Mux is excited to announce that we’ve raised a $9M Series A funding round from Accel. We’ve now raised $12M total, including our seed round in 2016. Joining our board is Dan Levine, an incredibly sharp investor and entrepreneur who understands developer businesses as well as anyone.
Over the last 7 years, I’ve pitched more than 100 investors and raised 4 funding rounds for two video technology companies (Zencoder and Mux). During this time I’ve watched investors evolve in how they think about video, shifting from cautious to excited and back again.
In 2010, when we raised our first round of seed funding for Zencoder, investors were concerned about market size. The biggest question we got was: “How many companies really publish video?” Or worse: “Doesn’t everyone just use YouTube?” This reminds me a bit of the infamous quote which may or may not have been spoken by Bill Gates: “640K ought to be enough [RAM] for anyone.”
When we raised our second round at Zencoder in 2011, things had changed. Investors were now excited about the future of video, and almost no one asked us about market size. We probably did a better job of preempting this question when we raised our second round; we began our pitch with two simple points: “Video is exploding” and “Cloud is exploding,” both of which were uncontroversial. But there was also real optimism about the future of online video when we talked with investors.
By 2016, this optimism had changed to cynicism. Venture returns on video companies were abysmal. The biggest exits were well under $1B, and public multiples were low. Almost every major venture firm had invested in a video company, and almost every major venture firm was disappointed in the results. So when we raised our seed round for Mux, we had to answer the market size question again, but this time with a different spin. The main objection was now “Why are there no billion-dollar companies in video infrastructure?” or “How will you avoid stalling out as a mid-sized business like everyone else?”
But an astute reader (or investor) will see that this cynicism makes it a good time to get into video. Over the last few years, video has become an under-invested sector. Meanwhile, the growth of online video has hit an inflection point. Our Mux investors understood this, and for every investor who couldn’t get over the poor returns of the last few years, there was an investor who knew that online video won’t always look like it did in 2015.
If you look closely, it’s hard not to come to the conclusion that online video is going to grow significantly over the next decade.
Online video is big and growing. Cisco estimates that 82% of internet traffic will be video by 2020. This is a staggering number: if you think in Pareto terms, this means that the internet is basically a platform for video distribution.
Online video is changing. In 2005, video meant ABC and Disney. Now, Snapchat, Facebook, and Twitch are arguably the most exciting video networks today. Snapchat streams 10B videos every day. For comparison, about 13M people watch NCIS, the top primetime series at the time of writing, according to Nielsen (week of April 3, 2017).
Online video isn’t just for entertainment. Almost 50% of internet users look for a product-related video before visiting a store, and shoppers who watch a video are 81% more likely to buy online. Video is growing quickly as a communication channel: for marketing, ecommerce, corporate communications, and more.
And believe it or not, it’s still early. By some estimates, Netflix is only about as big as a cable network like Discovery, and more than 90% of broadcast TV content is still watched offline. And 75% of US households still subscribe to cable or satellite TV, meaning that only about 17% of cable subscribers have cut the cord in the last 5 years (down from 91% five years ago). It’s not hard to imagine online video growing 1,000% in the foreseeable future.
Recent Mux research shows that viewers are still frustrated with video streaming performance. Users stop watching video when they run into performance problems, and a whopping 95% say that “When considering streaming video services, the reliability and quality of the video streaming experience is very important.”
Online video today is held back by poor quality video streaming. If a video doesn’t play well - with high quality, quick loading, and no rebuffering - viewers move elsewhere. This is measurable (rebuffering reduces watch time by 40%) and companies like Netflix and YouTube have invested thousands of hours into these problems.
This is why we built Mux. We want every publisher, from big to small, to be able to measure and monitor their video streaming quality of experience. We recently released a self-signup version of our product that scales based on volume, so both small and large publishers can understand their performance.
We raised our Series A to fund this vision. We’ll use the money to continue to go deeper into video performance, creating new features and tools to help publishers build better video.
We've already built a solid foundation, and believe we’ve created the most accurate, actionable, and usable analytics platform for video performance on the market. Customers like Wistia, Livestream, IGN, and others have used Mux to make significant improvements to their video streaming.
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