And that’s a problem that we solve.
Q: I am surprised that TV networks just didn’t build this for themselves. TV is their business, right? Being able to search and find video would seem important to that business?
A: Yeah, why didn’t they? Maybe it’s like the shoemaker’s children go barefoot or something like that. It’s just not something they’re going to do — go making software like that. We’ve seen companies that have built versus buying a system and we end up going in and replacing the thing that they built themselves because it’s hard to maintain if you’re a TV network. You’re not in the business of hiring and retaining software developers.
Q: So who were your very first customers?
A: The Harris County Sheriff ’s Office. We found out that they had downloaded our consumer product and had spent like 60 or 70 hours troubleshooting the hardware to record lots and lots of TV. They showed us how they did it. They would fast forward through the video and be like, “Oh hey, wait, go back to that thing, we saw a guy wearing a uniform.”
I left the meeting and I thought, “If we could somehow make it so they could search instead of having to visually scan the video files, that would be tremendous.” We went to a few other people and said, “If we built this for you, would you like it?”, and people were universally excited. So we built the prototype of that product. I think it took two or three months.
Q: How did you spread the word?
A: We went to a trade show in Las Vegas, the National Association of Broadcasts, and we set up a booth. We were overwhelmed with the interest we had. That’s where a lot of the early interest came from.
I would say like our first big customer was “The Daily Show.” That was a really big win for us and it really changed the arc of the company when we got “The Daily Show” as a customer.
Late night TV is one group that we just dominate. You name any late-night TV show and they are most likely using SnapStream: “Last Week Tonight with John Oliver, “(Full Frontal with) Samantha Bee,” Stephen Colbert when he was with Comedy Central.
Q: Does he still use it now? A: The first thing that they put in when he made the switch
over to over to CBS to take over “The Late Show” was SnapStream.
Q: Who else uses it that might surprise people?
A: We have a few hundred customers. Focusing on searching television, we have broadened what we do. so it’s not just about building a haystack and then finding a needle in that haystack of TV moments. We also are a way that organizations record television and then grab the best moments and put those up on Twitter and Facebook.
Q: That’s your social TV?
A: That’s right. If you go on Twitter during and after the Oscars or any other live events or pop culture kind of events, a large number of the TV clips that are out there are from SnapStream.
Buzzfeed is also a customer. Politico, during the political debates, will use SnapStream as a way to get TV clips and immediately flip them over to Twitter and Facebook.
You know there are some government customers that use us, but we can’t say the names of. But yeah, if you imagine… We have a we have a broad set of customers.
Q: You said you have a few hundred customers. What’s the hardest thing about selling SnapStream?
A: We’ve been a small team up until now, so that’s part of it. We’re in the process of growing the team. We just hired a new VP of sales and and he’s taken over the sales team.
We shifted our business model to an annual recurring revenue model about two years ago and that’s worked really well. We’ve intentionally done a lot more advertising. We’re going to more and more trade shows and I think year over year, we’ve grown about 40 percent. We’ve been profitable for many years, but the growth of revenues allowed us to make more investments in the company.
Q: So you’re an investor yourself. What kind of company interests you?
A: Well, first of all, I really have shifted my focus to SnapStream. I have really backed off of investing in the last 12 months to focus on running SnapStream, building out the leadership team here. I’ve been very actively saying “no” to investing.
I actually was only spending a day a week at SnapStream in my late 30s, from 2011 to 2015. I had promoted somebody here to be president of the company and he was running the company day to day.
I turned 40 and I was like, “Hey, what am I doing? Let me go back and run that company that I built. Let me see what I can do with it.” I came back full time and that’s driven a lot of the growth that I mentioned. I’ve been having fun; we’ve continued to grow and I decided I would like to say no to things. I’m building this Houston tech company right now.