
Ficto's Plan to Test its Way Toward a Mobile Streaming Content Strategy
Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake
Fiction Riot, the L.A.-based entertainment company behind mobile streaming app Ficto, raised $250,000 this week. Chief executive Mike Esola says the company has intentionally grown slowly, eschewing venture capital in favor of incremental fundraising from family offices, institutions and friends and family.
In total, the company has raised $3.5 million, according to an internal document.
Ficto is free to download on iOS and Android, but is currently in a testing phase, says Esola, a former agent at WME and UTA. He and his team – which includes Jeff Mayo (employee #80 at YouTube and #300 at LinkedIn) and Nick Mitchell (former head of engineering at Technicolor) – plan to launch the fully fledged service in Q4 of this year. That will receive a boost from distribution partnerships that will guarantee them 1.3 million automatic downloads of the Ficto app, according to Esola and the document.
The company's business model is based on advertising and providing white label streaming technology to third parties such as festivals, conferences and broadcasters, Esola says.
Ficto aims to leverage mobile-oriented tech to offer a unique user experience. In the future its shows will include features like interactive choice-based storytelling; content that is unlocked if a user goes to a specific location; and real-time chats. The tech stack is also built to provide unique opportunities to advertisers and financial transparency to creators.
dot.LA caught up with Esola to talk about his plans for the Q4 launch, what short-form video competitor Quibi got wrong, and how Ficto will do it differently.
How did Ficto come about?
It started out as one primary thing but it has evolved. The original focus was on backend compensation for artists. I was an agent for about 16 years and I made 95% of my revenue on 5% of my deals; it's the same with most artists. And most of the time that comes from the backend.
But when streaming came along it eradicated the backend. Everything's going to streaming. Consumers love it, but like many tech companies they don't reveal their metrics – it's inherent in the tech culture.
I was really impressed with Netflix; they basically invented streaming, and production is up because of them. But I love this industry and I didn't like what I was seeing for the creators. If you take away content performance metrics, it changes everything. So that was my inspiration. I couldn't sit around.
Mike Esola is Fiction Riot's CEO
Where is Ficto headed from here?
Q4 will be significant for us. The last couple months have been a beta period; we're testing, not spending money on marketing. We'll have 10 original shows coming in Q4, but we can't premier those now because we can't shoot them.
The filming moratorium looks like it'll lift soon and we'll go back into production. These shows will give users more empowerment and engagement than the shows that are on our beta version.
Those are good shows, too, and there's an element of empowerment there, since we accepted several of them through a submission portal; and also some engagement, with micro-donations from viewers. But we'll take all of that to the next level. To be able to do that how we want, you have to bake it in from the start.
We also have a number of great distribution deals coming in Q4, which will come with automatic pre-downloads that will allow us to exceed the downloads that Quibi got.
What will you do with the money you've just raised?
That was almost all convertible debt, and it will go to content, marketing, and operating expenses – which includes technology development.
We're not opposed to VC money but it's got to be the right moment and the right value proposition for them. We don't want to rush the valuation. And it seems lately there's been a bit of a reckoning in VC because of overvaluations and a have-or-have not mentality. VCs are really smart but like everyone they spread themselves thin. These are generalizations but I think there needs to be a more diverse approach to how VCs invest.
What do you think Quibi got wrong?
It's very simple: their value proposition is not correct. What problem are they trying to solve? They're aware there's an amazing amount of people, especially young people, watching on mobile. But content on mobile and content on normal streaming is not apples to apples, and they didn't adequately adjust their approach to production or programming. You've got to do the other things that people expect on mobile, and the way we think about that is it's all about empowerment and engagement.
Quibi raised and spent all this capital and assumed people would adopt their product, without hardly testing it – they just went straight into a big launch. If you do that in any industry the odds are against you. Every other app is built how we've built, but Quibi didn't care about history. (They figured) this is what people will accept — that they'll like what we make. It's not the first time this has happened to (Quibi chairman and founder Jeffrey) Katzenberg. Look at pop.com – it didn't launch. Dreamworks' live-action business sold for pennies on the dollar.
Quibi also disregarded the importance to young people of a free service. It's not easy to get someone to pay for a service with no established brand or content, especially young people.
The people making decisions at streaming services are focused on a mature, established market — long-form, primarily over-the-top, in front of the TV. They're missing this explosion, this cultural gap of mobile viewing. Quibi caught onto that, but it's not just about the length of the content. That's where Quibi got it wrong — it's about empowerment and engagement.
It's a different type of offering and different type of expectation that comes along with the internet, with mobile, with social and lots of things that aren't necessarily obvious. But people have a different value proposition in mind when they pick up their mobile phones. With any offering, whether you're talking about movies or Dropbox, you've got to deliver to consumers' expectations; and if you're lucky, you've got to exceed them. So if you're going to create content for mobile you have to meet those mobile expectations.
What exactly do you mean by engagement and empowerment?
Engagement is a fancy word for interactivity. It's about making people feel like they're part of something. It could be a choice-based show, or a location-based show that you unlock based on your location. It could be livestream; livestream is the longest anyone spends on average on mobile by far – you know why? Because with livestream, you feel like you're part of something, since it's happening in real time. You can do live-chat functionality, commentary, opinion, social integration — it's easy to do that for our shows. Quibi completely cut all that out.
And empowerment is basically about allowing people to submit content or opinions. Polling is its most basic form, or clicking to donate. Beyond that you see people submitting a video to be a part of something – TikTok is the most successful at that. We haven't premiered it yet but we have an interactive dating show that will empower viewers to win a date with a celebrity. And we'll do other competitive shows where people will have to submit a 10-second video to win a prize.
Most of the services are focused on long-form content and they're ignoring the twenty-somethings and teens because they don't understand it. They scratch their heads at why Quibi doesn't work and why TikTok does, and they dismiss TikTok as crap user-generated content. But it doesn't have to be that. It can be a hybrid. And that's where we see ourselves.
This interview has been edited for brevity and clarity.
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Los Angeles is home to around 5,000 startups, the majority of which are in their young, formative years.
Which of those thousands are poised for a breakout in 2021? We asked dozens of L.A.'s top VCs to weigh in. We wanted to know which companies they would have invested in if they could go back and do it all over again.
Boiling
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGaW1hZ2VzJTNGcSUzRHRibiUzQUFOZDlHY1EwRjdlRzlxY3JFd1lNVS12T2VTWng1NFd6VFdWUktaMFpyQSUyNnVzcXAlM0RDQVUmaG89aHR0cHMlM0ElMkYlMkZlbmNyeXB0ZWQtdGJuMC5nc3RhdGljLmNvbSZzPTEwMDImaD1jOGIyM2Y5YWNhNGNhNDY3NzZhNmUzNTU3MWI2YzAzNjcwOTU1Nzg0ODQxZDdiZGIyZjAxMzUxNjdkN2I5NWY2JnNpemU9OTgweCZjPTE2MDM4MjI5MTgiLCJleHBpcmVzX2F0IjoxNjY1MTY5NTcxfQ.iTVRhSe0UulUxSyMUZ4QA7_0njADdWe3QEJ28-xW6m0/img.jpg" id="a03b9" class="rm-shortcode" data-rm-shortcode-id="03faa4898896a9ce5be09d51dc104b73" alt="Pipe logo" />Pipe
<p><a href="https://www.pipe.com/" target="_blank">Pipe</a> provides financial services to help cloud service companies tap into their deferred cash flows, allowing them to continue growing without taking on debt or giving up ownership. For subscription-based businesses, this makes it "as if all of your customers converted to annual plans overnight," according to the company.</p><p>Founded by Harry Hurst, Josh Mangel and Zain Allarakhia, the company <a href="https://dot.la/pipe-taps-60-million-seed-extension-2646245409.html" data-linked-post="2646245409" target="_blank">raised $66 million of seed funding earlier this year</a> in a deal led by Craft Ventures and Fin Venture Capital.</p>Clash App Inc.
<p>Created by former Vine-r Brendon McNerney and entrepreneur and marketing expert P.J. Leimgruber, <a href="https://www.clashapp.co/" target="_blank">Clash App</a> is a short form video platform similar to TikTok, but without built-in sound libraries. It's geared toward empowering creators with innovative monetization options and inclusive communities.</p>XCLAIM
<p><a href="https://www.x-claim.com/" target="_blank">XCLAIM</a> has created an electronic platform where bankruptcy claims that take a notoriously long time to process can be digitally traded. Founded in 2018 by Matthew Sedigh, who has operated in the corporate restructuring field for more than a decade, the company says "rather than wait years for the bankruptcy court process to issue payment distributions, creditors can now access immediate liquidity by selling their claim to interested buyers." Earlier this year, it raised a $4 million seed round led from Luma Launch, First Round Capital and Freestyle Capital.</p>Simmering
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGaW1hZ2VzJTNGcSUzRHRibiUzQUFOZDlHY1JlR3QzLWlHSmFtYVJnLXNwSXVYcDc5N0xOdnpTYWhYYVloQSUyNnVzcXAlM0RDQVUmaG89aHR0cHMlM0ElMkYlMkZlbmNyeXB0ZWQtdGJuMC5nc3RhdGljLmNvbSZzPTYwNiZoPWU3NzNhYTkwODZkNmE4OWQwMWU0ZjZkODk0ODU1ZWEyZDIzMmU3YTYyNzJjYTU3Mzk3MmI0NmQ0NjAxMDY3YzMmc2l6ZT05ODB4JmM9MjQ3NDg5MDE0MiIsImV4cGlyZXNfYXQiOjE2NzAzMzU0NjB9.iqCUfvVUI22AGAz-QYPiS7XFb26sw3mGaU8seorLqxQ/img.jpg" id="44f84" class="rm-shortcode" data-rm-shortcode-id="cbdc9b0cdf21d3873eef2a40647ae810" alt="Freck Beauty logo" />Freck Beauty
<p><a href="https://freckbeauty.com/" target="_blank">Freck Beauty</a> manufactures beauty products intended to make the user feel seen. Remi Brixton, the company's chief executive officer, founded the startup in 2015 when she was in search of a freckle makeup product. When she couldn't find one, she launched her own, the FRECK OG. The East Los Angeles-based company raised an undisclosed amount of seed funding in a deal led by KarpReilly and Stage 1 Fund earlier this year.</p>The Skills
<p><a href="https://www.theskills.com/" target="_blank">The Skills</a> wants to be the <a href="https://dot.la/the-skills-2649267338.html" target="_self">master class on sports </a>and life. The Los Angeles-based startup launched two months ago and offers classes from gold medal Olympians — including swimmer Michael Phelps and volleyball player Kerri Walsh Jennings — and Grand Slam tennis Champion Maria Sharapova. In December, it closed a $5 million seed round backed by Boston-based Will Ventures, Global Founders Capital, 8VC, Maveron, Hack VC and Correlation VC.</p>Mapped
<p>Founded by Shaun Cooley, former chief technology officer of Cisco's Internet-of-Things (IoT) and Industries division, <a href="https://www.mapped.com/" target="_blank">Mapped</a> provides IoT services in El Segundo.</p><p>The company raised $3 million of seed funding in a deal led by Greycroft earlier this year, putting its pre-money valuation at $9 million. </p>DataPlor
<p>Created in 2016 by Geoffrey Michener, <a href="https://www.dataplor.com/" target="_blank">Dataplor</a> indexes micro-businesses in Mexico (and will soon be expanding to other countries in Central and South America) and sells the data to larger companies.The company relies on contractors in those countries to collect the information from local businesses. It raised $4 million from ff Venture Capital, Quest Venture Partners and Space Capital earlier this year and expects to use it to expand into more Latin American countries. </p>Grow Credit
<p>Launched by serial entrepreneur <a href="https://joebayen.medium.com/a-black-founders-guide-to-raising-a-2m-institutional-seed-round-a8687f95087f" target="_blank" rel="noopener noreferrer">Joe Bayen</a>, <a href="https://growcredit.com/" target="_blank">Grow Credit</a> helps customers improve their credit score by providing credit for subscription services like Netflix and Spotify. Their MasterCard can help consumers with thin or damaged credit scores and the small line of credit can be upgraded for a fee. The company closed a $2 million seed round earlier this year with participation from Mucker Labs.</p>Outer
<p>The two-year-old Santa Monica-based company has seen business boom during the pandemic as retail stores shut down and online orders surged. The direct-to-consumer outdoor furniture brand <a href="https://dot.la/outer-furniture-raise-2646187491.html" data-linked-post="2646187491" target="_blank">uses backyards as showrooms</a> and <a href="https://dot.la/how-outer-aims-to-disrupt-the-outdoor-furniture-industry-2647872107.html" data-linked-post="2647872107" target="_blank">raised $4.3 million in a seed round</a> earlier this year led by Mucker Capital. Founded by Jake Liu and Terry Lin, a former designer at Pottery Barn, <a href="https://liveouter.com/" target="_blank">Outer</a> aims to appeal to Restoration Hardware and Pottery Barn shoppers. </p>WhatNot
<p>A livestreaming reseller of collectibles like FunkoPop vinyl figurines, Pokémon cards and sports cards, <a href="https://www.whatnot.com/" target="_blank">WhatNot</a> taps into a growing retail trend and promises that the collectibles are verified, much like sneaker reseller GOAT. </p><p>The startup secured $4 million in seed funding this month from Scribble Ventures, Wonder Ventures, Operator Partners, Y Combinator, Liquid 2 Ventures, Twenty Two Ventures and other investors. The company plans to use the funds to expand into video games, comics books, designer toys and vintage fashion.</p>Fourthwall
<p><a href="https://fourthwall.com/" target="_blank">Fourthwall</a> is the developer of an internet platform that helps content creators launch fully-branded websites focused on interacting with fans. Their website tag phrase is "Make a living doing what you love," which is complemented by their model, which provides creators 100% ownership of their website and brand.</p><p>Founded by Walker Williams and Will Baumann, the company has raised $4 million to date, from investors Defy Partners, Lightspeed Venture Partners and Initialized Capital Management.</p>Shop LatinX
<p><a href="https://shoplatinx.com/" target="_blank">Shop LatinX</a> calls itself the "leading beauty, fashion, and lifestyle ecommerce designed by and made for Latinas." The brainchild of two Los-Angeles-based Latinas, Brittany Chavez and Raquel Garcia <a href="https://dot.la/techstars-la-2646304264.html" data-linked-post="2646304264" target="_blank">launched their website</a> before Black Friday in 2016. It features more than 200 brands.</p>First Resonance
<p>Founded by former SpaceX software engineer Karan Talati and Neal Sarraf, <a href="https://www.firstresonance.io/" target="_blank">First Resonance</a> promises to ease the workflow for manufactures with software intended to provide greater visibility into production and test product development lifecycle. The company raised $1.75 million of seed funding last year from Wavemaker Partners, Stage Venture Partners and PLG Ventures, among clothes.</p>Vurbl
<p><a href="https://vurbl.com/" target="_blank">Vurbl</a> offers curated, one-stop-shop of what it calls the best audio on the internet, which can include podcasts but also goes well beyond that from religious sermons to court arguments. The new platform founded by CEO Audra Gold is being built with the <a href="https://dot.la/vurbl-raises-1-3-million-to-build-the-youtube-of-audio-2647713757.html" target="_self">$1.3 million pre-seed round Vurbl closed in September</a> led by AlphaEdison with participation from Halogen Ventures and Ten13.</p>PocketWatch
<p>Former Disney executive Chris Williams founded <a href="https://pocket.watch/" target="_blank">the studio</a> that produces family-focused content from YouTube stars. This year it launched clock.work, an advertising agency designed to help major brands reach kids. Investors include Viacom, Greycroft, Third Wave Digital and United Talent Agency, along with strategic angels including Robert Downey Jr. and Jon Landau.</p>PocketList
<p><a href="https://pocketlist.app/" target="_blank">The app</a> allows renters to see and share apartments that will soon be available before they're listed — reducing the time properties sit vacant and potentially heating up competition among apartment hunters. It launched <a href="https://dot.la/renter-app-2646416605.html" data-linked-post="2646416605" target="_blank">earlier this year</a>. The company has $2.8 million in seed funding led by David Sacks' Craft Ventures along with Abstract VC, Wonder Ventures and angel investor Spencer Rascoff, co-founder of Zillow and dot.LA.</p>Quilt
<p>The audio-based social platform promises to be the spot for "live, supportive, feel good conversations—just like hopping on the phone with a friend when you need it most." It lets people start a conversation around any topic or join by listening. <a href="https://www.beta.wearequilt.com/" target="_blank">Quilt</a> raised an undisclosed amount of venture funding from Freestyle Capital in 2019.</p>Tonebase
<p>Founded by Abhi Nayar, Chris Garwood and Igor Licthmann, <a href="https://www.tonebase.co/" target="_blank">Tonebase</a> provides high-level music education online. Yale School of Music alumnus Garwood and Lichtman<a href="https://news.yale.edu/2018/01/22/first-person-how-we-are-bringing-high-level-music-education-masses" target="_blank" rel="noopener noreferrer"> told their alma mater that it built with the idea </a>that it was "a way for people everywhere to learn from the very best musicians around the world — individuals who, due to their busy performing and teaching careers, are traditionally accessible to only a select few." The company has raised an undisclosed amount from Launch fund, e.ventures and other undisclosed last May. </p>Second Spectrum
<p>Launched in 2013 by Jeff Su, Yu-Han Chang and Rajiv Maheswaran, <a href="https://www.secondspectrum.com/index.html" target="_blank">Second Spectrum</a> already has deals with the NBA and English Premier League. This year it scored another one with Major League Soccer to use its optical tracking system to evaluate and analyze performance. </p><p>Second Spectrum puts their tracking cameras inside the stadium. Machine learning and AI-powered analytics provide detailed data that helps coaches and others better understand the game from player speed and deceleration to shot velocity in near real time. That technology can also be used on broadcast platforms to give fans more insight. The company raised about $20 million backed by CAA Ventures, Raine Ventures and The Chernin Group in 2018.</p>Toucan
<p>Founded by CEO Taylor Nieman, Shaun Merritt and Brandon Dietz, <a href="https://dot.la/slingshot-aerospace-ceo-2646797521.html" data-linked-post="2646797521" target="_blank">Toucan</a> is a Chrome browser extension that lets people learn a new language. It scans websites you visit and translates some words into the language you want to learn. The Santa Monica-based company most recently raised a $3 million round backed by GSV Ventures, Amplifyher Ventures, and Wonder Ventures, among others. </p>Serve Automation
<p>Created by former SpaceX engineers, <a href="https://serveautomation.com/" target="_blank">Serve Automation</a> aims to change the way foods get delivered. It has secured $7 million in a seed round and is operating in stealth mode. </p>- Meet 3 Early Stage Science Startups at First Look's Showcase - dot.LA ›
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