With Team Downey heritage, Epoxy gets $2M to build pro tools for YouTube content creators

By Michael Carney , written on March 5, 2013

From The News Desk

YouTube evolved as a consumer generated video platform, and was not initially a place where content creators considered building a significant business. Now that this is changing, there’s a noticeable lack of sophisticated tools traditionally available in other online businesses categories like ecommerce, gaming, and publishing. Despite the amount of money being directed toward premium content creation on the platform, content creators still lack basic audience acquisition, engagement, retention, monetization, and analytics tools.

Epoxy is a startup formed by digital media entrepreneurs that confronted these problem first hand while working inside Team Downey, Robert Downey Jr.’s digital media production, investment, and incubation company. Coming out of stealth today, the Los Angeles-based company has announced $2 million in Seed financing in a round led by GRP Partners, with participation from Greycroft Partners, Bertelsmann Digital Media Investments, Advancit Capital, Machinima CEO Allen DeBevoise, Maker Studios Chairman Ynon Kreiz, and others. GRP’s Mark Suster has joined Epoxy’s board as part of the round.

Epoxy is in the late stages of developing a comprehensive suite of professional tools for online video creators, channels, networks, and studios aimed at solving the widely-acknowledged problems  related growth, engagement, and monetization currently facing the industry. There are limited product details available today, as the company has not yet released its beta product (expected by month’s end).

The initial roll-out will be a closed to a network of trusted partners only, with a broader public launch expected by year’s end. The Expoxy product will ultimately be sold on a SaaS basis, with varying levels of sophistication availabe to hobbyists, professional channel operators, networks, and studios.

“We feel strongly that you need to think of online video as an internet business,” says CEO and former Team Downey president of digital Juan Bruce. “Our goal is to bring the same level of operational sophistication available in other online business to video.”

Bruce has an engineering degree from Stanford and genuine design chops via time leading digital initiatives at IDEO, Continuum, and Brand Sense. His co-founders include, fellow Stanford engineer and experienced founder Jason Ahmad, Brown graduate and former Adobe engineer Peter Skirko, and Stanford grad and YouTube design consultant Brendan Wypich.

“People are watching video in more places and on more devices than ever before,” says Ahmad, the company’s chief product officer. “We now have the unprecedented ability to look at exactly what's happening in a channel. Epoxy is about using that insight to better connect with audiences and empower better and more relevant content.”

Epoxy closed its financing round approximately two weeks ago, after reluctantly beginning conversations with investors shortly before Christmas. The founders’ planned to bootstrap the company initially, but say that once word got out about what they were building, inbound interest from the category’s best investors was more than they could turn down. (It must be nice to have the problem of seeing several million dollars wired into your bank account, despite your earnest protests.) It doesn’t hurt that Team Downey, GRP, and Greycroft are all early investors in Maker Studios. If nothing else, it goes to show that everyone around the table has a similar sense of value in the online video category.

According to Bruce, the primary reason these mission critical tools do not currently exist for the online video ecosystem is a disconnect between the way content has been created for decades and the way online businesses are run today. Traditionally, media creation has been segmented into the functional areas of production, distribution, and marketing. Today’s digital-focused organizations are much flatter and demand far more interoperability.  “When you look at the best operators in the content space, they have a very different business cycle that they are good at and familiar with,” the founder says.

It didn’t help that YouTube evolved as a democratized video platform, and its parent company Google was focused more on growing and operating its massive network than on producing premium tools for a niche segment of its user base. It’s not the only massive company to rely on third parties to build additional functionality on and around its platform.

“YouTube is a distribution platform, not a distributer,” Bruce says. “Unlike with Hulu, Netflix, and other online platforms, content creators need to take ownership of their own distribution and business optimization.”

Epoxy has set out an ambitious set of goals, hoping to offer comprehensive solutions to a wide array of customers. There is little doubt that the founders have a good grasp of the challenges facing the industry. And with their industry pedigree, and that of their investors, there should be little trouble getting into the door of high profile potential clients. What remains to be seen is whether they startup can deliver real solutions these obvious, but highly complicated problems. As always, it's one thing to talk a good game. The proof will be in the product.