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Monday, October 16, 2006 - Page updated at 12:00 AM

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Brier Dudley

NW style of YouTube success

Seattle Times staff columnist

Entrepreneurs around the world are wondering: Why YouTube and not us?, but it's an especially poignant question for Matt Hulett.

Eight years ago Hulett helped found Atom Films, a Seattle company that was the YouTube of its day. Atom helped amateur filmmakers distribute short videos to a broad audience via its Web site.

Like YouTube, Atom was heralded as a revolutionary, propelling video into the Internet age and bridging the gap between the Web and Hollywood.

Atom's site had tens of millions of visitors, offbeat content and backing from Sequoia Capital, the firm that later funded YouTube.

Sequoia made a killing last week when Google paid $1.65 billion for YouTube. It also did OK with Atom, which sold with much less fanfare in August for $200 million, to Viacom.

"It's not $1.6 billion, but it's not zero, either," Hulett said. "It's not like we were the Google type of return, but we weren't Webvan."

Hulett is fine with how things turned out. Atom later moved to San Francisco, and Hulett went to Expedia. Now he's chief executive of Mpire, a Seattle-based Internet shopping service started in 2004.

Atom took a different approach, he said. While YouTube focused on improving the experience of sharing and posting any digital video, Atom emphasized quality content and distribution rights. Atom screened content and paid royalties to people who supplied video to its Web site.

"I actually had a business plan for a YouTube-like service back in 1999," he said. "We didn't do it because bandwidth costs were just so hefty at the time — they were prohibitive to actually launching the service."

Other obstacles were the high cost of storage and slow uptake of broadband. That's all changed, opening the door for YouTube and video downloads from iTunes and Amazon.com.

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"All of those things we predicted in 1999 — it's a question of timing and it's also a question of the infrastructure," Hulett said.

I think another difference between Atom and YouTube is cultural, reflecting a more conservative approach to startups in Seattle.

Silicon Valley seems more amenable to backing Web ventures with cool, useful technology but not much of a business plan. Google is the biggest example, and YouTube is the latest. Their successes may perpetuate a "build it and they will come" approach, even though they're exceptions and not the rule.

In contrast, Atom emerged with detailed plans to make money through licensing fees, ads and e-commerce. It didn't pan out, but Atom's star burned bright for a while.

When I bounced this off Hulett, he agreed Seattle is more cautious, but he said the culture is changing.

"We tend to be a little more humble and conservative. Certainly, you can see that from the investment style," he said. "The focus down in the Bay Area is get things out very quickly, then measure extremely quantitatively your success. The style in the Northwest is focus on your operating metrics up front, a very thorough business plan, then launch your product."

But lately he's seeing new approaches here. One example is the embrace of open-source software, even among ex-Microsofties at Ignition Partners who are backing Hulett at Mpire.

"You would have thought they came from the valley and loved Unix," he said. "It is very easy to change."

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com.

Copyright © 2006 The Seattle Times Company

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