Veoh Bust Should Be A Reminder That Execution And Focus Are More Important Than Vision

Dmitry Shapiro

Photo: JDLasica via Flickr

While it’s never good to see any company go under, one can’t at all be surprised to see Veoh finally go out of business after burning through more than $70 million in funding. While they were not the first and definitely won’t be the last company that will have to shut their doors this year, Veoh should act as another example to the industry that focus and execution are more important than vision.

From day one, Veoh never really executed a clear and concise business plan on what they were going to offer, what problem their platform would solve, or what the business model of the company was going to be. While all companies need to adapt their focus to try and stay in step with how the market evolves, Veoh always struggled to define who they were and what they were doing in the market. Their business model changed so many times and their platform shifted focus so often that even in the short-term, no one really knew what Veoh offered. Whenever you would ask people what Veoh did, you’d always get different answers, even from those who were in the online video industry.

The problem was that Veoh simply lacked focus. It’s hard to do anything well and focus on it when you’re trying to be everything to everybody. Veoh was a video platform, a content syndicator, a TV guide of content, a recommendation engine, an ad delivery platform and a software company that was pushing users to download Veoh’s own proprietary video player. That’s simply trying to do too much. If Veoh’s content was niche, maybe they could have pulled it off with the right focus, but when your business model is based purely on advertising, you can’t keep your content niche since you need as much traffic as possible.

In a post talking about the company closing down, Veoh’s CEO Dmitry Shapiro said the company was on a run rate of $1 million a month in revenue. To put that in perspective, Veoh was delivering 240 million video streams a month to 28 million unique users and earning less than $1 million a month with that traffic. Those are numbers that simply can’t add up to a successful business no matter how you slice it.

While some want to say how much vision Veoh had and talk about it being a sad day for them, it’s not. No company can raise $70 million in funding and expect to have a viable, sustainable business unless that have a clear and focused business model of how to generate sales. Veoh never had that. To me, the nail in Veoh’s coffin came when they had to raise a third round of funding. Before the third round, Veoh had already raised about $15 million. If you can’t make a business like the one they were aiming for work with 15 million, then another 25 million is not going to help. And when you burn through that $25 million in less than a year and have to raise another $30 million only 10 months later, you’re already done.

Things have to be kept in perspective. Veoh took $70 million. If you take that much money you have to wonder to yourself how you are ever going to show value to your investors when you know there is no way your revenue is ever going to come close to the level of money that you raised.

No doubt, there were some really smart and visionary technical folks working at Veoh. But the problem we have seen time and again is that most technology people can’t take that technology and turn it into an offering in the market that makes money. Everyone seems to want to talk about the best platform, features and bells and whistles but then can’t explain how they will use the technology to make money. Veoh is a good reminder that it takes a lot more than just Vision to be able to turn technology into a product/platform that people are willing to pay for and generates enough revenue to actually turn a profit.

Dan Rayburn is executive vice president at and principal analyst at Frost & Sullivan. This post originally appeared at his blog and was republished with permission.

More from Dan Rayburn’s Business of Online Video blog:

  • YouTube Launches “Video Speed Dashboard”, But The Results Don’t Tell You Anything
  • Without Enough Inventory And Targeting, Online Video Advertising Will Remain Dead
  • Free Product Giveaway: Wowza Media Server 2 ($995 retail)

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