In Japanese, one of my favorite words is gaman. Translated it is a combination of “patience and persistence” and to be a good entrepreneur you must have the gaman gene.
Boxee, a company that brings the Internet media experience to your living room, announced a round of financing today from two quality firms here in New York — Spark and Union Square Ventures. It’s a testament to what they have achieved so far. Fred Wilson and Bijan Samet get plenty of opportunities so it’s worth thinking about why Boxee was able to secure financing at a valuation that made sense for the team.
Of course, I’m interested in thinking about how this particular Israeli company secured financing. If I’m not mistaken I think it’s the first Israeli owned company in either firm’s portfolio but I can’t say that with certainty. Fred’s post lays out his investment thesis. As usual, his voice is distinctive, differentiated and thoughtful. Read it to hear to understand why Boxee is special.
Here are my thoughts on how Boxee got this chance to build a big company and did so at a time when many investors are pulling back on new investments.
1. Boxee has been over a year in the making. This is a year where a small team worked tirelessly for very little money or no salary (in fact I think founders contributed some of the capital and tons of it in sweat equity) to get the company to a point where it would be eligible for financing.
2. This team completed a product with a closed alpha relatively swiftly because they were very clear about what they wanted to do from the beginning. Their mission is to unite web media consumption with the home theater. They stayed relentlessly focused on that. I’m sure there were many times during the year where investors questioned their strategy and product roadmap etc. Fred admits he declined twice before saying yes. However, they did not waver and kept building a product that we all need. Having a vision and sticking to it is much easier said than done.
3. They met the big market challenge. Everybody loves TV, everybody has broadband, and plenty of people have a big plasma screen ). So getting the on-demand web experience to the Plasma screen in the living room is vitally important for audiences to grow online and convert from watching NBC to watching Hulu. This is a company that could have 100mm users or more. That’s rare.
4. Boxee kept their alpha invitation-only and created a culture of listening to user feedback to simplify the product. Now, they will continue to look for ways to make Boxee easier because they know that’s the critical element in order to spur growth and cross the chasm to mainstream adoption. Avner wants a 1mm users by the end of 2009, but he knows value is created with 10mm and Boxee is the platform with 100mm. Listening to users will be how boxee gets there.
Most importantly, Avner, Gidon and their team recognize they must understand the culture of the people that Boxee wants to serve. From the beginning he was focused on the 300 million American television watchers. So Boxee has an office in New York with the CEO here and the development takes place in Israel. This means many trips back and forth between Tel Aviv and New York. It’s tiring and difficult. But this is how Boxee has world class development talent and product leadership based in a huge market like the United States.
Boxee is symbolic of Israel’s future — a global company that serves consumers around the world and creates job in Israel and abroad. It’s a company founded and owned by Israelis that live around the world. This is great for Israel and even better for the people who are served by these extraordinary innovations.