Veoh
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Veoh Networks was an internet video pioneer launched in September 2005 by founder Dmitry Shapiro. The video-sharing site grew to a $12 million revenue run rate with more than 28 million monthly users, backed by $70 million in capital from investors including Intel, Time Warner and Goldman Sachs. It won a landmark DMCA safe-harbor copyright case against Universal Music Group in September 2009 — a victory that proved pyrrhic when the legal costs drained the company.
02 / Veoh FAILURE REASONS
Failure reasons
Veoh filed for Chapter 7 bankruptcy in February 2010 because a two-year legal battle with Universal Music Group distracted the company and burned its cash, even though Veoh won the case on summary judgment. With the broader macro-economic downturn making it impossible to raise more money, and reports suggesting the company was spending up to $4 million a month while generating only $12 million in revenue over its lifetime, liquidation was the only path. Its assets were acquired out of bankruptcy by Israeli startup Qlipso in April 2010.
03 / EVENT HISTORY
Events in the structured record
- Launched
Veoh Networks launched in September 2005 as an internet video-sharing site.
- Copyright battle
Universal Music Group's copyright-infringement suit against Veoh was tossed out by a federal judge in September 2009, ruling Veoh met DMCA requirements; Universal appealed.
- Chapter 7 bankruptcy
In February 2010, founder and CEO Dmitry Shapiro announced on the company blog that the distraction of the legal battles and the macro-economic climate had led to Chapter 7 bankruptcy.
- Acquired out of bankruptcy
On April 7, 2010, Israeli startup Qlipso acquired Veoh out of bankruptcy for an undisclosed sum.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
Litigation can kill you even when you win: two years of copyright battles drained Veoh's cash faster than it could earn.
- 02
Match burn to revenue: spending up to $4M a month on $12M lifetime revenue is not a strategy.
- 03
Raise before the downturn: by spring 2009 it was impossible to raise money for a money-burning web video site.