A Q&A with Videoly.co co-founder Konstantin Zagaynov. The Helsinki-based startup, which offers a user-generated video library builder for brands, announced in mid-October that it has raised €120,000 in Seed funding. Investors include Reaktor and Tekes. It was founded last year by Zagaynov, Natalia Angapova, and Sergey Andryukhin, and this is its first round of outside funding.
SUB: Please describe Videoly and your primary innovation.
Zagaynov: Videoly.co is a media library of product video reviews from YouTube. What we do is automatically enrich ecommerce sites with product review videos in order to provide relevant info. to the shoppers. With Videoly, shops can cover product listings with video without any manual work. Shoppers who watch video are 100 percent more probable to buy products than those who don’t. So we offer a powerful ecommerce tool to boost sales conversion.
SUB: Who are your target markets and users?
Zagaynov: Our target market is about 1.5 million online stores with $1.9 billion revenue a year. There are big whales among them like eBay, Amazon, BestBuy, and a vast number of shops built on ecommerce platforms which we can reach through marketplaces of the platforms.
We focus mainly on English-speaking countries, but we’re ready to support other languages too. We already have experience with German and Dutch shops.
SUB: Who do you consider to be your competition, and what differentiates Videoly from the competition?
Zagaynov: We have three groups of competitors: Big companies who offer full video production from shooting video to delivering to customers, like Invodo—their price is really high; solutions like making video reviews with photos and added music; and many developers who offer extensions on ecommerce marketplaces.
We differ considerably because our solution is automatic and affordable. Customers buy not just tools to plug-in videos—they buy increasing sales with a clear fee for it.
SUB: You just announced that you’ve raised €120,000 in Seed funding. Why was this a particularly good time to raise funding?
Zagaynov: We’ve begun to show very good traction and it seemed like we found the right revenue model. So, we need a support to expand delivering our solution though new channels.
SUB: How do you plan to use the funds?
Zagaynov: As mentioned, we want to find new channels to market, and it is not only about customer development and marketing. It especially affects strengthening our technology. So yes we are going to find an investor who could be our strong partner on the e-commerce market.
SUB: What was the inspiration behind the idea for Videoly? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Zagaynov: The idea of the service comes from the moment when Sergey (co-founder Sergey Andryukhin) suddenly realized that there are not many reliable ways to give feedback to manufacturers about products, and be heard. Discussing this problem, Sergey and Natalia (co-founder Natalia Angapova) came to an idea of a bridge between customers and stores. Somehow they should be connected and help each other within the shopping process. Profit to customers was evidence. But what value could we bring to shops? And the answer is increasing conversion, increasing sales. So the puzzle came together, it was exactly that ‘aha’ moment.
SUB: What were the first steps you took in establishing the company?
Zagaynov: First of all, we built a Chrome extension to watch video reviews on Amazon and eBay. After that we started to build our matching technology.
SUB: How did you come up with the name? What is the story or meaning behind it?
Zagaynov: It’s our favorite story. We still laugh a lot when remembering this. We started with the name ‘Quch.’ But later I found from native American speakers that it sounds similar to ‘cooch,’ and it couldn’t be that strong and simple any more. So, we came up with ‘Videoly.’ We’re sure the name, which contains keywords describing our business, is more memorizable than others, and it’s important when meeting potential customers or investors. And we like our ‘O’ letter-like player button logo.
SUB: What have the most significant challenges been so far to building the company?
Zagaynov: We started to build a company that would have its technical team in Helsinki and sales center in Berlin. While this brings certain advantages—we got our first costumers in the CE area, while investor is from Finland—we need to constantly pay attention that everything that happens in one office also gets to be known in another.
SUB: How do you generate revenue or plan to generate revenue?
Zagaynov: Our revenue model is based on added value. We take two percent from sales generated through us after watching video on a website. If we don’t bring new sales there is no fee from a client.
SUB: What are your goals for Videoly over the next year or so?
Zagaynov: Our future—bring video reviews to all shops and make video reviewing a natural habit, like shooting pictures with Instagram now. We are going to build a marketplace for brands and reviewers to fill every gap in describing products with video reviews. We’re now developing matching technology so every video can be classified, like ‘unboxing,’ ‘useful,’ ‘consumer,’ ‘professional,’ etc. And of course we will improve our channels to deliver video reviews where people need them.