Veoh Should Be A Reminder That Execution & Focus Are More Important Than Vision

While it’s never good to see any company go under, one can’t at all be surprised to see Veoh Networks finally go out of business after burning through more than $70M in funding. While they were not the first and definitely won’t be the last company that will have to shut their doors this year, Veoh should act as another example to the industry that focus and execution are more important than vision.

From day one, Veoh never really executed a clear and concise business plan on what they were going to offer, what problem their platform would solve, or what the business model of the company was going to be. While all companies need to adapt their focus to try and stay in step with how the market evolves, Veoh always struggled to define who they were and what they were doing in the market. Their business model changed so many times and their platform shifted focus so often that even in the short-term, no one really knew what Veoh offered. Whenever you would ask people what Veoh did, you’d always get different answers, even from those who were in the online video industry.

The problem was that Veoh simply lacked focus. It’s hard to do anything well and focus on it when you’re trying to be everything to everybody. Veoh was a video platform, a content syndicator, a TV guide of content, a recommendation engine, an ad delivery platform and a software company that was pushing users to download Veoh’s own proprietary video player. That’s simply trying to do too much. If Veoh’s content was niche, maybe they could have pulled it off with the right focus, but when your business model is based purely on advertising, you can’t keep your content niche since you need as much traffic as possible.

In a blog post talking about the company closing down, Veoh’s CEO Dmitry Shapiro said the company was on a run rate of $1M a month in revenue. To put that in perspective, Veoh was delivering 240M video streams a month to 28M unique users and earning less than $1M a month with that traffic. Those are numbers that simply can’t add up to a successful business no matter how you slice it.

While some want to say how much vision Veoh had and talk about it being a sad day for them, it’s not. No company can raise $70M in funding and expect to have a viable, sustainable business unless that have a clear and focused business model of how to generate sales. Veoh never had that. To me, the nail in Veoh’s coffin came when they had to raise a third round of funding. Before the third round, Veoh had already raised about $15M. If you can’t make a business like the one they were aiming for work with 15M, then another 25M is not going to help. And when you burn through that $25M in less than a year and have to raise another $30M only 10 months later, you’re already done.

Things have to be kept in perspective. Veoh took $70M. If you take that much money you have to wonder to yourself how you are ever going to show value to your investors when you know there is no way your revenue is ever going to come close to the level of money that you raised.

No doubt, there were some really smart and visionary technical folks working at Veoh. But the problem we have seen time and again is that most technology people can’t take that technology and turn it into an offering in the market that makes money. Everyone seems to want to talk about the best platform, features and bells and whistles but then can’t explain how they will use the technology to make money. Veoh is a good reminder that it takes a lot more than just Vision to be able to turn technology into a product/platform that people are willing to pay for and generates enough revenue to actually turn a profit.

  • The “smart” ones are the people at Veoh, since they can get funding from “ALL the smart investors”.

  • Respectfully, I have to disagree. Those (lack of focus/bad execution) seem more symptomatic, than causal, to me.
    I think the specific problem with Veoh is right there in the first two lines of the blog post by its CEO: “Veoh launched in September of 2005 with a bold goal: To make it possible for anyone with a video camera and a computer to broadcast video to the world.” Unfortunately, it wasn’t that bold a goal.
    YouTube was already doing the same thing, and around that time, we also had companies like Revver, DailyMotion, and Metacafe working towards that exact same goal. The subsequent twists and turns they’ve made (as you’ve outlined), were simply after-effects of a faulty start.

  • This actually helps me because we are great at developing unique content but frequently we get side tracked and distracted by technology stuff. For example, we ruminate a lot about should we set up our own Wowza server b/c it is not too expensive but we don’t have the skill set so we end up spending more than we save in time and dollars trying to find competent and reliable help to get Wowza configured for our use and even when it gets configured u r distracted about whether it will work properly or not. And for God sakes don’t let me get into the time and energy trying to set up our on service to stream to mobile phones.
    So even though a FMS reseller cost a little more than we would like if we use them this will allow us to Focus and Execute on what we do well, Content Development. And the FMS provides about 90% of what we need video wise. Check out our site: http://www.academicathleticism.net

  • fred

    Without a vision there is nothing to execute on…I think this is more a case of the founder and the board not realizing they needed help on a plan for revenue until it was too late – the UMG lawsuit didn’t help much either nor did trying to serve the whole world video instead of just the US – oh yeah and the very high CDN costs in the early days sucked up a bunch of that $70Mil – of course several CDN providers benefitted. Dan – what was the last startup you worked at? Your analysis above reminds me of times when sports announcers say “Whoever has the most points at the end of the game wins”.

  • I disagree. Without focus and execution, the vision can’t be successful. Not the other way around. Those who are successful with their “vision” succeed due to all of the other business pieces they put in place outside of that vision.
    You say the problem was “not realizing they needed help on a plan for revenue until it was too late”. That’s exactly my point. You can’t start a business and not have a plan for revenue from day one. ESPECIALLY when you took $70M in funding.

  • How many more decades need to go by until VCs stop funding unsustainable business plans? We’ve seen hundreds of these types of companies come and go- yet they keep getting funding.
    Any VCs out there still considering these types of companies should give me a call and I’d be happy to, for a percentage of the money you DON’T invest (and don’t lose), show you, quantitatively, why these businesses don’t and won’t work.

  • Rob

    It isn’t the vision, or bad business plan per se, it is bad management that pervades most of these companies. Even the most basic management systems aren’t in place and the companies just hope to get lucky.
    Clue: if no employee has ever had a performance review, if accountability is at best sometimes enforced, and if it isn’t clear what your co-workers jobs due to increase the value of the company it is being poorly managed.
    Regarding the previous post about execution, execution is in many ways the easy part. It comes, as Steve points out, after the really difficult work of writing and vetting a viable plan. A plan that actually is in balance with the investment dollars and the market opportunity.

  • Internet Content/Channel based businesses have a lot to learn from their TV/broadcasting counterpart. A myriad of inane contents are insufficient to garner hits. Secondly, innovations in social marketing and simple one-click business arrangements with content providers are required to attract and pull proven “personas” from existing incumbents like youtube

  • Mike Izquierdo

    Dan, you’re right on the mark. If the Vision is purely based in technology then you have problems. With any business the objective is to satisfy customers needs to make their lives easier, more productive, happier etc. Just because you thought of a new technology doesn’t mean it’s useful to anyone. It seems to me that in order to have a successful business the Vision must be tied to your Customer’s needs. If you don’t know who your Customer’s are or what they need, then I can’t see how you can be successful.
    Of course, all of this should be in the business plan. In Veoh Networks case, it probably was. But changing the business plan is a sure sign that you failed to identify who your Customer is or How many of them there are. Keep in mind that when I refer to Customer I should point out that I mean “Paying Customer.”

  • It is obviously best to plan and focus but as Napoleon said I would rather have a lucks general than a good one.
    Any business plan you prepare needs to have flexibility built in because the trading environment is not going to be the same in 2 years as it is today, markets and economics change, and those that do not change with them die.

  • bpf

    I would agree with you that “Execution & Focus Are More Important Than Vision”, but sadly without vision there are no execution and focus, it’s all work in vain.
    Vision is what sets the winners apart from the others, vision makes the champions, vision is what the most successful people in the Forbes list EXCEL at. Vision means imagination, and without imagination there is nothing. I would say vision is 60% of a success story, the rest, i’ll tell you another time 🙂