Is Technology the Only Way?

An entrepreneur in Europe writes to me today asking for advice on where to find funding for his startup, which is focused on building an online digital video network.

The company is looking to work with specific brands and content providers to build value-added video channels. The CEO is a super innovative guy with one European IPO already under his belt. I heard his full pitch a few months back and remember being impressed with his insight into the media business and what it needed, although the specifics elude me now.

The problem for the company, according to the entrepreneur, is that everyone he shows it to looks just at the technology underlying the service (or asks if he’s heard of YouTube). But the real value, in his mind, is in building a viable consumer brand and a cache of corporate clients.

He writes:We see technology as an enabler, not a value
proposition per se (though we own our own P2P hard core source code).

Everyone knows that it might be that tech is an entry barrier in the short term, but if there is a profit to take home basic economic theory and reality shows us that this tech becomes a commodity.

My company is NOT tech and is not tech driven. We are a business focusing on entertainment and building a consumer brand.

His point is a good one. Technology may make or break a large portion of enterprise-oriented startups, but it doesn’t always matter as much for consumer brand companies. Content counts, especially in the media business.

His company has already signed 16 channels of premium content, including contracts with the Open Swing Dance Competition, U.S. Female Wrestling, a world-class poker player and has more than 40 other channels in the pipeline.
Would PEHub, for example, be better if it employed some kind of flashy AJAX application for showing our stories? Maybe. Maybe it would suck valuable resources away from actually delivering good stories and interesting opinions and turn the site into all sizzle and no steak.

I’m flummoxed on who might be interested in funding such a startup. I feel like most VCs I write about repeated the “defensible technology is all that matters” mantra until it blinded them to any other opportunities.

If you’ve got good advice for the entrepreneur you can leave it here as a comment or contact me directly for details.