Yourekas Business Model

So why do I think Yourekas has an opportunity to outperform its competitors? I think that the current video-making websites all have their flaws, and that the best methods of creating user-generated videos in use today can be improved upon. Basically, Yourekas will compete with competitors using two types of business models. One consists of big companies that use search engine algorithms to find popular topics. Then, they project a value for the ad revenue from a video on that topic, and pay filmmakers to make a video about the topic for a sum of money less than the expected value. The payment is usually something like $50, and the filmmakers can make as many films as they like. The other business model is to get big companies to post a reward of several thousand dollars for a contest in which anyone can submit a video. The company then picks their favorite, and gives the money to the winner after the website takes a cut of it.

Like I said, both have their flaws. The first model fails to create enough incentive to make quality videos. They are often full of superficial content, lack important content and are far from entertaining. This method fails to utilize one of the Internet’s most valuable characteristics: the ability to make a video go viral. Also, Google recently announced that it is changing its search algorithm to punish so-called “content farms” that simply publish as much content as possible without much regard for quality. The second model does save companies money by getting amateurs or small studios to do what big, professional studios did before. However, they still rely on an individual or team with limited capabilities and resources. Also, some of them have all-or-nothing payouts in which a contestant can submit a remarkable video, and not receive a dime for it.

The Yourekas model is supposed to improve on these limitations. First, users will submit yourekas, which are original ideas about how to use products in ways most people are not familiar with. These will be screened by me, but only to remove submissions that don’t have enough content. Then, the person who submitted the youreka will be responsible for make contests need to create an entertaining how-to video of the youreka. These contests will be for things like music, illustrations, graphics, and acting. Users will submit works to be considered. The user running the contests will select a few favorites, and then let put them up for a vote by the public. Think of this stage like American Idol where judges pick the contestants who go to Hollywood, and then let the audience vote. The user running the contest will then have the choice to go with the crowd’s selection or pick his own. Think of this stage like the lifeline in Who Wants to be a Millionaire, in which the contestant can pick the choice the crowd thinks is the answer or go with his gut feeling. Finally, the winners of each contest collaborate to make the video and share the revenue, with Yourekas taking a cut.

I did not come up with this method out of the blue. It is the result of several iterations and makes use of a concept I learned while getting my MBA at Rider. It is a derivative of the method for coming up with solutions to problems called nominal group technique. Basically, employees are told of a problem before a meeting and asked to come up with solutions to present at the meeting. After all the potential solutions are presented, all of the employees discuss the strengths and weaknesses of each idea, and then rank them. Nominal group technique has been shown to work better than brainstorming in coming up with effective solutions. I learned about it in both of my Organizational Behavior classes, and had the chance to discuss how it relates to Yourekas with one professor, Dr. Promislo. We discussed how crowdsourcing can increase the creativity of the films, but how each project still needs a leader to guide the process.

There are a few reasons why I like the Yourekas method. One, artists can specialize in what they do best and only focus on that one task. In the other methods, an artist in a small team may have to fill gaps in the team’s abilities and work on something that their heart is not into. Two, artists don’t have to create something entirely new for each contest. They can submit something from their portfolio, and then explain how something like it can be used for that particular video. This means that they don’t have to risk putting out a lot of effort without winning anything. They only have to work on the project once they know they have won the contest. This reduces their risk compared to other methods. Three, once they have won the contest, the artists can work on the project as much or as little as they want because there is no set reward. The artists earn a share of the ad revenue, meaning that Yourekas is more of a meritocracy in which the money users make should correlate more with their effort than it does at other sites. Four, this method creates virtual teams, unlike other sites that mostly rely on one individual or studio to make the video. This should lead to more creativity and better quality videos because the talent pool is bigger and more diverse.

First post about Yourekas, Inc

I had the original, basic idea of Yourekas over two years ago. I debated with my self whether it could be profitable or not so I decided to investigate. I read several books, including Wikinomics, Groundswell, E-preneur, The 4-Hour Workweek, and How to Start an E-Commerce Business in a Week, and several articles online. Some insights from these sources, and my growing frustration with my current job as a chemist lead me to take a few low cost steps to get the ball rolling. On 1/16/09 I bought the yourekas.com domain name for about $20. At first, I actually tried to buy youreka.com (without the “s”), but some blokes in England owned it. I offered them $200, and they still wouldn’t sell. This first step ended up being indicative of almost everyone other step I’ve taken since; almost every one of my first choices ultimately were not possible or had a major disadvantage, and diligence or creativity lead me to a better choice. At the time of this writing, there is no website at youreka.com.

I proceeded to start a Ning account – at the time it was free. It had all of the social networking features I needed, and an API that developers could use to create what I needed that it didn’t have. My initial search for developers was fruitless. They were either too expensive, or didn’t have the required skills. Some stopped responding to my emails after I went into more detail about what I wanted. Finally, Ning launched a website for Ning account creators to meet third party developers with Ning experience. I noticed that one company, Sympho Networks, was networking much more than any of the other developers and they seemed to know what they were doing. I told them my idea and they gave me a reasonable quote. I started to think more critically about what I needed so I could have them develop all of the basic functionality at once.

And then I got laid off.

Losing my job made it much harder to justify spending money on a high-risk project. In the summer of 2010, though, I decided to do an independent study at Rider University to determine once and for all if it was still worth it to invest in Yourekas. In writing the business plan, I found that it was. Several competitors were doing something similar things, but I felt they were still missing the mark. I found that a famous blogger and software engineer, Guy Kawasaki, had done an experiment to see how cheaply he could make a popular, profitable website (http://blog.guykawasaki.com/2007/06/by_the_numbers_.html#axzz1CYVCqERx). His start up costs were about $12,000, which is what I was willing to spend, and the site was bought by a larger company. I also read many articles about online collaboration, and felt that Yourekas was the next logical step in even though nothing quite like it had been created.

In July 2010, I paid Ning about $500 for a Ning Pro account. In August, I incorporated Yourekas, Inc. for $500, opened a bank account for the company, and told Sympho I’d be moving forward with the project. The delay gave me the opportunity to ask them more questions, which helped me gain more trust in them. This was important since they are located in the Philippines, and I will be sending the greatest portion of the project’s startup expenses to people I could never meet in person. In November, I sent them my first payment of $2600. They are currently still working on the first part of the project, and they send me updates regularly. It’s important to point out that I will be paying them much more that estimated in the business plan. I was not able to use the Box.net application for free like I thought I would, so they will be building a custom application in its place.

Recently, I have been doing what I can to get things in order for when the site is done. I read in Entrepreneur Magazine about a law firm’s promotional offer of free legal services to tech startups. They determined I was a good fit, and agreed to write my terms of service, as well as provide a few other services. They also advised me that I’d be better offer converting the S-Corp to a Delaware C-Corp to make it easier for venture capitalists to buy stock. I estimate I will save about $3000 by using their “Tech Law Project.” I do not have to use their services in the future, but I do plan to since they have helped me out so much. The law firm mentioned in the business plan will no longer be used. Also, I set up a Google Analytics account and have been creating custom reports to easily enter information into a spreadsheet of metrics I am creating. The idea is to combine data from financial worksheets, web analytics and my marketing funnel to find which media provide the highest advertising return, which parts of the site need the most improvement, and what features users like the best and lead to the most sales. I won’t be able to complete the custom reports and the metrics sheet until the website is complete.

Most recently, I received a quote from Rue Insurance, and it was much higher than the estimated insurance expense in my business plan of $200/year. The Rue quote had general liability at $500, workers compensation at $369, and NetProtect Essential, the insurance that would protect the actual site, at about $2000. Currently, I don’t think I will really need general liability because all of my equipment is my personal equipment in my home, and I don’t plan on hiring employees so I won’t pay workers compensation. I will pay the $2000 to protect the site, especially since Guy Kawasaki’s site was hacked in the first week (his site was instantly popular because of his fame and probably presented quite an entertaining challenge to hackers – a problem I don’t anticipate having immediately).

I have also begun to work on the tutorial video that will be placed on every page of the website to show visitors how to use the site, and will be used as an advertisement on Youtube. This video will go through an example of a youreka, and I think my idea for the tutorial is really interesting – interesting enough that when people see the video they will share it with friends. Basically, I plan to make a video of how a motion sensor, something called Airport Express, and software can be used to turn on music from your computer when you walk in a room. I have ordered all of the parts. When they come I will see if I can get it all to work. The next step will be sending a script to Indie Frame Films so they can give me a quote and then start to make it. This project must also wait until the site is built before it can be completed because it will show how the site is used.

So far I have gotten everything that I want within my budget, but it has taken much longer than expected. I am anxiously awaiting the completion of the site so I can see if the first version that Sympho comes up with does everything I need it to do. I am also worried that my tutorial idea will not work. It is by far the best idea I’ve had for a youreka yet. It is something that knowledgeable people at Best Buy and the Apple Store couldn’t figure out how to do yet has widespread appeal, sets the standard for quality on the site, and is simple enough that people will immediately see what the site is all about and get really excited about it. I have minor concerns about the design of the site’s graphics, and the fact that the site will have to attract various kinds of artists to be truly collaborative. Sympho Networks gave me a free site design because the project is so big. I’m not sure if they are done the design, but right now it is not what I’m looking for. As far as advertising goes, if I spend a good deal of money and it doesn’t attract enough users, I could be in real trouble. I will start with as much free advertising as possible, then go to Youtube, and see where it takes me. Maybe the data from Google Analytics will show where some visitors are coming from and present new marketing opportunities.