Mixergy, Gregg Spiridellis of JibJab

Mixergy, Where Ambitious Upstarts Mix

Guest: JibJab, Co-Founder Gregg Spiridellis

About JibJab: Back in ancient times, 1998 to be exact, two brothers bore witness to an animated dancing doodie streaming over a 56K modem and it changed their lives forever. What Evan and Gregg Spiridellis saw in their browser was more than a dancing piece of dung; it was a once-in-a-lifetime opportunity to be pioneers in a brave new world of entertainment.

At the time, Gregg was an MBA student at the Wharton School of Business, recovering from four years of investment banking, and Evan was an accomplished independent animator creating festival-winning short films. The idea that production costs were dropping and distribution was opening up led the brothers to believe (some said naively) that they could create a giant, new entertainment brand. In 1999, the brothers started JibJab in a Brooklyn garage (despite the fact that starting an Internet company in a garage is really a cliché thing to do).

Interview: “Home of the ambitious upstart”

• What was your vision? To take advantage falling production costs and distribution was opening up to build a brand.  Evan was creative and visual inspiration. Gregg was going through MBA school at Wharton and saw an opportunity.
• Where did you see it going as a media company? They really didn’t know but saw the opportunity and were lured by the new medium.
• How did you see yourself getting an audience? Referral based marketing; they wanted to create something of value to the user.  They provided very visible subscribe links and tried to get subscribers to recommend them to friends.
• Where did you envision the money coming from? Didn’t know but they new their was enormous value creation opportunity to create a brand.  If they were first and worked hard they would figure it out.  They were able to make money from the get go and reinvest so the need for venture capital wasn’t necessary until 6 ½ years after startup.  Business was originally a content studio: licensing and creating original content and doing exclusive deals.
• Your brother brought in very talented people, how did you pay your first employees? They reinvested their own money.  They raised 50k from friends and family and then worked on deals and made sure they could pay the rent for 3 months and then reinvest in more original content.  Very speculative and risky, something Wharton would’ve frowned upon.
• Did you first get the licensing deal or first develop a show? Developed shows, purely speculative, they invested their own money but it was ok to them because they were building content, developing their audience and brand and big vision.
• Was the break down Evan would design the shows and you would do the business side of things? A little bit of both, Gregg helped write some content.
• What was the end goal? Were you planning on creating artistic works of online art or something fun and viral?  They were trying to create something fun viral that they could develop a brand that had value.  They wanted to create something similar to Saturday Night Live but web based, have one uber brand and multiple sub brands that support the main brand.
• Besides having a subscribe button what did you do to feed growth? Persistent “email a friend” form field.   They are very careful when creating an email; they only want something of value included.  Email helps get people to the site and social sites like Facebook, MySpace help virility.  They don’t see much traffic generation by Twitter.
• They created videos just for other companies, 99 to 03, problem with sponsor type work it isn’t scalable however, it paid the bills.
• Mike Jones in a previous interview came in and said it was important to take time and energy to build their own products and build their own brand did you find the same thing true? Absolutely, it is a wonderful thing to be generating capital based on your service business but at some point you want to get out of the service business into something scalable.  You need to turn down jobs and be disciplined in your goals.
• How did the dot com bubble burst affect your business? Crushed us, they had bootstrapped but saw the crash coming (too much money throw around by lavishly funded VC companies) and repositioned into a toy line (Nasty Santa) and Christmas cards.  Went from 13 people to the two of them, times were tough.
• How did you deal with having to let people go after they helped you succeed? It was really tough but to be honest they were all artists that he felt wanted to explore other avenues after having done nothing but JibJab for two years.  Still great friends with all ex-employees.
• What kept you pursuing JibJab? They were passionate and loved the work.  The fixed costs were small and they felt people cared, they had a 100,000+ followers which kept them going.  They felt their was exponential growth opportunities, the bigger your base gets the easier it is to achieve your goals.  Their Black Swan was “This Land”.
• How often did you doubt yourself during the tough times? Hourly, I don’t think that goes away.  Fear is the best damn motivator out there.  Luck favors the well prepared.  All entrepreneurs have the feeling that others are confidant and killing it but everyone is just as worried as you are.  Setting goals help them feel that they were making progress.
• Did you know that when you created “This Land” that it was going to put you on the map? They knew they had something special but didn’t realize how special.  The scope of success was way beyond what they imagined.
• What was the first indication that this was a smash hit? Day one they would get typically 40,000 streams and this time they got 100,000 and Gregg started to worry about server issues.
• What was your first TV appearance? Brian Wilson, Fox News (normal viewing hours) they did an ABC News Bush vs. Gore rap battle at 3am before the Fox appearance but partially feel it didn’t count because of when it aired.
• How did you capitalize on “This Land”? They went back to what worked, exclusive licensing deals.  They also made sure the Brand got out there unrelated to the political content and also went back to merchandise.  When they did their second video, the night before the release the “Today Show” was literally coming in to set up for the interview they came up with the idea of selling two JibJab videos on DVD.  They create a fake mock up of the DVD and created a Yahoo! Store and when the Today Show came in they promoted the product during the interview.  They had no idea how they were going to fulfill the orders but figured they would figure it out.  They ended up with 8,000 orders the first day.
• How did you know how to contact Sundance? The summer before he was at producer’s conference and he met people from Sundance and was offered the opportunity.
• Where did the idea come from to allow people to insert their faces into your work? They knew the licensing business was going away because of YouTube.  So they focused on quality for big brands that want premium content and a network called Joke Box.  They turned down an opportunity to do a feature film to focus on the web and maintain customer base.  This was when they realized they would need capital and did their Series A with Polaris Venture Partners.  They realized the quality standards were not scalable because the time between productions and they had to rethink their business model, which is how they got into eCards and social expression products.
• What are the benefits you see in the greeting card business? When coming up with the idea Gregg was looking for something that would smooth out the spikes between productions.  He researched American Greetings financials (10K) and they broke out online interactive numbers.  He was convinced this would work, Evan had no interest but Gregg convinced him that they could do quality work and redefine the industry.  I’m not going to pay for a video that makes me laugh that’s consumption, I demand free consumption on the web, that’s the way everyone is.  However, if you are giving people content that they can use, that’s got utility that they can use to express themselves in their lives they’ll pay for that.
• How big of a concern is the business part of business for you? They are equally concerned about the creative aspect of the business which allows them to be able to gather great business data points to build a better product.
• What is the end game for JibJab? We will be a major studio.  They are building creative swat teams, they see talent as extremely important, it is more scarce than capital.

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