Socialcam Founder: There Will Be No Instagram of Video
After the dust settled on this morning’s shocking announcement of Autodesk’s Socialcam acquisition, I was able to catch up with senior members of each team to get their thoughts. While I stand by my earlier assessment of the deflated state of the overall social video market and the impact this transaction will have on the valuation of competitors, I was able to glean some additional details on how and why Socialcam made the decision to exit when and how it did.
First and foremost, Socialcam CEO and founder Michael Seibel was adamant that this was in no way a concession and that the sentiment around the office was one of high fives. While he wouldn’t specify exact returns, he said that all investors made more than 3X on their investment in approximately six months, while at least one early investor did nearly ten times better than that. Unlike some of its competitors, Socialcam didn't raise much early capital and didn't have the burden of nine-figure valuations to live up to.
It’s no surprise that this is the message the founder is pushing. Along those lines, it’s hard to argue that these results are a failure, and I’m sure those on the upper end of the return spectrum are thrilled with their takeaway. That said, it has to be a more modest sum than most were anticipating just a few short months ago when Socialcam’s closest competitor was raising at a mid nine-figure valuation. No one invests hoping for a mere 3x return.
Seibal argues that few on his team bought into the hype. “Anyone who knows the video sharing space intimately knows that the comparison to Instagram was a fallacy from the beginning,” says Seibel – apparently someone forgot to tell Viddy’s backers that. “Photography has been mainstream for decades, even before computers. Video creation is still not mainstream. Accordingly, this has always been more of an uphill battle and a long term opportunity than photo sharing.”
Seibel further argued that reports of his app’s decline were greatly exaggerated. According to the CEO, Socialcam has recorded 12 million new downloads in the last 90 days – a period of time that post-dates the big Facebook Open Graph boost. Across its user base, enormous quantities of vide are being created and shared. To that end, 10 percent of the time when users open the app, they subsequently open the camera feature and create new content.
From Autodesk’s perspective the acquisition represents an opportunity to continue delivering premium consumer content creation tools. “One year after our acquisition of Pixlr, the company has grown 10 times,” says Consumer Group VP Samir Hanna. “We hope to have similar results with Socialcam.”
Ok.... if a year from today Socialcam has 540 million uses, I’ll eat my Macbook. Instead, Autodesk should be content to improve the product and stabilize user growth and engagement at current levels – which in many ways have been called artificial up to this point.
One resource the newly-acquired social video team will absolutely gain is access to industry leading video expertise. Autodesk made the software used by the video editors on the last 17 consecutive Academy Award winning Best Pictures. From Socialcam’s perspective, this represents an opportunity improve in an area where it already leads its market: filters and effects.
Seibel notes that when the company launched its “version one minimum viable product” for video filters, the app saw a 100X increase in engagement near overnight. With that in mind, he was absolutely giddy describing the possibilities for future filters and effects to be created in partnership with the rest of the Autodesk family.
Ask Seibel and Hanna about the competitive landscape and both say that the social video space is a winner-take-all game. To them it comes down to standardization and a social ubiquity. It was this way of thinking that drove the decision to complete this transaction and merge an established brand and network of social users with some of the best technical talent in video effects.
After today’s acquisition, Socialcam is entering a new phase. This period will be measured more by the quality of the product delivered and the depth of the engagement driven than by the sky-high valuations being arbitrarily assigned to companies in their space.
For the remaining independent competitors, the question remains, what can they do to grow users and engagement number to challenge market leading Socialcam. As I said earlier, “There may still be an Instagram-style winner in the social video race (and there’s still no telling who it will be), but whatever results these companies achieve will have to be based on sound fundamentals.”