Revenue is Meaningless – Building a Profitable YouTube Business

When any new business sector emerges, there are fits and starts as companies compete for opportunities, pivot to fill new needs, find their niches, or just disappear.  The growing YouTube ecosystem is a case in point, with both explosive growth and setbacks.

We feel pretty good about writing a playbook for a successful business in the YouTube economy. We’ve created proprietary technology AND built a growing, successful MCN that includes valuable tools and strong content creator partnerships. We are not in Hollywood or the Bay Area. We are not reliant on the next round of funding. Management calls 100% of the shots and we’ve been profitable since shortly after inception. Here’s how that happened:

Mid-2009 – Bent Pixels got its start as a mobile app development shop, beginning with Shaquille O’Neal’s official iPhone App which had YouTube embedded. This was our first exposure to the power of YouTube. We kept overhead low, operating with lean staffing and hiring only the best developers and designers wherever they were – worldwide.

After building multiple apps through 2010 for entertainment brands, the potential of YouTube as a larger business opportunity smacked us in the face. It wasn’t so much that we foresaw the explosion of YouTube as a platform then we simply saw a vacuum to fill, like any good entrepreneur. We immediately pivoted Bent Pixels to focus on rights management on YouTube, starting with Kevin Hart and HartBeat Productions.

Our structure remained and we grew as a virtual business, using the best technology available while continuing to keep overhead and staff to a minimum.   We maintained focus on producing quality products with collaborative tools and geographic advantages — like having our development team working while our marketing and business development team was sleeping. We had day jobs, with all of us working nights and weekends, but this business structure allowed us to be immediately profitable.

Late 2012 – Things were taking off on YouTube and multi-channel networks were forming. Being one of the first certified MCNs, we saw the opening to add channels and build tools for those channels. The MCN side of our business is focused on helping partners grow their channels by getting more viewers and increasing revenue from proprietary video content. Our business philosophy is unique in our space and we continued to wonder – are we doing things right? Everyone is raising massive capital – are we are going to be left behind? Are we the dumbest guys in the room?

Entering 2013 – Our profitability and partnerships continued to grow. It was clear the opportunity was in the convergence between rights management and MCN services. This is what kick-started our big revenue growth — and, more importantly, profits. Our profit-centric model allowed decisions to be clear and growth to be measured. We added staff only after deals were closed and associated profit was realized — not before.

Now – We continue to build out our rights management tools, giving us differentiation, while providing a foundation for other rights management and brand management tools to be created. It’s a long-term vision of success that is very different from a “runway” for those raising outside capital.

Our partners like having one solution for understanding how their branded content is proliferating online, monetizing it, and getting data and insights that help them grow. During the past year, we doubled profitability in one month, then did 1.5x the next month, and have continued on a rapid growth trajectory. We went from 1,800 partners in 2012 to over 3,000 this year. We’ve seen a hockey stick growth pattern in total unique viewers per month, growing nearly 2,200% from July 2012 to March 2013, with the trend ongoing.

From the beginning, we’ve focused on avoiding the bloat, being nimble and opportunistic in our thinking, and remaining independent and cost-conscious, all of which has allowed us to be the “palm tree” in this dynamically changing YouTube environment; swaying with the heavy winds without breaking. Of course, it’s been difficult at times, but we’ve managed to hold fast to our culture. We’ve been able to pounce on opportunities while others have struggled to find their way. We’ve proving what we believe: Revenue is meaningless without profits. Maybe we aren’t the dumbest guys in the room.

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