June 3rd, 2013 Founders@Fail: DramaFever, Seung Bak
On Monday, June 3, 2013, OLC attended Founders@Fail, moderated by Schuyler Brown at General Assembly. This particular event featured Seung Bak, the co-founder for DramaFever, a streaming web service that provides subtitled Asian television. Bak comes from a non-entrepreneurial backgrond and DramaFever is his first startup—and a successful venture as well.
Seung Bak: I only worked at one company—CaptalIQ. We worked a hedge fund and did zero to 400 million in revenue. When you work at a startup, there’s more jobs to do than bodies. It was total chaos. The company, though, raised $30 million and it took one to three years to really get things ramped up. The ideation to reality to multiple pivots and revenue—I wanted to do my own. The reason I picked DramaFever is because I saw a market opportunity that was not obvious. For no reason, I saw people that weren’t Korean creating subtitles for Korean television. Why are they going out of their way to watch it?
There were people already there to consume the content and so we just jumped on it. We had zero licensing—my partner worked for Ziff Davis. We cold called people and after five to six months, we were able to get a Korean network in Los Angeles to give us a shot. They gave us a bunch of old drama and let us go nuts over it.
Schuyler Brown: How did you build credibility?
Bak: We had a graphic designer mock up a site and we sold that. I’m a marketing guy, my partner is a business development guy, so I called up people I knew from CapitalIQ that were great engineers. I found someone who worked at CapitalIQ and built a simple, three page website to launch content. There’s no real silver bullet. No one really cares about what you do. We did do a lot of PR to raise awareness, though.
Brown: Let’s talk about some of the hacks—how did you create the follow up to be on people’s minds?
Bak: We deliberately went to fans that are passionate about their content. We built a relationship with them. It’s not scalable, but that’s how the site really grew. For us, there was no competition for us at the time, so we were getting premium content on the cheap.
Brown: Were you structuring your deal on a pay-as-you-go basis?
Bak: Initially, we tried to get a non-share, but we ended up with a revenue share. We got a company using a title-by-title basis and a 50/50 revenue share. We have no 5 million people going to our site—and it’s mostly Americans.
Brown: At what point do you decide that A) you have enough money to cover bills during the early days and B) finance your company?
Bak: The reality is that I didn’t spend time raising money. We tried to focus our concept. It’s bad when you have your day job and you can’t do PR.... For the first year-and-a-half, it was people coming to my apartment to work and then going to my day job. Finally, I went all in. It was a three-person team doing things here and there.
Brown: There weren’t a lot of infrastructure to build a video site when you started. How did you get around that?
Bak: On the video side, there’s a lot of video platform types. Our startup cost for the video side was really cheap, but it wasn’t enough for attraction. It was a lot of off-theshelf tools. We were monetizing from the start.
Brown: What about advertising—what about A/B testing?
Bak: We’re doing A/B testing now. We weren’t going to do it until we got funded. A lot of it is doing it the cheapest way. There are a lot of people that want to do cool things and that’s how we got by in the early days.
Brown: How do you manage team dynamics?
Bak: I did it out of necessity. The industry as a whole is moving fast. In the end, it’ll be a different experience for everybody. It comes down to how your relationship is with people. A lot of the times, you want to hire people because of time pressure. But we’re doing try-before-you-buy deals. You want to try to do things on part-time contracts.
Brown: What was your interview process like?
Bak: The key thing was that a lot of the times, you didn’t know until you actually worked with them. You need to set expectations in a limited fashion.
Brown: Any advice on contract-based projects?
Bak: We didn’t have a lot of contracts. It was mostly handshakes. I think it’s wise to avoid overseas developers—you can’t control them really.
Brown: What about effective project management?
Bak: You got to do your best to talk to people in your domain expertise. You could have other people help you hire, get funding—a lot of people are willing to help. Always keep the ball rolling. I’d try to get as many people in your domain to help you out.
Brown: Early-stage funding is tough. What was it like for you?
Bak: For the first couple of years, it was my savings. Then we raised $1.5 million. It ended up being a lot, but a lot of times, it felt like pulling teeth. It was personal friends chipping in at first. A lot of people don’t want to do anything until there is a deal to be had. They want to be part of something cool. Until we got a critical mass of money, nobody wanted to step up. I didn’t have a lead investor. I basically put a basic deal and got everything together in the end. That way, it puts something concrete in their minds. To get to closing, you need to realize that everyone’s funding rounds are different. It’s ultimately up to your business, but you should have conversations with a lot of people. At the same time, you need to—you should be building your product. Looking back, I’d have done a better job going after better groups of investors.
Brown: In terms of trying to run your process, how would you evaluate features that would filter people in your process?
Bak: In the angel world, it’s important to work with people that have experience in the startup world or have investments in it. The universe of angels—they move in packs. Nobody actually wants to do the work. Some of the filters depend on your work. In the angel community, they’re going to go to where the well is.
Brown: What about the story? To be cool or hip, you need to be a trend that’s cresting....
Bak: I tried to make it as big as possible. You have no credibility with people. In our case, after some time, I tailored my pitch to people who would be interested in this product. I was super niche. Over time, I zeroed in on a certain group of people who I knew would understand the product.
Brown: Video can be difficult to scale. How did you handle it?
Bak: The build option wasn’t an option to us. Now, everything is cutting-edge for us. Half the people in our company are engineers and product developers. When machines break, we use brute force. Engineers stay up all night working to fix the problem.
Brown: How did you experiment with pricing?
Bak: In our case, we have three revenue streams: Ad-based, syndication and subscriptions. We played around with pricing for a bit. Subscription-wise, we were charging $5 a month, but then Netflix came out and so, we increased the price to $10. We grandfathered in initial users, so as long as they were using the service, they’d be charged the original $5. We’re still growing, and we’re wondering if we can raise the subscription fee to $15 for new customers.
Brown: How do you manager your junior staff?
Bak: I’ve taken the approach that it was setting expectations and trusting them that they’ll do it. I’m a first time entrepreneur, I don’t know what I’m doing half the time, just like them.