THE DISH: “The American dream isn’t that you find this genius idea and it all goes well. It’s that there’s no harm in trying.”
This is one of the many Jay-isms that flow naturally in conversation with serial entrepreneur, author and CEO Jay Samit over grilled vegetable salads—while L.A.-based Samit is actually in L.A. for the moment.
As CEO of SeaChange International since last October , Samit just returned from demonstrating the company’s premium OTT platform Rave “morning, noon and night” at the NAB Show in Las Vegas. From here, he’s off to nine cities in the coming week. The company will be in demo mode again at INTX in Chicago, with Rave and the Timeline social media discovery and analytics platform.
After lunch, as I read an advanced copy of his upcoming book DisruptYou!, with a foreword by Linked- In cofounder Reid Hoffman, I spot many of Samit’s perspectives from our conversation. And it’s no surprise that his “American Dream” quote is less than 140 characters. Insights throughout his chapters are pull-quoted at tweet-length. The ideals also are known to show up in his Twitter feed (@jaysamit), which has more than 100,000 followers. Or in his Wall Street Journal blog, or the course he teaches on tech startups at University of Southern California. (He sleeps four hours a night and has never had a cup of coffee.)
The book, as the intro reads, is “for anyone with a big idea but with no idea how to apply it, and for anyone worried about being made irrelevant in an era of technological transformation.”
It culls from Samit’s many successes in e-commerce, digital video, social media, mobile communications and software, which he says he achieved by “disrupting” himself and the businesses he’s run. He’s attempting to do it again with SeaChange, whose roots are in VOD technology; Samit sees huge opportunity for the company in the OTT era.
To wit, he offers a bold prediction at lunch—that the bottom-performing 20%-30% of programming networks will find themselves paying distributors reverse- compensation, going away, or adapting to OTT.
“I really just see SeaChange as a startup with $100 million in the bank and a tremendous legacy. But it’s Day One in the OTT world. So it is a startup,” he tells me at Ivy At The Shore.
Samit elaborates on his path to SeaChange and where he sees it leading. Edited highlights of the conversation follow.
What led you to SeaChange?
All these things that some people looked at as doom and gloom are huge opportunities. But who’s going to capture the value and [with] what strategy? I’m all about empowering everybody to try. So I’m an equal opportunity arms dealer at SeaChange.
Is there a specific tipping point you saw for why suddenly OTT is the word? It’s all everybody’s talking about.
It’s like the 1800s and we know the railroads are going to California and [you’re] just going to stand in the middle of the desert of Arizona and you’re going to make money because the railroad has to come. That’s what’s happening here. Everybody has no choice. … There’s no place in public that you don’t see somebody looking at a screen. And so that is a chance to make money and make people’s lives better and more enjoyable.
SeaChange was the company that invented video on demand, which was a genius idea. And unfortunately, their business model was: here’s a box, a server. ‘Cable company, you pay us once and we’ll find somebody to sell to next.’ As opposed to the Bill Gates model or the SalesForce.com model, which is, ‘Here, we’ll give you this thing and just pay us a little bit every stream’ and they would be this multibillion dollar [company].
So I’m coming in now, saying in this sea change, pardon the pun, of going to OTT, ‘Let me switch the business model. Let me not try to find big, giant companies to pay us millions of dollars.’ ... Why not give it to these partners and say, ‘Let’s be on the same side of the table and figure this out together.’ And every ad dollar that comes in, we make a piece of it. Every subscriber, we get a little piece. This way we can get into the market now, not two years from now. And we’ll be at the center, taking all the data that we’re learning of how we can give a better experience.
When you say “give it to them,” you mean license it?
Correct. We’re doing this with the BBC; we’re doing this with others. In less than 6 months we already have live trials of this going on in North America, South America and Europe.
If you really want to have a system that gives you the flexibility of figuring out the business model, and that’s disruption here, what is the model that’s going to work in this future? Is it subscription? Is it advertising? Is it rental? Is it paid to own? Is it a combination? Is it different things to different demographics and different packages?
We’ve built out all that flexibility. So to go out with the capability that only lets you do one of those, you’re risking going out and having the right content for that audience, but not being able to monetize it.
What is your vision for SeaChange and how is it is unique in the marketplace?
One of the things that attracted me to step in is to come into a company that has a 20-year legacy of excellence, technical innovation, three Emmys, for some of the most demanding clients on Earth. Cable companies have to work 24/7 all the time, everywhere.
Taking that to this larger group around the world, internationally, where most of the world is going to be receiving content through a wide range of screens—whether it’s direct to a smart TV, direct to a tablet, direct to a phone—we have to give them the tools to be able to do that. No one else is in that business.
I think of ourselves kind of like Levi Strauss in the great Gold Rush. You can’t name any of the miners who found gold in Sutter’s Mill, can you? But Levi made the tools that made it possible. He figured out, everybody needs a better pair of pants. Put some rivets in it and it survives the toughness.
Your target customers are any programmer and any distributer of programming?
Yes, sports leagues, special interest, any content creator.
What’s your measurement of success in this gig? A year from now for example, what would you like to be able to say?
Going back to my original thing of genius company with genius employees, and doing this amazing engineering—but had the wrong business model. For a greater percentage of our business and our trajectory to be recurring revenue and an SaaS model, as opposed to a one-and-done. One-and-done is really hard. Because there’s no predictability. ... On a personal level, it’ll be really helping to create this next experience. This next generation of how consumers globally enjoy and interact with content and advertising. And hopefully figure out what makes it sustainable.
Thank you for the advanced copy of Disrupt You! Why should people working in the TV business read it?
If you work in this industry, your job, your company—whether by choice or circumstance—is going to be disrupted. Period. And so you have an individual choice. You can let things happen to you or you can take charge of your destiny.
The book is really about showing people how to think of themselves differently first. And once you’ve disrupted yourself and your limitations, then you can apply the same to your job. ... I’ve raised hundreds of millions of dollars for startups. The lesson is how to be successful time and time again. ... The opportunity’s there. When you were a kid, people started putting limitations in your mind of what you can’t do. Women even twice as much so. That’s not a sexist comment, that is the society they walked into. If you go internationally, it could be even harder. But again, in all those circumstances, there are those who rise out and figure out how to do it.
What are some of the top things you learned from working in the music industry that you can apply to TV?
One of the more fascinating ones is when the Napsters of the world came along, everybody was stealing all the music, it was easy. You would assume you had 100 years of music to steal, so there’s massive volume, but the next year you just have the new releases. So eventually the amount of piracy should be going down in volume. Didn’t happen. Stayed at that level, continued.
So then we looked and analyzed the individual pirate, the individual stealing the music, and here she was stealing the same song over and over again, which didn’t make sense at first. But then when we sought these people out and I talked to them, [I learned] they knew it would always be somewhere in the cloud, it was easier to go get it than to figure out where they had it. So that’s when you realize we have a generation who didn’t want to own things— they just wanted to have access to things.
The whole idea of a sharing economy, what makes Google work, what makes Airbnb? All that insight comes out of seeing what piracy is. So if that’s true then what is the value of a large home video catalog if people aren’t going to want to own? The value is only—and this is self-serving—you need to bring context to content. How do you make your long tale relevant and timely?
Everybody’s done recommendations the wrong way.
Uncle Ralph came over to your house one Christmas and to keep him occupied you got him a pay-per-view of John Wayne so now every time you look they recommend a John Wayne movie to you.
Or, the other methodology is everybody in the universe decided to watch Spider-Man this weekend so the recommendation engine says whether you’re an 82-year-old woman or a 12-year-old immigrant, “Here is Spider-Man.” Doesn’t make sense.
Why I bought Timeline is they look in real time, look in the full firehose of Twitter, Facebook and Instagram, natural language processing—not keyword— what is the intense discussion of people in your zip code, your gender, your demographic, now? So if we know what you’re talking about right in this moment we can make news more relevant, we can make recommendations more relevant, we can make ads more relevant.
Is this your message to programmers and clients? “We’ve got the technology, the flexibility for whatever your business model’s going to be and also offer you recommendations?”
100%. Here’s an insider example. So one of the surprise things is in the field of worship, various denominations have come to us about going OTT. So they have thousands—if not ten thousand sermons—and now they’d like to go directly to consumers in one click. Genius. But how do you find the right sermon for the right person?
If a celebrity, a young, twenty-something millennial celebrity overdoses and everybody’s talking about that in the news, perfect to send the sermon out to that age group about the evils of drugs and alcohol. If somebody else saved a dog, help thy neighbor. Whatever the message is, you’re getting people when they’re in that frame of mind to use it.
And I know this from the music years: every artist’s best year, they never got to see. The second they die everybody’s thinking about them. But in the old days of supply chain until you could get out Michael Jackson’s Greatest Hits to every store in physical, now it’s one click. Somebody’s in a plane crash? That VOD should be available right then and there.
But it also works in the positive. If you’re announcing to all your friends that you just got pregnant, you may be in the mood for a certain piece of content. People that are in market for a car is what drives a lot of local advertising. We’ll now know with multiscreen that your phone was on a car dealership lot that weekend. Or what if that phone was on three lots this weekend? We know that you’re really serious. What is that now worth? It’s very helpful.
I used to have in my last company that Fox acquired, we drove hundreds of thousands of people into Best Buy. But we also would know whether they were in the printer aisle. What’s that worth to an HP if you’re standing 10 minutes in that printer aisle? Would they want to give you a coupon?
From the consumer’s perspective, how do you address what my reaction just was? Which was: That freaks me out. It freaks me out when I see on my Facebook a suggestion to buy a Detroit Tigers sweatshirt combined with the State of California. “We know that you live in California and you’re a Detroit Tigers fan.” And I don’t really like that.
We work in 70 countries, and follow all the laws of privacy. A lot’s made out of this and everybody has the ability to opt out on all these things. And yet, you download an app that gives you a flashlight and that flashlight app sells all of your data. What reality is, most consumers enjoy and don’t mind that when it makes their lives better…It’s a fine line of how it’s done. I’m obviously very pro using big data to make people’s lives better.
What do you think of the state of measurement and what is SeaChange doing in that area?
Google had raised the bar and become the most profitable business on Earth by doing accurate measurement, 100% on advertising. And then you get to where the big dollars are spent and it’s a murky, obtuse Ouija board that had momentum.
The tipping point has been everybody in that ecosystem is fed up. The brands don’t want to waste money, the agencies are getting squeezed, broadcasters are feeling like what they’re creating isn’t monetized. Content creators, shows, are saying “Wait a minute, I have millions of people watching this not when it’s live.” Jimmy Fallon, one of the most talented people ever, most of his viewers aren’t live at night making NBC money. Should they cancel that show or is the failure in measuring and monetizing? Where is the value captured in the new value chain? It’s basically what this book is about.
What if you could come up with a new system—that’s based on data—that had instead of guessing, knew accurately to the individual instead of the household. So in multiscreen software, what we provide, if you’re here and the TV’s at home, we can deduce that your husband is watching TV. Or whoever else is in the household. But in different situations.
In a multiscreen, multi-person universe, just as Google knows who’s on the computer and when, just by browsing habits, all that’s doable. So now, why not give advertisers a way of buying in eyeballs, buying in human, buying he experience, as opposed to paying a different amount for the same human being when they watch it on Hulu, versus watch it on VOD, versus watch-it-live. In all those situations, except for live, you know the person made a proactive choice, to want to watch that piece of content. Ergo logic would say they’re paying more attention and they’re more valuable. But financial systems today, when they do the measurement discount that person by 90%.
So if we’re not measuring from a selfish human level, that means less good content is going to be produced. So we all as a collective lose. So why not get broadcasters to the table? Why not get stations to the table? Why not get a new viewpoint like Univision to the table? And why don’t we all together figure out a better, more equitable system that works? And that’s what NewCoin is.
NewCoin’s a joint venture of SeaChange technology, Fox, Tribune, Univision and others. And we’ll test at the end of the summer an alternative. That’s created by and for those who it impacts, with transparency and accuracy—as opposed to holding people hostage.
Change is inevitable. The only question is: do you want to be the change?
What does the test entail?
We’re taking Dallas, just one DMA. And we’ll show capability and functionality that should be. If people prefer that method, we’ll roll it out nationally. And then roll it out globally.
What is the actual metric? What data are you selling?
We’ll be sharing how you can view it, how you can look at it, all that. In a way that conforms to what people’s present expectations are and then let you go and do a deep dive in a way that we think is more functional. So the person who just wants to buy the way that they’ve always bought, and always view and always think, you give them what they always want. The other person, you let them go inside and see “Oh my God, I can be more efficient.”
And I’ve built an ad tech company in the past and it was embraced and utilized by some of the biggest brands in the world: the Proctor & Gambles, the Krafts and the Nestles and the Cokes. So you have a generation that grew up in the agencies and brand managers who are expecting a quality of analytics that they’re not getting. So they know that they’re not being efficient with their spending.
Why is there not a media agency as one of the partners?
Really good question and I’m going to be honest with the answer. In the past, when one of the big, giant agencies invests in a company, there tends to be that everybody else says “That company’s dead to us.”
So it’s deliberate.
It doesn’t mean there’s not constant communication. Both with the brands and with the agencies and the media buyers and planners. The key is to have as many viewpoints as possible. That doesn’t mean everybody has to have equity in the joint venture.
How would NewCoin actually work? You’ll provide essentially two sets of data? One that syncs up more like the traditional way?
You’ll have a UI that allows you to look at the data in a number of different lenses. One of which is the way that you’re used to do. Some people don’t want change, and they don’t want to disrupt what works for them as long as it’s working.
Are you guaranteeing or estimating a percentage of accuracy?
We’ll show how we do it. Our goal is to make as little of it estimated and as much of it to be accurate data. Every stream that’s getting to a consumer is ones and zeros. Whether it’s through a cable box, a phone. The only ones that aren’t ones and zeros are the rabbit ears. If you take the rabbit ears out, scientifically you can measure accurately, 100% of that universe.
And NewCoin is set up to do so?
I didn’t say that. I said scientifically, you can. The idea to extrapolate from a thousand or two thousand people for $100+ billion in spend seems insane to me. And yet, I’m new to the asylum. It still seems insane and I believe rational data benefits everybody to make better decisions. And for the consumers too.
Ok so the other set of data—there’s the version that has rating points, and share —what’s the other piece of it?
So lets pretend we’re talking about cars. We’re talking about cars and this car is 400 horsepower and this one is 500 horsepower. And that is all of the data that you’re getting. So you deduce “I want the 500 horsepower because 5 is bigger than 4. That sounds good.” That would be one set of data and we’re not changing that.
Then you could dive in and say “Miles per gallon, this one gets 200 miles per gallon, this one gets 5.” Wait a second it’s probably a lot cheaper to run. This one can haul 10,000 pounds and you need to deliver bricks. This one only sits two people. There’s a whole bunch of different stuff that matters to different people. Television is the same way.
If you’ve ever been to that morning after ratings meeting at every network, I get to hear the person who looks at the reports come in without saying that they won. We won in lefthanded women that have one child on Thursday. We’re No. 1 in that audience. The number of ways of slicing and dicing relevancy. As opposed to “We sold more cars last night for our car sponsor than any show that week on television.” Wow, that’s a statement Ford would like to hear. “More people that stepped foot on a car lot in the past thirty days watched this show on television.” I want to buy that for my car company. So it’s what you’re looking for, what’s important.
So it’s an on-demand data product.
Why not go from video-on-demand to data-on-demand.
If you look at the trends, the biggest trends right now are big data, we’re dead center on how to use that for monetizing for $100 + billion, Internet of Things, that’s all the new devices in your home, your grills that go over your air conditioning thing, they now have ones that are WiFi and motion detectors. There’s nobody in the room? No air conditioning. Your car’s within three miles of the house? Open them up and [there’s] air conditioning. Crazy stuff. You only have a micro billing relationship with two things: your mobile company and your pay-per-view cable company. So our home Gateway product, Nucleus, opens up a whole bunch of new services on that home gateway that the cable company can monetize.
We’re at the center of the Internet of Things, we’re at the center of big data, we’re at the center of the whole mobile revolution, advertising.
Tell me a more fun place, given my passion for disruption and change, for me to be. And that’s why I’m on the road non-stop. Because I see all this opportunity for us, I have 700+ geniuses tackling this on every front and it’s just a sea of excitement. I couldn’t pick a better fantasy story. And you can do this too—just buy the book!