What Went Wrong With Joost?

71 thoughts on “What Went Wrong With Joost?”

  1. The problem with Niklas and Janus is that the success of Kazaa made them think that P2P is more important than it is. P2P was necessary for Kazaa but only for legal reasons. We are now learning that non-P2P VOIP is actually a lot better. And non-P2P Hulu blew Joost out of the water.

    1. Good point. Who needs P2P when YouTube is willing to host videos for free. It’s tough for any business when your competition is willing to throw away $100-500 million per year. Of course, it remains to be seen whether YouTube has a viable business, or whether they simply succeed in destroying other businesses. I think that’s a general question we will soon see answered for the www in general, as the easy money investment climate dries up.

    2. Dead right. Back when Joost started the consensus was that video needed P2P because of the huge bandwidth requirements (I remember a piece of analysis round that time suggesting it cost $1/GB all-in, and (pre-H264) maybe 1Mb/s for reasonable quality so you needed $0.25/hr of revenue just to cover serving and bandwidth- that’s a marginal case. But H264 and Moores law have eroded that difference so now I think everyone is looking at server distribution for video (anyone know Google’s cost/hr on Youtube?). That undermines the USP for Joost and means that no matter how well they executed the P2P model left them at a disadvantage in the real core requirement – to win the content deals. Furthermore, the only market with the scale to work (given the content-owners’ requirement to territory licensing) was always going to be the US, so the international base was maybe more of a burden than a benefit?

    1. Alex,

      Boxee is doing a couple of things right: they are open source so the project will continue to go on, with or without the company. Secondly, they are encouraging others to jump on their platform and develop Boxee extensions. That is very crucial for them to get real traction. Whether they will be ultimately successful – remains to be seen.

      1. That’s an interesting point to hear (I’m an Open Source entrepreneur). Intuitively, it doesn’t seem to me that it would really do Boxee any good if the project goes on after the company is gone.

        But maybe you’re saying that a project with known longevity give customers and partners the security to invest their time, energy and money into it– paradoxically making the Open Source company thrive?

        My guess is that Open Source isn’t magic pixie dust to make any company succeed (or fail!), but it might give a business an edge in a market with some 800-lb. gorillas in it.

    1. I love spam! yum! David, can you please share with us what you have learned? And could you please mention the name of your start up a half dozen times.

    1. Agreed, the good content they had was old and/or off-the-air shows. I was really excited to get in the beta when they first launched, but found myself using the client less and less after the first month because there just wasn’t much worth watching. The rest of this article is pretty spot on too.

      I’m also surprised they didn’t push their music advantage. At the time they had a lot of music videos and features, at a time when YouTube didn’t yet offer music videos and there were very few other alternatives.

      The whole situation is disappointing because there was so much promise and it was very innovative when it launched. The P2P technology in the client was supposed to offer a way for the video to be faster loading and much higher quality too.

    2. I second this, lack of GOOD content. I’d say a close 2nd reason, at least for me, is that the content they had was impossible to find. I counted on the emailed newsletter to tell me what they had available, because I could never find anything on their site.

      Hulu, OTOH, makes it very easy to find shows and movies.

      Joost was like trying to find a text book in a really messy teenagers’ room. After a while, you give up.

  2. You either need content or distribution. Apple has the distribution through devices, Hulu the content. There is no technology play for video. Joost was a dumb idea to begin with, and has remained so throughout.

    Unless you control a chokepoint, you are going to lose out to those that do.

  3. Nice shopping list but only one is really true and Christian nails it – content. Lots of people downloaded the client and almost none stayed because the content wasn’t compelling enough – me included. There isn’t a big market for fourth-rate TV on the internet. The rest is a footnote.

  4. Om,
    You did a great job saying what the prob was… I think you missed a big one slightly touched on it but its gotta be said. The CEO… hiring a big corp guy to run a little startup? yikes HUGE mistake… that guy doesn’t know nothin about starting something in his garage getting 10 engineers to follow him into the darkness on no pay and hitting the funding light. Mike Volpi for ceo i remember reading that thinking “bye bye joost” they signed their death warrent with hiring bad leadership like that. Mike needs to stay big corp. cisco != startup

    1. Hardyhar

      I think while you may have a point, I followed the company long enough to know that *wasn’t* really the problem and things were pretty messed up even before Volpi got there. I think in the end it is easy to point fingers at one guy — big salary and big brand name does that to you — but ultimately it was a failure of the collective including the investors.

      1. Om,

        Ceo does get a lot of heat but that’s his job. There are many stories like this in the valley of mr big corp to thinking of doing a career change at 40 something to a startup. But if you aren’t a startup guy they usually fail.

        There are cases of good startup ceo’s taking the helm during extremely bad situations. A favorite story of mine was one of the first video advertising companies. They had 100 employees had burned through $20M all kinds of products making little to no money, the vp of engineer hardly showing up for work.

        The ceo who was brought in there on day 1 realized the major issues. Day 2 laid off 85% of the staff (unfortunate), nixed 90% of the products and focused the core business on 1 thing, and turned the company to profitable in 2 years selling it for north of $100M… you see that is a good CEO a good startup CEO. So if that is a good startup ceo and what a good startup ceo can do then what did Mike Volpi do? was he a good startup CEO? my vote is NO he let down his people and the investors and he should know that the guts and risk taking involved in being a good startup CEO is heavy and takes a tad bit more than being a big wig at cisco… but maybe you know that? you took money and are a founder…?

    2. I agree.. Majority of promising start-ups which I knew failed because of bad hiring strategy for leadership roles. In most cases VCs are pressuring management to hires executives from large companies. They have a perception that the founding team or new hires from other small/mid size companies does not have enough experience to get their company to profitable exit – M&A or IPO. Also I notice that majority of partners at VC firms career tracks have been to work for large companies and most of never worked for successful start-ups. I think real successful enterpreneaurs are extremely helpful for start-ups, but they prefer to become angel investors and don’t prefer to work! as a partner at a VC firm.

      1. I was curious to check out the management team at Joost and looked them up at http://www.joost.com/about/executives/. My first impressions are

        – Where did founders go (not a good sign for a start-up) ?
        – CEO not suitable for leading a start-up (team of 100) and next generation technology development because ‘For the 13 years he was at Cisco, Mike was instrumental in the creation of the company’s acquisition and investment strategies, as Cisco acquired more than 70 companies during his tenure.’
        – Non of other management have successful start-up experience.
        – Everyones have tittles to include SVP, VP, Chief. Tittles at start-ups should be limited to Senior Manager/ Director, because most of them don’t even have handful of direct reports.

        I feel sorry for investors and employees at Joost.

  5. I agree with Christian. I was part of the Joost Beta and was very keen on it. Tried it out in the early stages but there was just no content! I am sure you only have a few opportunities to grab new viewers. I did give Joost a couple of goes but saw no improvemtn. Agree with the other comment ‘content is king!’

  6. I’m not sure the content issue is one of quality. YouTube built a huge audience because it had volume, not quality. The problems I had with Joost were simple usability issues. I never found a compelling reason to open up the client after the 2nd or 3rd disappointment.

    Flash isn’t better because it’s better. Flash is better because it’s in your browser.

    1. Well put.

      Before Hulu laid the finals nails on the joost coffin. Youtube had killed it. Why? because joost needed a client and it was not intuitive to share stuff and view content from anywhere.

      (pre acquisition) Youtube was google friendly, had search (not that great but atleast functional) and pretty good related content. This along with amazing sharing options (hey you could just email / im / fb / embed ) the link ensured that youtube was everywhere. Hulu added great content to the same basic formula.

      Interestingly when users pressed youtube to improve video quality, the founders always said that the wide availability of content i.e. reach (thanks to flash) was more important than quality.
      Joost had quality not reach. Ultimately that killed it. By the time joost went browser based people had forgotten it because every tv provider had flash video on their site anyway.

  7. Joost also made a mistake when it looked at the success of Youtube and the young audiences.

    There are two different types of content: Those that demand high attention and those that demand low attention.

    Many brief Youtube clips are high-attention, but most longer shows, for example much of MTV’s daily content for example is low attention, soundtrack-driven and can run in the background.
    Many kids have TVs in addition to computers. Low attention content runs in the background on the televisions.

    Teenagers nowadays multi-task, they watch high-attention content intensely (e.g. also fullscreen) – with much of Hulu content being high-attention series, but most of the licensed content on Joost was low-attention content and as such not interesting enough to run on a full-screen application.

    1. Julian this is a perceptive comment. It’s very difficult to get the full attention of anyone on one screen (with the possible exception of mobile). Someone should reinvent Joost as a low-attention video stream that doesn’t consume too many resources at the client or server side — P2P? — think linear ad-supported drone TV. We could call it TVitter.

  8. I agree with some of the previous comments.

    The platform is important when you are a platform provider (telephony is an example).

    The platform for the distribution of online video is actually a commodity.

    What is valuable is the ability to attract high quality content and a lot of viewers. How successful would the iPod be, if there was no content on iTunes? Answer: not at all.

    Joost never had any meaningful content (at least in Europe). If there is nothing to watch, why should people care?

    1. If you’re talking about content availability in the iTunes Store, I don’t think the ipod is the best example for comparison. Even without the iTunes store, the iPod solved a lot of music portability problems and probably would have been successful as a device alone. There are plenty of ways to get music onto an iPod without going through the iTunes Store. That said, the store has been a great addition to Apple’s business and a great strategic play.

      Joost just didn’t solve a problem. It wasn’t necessary. I can remember all the execs at my company getting caught up in the Joost hype and saying “We need to do what Joost is doing!” My response was always “You have the Joost client installed, right? When’s the last time you used it?”

  9. Excellent analysis. Content is king, and not having content has been Joost’s biggest problem. One would be naive to assume that Joost didn’t (or still doesn’t) realize this. What would probably have held them back from solving this? The founder pedigree should have helped rope in content. The multi-country setup should have helped them sign up for premium content in any one of those countries. But that didn’t happen, and for reasons well elucidated by you.
    A couple of other remarks
    * Joost missed the IP/patent trawl opportunity. IP hatred probably runs deep in the Joost family, but in all fairness, startups are entitled to protection and IP patenting offers exactly that. Joost could have bagged a tonne of patents, thus creating a credible threshold for competition to enter.
    * Joost could still explore new/emerging markets and potential tie-ups with content kings there. If you can’t be a facebook, don’t despair – try if you can become orkut.

  10. Joost was hamstrung by its client and later on it attempted to branch out onto other platforms like DivX Connect the NEUROS and just a few Weeks ago the PS3 they should have got on platforms like the Wii and Wiiware 2 years ago but they didnt and now they are gone .

    They might survive in the White label market unless they continue to develop solutions for alternative platforms like gaming consoles .Fujisoft in Japan has done this and they have a Flaghship product with Everybodys Theatre on Wiiware (also low development costs) and they are a white label technology provider

    1. Exactly. Joost’s failure is a lot simpler than Om Malik wants to make it (in a cringe-making attempt to make himself look smart). Joost didn’t have compelling content. Every other problem would have been forgiven if there had been something worth watching.

  11. Om, good analysis. Wonder if you left out one big thing – the role of Volpi. He came in when Joost was on top, had just raised all that money and way before Hulu launched. I’m an exec recruiter in the valley, and had big questions when I saw the volpi choice (big slow corp tech guy for Joost?), and would like to know more about inside story on how that actually played out…what was his approach? I’m sure you don’t want to piss off a guy like Volpi, but its got to be a huge part of the story.

    1. Ravi

      I answered your question about in response to another question.

      Whether he was right for Joost or not…. you make your call, I will make mine.

      I have known Volpi for a long time, and I can tell you — he is no slow corp tech guy. I think he is a solid executive who was brought into lead what was being perceived as “the next big thing.” By the time he got there, the company had been besieged by technical problems even then, not to mention other issues.

      On the issue of pissing him off etc… trust me if there is one thing I don’t care about: pissing people off.

      THanks for the comments

      1. Om, great post. Think Ravi has a point though. Don’t know Volpi but sure that he is a ‘solid exec’ given his post at Cisco and will go on to do great things. The question is – was he the right choice for a startup? I have seen this too many times…startup has momentum (and in this case money and runway) but is messy (more normal than not), pedigreed guy from large corp with name comes in and doesn’t realize he’s now playing speed chess and often relies on the wrong set of instincts. Find it difficult to believe that with the assets that Joost did have at the time a perhaps more hardened entrepreneur could not have created some value from it.

        Common mistake and important lesson.

        Thank you again for a great post.

  12. Guys you sound like broken records… content isn’t king. Cause if content was king then yahoo > google

    doesn’t anyone learn from history?

    you fools will keep chiming that then someone will get video right and you’ll be saying OMG (insert new market name here) is the best thing since sliced bread. Just like what you said about search when google started to get traction cause before google “content was king” or maybe you kiddies are too young to remember that?

    1. Hardyhar

      While I agree with you in principle, I think video might be a different story, mostly because we have been trained to think in terms of watching produced content and essentially gravitate towards the television/movie/live sports type of content churned out by hollywood. It is just a special case.

      I think the failure of many web video-related production houses points to the long gulf that exists between the “produced video” and “casual video content.”

      Hulu’s success is a good example of that. I for one totally misread their value proposition and their “content advantage.”

      But going back to your comment, it is great to be a platform that can leverage other people’s content without really spending much on it. Aka Google. Sigh… now if we all could be like that 😉

      1. Om,

        in the next month my pr guy will be contacting you guys… he has connects to you. You’re gonna see something that’s gonna make you think “i think these guys got something here”. It’s gonna remind you of the first time you used google and thought “huh this just works I’m finding what I want” and it has nothing to do with keyword search.

        It isn’t the content value prop, it isn’t keyword search that will win this video market it’s something else…

        When you read the bio of the insane 20 something founder with a CS background heavy enough for him to chill with Ph.D’s and a startup background that has him hanging with the valely’s top firms… that’s me. We’ll have to get a drink sometime after we own this new market. Mohito’s at Nola’s? 🙂

        Have a good one and rock steady bro!

  13. Good reading, with plenty of noteworthy tips for start-ups.

    My two cents, for what it’s worth, is something that’s always bothered me- the name. “Joost” just doesn’t do it for me- and it rolls out to the brand and marketing, most of which has ignored me as a potential customer. I use Skype daily, Facebook, not Twitter, but most ‘popular’ applications, and even though I kept making a note to check out Joost, I kept forgetting about it…

    I loved the idea of Joost when it was pitched at an IT conference in Johannesburg a while ago, and even since then, I heard almost nothing.

    I would have added one more thing to the to-do list:

    Build the brand. Better name, more exposure. Skype, which most of my friends use, is promoted largely by word-of-mouth, in my experience anyway. So was Kazaa? Surely Joost should’ve spread the same way… perhaps in addition to all the reasons above, it just wasn’t catchy by name, or brand appeal either.

    Advertising through any means neccessary (insert content/investment partners here) would have increased interest, even if only temporarily, justifying placement of better content, in order to attract better advertising, thereby generating revenue…

  14. Controlling the means of distribution + quality content + delivery mechanism with viral control are key as they always are. When the fundamentals are in place, management gets a whole lot smarter.

    Your analysis about Joost not being flexible is a major part of your argument, but it’s really very hard for companies to shift their business or platform models mid-stream. There’s a tendency to doubt the effectiveness of competitors, in this case Hulu, which, after all, only really became a force to reckon with in the last 6-9 months.

    Without controlling compelling content, Joost was always going to lose out to Hulu. Big media’s interest in Joost was a defensive investment. In Hulu, they found an effective channel that they actually owned.

    And then there’s the question of how you earn money from the operation. After all, no matter how innovative an approach, if it can’t make money – it must fail.

    Very thought provoking analysis.

    Thanks – Simon

  15. as one of the early beta testers i can say

    content, content and content….
    i missed the content and also the speed. i had a virgin media contract in the UK with 2mb but there were always bumps and i could not stream without problems

  16. Sad but not surprised. We had a distribution deal very early on with Joost for our content, but the bandwidth requirements for their service, even now, exceeded what was feasible in an asymmetric world. They would have stood a far better chance if we have fibre to the home.

  17. I agree the lack of content was important and I’ll add that it is easier to effective browse on HULU than it
    was on Joost. Nor did Joost seem to bring in much more content.

    proof that the big boys are just boys………………………..Trig

  18. Along with all the excellent comments above, allow me to add the following:

    Joost was possibly the most hyped start-up I can remember. I was going to “change everything”.
    I, and probably a million other internet early adopters, didn’t get an invite. It was only for important internet people.
    By the time the service went live, I was already an enemy, and I’m sure I wasn’t alone.

    1. Its what you do when your consumer facing company fails but has some intellectual property, some servers and a handful of MBAs and hire your services out to other companies who cant afford to buy you .

    1. Streaming costs are sufficiently low now that P2P hardly helps. On the other hand, the technological complications of running a stable P2P platform are very substantial. No one starting out today would really consider P2P for this kind of service.

  19. Agree with Om: stick a fork in it, Joost is done.

    While it’s taken Joost much longer to make this supposed strategy shift from consumer to business, they share a similar history to my company, SesameVault. Like Joost, we started out in 2005 believing that client-side software that enabled computers, video game consoles, and other devices to function as media centers was going to be a huge opportunity. However, it quickly became apparent to us that capturing this opportunity was going to require us to do a whole lot more than simply develop some cool software. In addition to developing a server-side platform (later to become SesameVault) to store, manage, and stream content to the devices that were running our software, we were also going to have to go out there and secure licensing deals from the content owners.

    So, fast forward to July 1, 2009: Joost announces they are totally ditching consumer to focus on business services. All things being equal this seems like a good shift for Joost: business-focused web video services is a high-growth market, albeit an increasingly crowded and competitive one. However, all things are never equal, especially when it comes to Internet startups. Having spent $45M on the development of consumer software and ad-supported services, and replaced the high-profile CEO with the SVP of Engineering, this looks like a last ditch effort to mitigate an otherwise colossal failure.

    My complete take on the Joost wind-down and the parallels with our company can be found on our blog: http://sesamevault.com/blog/#post-621

  20. “simple, easy-to-use interface”

    Hulu won because of this statement.
    If you want general users to mass, it needs to be easy to work. Hulu is. Joost wasn’t.

  21. All good points, but the real issue with Joost was content. Joost went to the media guys and were arrogant and didn’t udnerstand what they needed. it would up without the deals it needed for premium content. The thing we’ve all learned is that premium content is the only place to get revenue and profits in the online video space. Without content they didn’t get users or revenue.

    Look at Google and YouTube. They’ve gone back and are cutting deals for premium content because that is the only way to make money. Look at Hulu. ALl premium content and they get revenue.

    To paraphrase a campiagn slogan: it is all about the content stupid!

  22. Ah, hindsight.

    For those of us old enough to remember, it’s interesting going back to 2007 and the general tone/feel that the trade-blogs (such as this one) were projecting on HULU and JOOST.

    Let’s face it, there was that geeky-tech-newmedia thing going for JOOST. Everyone was enamored with them, even if they were having fairly poor User Experiences (even cutting them slack for their initial lack of Content, that was claimed to have been “fixed” within months)…

    But, HULU, it was the ugly stepchild of “oldteevee” and people were not really very kind to it (the name was the first bit of mockery); there were all sorts of reservations expressed and not much fanfare (except, well, it was watchable compared to everything else; but, it just didn’t have that tech/geek thing going for it)…

    It really felt like people wanted JOOST to succeed and HULU to fail. Really, in your heart of hearts, wasn’t that the feeling here (and most tech/media blog trades)?

  23. I would say it’s obvious. It has already happened with Hannah Montana. When a company like Disney has to steal through a boy band to over a pay an excutive producer Millions of dollars for a show that teachs bad cultural values, even by American Standards. Then it’s a problem, also I hate the fact they did the same thing as Joost with their stocks last year too. Hey, it’s just what BSB told me.

  24. Guys –
    1) Content: Hulu had it by virtue of its pedigree to start, and its product and technology superiority to sustain. Joost never got it.
    2) Leadership: Jason Kilar, CEO of Hulu, like Mike Volpi, is also a big-company guy (Amazon), though he helped launch and grow businesses at AMZN for 10 years. He’s as solid as they come, and had enough experience in running tech projects from their inception and bringing them to consumers, not enterprises. Volpi was actually the ‘safe’ choice, since he is a deal maker. Joost knew that they would need to get content deals done, but they just couldn’t get them done in time. Kilar, with Amazon training knows how to bring products to consumers and determine what is working and what is not. He ran worldwide platforms for Amazon. If a mouse cursor moves on their property at Amazon, they know it and can figure out what you will do next!
    3) Viral features: That’s a load of crap for this. Hulu is NOT successful because of its viral success. YouTube is POPULAR (though not making much money) from its viral, social nature. Buzzword whoring.
    4) SEO: More buzzword whoring. Google, I bet, is not a big driver of traffic here. There are going to be enough links in, no matter what. It is true, though, that Joost made it hardER for allowing a ton of sites to link directly to their content.

    The ironic part is Volpi is probably better suited for doing white-label sales now. Networks are starting to deliver their own destination properties and getting in now is going to be critical. However, Brightcove is right in there and others have squandered a lot of cash. Looks like Joost is in the downward spiral now…

  25. Good piece. It’s not just the content but how you deal with the people providing it. Joost lacked humility, a vital quality. It’s debatable whether the linear TV business is in decay – viewing figures suggest otherwise, the ad sales market implies certainly. But you don’t turn something that powerful on its head by marching into the offices of (still) big power players in the media and entertainment industry and giving a lame do or die presentation.

    Joost failed primarily for being a vanity business. Its founders should’ve (and do) know better. Shame they disconnected from their brains when they got issued with AmEx Centurions.

  26. I checked out joost when I scored an invite code, but the software was unresponsive and slowed down my comp. So I gave up. Seemed to create new friction rather than to solve existing friction.

  27. I was on the beta from Venice on… and for me the number one problem was the UI. It was horrible and despite numerous complaints, they never fixed it good enough and fast enough. For eg. if you scrolled through your channels it looped! FAIL: people like to know when lists start and stop, not go on a hamster wheel of seemingly endless options. It’s a great study in how to NOT build a UI. It assumed way too much from the user. Joost took me five minutes to figure out the UI. Hulu took me about :10 That is why it failed IMHO. Plus of course there was really no content that came close to what Hulu or Netflix on demand offers.

  28. oo yes tahnk The company took too long to realize that the client-based strategy was going to lose out to browser-based video services. Its legacy of building clients became its Achilles’ heel

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