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Interview with Ilya Pozin, Cofounder of Pluto TV

In January, Los Angeles-based Pluto TV (www.pluto.tv) was acquired by Viacom for $340M, one of the largest acquisition deals so far in the region this year. We caught up with Pluto TV's co-founder and Chief Growth Officer, Ilya Pozin, to hear about how the company started, and its path to acquisition—as well as to get some tips on startup success. Ilya also founded Coplex, a startup development studio.

What's your story and how did you end up founding Pluto TV?

Ilya Pozin: I'm a Russian, and came here when I was eight. I moved to an East Coast suburb of Washington, DC with my parents. It was one of those American dream stories, where my parents sold everything they had, and only had $5,000 in their pocket, quit their jobs, and came here to the united States to pursue a better life for me and my brother. I grew up in Maryland. I had always kind of been a computer nerd, and had been starting companies in high school. One, called Ciplex, I started in 1999, when everyone was asking for a website. I started a web design company, and ended up going to college in Florida, but kept on running the company on the side. When I got to LA after I graduated from college in 2005, I pursued it full time, and we quickly grew that company to over $5M in revenues a year, without any kind of funding.

We were building about 300 to 400 products a year for other people, including tons of apps, for tons of startups, and were managing tens of millions of marketing spend for those clients every month. That gave me the general landscape view and understanding of online technology businesses. From that, I discovered that it doesn't matter if you were a dentist, or a dating app, it was all the same thing. It started to feel like the Matrix to me. Imagine, if you're doing thousands of projects, at a certain point, your pattern recognition becomes insane. I saw that, if you build a good product that customers love, that people love to use, how you need to market it, how you need to run that project, and so forth. I ended up selling that company to someone I hired, and launched my first startup, OpenMe. That was the first time I raised any kind of capital, $600,000 in capital, for a social gifting platform—back when Facebook was very generous with data. We piggybacked against their data, and did lots of things with millions of users, and ended up selling that company for $6M. We then launched Pluto TV.

Pluto TV was one of those ideas I had when I was sitting with my daughter, looking for YouTube videos for her. I had just learned to change diapers, and, by far, I was not an expert on appropriate children's videos. Every time, I'd end up picking the wrong videos, and she just wouldn't want to watch them, because her attention span was very short. That's when I had the idea spark, looking at how consumers watch regular TV and cable, which they can watch for hours. On YouTube, you end up having to pick a new video every time you finish one, and that's just not the right experience. That's when it clicked for me, realizing that for some reason, everything online is on-demand. You have to search for everything online, which his tough when you don't know what you're looking for. I asked, where do you go for a curated, television-like experience on the Internet? Every single TV service online, from Hulu, to Netflix, and on requires people to search and find content, and really makes people work. If you ask consumers, and ask them if they want to be served, programmed, or have their own choice, they will pick have their own choice to pick anything they want. But, when you actually give them that choice, it's a paradox of choice, and they are frozen. We've all found ourselves stuck, looking for something to watch on Netflix for 35 minutes, and finally giving up.

The underlying issue is we don't know what to watch, which makes on-demand a really bad experience. That's the idea that sparked Pluto TV. We built a prototype, and plugged into the Youtube API, and started curating content into channels. I found the best cat videos for a cat channel, the best police car chase videos for a police chase channel, the best fail videos for a fail channel, the best news videos for a news channel, so that all you had to do was to go to Pluto and pick a channel which was already pre-selected and curated, and where videos keep on playing one after another. My co-founder, Tom Ryan and I partnered and took this business from just that idea I had with my daughter, to a massive exit. It's been one of the biggest acquisition in Los Angeles in the last thirteen to fifteen months.

Other people have tried to put linear television on the Web. Why it is you were successful, where they weren't?

Ilya Pozin: Timing is everything. I think that, a lot of startups that might have failed at this ten years ago, might have a new life today. We live in a very different era. We have access to so much content, it's actually exhaustive. We're constantly being put to work. When you've had a hard day at work, you just want to come home and be programmed to. That's a very common experience, and that's why linear TV still dominates. Even if you look at music, you have this ability to play any song, anywhere since Napster. But, 80 percent of music consumption is still someone programming what you're listening to, whether that's via FM, XM satellite radio, or playlists. It's not people picking and choosing every single time. That just doesn't happen. So, we want against the grain, two fold. Everything was going on-demand, we we said, more people want to be programmed to, which was very contrarian. Plus, we decided we were going to go free, at the very time every other company was going to subscription, video-on-demand (SVOD). Instead, we were going linear, and free, so we just took the market. We provided consumers with what they wanted to watch. When we first launched in 2014, we found the average person might watch 1.2 videos per session for video-on-demand, but out of the gate we were seeing the average person watching 23 videos per session for us. We validated that if we programmed content, and curated the right content, people would want to watch that content, back-to-back, and they would watch longer.

So, we built apps for every device you can find, and started licensing content, because we couldn't just build a business on YouTube. We started going to content owners to start licensing videos, movies, and TV shows. Today, a majority of the content is very long form, moving from what had been short form video. The better the content, the more people watched, and the more money we made from ads, the more we made from ads, the better content we could pay for. We entered a virtual cycle of very rapid growth. We raised over $50M from traditional VCs, as well as strategic investors like Samsung and Scripps. We built a rock star team. I think we took the best of the best here in Los Angeles, brought them on board, and just started putting fuel in the rocket ship.

How long did it take from starting this to the exit?

Ilya Pozin: We launched in April of 2014, and sold in March of 2019, so just five years. We were building it about a year before we launched. We signed the deal on my birthday!

How did the acquisition come about—were you looking for a buyer at the time?

Ilya Pozin: We never were intending to sell the company. We were working with content partners, and went to Viacom to do a content deal. The opportunity for an acquisition came from them. We didn't pursue them, and as they say, companies get bought, not sold. That definitely applied here, and that's the way it usually works. I think that it's pretty uncommon to go through a sale process, unless it's out of desperation. If you're building a great company and growing really fast, you're not going to be looking to sell.

So are you now looking at new projects and investments?

Ilya Pozin: I'm fully dedicated to Pluto TV. I think it's one thing to have a massive exit, which is incredible for being an entrepreneur, and great for LA, but what has been amazing about Viacom, is our goals are so aligned, and we have a real opportunity for Pluto be become even bigger than it is today, with a great partner. I was able to build something with a great outcome, but it would be naive not to look at the opportunity here of this becoming a massive household name. It's great to see what my baby is becoming with such a great partner on board. I'm fully on board and dedicated and still here.

You mentioned the roots of the company at Coplex. We've heard often it's sometimes hard to go from consulting to a product, how did you work through that process?

Ilya Pozin: It wasn't that difficult, because we were already doing the work for someone else, just with someone else's money. We were still building the product and marketing it. At the end of the day, you'd be done with a project you were so vested in, but you'd just have to hand it off to someone else's hands, which was a little depressing. I think we made a lot of people very, very successful, but we just saw no return from it, because it was just work-for-hire. Eventually, I said, everything we have been doing for other people, we can do on our own. Being able to put the energy I put into an agency, into a single product, was very exciting. I also knew I definitely wanted to work in the consumer space. Because I had a heavy marketing background, and ran all the marketing for our clients and product, it made a lot of sense. There's nothing like building a product, getting people into the door, watching how a user uses your product, and iterating. There's something really magical about that, getting people to react to your product. You put things out there, things happen, and it's so cool.

Thorough all of that experience, what did you figure out was most important about making a product successful?

Ilya Pozin: That's a really good question. I think, following the right process is probably the most critical thing. Build out a rapid prototype if you have a hypothesis, and prove it out. Don't spend months or years building it. See what you can do in a week, and put it out there. Base on the data you get back, iterate, and keep on improving it. Many people say that, but very few practice it. We absolutely do that today. If you look at our current state, we run tons of experiments, we prototype, and we put out things to a small number of users for testing. It's the right way to do it. I think, a lot of times, your assumptions are most likely wrong. Your vision of where the product is going, and where it ends up going when it's live and working are always different.

Thanks!