It has a Hollywood face–Will Ferrell, Judd Apatow, Zach Galifianakis–these are the people that make us die laughing. Another 50 people in L.A. work to keep the familiar faces pumping funny out to the online world. But the show lives or dies in an unfunny San Mateo, CA basement–rows of Macs, accumulated junk food, a kegerator–this is where about 20 engineers, designers, plus product and marketing people built and maintain the technology platform.
This oil-and-water combination of Silicon Valley and Hollywood makes FunnyOrDie a unique success story: the less-is-more agile, lean philosophy of startups poured over a big-budget business ethos. In an environment of over-hyped and under-researched projects, building killer technology has proven to be as effective as any straight man at keeping the laughs coming.
But like any popular video site, FunnyOrDie has serious growing pains, and a complete platform overhaul is scheduled for release next month. FastCo.Labs spoke with Mitch Galbraith, Patrick Starzan, and Ken Scott-Hlebek, who run the Silicon Valley office, to discuss the revamp and get a look inside the web’s funniest startup.
Why was the site being revamped?
Mitch: The main reason for this overhaul is that FunnyOrDie launched as an experiment in 2007, but today it’s evolved into a successful brand which encompasses not only the web, but also TV, movies, and games, not to mention mobile playing a much larger role. The product hasn’t kept pace with this brand expansion.
We did a big overhaul of all our web and mobile products last week, and over the next few months will be rolling out new projects outside of the web. For example, one area where you’ll see a lot more content is in the Pictures and Words part of the site. We’ve also now gone into films much more than we were six years ago. We’ve lined up financing to produce a slate of nine feature-length films with Scott Films over the next few years.
We’re now into TV pretty heavily and have lots of new material lined up. We’ve got a new show that’s going to be broadcast at midnight on Comedy Central right after The Colbert Report. It will be a “live” Twitter-based show where three comedians are going to compete live on Twitter trivia. We have a new six-part TV series on IFC in production called Spoils of Babylon, and a bunch more that have not yet been announced. We’ve created an eponymous card game in partnership with Hasbro, which is a take on Cards Against Humanity which recently became available in Walmart and Toys “R” Us.
Patrick: We’re also launching the Oddball Comedy Tour, which will go to 13 different locations headlined by Dave Chappelle & Flight of the Conchords. It’s going to be like the Lollapalooza of comedy tours. We’re hoping this will become a yearly thing.
We’re going to increase “thematic” projects planned in advance for holidays like for Halloween. One such example we’re working on is “Bear week”–a take on Discovery Channel’s popular Shark Week which we’re really excited about.
So with all this growth and changes to our original idea of FunnyOrDie, an overhaul like this was long overdue.
Can you tell us about the beginning?
Mitch: Yes, this is something not many people know of. In April 2007, Sequoia Capital along with a few entrepreneurs launched Funny Or Die’s first prototype not far from Stanford’s campus. Once completed they sent out an email to their friends; it immediately went viral and crashed the server. Despite its Hollywood image, FunnyOrDie had a very Silicon Valley beginning very much like the early days of a Facebook or a Google.
Instead of doing it the Hollywood way by partnering with a studio and finding a producer, we followed the Lean startup philosophy and launched that first prototype with a couple of low-budget videos to see if the public would first love the concept. Had we waited to partner with a big-budget Hollywood production studio, there’s no telling if the idea would have taken off at all. This initial act has set the tone for the company. So in true startup form, it started off as this really small really scrappy idea with no funding, no employees.
Any interesting stories from back then?
Ken: Absolutely, at that time, a yet-to-be-launched search company called SearchMe was one of Sequoia’s portfolio companies (Michael Kvamme’s father was a Partner at Sequoia) . Since we didn’t have any resources or a team in place, we tapped the CEO of that company, Randy Adams, to help build the site. As I mentioned, there was immediate traction upon launch and we didn’t have any resources at our disposal to handle that load (this was pre AWS, Rackspace, etc). But out of sheer luck Randy had a few hundred servers he’d already procured for his startup; as the site caught on fire over the next few weeks, he increased their capacity to five, then 10, then 50, and eventually a 100 servers before the site stabilized. It was incredibly fortunate that we had those servers at our disposal and avoided a meltdown.
Why have two offices: Hollywood and Silicon Valley?
Mitch: From the early days that was this vision for this company, to have one foot in Silicon Valley and one in Hollywood. We wanted to make sure we had the best of both worlds talentwise.
It’s been a tough road for entertainment startups, there haven’t been many that have cracked the nut. For example, back during the first bubble you had a lot of entertainment companies trying to have a tech component and vice versa, and that didn’t work out so well. Then again in 2007 when YouTube got that great valuation, it lit up a lot of interest and dozens of startups jumped into the video/entertainment space; very few of them still exist. It’s difficult because it’s almost two completely different sets of business practices; we understood this from the beginning and we set off to try to do both the right way from the start.
We structured the company this way so we could get the best entertainment talent in L.A., and the best talent in tech and online marketing here in Silicon Valley. Also, we’ve been doing social media marketing since 2007 when we launched. It’s a big part of our marketing, it’s how we reach our audience and the reason we were able to use it so well is because being here in the Valley we’re all innately passionate fans of Twitter and devices and early adopters in general. We know that when you get in on the ground floor of things, i.e., when you run into the founders of these companies serendipitously, you really understand what these technologies can do for you before anyone else.
Has this two-office structure contributed to your success?
Patrick: In some ways you can think of the success of the company coming from taking the Lean practices of startups and applying it to Hollywood. Studios routinely greenlight pilots for millions of dollars that may or may not turn into a show. That’s a pretty sizeable investment in something that’s not a definite. FunnyOrDie’s approach is to produce a video for couple thousand dollars and produce a lot of these; some of these then might actually turn into something bigger and eventually into TV shows, which is what’s happened.
Ken: We make around 25 to 30 videos a month. There are some in which we put a lot of budget into, but for the most part, a majority of our videos are built very cheaply and very quickly. In fact, it’s not unusual for someone to walk in with an idea for a video in the morning and have a video produced by the end of that day. This is something traditional Hollywood knew nothing of and it’s turned Hollywood on its ear a little bit.
Now the Lean startup method is ubiquitous, fashionable even, but that sort of task-measure-iterate approach where you make small investments in a number of different things, find some bright spots and follow those, was part of our DNA right from the beginning. And that’s one of those things that often gets overlooked for us. We seem like an entertainment company, but that’s what we do behind the scenes.
What kind of proprietary tech have you developed?
Ken: One morning Patrick walked in and had this idea. He said he’d been watching TV and noticed that most shows and commercials display hashtags in them. So his idea was that we should try displaying hastags right inside our videos, but make them so they’re clickable from inside the video itself. The whole reasoning behind hashtags on TV is to aggregate a conversation about them online.
His thought was that instead of waiting for people to hatch a hashtag and possibly have a conversation online, why not just make it happen by embedding a clickable hashtag in the video itself? This would then enable them to have a conversation and aggregate it. This would take away the thinking part for their users.
So he paired up with one of the engineers and the two of them sat down and it was up on production that afternoon. In total it took six hrs to turn around. They embedded a hashtag in the corner of their videos for users to hover over. When users clicked on it, it opened up the Twitter share window with the short URL along with the hashtag. This allowed them to become much more successful with getting things to trend on Twitter by removing all friction for users.
Within 24 hours Twitter called us and asked how FunnyOrDie was suddenly getting so much Twitter traffic, and they started using this as a best-practice example. At the end of the day it was so successful that Patrick ended up filing a patent for it.
Patrick: Yeah, it’s because we were here and we understood social media before anyone else and that it would become a great distribution channel for us. We launched around the same time as Twitter, and when we would go down to L.A. and tell them about Twitter all excited and stuff, their attitude was like, “We have no idea what you geeks are talking about but knock yourself out with this tweeting thing.” As a company, we were early adopters of all these platforms and became proficient in them at that time. And it’s been very successful for us because the overarching model for us has been producing great products at a low cost. So social media for us from a marketing perspective was just fantastic.
Here are some relevant social stats–we’re nearing the 100th largest Twitter following, we’re in the top 15 brands on Twitter, the #1 comedy brand on Twitter, and are a top 10 property worldwide in the Humor Category of Comscore. We’re also doing really well on Tumblr and Facebook. A big part of that is that we’re based here and we’re building personal relationships with the people who are building innovative solutions… and experimenting with things that you can hear about at a tech meetup or a VC cocktail party… and other things that happen just because they’re in this community.
Has being here made any difference to the bottom line? Has it helped you make any money?
Patrick: Well, since you asked, I have a better story for you. As you might know, one of the big things we do every year is an April Fools’ prank and everybody contributes to this. The first one was in 2008, we did this thing where we ran a story saying Reba McEntire bought FunnyOrDie… and that it was now called Reba or Die… and we added Reba into every video that day and it was awesome. We didn’t tell her but fortunately she had a good sense of humor and thought it was funny as well.”
So the obvious advantage of being in Silicon Valley is that almost everyone on the team here is a former founder or entrepreneur. So one of the engineers proposed this–instead of using the standard blank image avatar for when a user doesn’t upload a photo, why not replace all those with pictures of Reba McEntire? So he found like 40 photos of Reba, cropped them to the right sizes… and so there were 40 random photos of Reba… so it looked like there were a whole bunch of “Rebas” on the site all over the place. People loved it so much that even though the April Fools’ section shut down after a day or two, that part was kept around, because we couldn’t bear to part with it. It was so much more fun seeing these random pictures of Reba than seeing “no photo available.”
And then we did it the next year too, and at that point the same engineer who came up with the original idea thought that this could be something we could sell. So he approached the sales team and asked if they would be interested in selling those avatars as a package, an idea they completely loved… so it became a package called the “Advatars.” These were sold to studios and agencies who were trying to promote a movie, for example. When they bought the package, instead of seeing 40 pictures of Reba, users would see 40 different pictures of all the different characters from the film.
Mitch: And so in this subtle way, without really interfering with the user experience, we added value for the advertiser to support the ads and the skins that were already on the site. The beauty of this was that users didn’t even have to do any work to see this. If they didn’t choose a profile photo (and most don’t), many of them get assigned these random photos. So then they get intrigued… and click on the avatar… and get taken to that movie’s premier… or they Google it and find out for themselves.
This gave birth to a major revenue model for us–subtle branded entertainment. The centerpiece of it is this piece of content which stands on its own merit first and foremost. But there’s a brand message integrated into it and that’s been a staple of our ad business, which has been the majority of our revenue… and since early 2009 we’ve been doing these branded entertainment campaigns.
Are you guys still following the Agile and Lean startup methodology as you scale?
Mitch: Great question. And the answer is yes. For example, let’s take Ashton Kutcher’s Jobs which premiered recently; we made iSteve, which is a parody on the same subject obviously. iSteve started off as a spoofy web-based trailer, but then turned into a real project–a full-length 80-minute feature film. We distributed it to Hulu in May… and it was one of the top movies on Hulu for that month… and we made a lot of profit on it. We spent less money on this movie than what Jobs probably spent on the food for their stars. We got a lot of backlash for getting a lot of the details wrong, but as Macworld said about iSteve and Jobs, “At least iSteve was trying to be funny”. This is definitely something that the Hollywood office picked up from us. The idea of taking chances on these little things and seeing what they become.
Ken: We’re constantly testing new stuff like this and around our core product like a typical startup. Whether it’s A/B testing around our related videos algorithm… or how to organize our pages… or how to deliver our content so that our pages load faster. And again, I think if we didn’t have this startup mentality we think we may never have done all this. Most of our competitors blew through an awful lot of money awfully quickly on things that didn’t matter.
From a culture standpoint, it’s a best-idea-wins type of company. We have a conversation about why we want to do it and get input on what’s the best way to do it. Which is great, because usually the best ideas rise to the top. We get challenged all the time and that just makes us better. We can’t underscore the importance startup culture has had on this company. Which in many ways is the antithesis of the way Hollywood works.
Mitch: Some of the changes are due to our evolved brand identity as I mentioned above. So we’ve updated our logo to reflect that. It still retains the energetic, playful, and irreverent nature of our company, but doesn’t look like it was put together in 10 minutes anymore.
Some changes stem from design best practices, like incorporating infinite scrolling into our home page. We’ve improved our search to live search and considerably improved accuracy and relevancy.
Ken: A major change was upgrading the responsiveness of the site so FunnyOrDie would be fully functional on all mobile platforms. Since we publish all forms of content heavily–text, images, and video–making our platform responsive across all mobile devices was a huge challenge. And because we receive so much traffic from shared links in social media, a good portion of our traffic is on the mobile web.
We’ve rebuilt our video player from the ground up, moving away from a Flash-based technology to a HTML5-first platform. This allowed us to overhaul our voting feature for videos, which previously were very limited on mobile. Currently you can’t vote on embedded content, but the new HTML5 player will make voting available on embedded content as well. Plus, the player itself is much more slick. Given that voting is such an endemic feature (we are FunnyOrDie, after all!), a change like this has been a long time coming.
We will also be changing the way we display our content. Some users want an expanded view… they want to see as much content crammed into a page as possible… and some viewers want a condensed view and want to pick what they want to consume. We don’t believe there is a best view… and different people prefer different views… and we’re going to experiment what these two densities. In the coming weeks we will also be experimenting with these different densities of content.
[Photo by FunnyOrDie]