Engineering a New TV Model

An entrepreneurial life led ‘brilliant technologist’ to Aereo

By Jon Lafayette -- Broadcasting & Cable, 8/6/2012 12:01:00 AM

Chet Kanojia, founder/CEO of Aereo, the TV streaming start-up, is an engineer and entrepreneur who says that disruptive technology will eventually mean more opportunity for both viewers and content companies.

Those who know Kanojia were not surprised that his controversial business survived a challenge from broadcasters in court last month that might have shut it down. “His level of preparedness is the most important thing to pay attention to,” says Shana Fisher, managing partner of High Line Venture Partners, an early investor in Aereo. Not only were Kanojia’s legal ducks in a row, but “every duck,” Fisher says. “Try to dig a duck out of the row. It’s not going to happen.”

Kanojia was born in Bhopal, India, a city known for the 1984 gas leak at a Union Carbide plant that led to 3,000 deaths. Kanojia, who wasn’t injured, recalls spending weeks volunteering in hospitals. “As the magnitude of the disaster unfolded, even to the young mind it was pretty shocking stuff,” he says.

He studied mechanical engineering and, after a stint at his family’s concrete business, came to the U.S. and got his master’s in computer systems. He planned to become a professor, but dropped that notion when he heard only a fraction of his time would be spent teaching.

Kanojia says he’s always been entrepreneurial; he earned money by building and selling speakers and writing and licensing software. After working with a product development consultancy, he struck out on his own, launching Random Design, which made productivity software for lawyers.

But his real interest was the new world of devices hooked up to the Internet. He knew the cable industry needed systems to manage traffic, collect data and support other products, including video on demand. He visited Leo Hindery, who was about to leave AT&T; Hindery hooked him up with CTO Tony Werner, who gave Kanojia a few settop boxes to play with and a development contract for a new company, Navic Networks. Kanojia got to know the cable industry and collected advice from some of its top minds.

“Chet is a brilliant technologist” with “an ability to think strategically about the future [and] people skills that allow him to build an effective network by working well with others,” says Nomi Bergman, president of Bright House Networks. “Chet had a vision for the value of interactive television, and the power of our viewership data, long before cable MSOs realized there were opportunities in the space.”

When Navic waded into advanced advertising, it became a takeover target; in 2008, the company was acquired by Microsoft for more than $200 million.

Kanojia says the idea for Aereo had been bubbling in his head for a while. He thinks that about 20% of consumers might be happy with a broadband service that provided the broadcast networks, plus library programming from the likes of iTunes, Hulu and Netflix.

“The question became how do you solve access to broadcast,” he says. An answer came when Cablevision Systems won its network DVR lawsuit. “If the network DVR was legal, why not a DVR coupled with a network antenna?” Kanojia asks.

High Line’s Fisher decided to invest in Kanojia’s “crazy” idea during a 15-minute lunch. “He gives you an incredible amount of con! dence he’s going to get whatever he is doing done,” she says.

Fisher introduced Kanojia to her old boss, IAC CEO Barry Diller, who provided later financing. “Barry likes people who are extremely prepared, extremely smart, specialists in their areas, very strategic and very hard working,” Fisher says. “Chet works as hard as if this was his first start-up.”

Moving swiftly from prototype to commercial rollout in a year, Aereo provides subscribers with individual, dime-sized antennas at its facilities and transmits the broadcast signal to them over broadband without paying the retrans fees cable operators pay. Understandably, broadcasters have objected to this, but Kanojia contends that “everybody in the entire food chain is better served when there is growth. We need new people, younger people; bringing people who are averse to the traditional cable bundle into the [TV-watching] fold is a good thing.”

With Aereo currently having the blessing of the court, Kanojia plans to expand from Apple’s iO to other platforms and move into markets beyond New York. “We haven’t even marketed the product,” he says.

E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette