AnyClip’s Open Letter to Hollywood

At startups, strategies evolve.  So do their entrepreneurs

Only 6 months ago, I became the CEO of a startup called PopTok, a company that had some interesting insights about the film business, but a strategy that would not work.  AnyClip was born from the vestiges of this company and we swiftly adopted the idea that we would create a platform than enabled anybody to find “any moment from any film ever made instantly and legally.”

Successful managers solve problems for their customers in order to create  measurable economic value.  In our case, we believe the best method to stanch YouTube users’ blatant copyright infringement violations was to build a more comprehensive and useful service for reliving film moments.  This service will operate as a gigantic lead-generation mechanism for  the legal consumption of full-length and short-form video-on -demand .  We adapted our rhetorically catchy  vision –any moment from any film ever made — so that we would inspire  the studio ecosystem to embrace a new form of library discovery . AnyClip combats the looming piracy crisis that threatens to irreparably harm the movie industry.

During the summer, we were accepted into TechCrunch 50 — a conference that echoes the film industry by billing itself as the “Sundance of Startups.”  In order to launch at TC50,  AnyClip  had to abide by their rule of complete secrecy.  Only our investors and employees knew we were selected.  This meant that we could not share our prototype with any of our constituencies including content owners.

The TechCrunch guidelines presented a conundrum.  I wanted to use their platform to publicize our company’s strategy.  However,  I also worried that we would neglect a fundamental principle of running a startup —  treat your customers better than anybody on Earth.  How would the studios feel about us demoing the service without allowing them to preview it?

In general, we have been very warmly received by our partners in Hollywood for which we are gratified.  Actors, directors, agents, managers and studio executives demonstrate optimistic intrigue about  a legal database of movie moments that promotes the rich heritage of film.  That said, the industry expects AnyClip to adapt to its cultural norms .  Even giving a demonstration of our service with film clips requires the permission of the studios.  Legally, these demos are well-protected by the fair use statutes, but invoking them is clearly considered disrespectful.   That was ignorant, and I’ve had to adjust my thinking.  Hollywood has a business culture that asks for permission.  Internet companies tend to use legal arguments to justify their business practices and damn the values of  the traditional industries that preceded it.

Perhaps total disruption with potential legal justifications can work (see the Digital Millienium Copyright Act and so-called ISPs YouTube, MetaCafe Daily Motion, Veoh, and my old company Bolt ) , but I neither condone nor intend to deploy these practices. Finding any moment from any film ever made is a seductive economic proposition only if it discourages piracy and promotes the legal consumption of content.

I love films.  I want the movie industry to thrive so people like Spike Jonze and Peter Jackson can continue to make magical moments for me to watch and relive.  AnyClip is designed to grow the home video market (VOD, BluRay, DVD etc) by creating discovery and search capabilities that were not technically possible even a few years ago.

Imagine a comprehensive database that ensures that every watched scene  is one click away from a purchase or rental of the full-length film.  Consider YouTube and IMDB with a rich, searchable, and legal database to integrate into their sites .  AnyClip can do much to help grow the industry, but only if we earn the trust of the rights holders without compromising the needs of their audiences.

These are AnyClip’s challenges. We have to start somewhere and at the beginning we will not be able to license entire libraries.  But make no mistake, the rediscovery of every film ever made is our vision.  Massive legal consumption of every film ever made is our dream.

Why the World (Including Hollywood) Needs AnyClip

Movies are the world’s most influential communication medium.   They catalyze conversation in countries all over the world.  Films teach history, tell stories, and make people laugh until their bellies and faces ache.  Moving pictures are for the young, old, rich, poor, educated, and the illiterate.

Etched in each moviegoer’s memory is a panoply of great scenes from tens of thousands of films.  How much fun is a dinner, cocktail, or keg party if nobody could quote a movie line?   The language of film is universal.

Unfortunately, to re-experience these moments can be painful.  Watching Humphrey Bogart kiss Ingrid Bergman or John Belushi scream “Food Fight” or Russell Crowe facing down tigers in the Coliseum is a challenge. These are moments that everyone wants to experience over and over again. But, does anyone really pop in a DVD and patiently scan for their favorite scenes? No. We search the Internet. Mostly, we don’ find what we’re looking for, and, when we do, it’s far from a cinematic experience.

THE PROBLEMS

So far, The Internet has  provided a piecemeal solution to digital video. There are plenty of video sharing sites filled with user-uploaded content, but their selection is haphazard at best. You might find “I love the smell of napalm in the morning” seven minutes into a longer clip or with abominable picture and sound. Diehard fans do will share shaky, unreliable videos of their televisions shot on camera phones.

So you might find what you are looking for but only if you’re willing to sort through a lot of garbage and put up with subpar film quality. But  people love movies so they put up the  problems.

Over 12 million people have watched the above clip from The Lion King.   I wonder how much money Elton John and Tim Rice have gotten for their work.  Neither the owners of these films nor the artists who make them receive any compensation from the display of their works. If it’s not illegal, it’s definitely unethical. This user-generated video industry combined with other public policy issues have unintentionally driven a wedge between Hollywood and the most dynamic and creative Internet companies. Content owners must benefit from Internet distribution and AnyClip wants to provide the most compelling and engaging platform to help them do so.

WHAT IS ANYCLIP

Six months ago, my co-founder Nate Westheimer and I joined an amazing group of Israeli developers who also happen to love movies. We wanted to build a Web service that would allow anyone to find any moment from any film ever made instantly. Our co-founder and lead investor Erel Margalit suggested we name the company AnyClip.

Everybody wants to relive scenes and AnyClip set out to make that possible. Creating the data and search technology to make that work presents formidable challenges. When searching for a scene from a movie, people describe moments in so many different ways: from dialogue and plot description to hazy memories of shark attacks and flying cars. This creates really engrossing and thorny computing problems. If someone searches for “dead shark,” do they want to see Roy Scheider blowing up Jaws (i.e. action on screen) or Woody Allen lamenting the “death” of his relationship with Annie Hall (i.e. dialogue)? The AnyClip platform incorporates tools to handles these issues and more.

Early tests show our service can be a great discovery engine for films. A search for “I love you” produces countless clips from hundreds of movies. A brief visit to AnyClip can yield an iTunes download or an addition to a Netflix queue. At AnyClip, clips are dynamic and up to four minutes long. You can adjust a clip to relive exactly the joyous, daring, or inspirational moment you crave.  This sample may encourage a purchase, rental, or download of the entire film.  At minimum, it reunites the movie lover with the art and the artists who brought them such joy.  This reaffirm  loyalty and interest in the future work these artists produce.  That’s called “promotion.”  AnyClip evokes memories and channels them to enhance the values of the world’s great film libraries.

Today, we also launch a public API for our data and eventually for legally licensed content. This would allow companies like IMDB, Slide, RockYou, Netflix, Zynga, OMGPOP, Twitter, Facebook, Mahalo and – most importantly – the insanely creative and brilliant independent developers around the world to build great user experiences with movie clips on top of our movie data. AnyClip is a platform to power a renaissance of the greatest movies the world has ever known.

DISRUPTIVE BY DESIGN

If you look closely at the movie ecosystem, the only institutions that suffer from a legally available AnyClip are those that benefit from leaving the current system intact.   First and foremost are existing Internet media providers that hide behind the safe harbor provisions of the Digital Millennium Copyright Act. While nobody knows precise numbers, YouTube has served billions of movie scenes to audiences around the world.  Overseas video sharing and PTP sites — Tudou, Megavideo, PirateBay and BiTTorrent –operate outside the reach of US laws. Naturally content owners have been wary of digital distribution in light of these abuses and violations of the DMCA.

History shows Hollywood struggles with new formats and other technological innovation. They are instinctively protective of their core businesses. Thirty years ago, Universal sued Sony for creating the Betamax. Luckily, they failed and today we have a US $25 billion DVD industry. The good news is AnyClip enhances every distribution window.  Every one. We don’t compete. We complement.

And that’s important, because DVD revenue is dropping for the first time since the format’s introduction. Piracy and Internet video-on-demand from the likes of Amazon, Netflix and iTunes are changing consumption patterns. Economic realities have forced audiences to reassess their entertainment spending.

One way to stanch the bleeding in the Home Video Market is to reinvigorate the value locked in our memories. Short of innovation, the motion picture industry will continue to see declining revenue and audiences will get fewer new magical moments.  Why? Because Quentin Tarantino and Ridley Scott will be given smaller budgets. Does anybody really want to deprive Peter Jackson of the budgets required to make another Lord of the Rings?

Many powerful Hollywood people have told us that AnyClip is amazing but impossible. Some very smart industry executives are rooting for us to succeed but worry about the legal landscape. At its best, the digital rights marketplace is byzantine.  These executives are right to be concerned. For the sake of the movie industry’s wonderful and talented people, and the billions of fans around the world, we certainly hope we can find a way to work within the law to create great opportunities for all.

And this includes AnyClip.  While we will be a smaller participant in any transactions that occur between content owner and consumer, we believe this business will scale just fine. It’s the greatest content that has ever been made etched in the memories of everybody on Earth. We think “reliving movie moments” is a huge market. We are the catalyst for what will be a high-growth legal clip economy.

Our fourth co-founder is the former CEO of Sony America Mickey Schulhof. Mickey knows the pitfalls as well as the upsides of media innovation having introduced the CD and Playstation to North America. He always tells me that if it weren’t for naysayers, we wouldn’t have revolutionary companies.

“Sometimes you just have to do things, Aaron,” Mickey told me when I first described AnyClip.  It’s time for the curtains to open.

Entrepreneurial Lessons from David Ben Gurion

Three weeks ago, I visited David Ben Gurion’s grave.  Ben Gurion, Israel’s first Prime Minister, chose to be buried near his retirement home on S’de Boker, a kibbutz in the Negev  — a beautiful, desolate endless stretch of rocky hills and sand.  His final resting place overlooks a Grand Canyonesque valley facing a great expanse of the rocky desert that symbolizes the challenges of this complex region.

David ben Gurion

David ben Gurion

I was there for inspiration.This field trip, after two days of wall-to-wall meetings and big party, was the vision of one of the founders, investors, and directors of AnyClip Erel Margalit.  Erel is the founder and leader of Jerusalem Venture Partners.   He has crafted a venture firm that is so distinctive from the dozen other firms with which I’ve worked, that I’m almost feel we need a new category name.  The firm is part classic  ($780mm under management and big returns in telecommunications and semiconductors), part IdeaLab (Erel reminds one of Bill Gross’ legendary entrepreneurial restlessness), and part Ben Gurion – a determined, persistent, driven believer in all that Israel could be.

After a few months getting to know Erel, I realize now that it is no accident that he has located his firm, and, more importantly, his sprawling entrepreneurial campus in Jerusalem.   Israel’s Tel Aviv-oriented high tech community views Jerusalem the way those who are based in Palo Alto would view Bakersfield.   Only an hour by car, most of my Tel Aviv Internet friends tell me they never, ever venture to Jerusalem.

Erel runs the prominent JVP in a place that has been deeply rejected by the cosmopolitan, modern and increasingly affluent high-tech community in Israel.    But Erel has and will stay his ground.  His will to remake Jerusalem fuels his life.  He knows he can blend the ancient with the modern.  On a once broken down set of warehouses, near a defunct train station, JVP has created an incubator, office park, state of the art theater, and restaurant complex.  To see pictures of it only 5 years ago is to realize why people think Erel is “totally crazy.”

But come visit.  It’s all there and thriving.  On campus, there all kinds of interesting companies largely focused on consumer media — a category that has played a distant 4th or 5th Israel’s obsession with the telecommunications, security, and energy that generated huge returns in for JVP and other Israeli firms.  My company AnyClip sits across from Double Fusion (Second to Massive in in-game ad sales) and across from The Animation Lab –Israel’s attempt to replicate Pixar.

Erel is a maverick venture investor. He plays by a set of rules that are deeply grounded in his faith that an entrepreneur can do anything.  You can stumble and he’ll ask what’s next?  He doesn’t like to “prune his portfolio.”   David Ben Gurion created a country.   So what are you doing that’s so tough?  Erel  applies this Jobsian  faith in the invention and reinvention of companies  to the political and economic future of Jerusalem.  He sees hope where almost all see despair.  On the eve of the Israeli elections a couple of months ago, I listened to  Erel talk about his vision for Jerusalem:

I imagine a city that houses companies and office parks that are owned exactly 50/50 by Israelis and Arabs.  I see startups that sit next to each other that blend Jewish and Arab founders and are owned by a multicultural syndicate of investors.  Jerusalem will become the cultural and arts capital of new pan-regional festivals that celebrate all cultures.   Through the opening of Jerusalem, Israel will open and together with the Palestinians, it will become a gateway to the region.  Israel wil transform from the R&D center of world to it’s creative hub in close cooperation with the Palestinian inhabitants.  Diversity will be seen as a source of strength rather than weakness.  Finally, we will have  flights from Damascus and Riyadh to Jerusalem.

Each time I recount Erel’s vision of the new Jerusalem to family, friends, and colleagues they shake their head at me like he (and me for even recounting) are living in fantasy world.  Hope has been decimated for many Zionists.   Intifadas, suicide bombs, rockets falling on both sides instill despair and cultivate vitriol.  Jews pride ourselves on not falling into the cycle of hatred towards Arabs that is so morally vacuous and intellectually specious, but these past 15 years have emboldened the ignorant racists among us.   And while it’s understandable (how would you feel if your mother/brother/father/sister/wife was killed drinking coffee at a roadside café) it has created a sense of futility that betrays the ideals of Israel’s first entrepreneur.

On my journey into the Negev, I learned David Ben Gurion would not have wanted vitriol.  He craved progress.  This was a man who spoke of the importance of developing Solar Energy in the 1950’s!   He learned 9 languages because he believed he couldn’t read the great works of other cultures in the translation.   He located his Zionist ideals in a broad, compassionate view of humanity.  Erel’s own words about Ben Gurion transformed into a meditation about Jewish history that tried to put the ancient and the current into context.  There was a more nuanced presentation of why the political situation is so challenging.  But the intractability does not deter him.  Nor would it have frustrated Ben Gurion, who probably would have been excited by the prospects of flights from Damascus to Jerusalem.

As Erel spoke, I thought about how I ended up in this desert with this collection of entrepreneurs who were making semiconductors to enable high definition video on mobile phones or challenging SAP with a user-friendly ERP solution.   What made us come here?   Israel is only 60 and it’s been a relatively challenging go of it so far.  It was as if we stood at Monticello near Jefferson’s grave before the Civil War.  Who knew what would happen to the United States then?

Israel remains an entrepreneurial experiment and joining the process is intoxicating.   AnyClip, like so many startups, will attempt the theoretically impossible.  But we’ll do it with a better chance than a young David Ben Gurion had of creating a Jewish state on a tiny sliver of landed surrounded by Arabs on every side.
As one of the internet’s most thoughtful intellectuals  Fred Wilson wrote recently, “sometimes you just have to take a leap of faith.”

The AnyClip Plot

Imagine a web service where you can find every moment of every film in pristine quality.  You can search by dialogue, tag, actor, or any possible data source you can name.  You can cut any moment of less than 2 minutes and post it, send it, tweet it to anybody anywhere in the world.

You can access this service on any digital platform web, mobile, television etc.

This services allows you to relive every iconic moment you have ever experienced in your film-watching life no matter where you are.  Scenes pop into your head and you can instantly find, share, collect, distribute or any other verb you can possibly imagine.

Technical challenges abound for this service.  Extracting metadata, serving, editing and the panoply of technology elements create a thicket of problems none of which are insurmountable.

The real issue for AnyClip is that Hollywood wants to get paid and consumers (everybody thinks) want everything for free.  How do we find ways to get digital consumers to spend money for content?

Today, Fred Wilson will give a talk on disruption to arguably the most disruptive company in media history — Google.  For Fred, there are six words to consider when making a quality web service:  global, social, open, mobile, playful, intelligent.   How would the movie studios would fair under such scrutiny.

In certain ways, the movie industry is among the most zealous in the world when measured against these business values.   Global filmmaking has arrived and content is exported throughout the world.  It’s hard to think of a more playful industry and for all of the hand wringing that goes on among culture afficionados, plenty of thoughtful, intelligent, moving content originates and is developed by big movie studios.   While the studios don’t create many social services, they create much of what we talk about in social situations.  Movies are social.  Eventually the industry will figure out mobile.  They have proven their ability to adjust to new mediums many, many times.

BUT THE STUDIOS ARE NOT OPEN.    They believe that they should closely harbor what they own and get paid in advance by consumers and businesses who want to experience  or use their content.   And they absolutely disapprove of “playing” with the content.  They are playful, but only until the movies are completed and then, please, please don’t try to change or edit these works.  Openess is deeply foreign to Hollywood, but vital to the success of latest wave of Internet hits (MySpace, Twitter, and even Google) come to mind.   This tension is the opportunity for AnyClip.

I am an Internet executive, but also an aspiring filmmaker.  I want people to see my film, pay for it, and I surely don’t want consumers to steal it.  Still, I will put 100% of the content on the Web in different stages because for The Aaron Cohens to build an audience, the film and its marketing must be open, global, playful, intelligent, mobile, and, most importantly, social.   Surely, these “six words to live by” are the cost of entry for AnyClip.  We must execute on these values.

But will the studios connect and embrace this vision?

This is the narrative tension at AnyClip.

Scene One.  Take One.

Welcoming Nate Westheimer

I’m excited to announce that Nate has joined our new company AnyClip as the VP of Product.  He has posted a great account of how he and I have come to work together and you should definitely read it here.  Nate is one of the NY tech scene’s favorite people, but I’m making a big bet on his product development skills and I’ve never been more confident.  We have our work cut out for us. Nate is taking on the Herculean task of building a platform to take new movie clips where they have never gone before.  He will need all you to contribute killer ideas.

AnyClip grew out of an Israeli company called MyHollywood which launched a proof-of-concept product called PopTok.  From the time we started talking about movie applications, Nate and I were thinking about a database of movie clips for application developers.

Imagine every movie ever made available to be clipped for legal consumption and use.    That is our dream.  We have already released our API to a few product companies and hope to see more and more products in the coming months.

At AnyClip, we will create a legal, licensable asset for developers to access. We already have signed agreements with Paramount, Universal, Warner Bros and are close to a slew of new annoucements.

Naturally, we all have a series of ideas for application creation.  You can see Nate’s first attempt at CastingCouch on Facebook.   Finally, one of the great bonuses of AnyClip is  that Nate and I are sitting in Jerusalem as we write these posts.  Here, we have a really sharp, passionate team of developers and movie lovers and we will continue to add people here in Israel.  We also have a few needs in the United States which Nate detailed in his post.

We’ll keep you posted when we launch AnyClip.

Aaron

Thoughts on the StockTwits Deal

Full disclosure:  I’m not a user of stocktwits and spend very little of my personal energy thinking about stocks.  I do spend a considerable time with twiiter and even more time with some of stocktwit’s investors.  I think about startups quite a bit.

Stocktwits is interesting to me because they put together a Series A financing (I have to believe this means low seven figures, but I don’t know and haven’t asked) lead by IA Capital which is Roger Ehrenberg’s name for his personal investments.  Because Roger “lead” the deal (he was a previous investor) he built a large and diverse syndicate of Wall Street oriented professionals and Internet folks.  Roger lists 11 different investors on his post and apparently this list was not exhaustive.  Only 5 years ago, Series A meant professional venture investing and was primarily limited to two firms.  If I’m Soren and Howard ( I do not know either) , I would much rather have a group of individual wall street types that are actively tweeting and contributing to the community than virtually any venture firm in the world.  Seriously would Sequoia be better for Soren than the list of investors in Roger’s syndicate?

Unfortunately, most companies in StockTwits space don’t have the choice because the angel market has rarely been able to reliably organize itself into a syndicate that can do seven figure transactions.  But if they are able to do so by using professionals like Roger won’t this create competitive pressure on the venture business?  I would rather have Limited Partners than General Partners when the limiteds have so much industry expertise and industry clout.  Given an equal investment of time Is Michael Moritz or Michael Parehk better for StockTwits?

Perhaps people wrote about this theme during the week, but I didn’t see it.  Well organized personal capital may make considerably more sense than institutionally managed venture capital.  Over time, this could be a big change for the venture industry.

Fred Wilson’s post casually explored this theme, but Paul Graham certainly gets it  in  his latest essay.

Scott Rafer and Rafernomics

Sunday morning and I’m on my third cup of coffee and finally ready to make sense of my hour and a half with Scott Rafer.  Rafery and I have many intersecting paths.  His current partner David Cancel and I worked together 12 years ago.  Many of his investors (First Round, Betaworks etc) have been my investors in current or other lives.  He has candid, critical, and thoughtful opinions about numerous venture capital firms that we both know.  I will not publish Scott’s insight on firms and how to raise capital.  He has contrarian and, in my opinion, on-target assessments, but since I’m not a journalist I don’t think its assumed I will publish great stuff when I hear it.  I hope Rafer writes it all down some day.

What I can tell you is Scott Rafer is an entrepreneur’s entrepreneur and if you are one, you should find away to bring him into your world.  He and I met because he posted on twitter that he had two open slots in New York and I grabbed one last week.  Seems like he’s accessible to me.  Scott is very focused on the value of data and how it can improve advertising performance.  He is a founder of Mashery and Lookery (he’s the CEO) and lives a data life.   Numerous nuggets came out of our conversation, but I want to focus on our conversation on the current economic environment.

“MacroEconomics are fiction,” claimed Scott three times during our conversation.  He’s admirably cogent and intentionally hyperbolic in his arguments.  His point, and I agree, is that the startup community — investors and entrepreneurs — are spending too much time worrying about the recession, global finanical challenges, and domestic financial policy.  We both feel that entrepreneurs should focus on their energies on the economics of their particularly companies.

Some questions he asked me and might well be useful

Is there a value proposition where the marginal costs decrease with additional customers?

Will the nth data set collected create value for the individual sets collected before it?

Are you creating a product or service that increases the revenue or reduces costs for your target customers?

Can you prove that?

How are you measuring the results?

I met with Rafery to bounce ideas around on some things I have been thinking about and he helped simplify how I need to sharpen my thinking.  Plus it was fun.

Here’s my only criticism of Rafer and our session together and it’s not an Internet issue.

Rafer  grew up an admitted coservative to orthodox Jew and he and I are from the same generation.  I’m making a movie –The AaronCohens — which he’s certain to like because it’s a determinedly comedic Jewish film that also will explore the importance of social media at the turn of this century.

Despite the fact that he goes to the movies twice a year and doesn’t really watch DVDs and liked my concept he was certain he would not see my film in the theater.    I did not believe this and refuse to take no for an answer.   I need to get Rafer to the theater — or at least — get him to Netflix the DVD.

He’s in the target audience and I don’t need data to tell me that.