Monday, July 20, 2015
Flipagram: Using Photos And Music To Create A Viral Machine, with Farhad Mohit
Story by Benjamin F. Kuo
Los Angeles-based Flipagram (www.flipagram.com) has created a potent and wildly viral mobile app, which combines photos, music, and video to create addictive, engaging mini slideshows of your life. The company recently raised $70M in funding to further expand its app and team, from such impressive investors as Sequoia, Kleiner Perkins Caufield & Byers and Index Ventures. We spoke with Farhad Mohit, the CEO of Flipagram and a successful serial entrepreneur (having founded Bizrate, which later became Shozilla, and was sold to Scripps), to learn more about the story behind Flipagram and the vision behind its app.
Farhad, tell us a bit about the story behind Flipagram -- how did you get from Bizrate to Flipagram?
Farhad Mohit: As you know, Bizrate spawned Shopzilla, which took us from 2000 to 2005. Shopzilla was then sold, and I worked for a couple of years at the acquirer, Scripps, until 2007. By then, it was obvious that the original thesis behind the acquisition by Scripps was just not there. They wanted to milk it for what they bought, rather than build into the future. I jumped off, and at that point, I thought I'd retired. For the last six months, I was totally retired, but I realized that retirement wasn't for me. It really was not something I was capable of doing at this age. I had a lot of creativity, and it's wasn't all that fun to just loaf around and travel. So, in September of 2007, I got back into it, and we got a group of people going on a new startup, DotSpots. It was a very ambitious idea, and we spent a good time around it.
DotSpots was organized around distributed objects, and organizing ths thoughts of people all over the world, in all the newspapers, and organizing the semantic blocks of information around those thoughts. It would allow anyone to connect into information and add annotations anywhere. It was a very ambitious project, but it didn't quite work, because it was too ambitious. It was too head of its time. It was essentially a poor man's version of Rap Genius, which does the same thing for rap lyrics. They have a much better presentation than what mine was, which was too broad.
So, by 2010, we decided that DotSpots was not going to work, so we pivoted, to a new startup called Gripe. Grip was sort of a better social Better Business Bureau, which let people post their complaints and get resolution in public, non-anonymously. Gripe worked well as a social service, but it just didn't work as a business. It was somewhat antagonistic to businesses, who were just not interested in that kind of transparency. Plus, we found that consumers weren't comfortable griping in a non-anonymous setting, because they had to put their real name on there, and have to see it through resolution. So, that didn't scale well. That was between 2010 and 2012. In 2012, we decided to pivot again, aiming at the same group of consumers, turning into Cheers, a positive social network, kind of the opposite of gripe. However, that just wasn't catching fire. So, in the middle of 2013, my wife came to me saying -- Farhad, I want to support you, but what exactly am I supporting? We were expecting our second child, and we were debating all of these projects, where nothing had been happening. As they say, we were on the flat part of the exponential curve--but I just wasn't believing it.
Finally, my CFO said--you are pouring a lot of your own money into this, you need to plan how much you want to continue to put into it. That was a pivotal moment. I went to the team, and told them -- I don't think Cheer is going to work. We have enough money to last until February of 2014, but here are the options. We can take the money, and split it out among ourselves for a year's severance, and walk away. Second, we could pivot into something else--but we were just fresh out of ideas. And third, was to continue with Cheers, which was just a waste of more time and money. Surprisingly, everyone said--let's pivot, even though we had nothing to pivot to. Fortunately, Bryan, our CTO at the time, said his wife worked with two guys who had started this thing called Flipagram in 2012. We had all been talking about how this object in the middle of a social network was being very important, with Gripe and Cheer built around those objects. We decided to take a look at Flipagram, at worst case--giving those entrepreneurs some ideas, and best case, maybe find that there was something there.
So, I took at look at it. Flipagram at the time was selling the app for $1 on the App store, and essentially provided a more sophisticated version of the core of what we do. I met with them on September 20th of 2013, and told them--if I were you, I'd quit my job, and do the following. One, is you need to simplify the product. You need to remove the options and take out all of this extra stuff. You need to brand it better, and you need to make it free. Plus, you need to put a watermark on it, so that the object will sell itself. I told them, it's all about the storytelling. It's very different than other things out there, and because of that, you need to add music to it, and that music has to be popular--if it's just Muzak, it will suck. Finally, I told them, you need to put a link to further action in here, because--like Twitter--you need to have something that links to something much more powerful. The example is Twitter--Twitter is nothing without the link. So, I told them, this is what you need to do, and you need to do it in a month or two, otherwise--someone else is going to build a better version of this. Option two, is, if you don't quit and do this, you make make 100K or 150K, until someone else does this, and then that's it. Optoin three, was--we had been twiddling our thumbs here wit our pivots, and we're not getting anywhere with this. We have team with a great past track record, believe it or not, and we've figured out a lot of what not to do in the last six years. If you want, we can acquire your app, take you guys on, also as shareholders, and we can put all of our chips on what I just laid out for you. They took option three, and in October of 2013, we officially started Flipgram Inc. They were Flipagram LLC. Cheerful Inc. official acquired Flipagram LLC in October 15, and from then on we were chasing the product I had described, turning into the product you see today. We launched on November 18th into the App Store, and by November 24th, we were the number one app in the U.S. By the end of the year, we had launched into 87 countries, and we started getting calls from all these venture capitalists, including Mike Moritz and John Doerr, who flew into town to meet with me. We basically closed our $70M round of funding in February of 2014, which is what we actually announced yesterday. At that point, I had thought--we're on to something so big, and we have funding, we don't need to announce the funding. I thought--we hae John Doerr and Mike Moritz on our board, and why do we need to talk about this at all. We had lots of work to do, and although we had a story creating tool, we needed to build a story saving network, because it's all about the stories. We also had to secure the music rights and get musicians on the platform, so that they could benefit from the use of their music. Every Flipagram is an ad for that music, and every one links to the purchase of the music track that.
What was the magic that make this go viral?
Farhad Mohit: When we released the app for free, and we made those changes we said we did to the app, it took off. It was simpler to use, and free to download, and the watermark made it so that everyone who saw this object want to check it out and see it for themselves. That was a viral loop that happened. At the time, you used to see people posting our flipping square slideshows on Instagram and Facebook. Because we added the watermark, Flipagram, they would go check it out and see it for themselves. That caused the viral loop to happen -- everyone saw the Flipagram and decided they wanted to make one for themself. Everyone now has too many pictures on their phones and on their devices, and it's relaly too much to put into the moment sharing networks. If you think about what exists today, it's the moment sharing networks. Snapchat is a disappearing moment, Instagram is a moment in time, Twitter is a moment with a status or link. Those are all instant networks. They don't have duration and they don't over context. What Flipagram does, with flipping pictures, it it offers a place in time and allow you to tell a story. You can see here, me as a baby--me at 5 years old--me at 10 years old, 20, or 30--and boom, you've shown your lifetime in six stories. That's a very powerful metaphor. Here's when we met in Iran, here's where when we were in Spain, here's when we were in the U.S. It's boom, boom, boom, and that creates a story. There's no other way to do that. Blogging doesn't work, because if you're blogging, you already have to pick a language which half the world doesn't understand, and it's very difficult for people who are illiterate. You can get to millions of people, maybe, but for billions, there's no way. That's similar for video. You might possibly get millions of people creating videos on YouTube, but you're never going to get billions creating videos--editing is just very difficult, and turning 5 hours of footage into 1 minute story is extremely difficult. However, with Flipagram, you just put your photos in a row, go click-click-click, and it's incredibly simple. I think we lucked into a narrative object which can go from millions to billions of storytellers.
It looks like music has been very important coming out of the gate?
Farhad Mohit: That's a good observation. Music is very important. Visuals engage your primary sense, your vision. You don't have to think about it if you see a burning building that it's tragic. But if you have to read words, you have to read all of them, and process them, to paint a picture to see something is tragic. Audio, however, is equally powerful as vision, and it's your secondary primary sense. So, together, audio and visual objects are incredibly important. Think of a movie and its soundtrack. If you ever have watched a horror movie with the soundtrack muted, it's not scary. A romantic movie with a great soundtrack, when you hear that violin, your emotions well up. Music is that powerful. By having music here, it's not only more entertaining functionally, it makes it all that more powerful. Our observation early on, is we needed to let people add music. Even in the original Flipagram, we had a music library you could use to attach to these stories. What the little bit of innovation we did, is that we figured out that these stories are 30 seconds on average, and that the music previews in iTunes are a minute and a half long. So, by definition, we figured out that the music industry felt that only 1.5 minutes of a song was not enough to be a substitute for a whole song. They're right of course--30 seconds is certainly not a substitute for a full track, it's just a preview. The music industry, before Flipagram, had been hiding those minute and a half previews behind a gray triangle. Those gray play buttons are just not the best experience. Compare that to having that same music preview, coordinated to photos of my kids taking their first step. Hearing the track "Happy" shared with my family is a much more enjoyable experience than hitting a gray button. For me, it was intuitive that we needed to add music. We didn't care what the rights were or what's legal, we knew we needed to build in ability to add music. We figured, if we could build it, we'd then go get the rights. It's a win-win for everyone. Users love to add music for free and share that, the music industry loves it, and the musicians love it, because what better way to connect with your fans to see your fans use your music as the soundtrack of their lives. The music industry loves it, because it's an incredibly powerful way to drive awareness of their music and sales. Every one of our Flipgrams has a link to buy the track. One Direction ran a couple of contests on our platform. They just started using Flipagram, and never actually talked to us about it, and they told their fans to make a Flipagram for Harry Stiles birthday, and said they'd share the best ones. There were five million Flipagrams created on that one song, as the song telling the story of their life. That's an incredible thing. Those five million Flipagrams were shared with 100s of friends each, and it ended up 500 million impressions of the song. Not only that, it it's highly targeted. Prep school kids are using One Direction and sharing it to their pre school friends; the urban youth is in his setting, sharing the song with their friends in his own style; the soccer mom in the Midwest has a different story, using her angle--and all of them are using the same song, which links to a purchase. That would never happen if you tried to use the urban youth's style to sell to the soccer mom.
I thought, if this is the case, people should love this, and if they love it, the industry should love it as well. It took us a year, but we were finally able to reach out to the music industry and close deals to make this happen. That might seem like a lot of time in internet time, but if you put it in context of how the music industry gets things done, it's very quickly. It took Spotify, with their music streaming, two and a half years to secure rights to music in the United States, despite being extremely successful in Europe for years. Our attorneys actually told us they couldn't believe how quickly the music industry moved in this. I told them, are you kidding me, it's taken months to get to a term sheet! I think there's a big difference in time scales in the music industry, because we're luck in the Internet not to have those incredibly complicated rules and regulations, particularly around global rights.
Finally, what should people be paying attention to now?
Farhad Mohit: I think, on the heel of the music license, we are now far and away the easiest way for users to tell their stories. It's much easier than writing, and much easier than video. We now are working on adding more and more people to the platform. On the musician side of this, as a social network, it's a far more valuable place to bring fans if you are. Musician. The question is, what is a fan worth to you on Facebook, or Instagram, or Twitter? Artists have millions and millions of fans on those platforms, but what does that social network do for them? On our network, our fans are creating marketing material for your sound. They are literally making you the soundtrack of their lives, and sharing that with friends and family. All of those links are buying opportunities, and on top of it, they also tell your story, and link to your pages. It's an incredibly powerful way to tell a story to your fan base, and allows them to tell their stories, with your music, and get compensated for all of that. We are the most valuable place for a musicians. We already have thousands of musicians signed up and verified, and we are now pulling those musicians in, and pulling in their fans, and creating the best user experience as possible for those fans, to let those fans tell your story. What you should be looking forward to us is to watch how we grow.