
Virool (YC S12) Raises $6.62 Million “Seed” Round To Help Make Videos Go Viral - adebelov
http://techcrunch.com/2013/02/14/yc-backed-virool-raises-6-62-million-seed-round-to-help-make-videos-go-viral/
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Irregardless
How do you scale something that decreases in value with every new customer it
acquires? You can only pump so many fake video promotions into a market before
it's completely saturated and people start to resent the constant assault of
your ads. Not to mention the fact that every Tom, Dick and Jane with a camera
is already pushing their own videos every chance they get.

Then there's this:

> “All [Jimmy Kimmel] had done was expose [the Double Rainbow] video to a
> couple hundred million people who would find this video interesting to
> them,” Debelov says. (Actually, [Kimmel] tweeted it to his 90,000 Twitter
> followers). “We’ve taken that process, and reversed engineered it. We can’t
> guarantee your video will go viral because it all depends on your content,
> but we can get it in front of a million, two million, half a million,
> whatever your budget is – we can get you in front of that audience.”

You've reverse engineered the power of celebrity? Highly doubtful. When a
comedian with the clout of Jimmy Kimmel calls something the "funniest video in
the world"[1], his fans are going to watch that video. When those same people
see a video advertisement at the bottom of a blog post or in one of their
mobile apps, they're going to ignore it. Hell, even celebrity has its limits
-- Kimmel's suggestions would be ignored if he started posting random videos
rather than specific links of his own choosing.

Anyone born after 1980 has been conditioned since adolescence to ignore online
advertisements. It's gotten to the point where you have two choices: 1.) Make
your ad so obtrusive that it might actually cost you users, or 2.) Don't
infuriate your users, and settle for a CTR of .01% on a good day. I can only
see this service reinforcing that conditioning.

[1] <http://twitter.com/jimmykimmel/status/17665533038>

~~~
Thun
Disclosure: I am an investor.

When we were doing diligence on Virool we ran our own tests with the platform.
We took one of our portfolio company's videos and Spent $300 promoting it. At
the beginning the video had 15 views and 0 likes. We were able to finish the
campaign in a day, and at the end there were 7322 impressions and 3000 views.
Note that Virool only charges when a video has been watched for 30 seconds.
The conversion of and impression to a 30 second+ view was above 35% for all of
our campaigns and on mobile it was 70.32% (not that it mattered because you
aren't charged on conversion of impressions).

The next day we had 5483 views, 28 likes, and 10 comments (almost all
positive), without having paid for the incremental boost.

Your point about decreasing value and fake video promotions doesn't hold true
with this test nor the experience of other customers. The views are not fake,
they come from actual individuals who watch for 30 seconds from legitimate
publishers. If they weren't then YouTube could strip a customer of their views
as they did with Lady GaGa who lost 156mm views [1]. This hasn't happened once
for Virool.

If you watch a video for 30 seconds it is highly doubtful that you are
ignoring it. Virool doesn't do bottom of the page video pre-rolls that won't
be seen but are counted as a charged view. If you are in an app, it seems odd
that you would assume every user ignores a video for 30 seconds. You are
correct that there will be plenty of people who do ignore, but as a Virool
customer I am not getting charged when this occurs so it doesn't seem like a
strong argument why their business is flawed.

Finally, you may feel that people after 1980 have been conditioned to ignore
ads, but if companies like Facebook and Google are making billions in revenue
from digital advertising, I doubt that marketers are shoving money their way
if no one is looking at their ads. In 2012, US digital video advertising was
estimated to be around $2.9bn out of a $37.3bn bucket for digital ad spend
[2]. The market is still nascent and there is a continued shift of advertising
dollars to online and mobile from the classic channels (print/tv/radio). The
market isn't anywhere near saturated and I doubt it will be anytime soon.

[1] [http://www.huffingtonpost.com/2013/01/29/lady-gaga-
youtube-v...](http://www.huffingtonpost.com/2013/01/29/lady-gaga-youtube-
views_n_2574182.html) [2]
[http://www.emarketer.com/newsroom/index.php/digital-ad-
spend...](http://www.emarketer.com/newsroom/index.php/digital-ad-spending-
top-37-billion-2012-market-consolidates/)

~~~
JimWillTri
I'm not doubting at all what you say as far as views, likes etc. I think,
however, you are quite naive as far as Youtube deleting videos. Sure getting
view counts in the millions in a day will get your video deleted but not 6k in
a day. It would be nice if you could post the portfolio company's video so we
could see if it had a viral nature to it.

Also, a video getting that many legitimate views in a day should have scored
consecutive views in the following days - of course this is the nature of a
video going viral.

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JimWillTri
Noticed some pretty bad complaints from customers on Techcrunch seemingly
alleging click (or in this case play) fraud. Do you have anything yet in place
to prevent play-fraud?

"Tried running some videos with Virool. Couple of things I didn't expect:

1\. Even with very precise targeting, my entire $100 ad budget was eaten up
right away. We're talking seconds - minutes.

2\. I was charged for views after just a few seconds of starting the campaign,
even though the video is several minutes long. Clearly they are not
restricting charging to actual completed views. "

~~~
arbuge
Good point. Google's reputation in part is based on the exhaustive mechanisms
they have in place to combat click fraud and assure advertisers they're
getting billed for quality. I remember once bringing their wrath down on me
because of accidentally clicking on one of my own AdSense ads. Took me 9
months of grovelling to get my AdSense account unsuspended after that.

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jacquesm
Virality used to be a mark of excellence for a video, some way of measuring
success. Now that success is no longer a symptom but the actual goal the
nature of videos and their promotion will change.

Just like email could be used to reach large numbers of people in a short
time, spam attempted to destroy it.

Eventually this will devolve into 'video spam' where you'll be bombarded with
links to videos in the hope that they will go viral. Fortunately the cost of
producing any video is so large that this will dampen the flood but if there
are companies that aim specifically for virality of content then that is a
sure sign that we're about to see a shift.

Eventually viral videos will die out because too many impulses deaden the
nerve and then another useful and nice to have thing will have been murdered.
Virality is the mark of excellence of a successful meme, something that should
work its own way because you showed it to _a small number of people_ and they
decided to reward your work with a reference and so on. Forcing virality by
dumping a video in front of a large number of people will simulate the effects
of virality by using a starting group large enough that the eventual effect
will be indistinguishable from virality.

But it is not the same as virality. A viral campaign costs outside of the
original production costs next to nothing and is proof you got it right. If
you have to force virality you are actually saying that your video is not all
that good.

So users of services like these should realize that they are essentially
admitting their content is not the real thing.

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vannevar
It doesn't seem like the service involves virality at all, they just provide
an affiliate network to serve videos on for a fee. Like a video version of
AdSense. Am I missing something?

~~~
tinco
The service itself is not about virality, but their customers are people who
want their video to become viral, and for a video to become viral it needs
exposure to key figures, which you might reach using their 'AdSense' network.

Here key figures means people who are interested in your video, have the
personality to share videos and are charming enough to have a following that
enjoys them (and perhaps includes more key figures).

Also there Virool guys seem to have spend a rather large fraction of their
seed finance on the video funny that sells their service :P

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dude_abides
Naive question: Is there a technical definition that differentiates a Seed
round from Series A?

I used to think

\- Seed round was raised from friends and family - but this one has tonnes of
institutional investors.

\- Seed rounds typically raise <1mm at <10mm valuation - but this one raised
6mm+ (at maybe 50-60mm valuation?)

\- Seed rounds happen before the business is well defined - also not true in
this case.

So why is this called a seed round and not a Series A?

~~~
danielpal
It's probably a seed round and not an A round from the terms the round was
raised. Typically an A round comes with different terms like boards seats,
lead investors, pro-rata right etc. Also A rounds are always priced rounds
with stock issued. Seeds are normally not priced and instead debt (convertible
note) is issued.

~~~
dude_abides
I believe board seats and lead investor/pro-rata rights are just negotiation
terms and not a must for a Series A.

Your other point is a good one. If there was no valuation and only convertible
notes were issues, then I understand why this would not be a Series A.

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Cardeck
I am really sick of people talking about the multitrillion markets they want
to conquer. So many startups calling that card.It's ridiculous! "We will be
successful because it is a 1000 trillion market".How about being
realistic.It's just stupid.We all know nobody will get even close to a damn
trillion.

I would rather divide 7 mil.$ between 10 good startups instead of 1 like this.

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tferris
Anyone with a tl;dr about what they are doing and it differs from Unruly?

~~~
jacquesm
Apart from the tl;dr I was about to ask the same.

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venomsnake
We have a company that enables your videos to go viral ... that don't have
their own video that has gone viral to show their company to the world, but
instead we learn from techcrunch.

~~~
niggler
Apparently they need that seed money for the product :/

We are definitely in a bubble ...

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JuergenHoebarth
It's a nice forced viewing platform making zynga and others very happy ;) view
vid for 30sec and get some credits for FarmVille, exactly he audience everyone
wants to reach. Typical non viral approach just Deliver numbers for reports ;)
but big respect to the guys how they packaged it shiny and positioned it
within the whole ecosystem. As filling out surveys or subscribing to
newsletters or services like netflix in exchange for credits the user do not
like any more...

~~~
JuergenHoebarth
They provide a nice solution to get something out of all this free app users
who do not like to pay and this market is large. Something like 90 to 95
percent off all the players...

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ErikAugust
"He kept fielding from clients at the time was “can you help me make these
videos go viral?” "No... but..."

In search marketing, the question is "Can we get to top of Google?"

And the answer can be yes if the client is willing to go pay-for-play
(AdWords).

So these guys basically built their own platform to do pay-for-play, I'm
assuming.

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ccarnino
I am wondering what kind of valuation this company had got. To raise that
amount of money I expect at least $12M post-money valuation (and still they
have sold about 50% of the company for a seed round). So, the question is what
kind of mind-blowing traction they had?

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niggler
I wonder if there's a way to hook this with amazon mechanical turk: pay a cent
for a person to just open up youtube and watch a video. Then set up a network
where people pay money for views, and profit from the spread.

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martinshen
Great job Debelov! Psyched to have Virool going strong

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scep12
I would have called it Vireel.

~~~
roberto
Virool sounds like a russian saying "we rule".

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Thun
Congrats Alex!

