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December 19, 2006

Why I Like Our ExpoTV Investment

As I’ve done with others in which I’ve been intimately involved with a new investment here at Masthead, I wanted to write a blog post describing why I believe our most recent is a promising one for our firm (See previous posts on NewsGator, Intercasting, and Tremor Media). Today ExpoTV announced a $6.0M investment co-led by Masthead Venture Partners and Prism VentureWorks, with Brady Bohrmann of Masthead and Will Kohler of Prism joining ExpoTV’s board.

Expo Communications offers short-form video-based product shopping content collected from consumers, produced in-house, and submitted by advertisers. With this asset base of digital video, the company syndicates and monetizes it via distribution to online portals, online e-commerce retailers, comparison shopping engines, and cable video-on-demand outlets. Most visibly, on the ExpoTV.com site you can browse the over 20K "videopinions" - user-generated video product reviews - which the company has collected in the past few months. But the current incarnation of this website is only a partial glimpse into the opportunity which the company has begun to engage in order to create tremendous value for its investors.

The ExpoTV Opportunity: Intersection of Online Video and Social Commerce

When I first discovered ExpoTV earlier this year, it struck a deep chord with a number of themes which I had been pursuing. Not only is it capitalizing on the fundamental shift towards video-based content on the internet, but it is also a prime example "social commerce," something I’ve longed viewed (and blogged about here here and here) as a ripe investment opportunity.

Almost a year ago in January of this year, I posted that "There’s no question that the basic premises – the who, what, where, when, and how – of consumers’ interaction with video content is dramatically changing, and that’s getting people excited." Certainly we’ve seen how the prediction then that 2006 would become the "year of video" has proven true, but I believe that we are still at the beginning of the transformation of how we interact and relate to video content online. We’ve seen the adoption of broadband spur short-form user-generated video content, and the explosion of consumer usage of sites like YouTube and Revver have demonstrated that the visceral nature of viewing video online is extremely powerful. However, the content contained within these sites is often random and haphazard, leaving it difficult to monetize as some advertisers shy from the unpredictability.

The other emerging opportunity, which is less recognized, is to facilitate and leverage social commerce - providing consumers with rich social context to the purchases which they make through the use of web social software. With a significant portion of consumers’ time online spent online devoted to researching and evaluating future product purchases, the tools available today to aid in this activity (user-generated text review sites, price comparison engines, and editorial content publishers) don’t fully provide vivid social relevancy to the process. People are genuinely interested in connecting with each other about and expressing themselves through the products which they buy and their experience with them. Yet there isn’t a primary social destination site where individuals can shop together in a strong community (i.e. social shopping - sharing the act of shopping itself with others. Just as some people enjoy shopping with others in the real world, some will enjoy doing it virtually within a social network).

The opportunity, then, is for purpose-driven content which benefits both advertisers and consumers alike. ExpoTV capitalizes on this need by facilitating, aggregating, and distributing newly available video-based advertorial content (where the content itself is advertising). By value-add packaging of consumer generated videopinions and advertiser supplied video, along with its own editorial impartial product reviews and produced content, ExpoTV possess a highly-monetizeable digital asset for circulation in its own online property, others’, and on MSO’s VOD channels. This product content, in turn, directly facilitates online e-commerce transactions, making it much more valuable than other non-product editorial or user-generated content.

Content creators and community participants benefit from expression and connecting with others; consumers who reach the content via syndication benefit from the direct product knowledge with meaningful social context; advertisers benefit from awareness of their products; syndication partners benefit from added content and increased revenue. And, of course, ExpoTV benefits by providing and monetizing the entire platform for this intersection of constituents.

Founders Daphne Kwon (formerly of Oxygen Media and Walt Disney) and Bill Hildebolt (General Atlantic) have brought on Thi Luu (Amazon.com) and Jorge Escobar (Yahoo!), along with many other extremely important folks, to the team. And they’ve already accomplished quite a bit to date – collecting 20K videopinions in the past nine months, signing and launching a number of notable online syndication relationships (click to see examples of collaboration with Yahoo, AOL, Buy.com, Google, just to name a few; others impending), as well as extending the reach of ExpoTV to 20M VOD homes (on MSOs including Time Warner, Comcast, Charter, and Verizon FiOS TV).

Building on these accomplishments, we at Masthead are excited about our investment and the chance to work with the Expo team and Prism VentureWorks to further extend the platform and help transform consumerism on the web.

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