Digital Dealmakers: Dmitry Shapiro

Nov 6, 2006  •  Post A Comment

The player: Dmitry Shapiro, founder and CEO of Veoh Networks

The play: YouTube and its viral video brethren have proven that consumers are hungry for short videos online. Now Veoh Networks wants to demonstrate they’ll watch long-form content, too. Mr. Shapiro thinks Veoh will become the fourth method of distributing television, along with cable, satellite and over-the-air. Veoh is different from viral video sites in that it isn’t designed as a sharing service; it’s a site for broadcasting high-resolution short- or long-form TV content. “The real money doesn’t lie in video. It lies in television,” Mr. Shapiro said. “If you look at the long tail and look at the head, we are not focused on the head. We are focused on the midsection. Those are enthusiasts, independent producers. An enthusiast is someone who is a consumer and they do more than put a Webcam up and dance around. They write stories and invest resources in producing and talent, like `Rocketboom’ or `Ask a Ninja.”‘

The pitch: Veoh plans to introduce a revamped Web site before the end of the year. The new iteration will let producers choose from business models including ad revenue-sharing, subscription and pay-per-view. The revamped site will also give publishers the option to have Veoh digitize, transcode and syndicate their content. Veoh, which works with major content partners, aims to strike deals with movie studios and TV networks. The company inked a deal with TNT last summer to promote the network’s “Nightmares & Dreamscapes” series.

The competition: Veoh faces competition from a number of sites and services such as the The Venice Project, an online TV distribution business that the Skype founders are working on. Sites such as Revver offer a similar business model for content creators.

The market: Audience measurement firm comScore reported recently that more than 106.5 million people, or about 60 percent of all U.S. Internet users, streamed or downloaded video during the month of July, the first month the firm measured video streaming. In total, nearly 7.2 billion videos were streamed or downloaded by U.S. Internet users for an average of 67 streams per streamer, comScore said.

Backstory: Mr. Shapiro founded the company in November 2004 in his living room, the day after he returned from his honeymoon. “I found some engineers and we would spend nights working on it … We moved from one home to another every few weeks,” he said. “We’d pack up all our cable and computers and reconnect them again.”

The money guys: Mr. Shapiro has held two funding rounds for Veoh that raised a total of $14.75 million. Investors include Shelter Capital Partners, Spark Capital, Time Warner Investments and former Disney CEO Michael Eisner, who sits on the Veoh board.

Pros: “The opportunity is staggering to create a new television broadcasting medium that is better than satellite and better than cable because it’s participatory,” Mr. Shapiro said. “The opportunity of Internet TV is as big as the opportunity of the World Wide Web.”

Cons: The challenges are just as monumental, Mr. Shapiro said. “There are tremendous technologies to be built, and a lot of competition, getting there, getting above the noise, getting consumer adoption. We will need to address bandwidth requirements too,” he said.

His story: Mr. Shapiro, 37, was born in St. Petersburg, Russia, where he lived for 10 years. He then moved to Atlanta and earned a degree in electrical engineering at Georgia Institute of Technology. Veoh is Mr. Shapiro’s second venture-backed company. He previously built a peer-to-peer security firm called Akonix Systems, worked for Collegeclub.com and led the Internet technology group at Fujitsu Business Communication Systems.

Who knew?

Mr. Shapiro fancies himself an amateur music producer and has a recording studio at his house in San Diego. “I was in a cover band in Atlanta in college,” he said. “We covered classic rock, blues and heavy metal.”