I’m Karl Ulrich and I’m a professor at the Wharton school and I’m very lucky to have today with me Lindsey Stewart who’s the cofounder and CEO of Stringer. Lindsey thanks for coming in. >> Thanks for having me.
I want to first give a disclaimer, which is that your co founder Brian McNeil was my student, that’s the first disclaimer. You weren’t, actually. >> No. [LAUGH] >> And the second is that I really hope you guys make a lot of money, because I’m an investor in your company. So I just do want to get that disclaimer out of the way. >> We definitely want to make you a lot of money, and maybe a couple of bucks for ourselves too. [LAUGH] >> Great, awesome. Well, why don’t you give us the elevator pitch for Stringer? >> So Stringer is a video marketplace, and we allow our customers, major media customers, to request footage, custom footage, and get it back in a very tight deadline. Just drop a pin on a map, tell us what you want, and then thousands of contributors can respond to that request I give you exactly the video that you want to use for a number of reasons. We focused on editorial, initially, >> Give me a really specific example. What’s some footage you’ve captured recently, and how did it actually work? >> So, we had a number of news organizations who wanted footage when there was that disaster in San Bernardino. There was active shooter, at least, on the run. They went in, they dropped pins all over the San Bernardino county area, asked us to leverage our community of videographers there who then in under an hour’s time were able to get shots from patients arriving to the hospital related to the event, the location and interviews with people who’ve witnessed the event itself. And really just be able to come in and grab a lot of different kinds of what would have been very disparate footage at one time, all into one place and grab it from a single source which was us. >> So tell me a little bit, you said drop a pin. So that the producer is sitting at his or her desk presumably looking at a website? Is that how they’re actually entering their request? >> Yeah, it’s pretty simple. They just log in to our website. They put in a topic, so in this case it was a potential shooter in San Bernardino. They drop a pin on a map. >> I see. >> And say here are the locations we’re interested in getting footage from, and then when they hit submit, that goes out to our contributors who are in the area. Our videographers who’ve signed up to be on our app, in the area, who can look at the nature of the request, decide if that’s something they can respond to, shoot the video, either with their smart phone, or handheld cameras and then upload that footage. That footage comes back in real time to our customers. So, it this case it was like the likes of CBS News and The Associated Press. And then they can take a look at that footage, decide if that’s something that’s useful to them, hit the download button and grab it. All while they’re sitting in New York. >> Yeah. Who are these videographers? >> They range. They range from professionals all the way kind of down the spectrum to people who are interested in videography. One of the things that we have focused on in the last year is we’re finding who that population is. At first we cast the net in our marketing effort pretty wide, just to see who would come in. Who would provide valuable footage. And then we captured that data. What is that profile of a person look like? And now, we’re able to basically market to a more refined set of people, who have an interest in videography. Maybe had no way to monetize that interest. And now have access to our network of customers to sell their footage. >> You mentioned monetized. So there’s something in it for them? They get paid? >> Yeah, the get paid. So every time a request goes out, or any time they upload something and it sells to a customer, sells to a customer is a real key part of our business model, then they are paid. They are also told what the prospective payment would be from the onset, if it is indeed in response to a request like the one I alluded to before. And so unlike a lot of places where you could put video, like social media, where maybe potentially you just want to tell your friends you’re doing something, or you’re bragging about going to the The Super Bowl or something like that. This is not that environment. This is an environment where you provide valuable footage to customers who want to buy it. You’re not just telling the world that you’re doing something. >> About how much could they expect to earn? So it basically comes down to the per customer download. So the average for us that we pay out right now is $55. But every single time a different customer buys, they make money. And so potentially you’re making $55. Maybe three customers will buy and then it’s three acts of that. But that’s how the model works. Now we’re working on a different kind of model where we have some channel partners like Getty Images where the payments might look more like a percentage of what we bring in so that they capture, if we win big with a particular clip, so do they. We definitely want to make our contributors excited about coming back. >> Yeah, where did the idea come from? >> So, I’m a former news girl, I spent a lot of time producing. I worked the Fox News channel for almost eight years and then came up to the Bay area, obviously went to the Wharton School, worked at Bloomberg, and my final stop was ABC News. And so, the idea came from just a basic need in the newsroom. We have current Stringers, Stringer is the name of the company, who basically push content onto us on a daily basis or especially breaking news environments. And some of that content is great, some of that content is not so great. Some of the delivery is okay in terms of technology actually getting the content in house so that you can use it and put it on TV or publish it, and some of it is very slow. And so I thought it would be much nicer to have transparency in the system, where there’s a marketplace where photographers could upload footage, we could see it, know what we’re buying ahead of time, and it would be delivered to us quickly. The cloud has given us a lot of options and there’s a lot of speed but that doesn’t mean that the average individual stringer has all those tools at their back to make it a fast delivery. That was the initial idea, but then when I was here at Wharton I started basically randomly talking about it and Brian, the co founder said well what if we gave our customers the option to request the footage they want not just take the footage that’s available. And that’s a brilliant idea because all of a sudden you’ve just opened up the world to a producer and said I really need this protest in Minnesota. I really need storms in Tampa. I really need snow in Boston. And nobody has put anything out there that I want, and now I could basically request it. >> Yeah. >> And so that’s what we do. It works in both ways, but I have to say the request footage feature is the stickiest feature for the contributors, because they think rightfully so that they’re responding to a request from a customer. >> Yeah. This story follows a very typical template or pattern, which is the entrepreneur, his or herself feels the pain at some point in their life. And then says hey, I bet I could come up with a service that would address that pain point. So that is the template for Stringer. You were yourself the customer, basically. >> Yeah, I was the customer. [LAUGH] >> But did you always envision yourself as being an entrepreneur. What point did you say, I’m a news producer. I guess you had taken a break to go to school, is that right? >> Yeah, I was still a news producer while I was going to school. >> Okay. >> And I don’t know that I always viewed myself as an entrepreneur. >> Yeah. >> I viewed myself as a person who had a certain amount of get-up- and-go that I think is associated with being a news professional. But as far as putting all the aspects of a business together, that’s a pretty daunting task and even as an entrepreneur, I’d be lying to say that isn’t A daunting task now. But no I don’t think so, I think that business school and being around other people with different sets of talents, whether it be engineering or business operations, or finance, was really what kind of glued it all together. >> Well, so you sort of socialized this idea, kicked it around with some of your classmates and peers. At what point did you say, wow I’m really going to go for this. This is going to be what I do. >> I think it was when we looked at the opportunity in the market. Which is something that I don’t think, if I hadn’t gone to business school, I would’ve given much thought to. And I think a number of business people actually just get into the market who don’t have the training and do quite well without sizing things up so numerically or quantitatively. But yeah what really did it for me was we put an MBP together. >> Okay, so that’s minimum buyable product. >> Yes, Minimum Buyable Product together with our own money and then we started showing it to our prospective customers. We basically took it to some local news customers, some network news customers. And said, if it looks something like this, would you use it? If it looked something like this, would you pay for it? And we got a lot of positive response. I think it was that. And then we went to some investors and said, you know, here’s our idea. And do you think this is worth putting your money behind? And I don’t think without either one of those coming To fruition, we would have jumped off. Without the next bit of capital to get yourself to the next milestone, it’s pretty hard to get there. And without some valuation from the market, your first market where you’re going to sell it, it’s probably not a good idea also to go jumping and quit your jobs. Especially if I go, good one. >> Well you called it a MVP or minimum viable product but it was more of a mock up, is that right? Was it fully functional? Could they actually request footage? Or was it more of a mock up. >> It was initially a mock up. >> Yeah. >> And I mean I literally, you know, with some trusted friends in the news business >> Yeah. >> said, here’s how it would work. Here’s how it will look. Here’s how the dashboard would look. Dashboard didn’t look anything like had initially first. >> Sure. >> Drew but, what do you think? And, I got a lot of feedback there. And that’s important because before you spend engineering dollars. >> Mm-hm. >> Which are some of the most expensive dollars you can spend in a startup, at least right now. You want to make sure that at least the initial features that make sense. >> Mm-hm. >> So yeah, we started with a mockup and then we quickly after that did spend some money to make something functioning because people don’t really get things they can’t play with. >> Yeah. But Stringer is an example of what’s called more generally a two-sided market. I mean you have on one side demand, in this case the news producer. On the other side supply, in this case the videographer. And you are a platform to connect supply and demand. The challenge with two sided markets is you’ve got to get them started, and you have to keep both sides in equilibrium. So, how did you get it started?
So we started in one small media market, a place where we felt we could make some serious mistakes with customers and not basically put a megaphone to our mistakes. So we started in San Diego, which if you know a lot about media has a lot of great media professionals there, but isn’t the epicenter for And so we started with basically the demand side of things and said would you demand things. And then would you make requests of our system? And so we saw them make requests of our system, and then we had to build the contributor base on the other side which turned out to be initially easier than we thought. But then there’s the maintenance of the system, right? And so the maintenance particularly of the contributors. What keeps contributors and videographers happy to be coming back? And not just basically, you’ve paid for them to come on, and now they go away. So then we had to build systems in place, and learn from feedback from contributors about what they liked about us. >> Yeah. >> And what they didn’t like about us. And it’s some really hard lessons there, where we had to figure out how to get people to stay without paying them. Because they weren’t necessarily good enough to be paid, but they might be in the future. And so we learned how to do that. >> But let me take you back to San Diego. How small can that initial pilot be? So how many customers on the On the demand side you have? >> It really just started with want. And in fact, do you want, you know depending on your market place. But with ours you want to make sure that in some form or fashion in a meaningful percentage basis, you could fulfill some of that demand right, and then scale from there. you don’t need to start with three new stations. Start with one, then we went to two, then we went to three. And then we realized we were getting too much and that we needed more contributors on the other side and we needed a different kind of contributors and we needed contributors in other places, so you can add them one by one. It does depend on your marketplace if it’s more consumer facing I think it’s a little different. >> And were you literally hand picking the videographers on the other side? Or how were you finding these people? >> Yeah there’s a lot of hacking that goes on in the early days. Right? Because you don’t want to spend too much money either. And your own time is unfortunately worth less than almost anything, the capital you’ve raised. And so what I did is I basically called prospective customers and I said, who are the current people you buy from and then I started talking to all these different people about getting them to join. And I wanted young stringers to join. I wanted older guys. You know, there’s not a lot of women. who are stringers to join and get their feedback on how the technology works. I was literally handpicking them at first. But then we were starting to test how the market to kind of a broader market, to see who would come on and then who would contribute and to see who would be even better than the current videographers that were playing in the market at the time.
>> Yeah one of the key tensions, I suppose, is proving out the market in one location that is really getting that elusive product market fit, versus the desire to scale and to get bigger. How did you think through that decision, and how’d you decide when to go outside of San Diego? >> Well, we thought and what I’ll say is we thought through the decision one way. And if I were to do it again, I might execute it differently. But we basically said there should be a matchup between what San Diego’s stations want. And what San Diego videographers can provide. And those two sides should talk to each other beautifully. And that’s the perfect model where they sell each other, buy footage from each other. And boom, it’s this beautiful ecosystem. What we learned over time is that the value proposition for our customers wasn’t purely and that potentially they could get footage from their own market just fine or what they perceive to be as just fine. But they preferred also to get footage from other places. Other places even in clear across the country. And so that became a very tough value proposition for us to deliver on. And so what we initially said is okay we’re not providing the value necessarily we need to for even the San Diego stations. What do we do? So we took a look at the highest, the markets with the most news happening in them. So we did a rank of cities, of you know weather Crime, politics. And those were our next launched cities. And we found that we indeed got a little more traction with customers. They’re like good, you have that debate from Iowa that we couldn’t get through our other channels. You have that weather from Boston that we couldn’t from our other channels, but it still wasn’t quite enough and I have to say that they minute we told our customers that we had nationwide coverage, which wasn’t until November of this year >> Mm-hm >> That’s when the big customers started to plague all of us And because they liked the ease of thinking we were a one-stop solution for footage that they wanted in the US, and that’s where the conversations really got interesting. But, all that being said, a number of other scaling lessons were learned during that interim, that if I had launched nationwide, my marketing efforts, a year ago, it would have been a huge mistake. And for investors like you, I would have spent a lot of your money faster, and that wouldn’t have gotten me in a good position either. >> Yeah, so you did then play it about right, is what you’re saying. >> I think so. When you look at acquiring a videographer and you bring that cost down, it costs a 20th now if what it did a year ago, that’s a good decision. >> Yeah, yeah. >> On the other hand, of course, when you look at the other side of things, and potentially what investors want, and they want to see revenue ramp really quickly, that didn’t put us in the best position for that. >> Right. Yeah, really interesting. And give us a sense of that timeline. So you launched in San Diego? And then, how many months before you launched in the next city? And then, where are you now? And what’s that timeline look like? >> So we launched in San Diego in September of 2014, I have to get my dates in line. And then about three months later we started looking at other cities when we realized the value prop really wasn’t there for our customers. And then we launched in ten cities. And then we added about four more. And then we kind of sat there. And we had a number of early customers with very specific interests. And we started gathering data about the kinds of videographers we wanted to start recruiting. And the only way for us to really gather that data is understand who provided content our customers wanted, what they looked like. And then be able to take that data down the road and market again. And so that took a significant amount of time for us to gather that data, because we had to have customers buy clips from people.
And then our hypothesis was, if we market to a look alike of those people, that potentially that our cost of acquisition would half. That’s what we thought. We were like, instead of paying $22 for- >> For the videographer? >> For the videographers we’re going to pay 11. And then all of a sudden, it just plummeted to the ground. And now what we’re seeing just in the last couple of months. Is, for some reason, there is a little bit of virility that’s happening within that community. Where we’re getting people we haven’t marketed to, but are of that lookalike profile, as well. >> On the videographer side. >> On the videographer side of things, yeah. So and then we sat there for almost a year, gathered that data, and then had an infusion of capital that we could use. And marketed to basically nation-wide. And that’s where started really picking up people in every corner of the country. >> Yeah, so if I just put that timeline together, it was three or four months in San Diego. And then a year or so in the ten to 15 cities, and then you’re everywhere now, or at least you’ve opened up.
>> Yeah, a videographer in 180 US DMAs now. And our largest market has about 1500, and it scales down from there. >> Yeah, great. Tell us a little bit about the money, about the financing. >> Yeah. >> What the financing milestones were and how you achieved them. >> You always, when you raise money, want to be able to go to an investor and say, this is what I can get for your money. So the first milestone was, we’re going to do a proof of concept. We’re going to show that customers will play with this marketplace, and so will videographers. So that was the first pitch to early investors. And then the next milestone was really, okay we can take this model, take our learnings and improve upon it, in ten cities total. And potentially learn more about videographers. And then the next one was, we want to scale. And get to more videographers in more cities, potentially nationwide, and do some pilots internationally, just to see the mechanics of how that might work. So that was the milestones we put in front of our investors. We also wanted to show that investors in that latter part, or not investors, customers would pay for the product and that we could scale that. And so that has been the consistent march-along to investors. As far as investors are concerned, we found that, initially you go few people who know you, right? Who like the idea and are not unafraid of market places. For us unafraid of a media type of investment. And you have to sell that dream.
Once you have a product, you get out of dream mode and you have to start selling metrics, right. And that is a much harder game to play, right? Sometimes you rue the day you had one number. You just wish you were back to selling the dream again. And a lot of entrepreneurs will say that they almost never try to take a dollar for their product until the veritable last moment I don’t if that was a luxury we had in our current marketplace. We had to prove out there was going to be some money there. And then you grow from there. And now we’re at the stage where we’re taking current investors who want to lead around. But then also with the hope of some of these relationships with customers having a strategic investor as well. Because for us that is a very meaningful validation of not just what the product is now, but what the product could be. And what it means to the industry overall. >> Give us a sense of the dollars involved. So that first money, the friends and family money is about how much? >> It was $450,000. >> Those are some good friends. That’s a fair bit of money. >> It was a lot of friends [LAUGH]. >> A lot of friends. >> It was a lot of friends. [LAUGH] Yeah, those are some good friends. And then after our proof of concept and some validation, we were part of an incubator that put us in front of a number of media customers. And we got increased validation from that community. Then we saw another 450 come in, I guess it was another 550, so it was a million total. >> Yeah, a million total. >> And so then we got to this rough patch, right? Where we’ve gotten very far, but we haven’t scaled sales, and scaling sales is, it’s an adventure. Because there’s a lot of pricing and a lot fo other things. And than we said, well, it’s going to be really hard to scale sales unless our value proposition is something that is really easy for customers to understand. You can request video in ten US markets, well people are like, where can I get video? You can request video anywhere in the US. Now that’s something that the Associated Press understands, and so I’m in Germany and I’m like, hey, head of video, you can request video everywhere in the US. And he goes, okay, we’ll finally try you. Okay, well I’ll finally pay for something. And that inflection point, you’re seeing me at that point. So we, to date, have raised $1.5 million, and much of that has come from people who have tracked us along our process. >> Interesting. >> And that I would say, if you’re not raising money in one of those unicorn spaces, where people are just hot on you, And there a lot of good ideas that I encourage people to pursue that aren’t in the hot spaces. If you’re not virtual reality, it’s okay. Is to have investors who you communicate with, who see your progress Who, if you’re making a good number of your targets because unfortunately you’re never going to make the targets as fast as you want to. >> Right. Especially when customers are involved. You can go back to them and say, here’s what we’re doing, here’s what we want to do. And some of those folks will come along with you because they believed in you when you had a piece of paper. >> Yeah. So you now have much more than a piece of paper. You have real customers, but you need to scale it, and that sort of thing.
I read a ton of articles about how easy it is to raise money, and congratulations to those folks who are writing that, but I would say that those are headlines. And for the most part it is just beating the pavement, keeping in touch with the people who have invested in you in the past, and leveraging every contact they’re willing and every door. Walk through every door and talk to every single person you can because you never know when your next customer, your next investors going to come around. >> Yeah. >> Or advisor. We’ve picked up some really great advisors that way too. >> You point out that it’s tough out there raising capital that’s certainly been my experience. On the other hand you’ve done a lot with not that much money honestly. So it’s a $1.5 million to date, something like that, for a tech company. That’s actually, in the entire US market, that’s pretty efficient. Can you speak a little bit about how you developed the technologies so efficiently? >> Well, I mean it’s really on the backs of a lot of technologies that are already out there. So, for instance, AWS has been a really >> Amazon Web Services. >> Amazon Web Services which has an encoding platform, we didn’t have to build an encoding platform, it’s there. And they are very much interested in kind of getting in the craw of startups cause they don’t know which ones are going to win or lose. So for the first year I don’t think we paid a dime there. We just started paying for you know a hosting video which you know over time still I don’t think worries me very much. You know initially we had a number of engineers and we’ve built the platform to a certain point of course I’d love more, but then we were able to scale back on some of our engineering resources and really just treated as a marketplace. The building’s been built. Now, people can come to it, things could get better, and you can’t live without great engineers but you can maybe live without as many for a little while and bringing them back when you can. And, I think that’s kind of of the essence of it. Is you take a look at your budget. And you say, who cost me the most. And you try to treat those people as respectfully- >> Yeah. >> As you possibly can. But at the end of the day, if you have really expensive resources you can only have very few of them. When you’ve, like you said, raised a million and a half dollars. >> Right. >> And then you just get as about as efficient in every other corner as you possibly can. And you take a bunch of risks. To be quite honest, as founders, to see how far you can stretch it. But and then you don’t yourself on who faces the customers. You make sure that the customers have as good of an experience as you possibly can provide. >> Right, and I’m guessing that’s mostly you at that point. >> That’s me. And that is our curation team. And fortunately for me, I understand Journalist quite well. There are a number of really talented journalists in New York. One of the reasons I shifted the company to New York, they’re graduating from premier programs, and journalists don’t historically get paid as high as engineers. And so, I’m able to get a team of very smart people around me who aren’t as expensive as a software engineer. So yeah. >> Great. I want to just wrap up by asking you to reflect on the highs and lows. So you’ve been on this entrepreneurial journey a couple years now. Tell me a high and a low.
>> Well highs are always when initially >> And the early days when you talk to customers, and they actually tell you you’re not stupid, that this idea is cool. You just feel on cloud nine, and you’re just like this is amazing. The early lows are going into a number of investors who use a certain framework for >> Their investment strategy. And that’s not wrong. That’s just what they want to do and it’s their money. And they basically tell you that it’s never going to work, and that this is an utter failure for x, y, and z reasons. They’re calling your baby ugly. And sometimes they didn’t even really lift the sheet off the baby to look at it. And that’s very frustrating. And that’s a very low feeling. It’s really low to have someone who you don’t really feel gave you the time of day tell you you’re wrong. I’d say that is a cyclical process that I feel all the time. >> Yeah. >> And but now that we have customers who pay that euphoria that I used to get from customers now sometimes doesn’t even come from them because they say, but I really wish we had >> X, y, or z as a feature, and gosh that’s why we don’t use your service three times a day we only use it one time a day, and you know that you don’t have the capital yet to implement that. You’re not even sure that feature is something that’s worth developing you need to hear from them. And I think the day you come up with a plan, and you know you’re executing it right >> And you see it execute, that’s another high. >> Yeah. >> And it’s not you pushing the button. It’s awesome. Like when I looked at our system and I said, we’re not getting enough good content. This is not the content I would buy as a producer. How the hell am I going to fix this? >> Mm-hm. >> And I sat one Saturday afternoon and I >> Drew out a little plan on a piece of paper, and then put it in a little PowerPoint. And then I said, curation team, this is what you’re going to do at 7 o’clock in the morning. This is what you’re going to do at noon. This is what you’re going to do at 3. And you feel like the bossiest person alive. >> Yeah. >> And then two weeks later, it already works. You’re like, why did the hell did I not do that before? >> But it’s a really awesome feeling to see other people kind of execute your vision and enjoy executing your vision. I think that’s another thing, is when you see people who work for you believe in the system you’ve created. Because then they come up with their own innovated ideas for you. And then there’s obviously much more valuable employees Than teammates. >> Yeah, wow well it’s a great story. >> [LAUGH] >> And I hope there are a lot- >> It is a story. >> A lot more highs and not too many more lows. >> Yeah, I’m sure both will come. [LAUGH] >> Thanks so much for coming in. >> Thanks for having me.
I’m Karl Ulrich and I’m a professor at the Wharton school and I’m very lucky to have today with me Lindsey Stewart who’s the cofounder and CEO of Stringer. Lindsey thanks for coming in. >> Thanks for having me.