20VC Why Decentralisation is Key For Digital Media Distribution, Why Gradual Decentralisation Is The Most Practical Approach and Why Incumbents Are The Biggest Barrier To The Rise of Crypto with Adi Sideman, Founder & CEO @ YouNow



In this engaging episode of the 20 Minutes VC, Harry Stebbings interviews Addie Seidman, the innovative founder and CEO of YouNow, a global social network platform with significant user engagement. Addie discusses the evolution of YouNow, which has seen immense growth since its 2011 inception, now boasting over 100 million user sessions a month and creators producing vast amounts of live content daily. The conversation delves into the company's recent venture into crypto-economics with the launch of Props, a next-generation platform aimed at decentralizing digital media, and the strategic funding that has propelled YouNow's success. Addie shares insights into the decline of traditional TV viewership, the rise of participatory media on mobile devices, and the potential of microtransactions and cryptocurrency to revolutionize content monetization and creator compensation. The discussion also explores the benefits of digital media decentralization, including control, value distribution, and innovation, and the practicalities of transitioning towards a decentralized model using existing centralized assets.

Summary Notes

Introduction to 20 Minutes VC

  • Harry Stebbings introduces the show and himself, including his Snapchat handle.
  • Welcomes Adi Sideman, founder and CEO of YouNow, as the guest.
  • Highlights YouNow's growth, user engagement, and the new Props platform.
  • Acknowledges funding from notable investors and YouNow's recognition as an innovative company.
  • Thanks previous guests for introducing Adi Sideman to the show.

"I'm thrilled to welcome the incredible founder to the hot seat in the form of Addie Seidman, founder and CEO at you now."

The quote introduces Adi Sideman and sets the stage for discussing his background, the growth of YouNow, and the new Props platform.

Importance of People Operations

  • Speaker B emphasizes the critical role of people operations for founders and operators.
  • Lattice is recommended for its performance management solutions, including 360 performance reviews and continuous feedback systems.
  • Recurli is mentioned as a leading subscription management platform, credited with increasing revenue and reducing churn rates.

"Your most important job is people operations, whether that be hiring execs, developing managers, or retaining top talent."

This quote underlines the significance of managing and developing people within a company, suggesting that it is a top priority for business leaders.

Adi Sideman's Background and Origin Story

  • Adi Sideman describes his passion for interactive video and consumer video.
  • Discusses his early work with enhanced CDs for artists before the internet era.
  • Transitioned to creating online applications that allowed user creation and sharing.
  • Co-founded the first online karaoke and a user-generated radio ad platform.
  • YouNow's inception was driven by the accessibility of phones and the desire to enable media participation.

"I'm a consumer video guy."

Adi Sideman explains his long-standing interest and experience in the consumer video space, which led to the creation of YouNow.

Transition from Traditional TV to Mobile

  • Traditional television viewership has been declining for years.
  • Mobile devices are increasingly replacing TV, especially among younger generations.
  • Young people are seen as media participants, not just consumers.
  • The gaming industry's growth surpasses Hollywood, indicating a shift towards interactive and participatory media.

"Traditional television viewing is on decline for many years now, and it's being replaced with time spent on mobile devices."

This quote summarizes the shift in media consumption from traditional television to mobile platforms, particularly among the younger audience.

YouNow's Growth and Mobile Live Streaming

  • Adi Sideman explains YouNow's success as the largest mobile live streaming service in the US by 2015.
  • Discusses the development of Props, a new platform aimed at democratizing media through decentralization.

"I started you now, which became the largest mobile live streaming in the US in 2015."

Adi Sideman talks about the success of YouNow in the mobile live streaming market, setting the stage for the introduction of their new platform, Props.

The Rise of Interactive Media

  • The gaming industry's success is attributed to the desire for participation and impact in media.
  • Almost 2 billion people play video games, indicating a strong engagement with interactive content.
  • The behavior of participating in and impacting real-time media experiences is increasingly popular.

"The gaming industry bypassed Hollywood in size. It's around 100 billion a year versus Hollywood at less than 50."

This quote highlights the significant growth of the gaming industry as a result of its interactive nature, surpassing the traditional film industry in revenue.## Evolution of Media Consumption

  • Traditional TV viewership is declining as audiences seek more interactive and participatory media experiences.
  • Social video experiences on mobile devices, like Snapchat and Instagram, are becoming more popular.
  • People are moving from passive watching to actively engaging with media through their phones.

But more and more people don't want to just lean in, they want to jump in.

This quote highlights the shift from passive media consumption to a desire for interactive experiences where users can be part of the media they enjoy.

Monetization in the Age of Interactive Media

  • The media landscape is becoming more participatory, mobile, and accessible.
  • New monetization models are developing, moving away from traditional ad-based revenue.
  • Interactive video environments and gaming have higher revenue per user per hour compared to TV and radio.
  • Brands are leveraging new monetization methods such as branded digital goods, subscriptions, and microtransactions.

And we already see that in gaming and in live streaming. Mary Meeker came out with a report a few months ago that talked about revenue per user per hour. And in interactive video environments like live streaming and gaming, it's fifty cents per user per hour. And on tv and radio, which are mostly ad based, it's less than $0.07.

Adi Sideman references a report by Mary Meeker to compare the revenue generated per user in interactive environments versus traditional media, emphasizing the monetization potential in newer media formats.

Digital Goods and User Engagement

  • Digital goods can be used to enhance user experience and engagement.
  • Scarcity and special features of digital items can make them valuable and desirable.
  • Brands, like Coca-Cola, have successfully implemented these strategies to engage with users and create a sense of celebration and community.

We set the price because we want it to be scarce within the experience. If it was cheaper, there would be too many exploding coke bottles and it wouldn't be fun. So when it shows up on the screen, it's a real celebration.

Adi Sideman explains the rationale behind pricing digital goods, like the virtual Coke bottle, to ensure they remain special and create a memorable experience for users.

Microtransactions and Creator Support

  • Microtransactions are a powerful engagement tool for content creators.
  • Audiences are willing to support creators they enjoy through microtransactions.
  • Changes in platform guidelines and the rise of cryptocurrency are facilitating micro payments, benefiting creators.

We have creators earning five figures per month from micro payments.

Adi Sideman discusses the significant earnings content creators can achieve through microtransactions, indicating the viability and potential of this revenue stream.

Decentralization of Digital Media

  • Centralization of digital media distribution by a few decision-makers can have significant impacts, such as censorship.
  • The value generated by digital media networks is disproportionately allocated, with most going to a few companies.
  • Decentralization can lead to a more equitable ecosystem, rewarding creators and consumers alike.
  • Blockchain technology is seen as a means to achieve a decentralized economy in digital media.

When you consider the benefits of digital media decentralization, first one is leaving control for digital media distribution in the hands of few decision makers is a real issue.

Adi Sideman highlights the problems with centralized control in digital media and suggests that decentralization could address these issues.

Approaches to Decentralization

  • There are two main approaches to decentralizing digital networks: integrating new protocols into existing services or building new protocols to create decentralized networks.
  • The choice of approach can influence the effectiveness and adoption of decentralized systems.

There's two schools of thought around this. One, integrate new protocols into existing services, and then second choice being build entirely new protocols and exact the decentralized networks through those protocols.

Adi Sideman discusses the different strategies for achieving decentralization in digital media, suggesting that both have their merits and challenges.## Promise of Decentralization

  • Decentralization fosters innovation, equitable distribution, and presents disruptive opportunities.
  • Existing services like Reddit or Twitter decentralizing could advance a decentralized future.
  • Exposure to decentralization for millions could educate and open up new possibilities.
  • New purely decentralized protocols like Ethereum are maturing and hold undeniable potential.

"The promise of decentralization is real and valuable and promotes innovation and equitable distribution, and it's a great disruptive opportunity."

This quote emphasizes the inherent value of decentralization in fostering innovation and equitable opportunities, highlighting its potential as a disruptive force in various industries.

"If Reddit or Twitter existing services found a practical way to decentralize, is that a good thing? It will certainly advance us towards a more decentralized future, educate more individuals and companies on the possibilities, expose hundreds of millions of users to this new dimension."

The speaker suggests that if large platforms like Reddit or Twitter were to decentralize, it would not only be beneficial but also serve as an educational tool for individuals and companies, highlighting the widespread impact of such a move.

"When the new protocols that you mentioned, which are purely decentralized, like ethereum, and know reach maturity in the years ahead, they hold undeniable."

This quote acknowledges the potential of emerging decentralized protocols, such as Ethereum, to shape the future as they reach maturity and become more widely adopted.

Gradual Decentralization

  • Gradual decentralization is a practical approach leveraging existing centralized assets.
  • It involves transitioning to a decentralized network over time, as decentralized solutions become viable.
  • This strategy allows for the current benefits of centralization while preparing for future decentralization.

"Gradual decentralization is a practical approach whereby you leverage your existing centralized assets like users revenue, proven product market fit, and you achieve an ultimately decentralized network over time."

Gradual decentralization is described as a strategic and practical method that utilizes the strengths of current centralized systems to eventually transition to a decentralized network.

Decentralization in Two-Sided Markets

  • Two-sided markets are particularly suited to gain value from decentralization.
  • Not every business model is suitable for decentralization or can reap its benefits.

"I tend to think of two sided markets as being prone to having great value in decentralization."

The speaker believes that markets with two distinct user groups (e.g., buyers and sellers) stand to gain significant benefits from adopting a decentralized structure.

Props and Rise Ecosystem

  • Props is a decentralized video application ecosystem, with Rise being the first application.
  • Transitioning from a high commission business model to a tokenized, equitable economy.
  • Creators are rewarded based on their contribution to network growth, aligning incentives.

"Props is an ecosystem for decentralized video applications and rise is the first application on it."

Props is introduced as a platform for decentralized video applications, with Rise being the inaugural application to launch within this ecosystem.

"We're launching a decentralized, tokenized economy later this year's where creators, whether they're independent like you or MTV or America's Got Talent, both of which are on our service today, will be rewarded with token."

The speaker outlines a significant shift in their business model towards a decentralized, token-based economy where creators are compensated with tokens for their contributions.

Token Network Effect

  • Tokens can jumpstart an economy by rewarding contributors, solving the chicken and egg problem of marketplaces.
  • A reward pool distributes tokens algorithmically to all network contributors.

"You can jumpstart the economy by allocating a portion of the tokens to a reward pool that logarithmically and algorithmically every day over a period of years, rewards all the contributors to the network, big and small."

The speaker describes a mechanism where tokens are used to incentivize all participants in the network, effectively kickstarting the platform's economy and encouraging growth.

Cryptocurrency in Virtual Economies

  • Cryptocurrency offers a liquid, real-world value proposition.
  • It enables a larger opportunity by powering a platform with multiple use cases.
  • Cryptocurrency aligns the business model with users' interests, incentivizing network growth.

"We're moving from a relatively small opportunity of running a single video use case and a single app with a currency that works only within that app to a cryptocurrency that is liquid and has value in the real world and powers a platform and an ecosystem that enables endless use cases."

The speaker explains the shift from a limited, app-specific currency to a real-world, liquid cryptocurrency that facilitates a broader range of use cases and opportunities.## Token Incentivization and Ecosystem Value

  • Incentivizing a broad base of users, developers, and creators can significantly increase an ecosystem's enterprise value.
  • The appreciation of the ecosystem's token is a communal effort, not just the company's interest.
  • This community-driven appreciation is termed "asymmetric warfare."

"Well, sir, the enterprise value of our ecosystem stands to increase significantly if we're able to incentivize masses of users, developers, creators and all people who contribute to the network in the ecosystem."

This quote explains the strategy of increasing an ecosystem's value through community incentivization.

"It's not that us alone are eager to see it appreciate, but a community of millions is now incentivized to appreciate our asset."

This quote emphasizes the collective effort in appreciating the value of the ecosystem's token.

"And I call that asymmetric warfare."

This quote introduces the term "asymmetric warfare" to describe the strategic advantage of community-driven token appreciation.

Personal Preferences and Influences

  • Adi Sideman shares his favorite book, "The Last Lion," highlighting its lessons on leadership and its compelling narrative on the 20th century.
  • Sideman believes George Harrison was the best Beatle, a unique opinion among his peers.
  • The quote by Alan Kay on inventing the future has been seminal in Sideman's career.

"The last lion. If you haven't read it, it's Winston Churchill's biography by William Manchester. It's a masterpiece in leadership, and it's a riveting story about the 20th century."

This quote shares Sideman's favorite book and the reasons for its significance to him.

"I believe that George Harrison was the best Beatle."

This quote reveals Sideman's personal belief, which is contrary to the common opinion.

"Well, Alan Kay, the famous software developer, said the best way to predict the future is to invent it."

This quote indicates the influential advice that has guided Sideman in his career.

Barriers and Changes in the Crypto and Tech Industry

  • Centralized distribution channels controlled by incumbents like Apple and Google are the biggest barriers to the rise of crypto.
  • Sideman expects these incumbents to gradually move towards more openness and away from restrictive practices.

"It's the incumbents who control the centralized distribution channels today, like Apple and Google."

This quote identifies the major players that pose a barrier to the adoption of cryptocurrency.

"The fact that Apple still reviews every update by every line of code is just horrendous in terms of facilitating development, and it's not sustainable."

This quote criticizes Apple's stringent review process and predicts a shift towards more openness.

Vision for the Future and Decentralization

  • Sideman envisions a new ecosystem that allows people to participate and impact their surroundings through digital media.
  • Technology is seen as an enabler for participation in various social experiences, with a timeline for full decentralization laid out in the company's white paper.

"People want to participate and they want to impact their surrounding. It's human nature."

This quote speaks to the innate desire for participation and influence, which the new ecosystem aims to fulfill.

"Programmable video is here today and we're all over it."

This quote highlights the current capabilities and focus areas of Sideman's company in the media landscape.

Cross-Border Investing and Global Business

  • Sideman advocates for more cross-border investing to reflect the global nature of modern businesses.

"Well, our businesses are now global, and I would like to see more cross border investing."

This quote expresses Sideman's desire for investment practices to adapt to the global scale of contemporary businesses.

Acknowledgements and Sign-Off

  • Harry Stebbings expresses gratitude for the guest, Adi Sideman, and thanks those who recommended him for the show.
  • The conversation ends with an appreciation for the guest's participation and the fun experience.

"Harry thank you so much. This was so much fun. Thank you."

This quote is Sideman's expression of gratitude for being on the show.

"What a guest."

This quote from Harry Stebbings shows his positive reception of Sideman as a guest on the podcast.

People Operations and Performance Management

  • Importance of people operations in running a successful business.
  • Lattice is recommended as the top performance management solution for growing companies.

"You'Re a founder or operator, your most important job is people operations, whether that be hiring execs, developing managers, or retaining top talent."

This quote emphasizes the significance of managing people effectively in a business setting.

Subscription Management and Revenue Growth

  • Recurli is presented as an essential platform for subscription management and for reducing churn rates.

"And they have the ability to not only increase revenue by 7%, but also reducing the all important churn rate."

This quote highlights Recurli's impact on increasing revenue and reducing churn rates, which are crucial for subscription-based businesses.

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