Razmig Hovaghimian: from failed pizza maker to founder of Viki
Razmig Hovaghimian, CEO and co-founder at Viki.
Razmig Hovaghimian, the co-founder and CEO of Viki who sold his startup to ecommerce giant Rakuten on September last year, has quite a story to tell. (Note: Razmig will be speaking at Startup Asia Singapore this May 7 and 8. There’s still time to get tickets, and until April 30 there’s a 10 percent discount with the EarlyBirdApril code.)
Hovaghimian is ethnically Armenian but was born in Cairo, Egypt. A month after turning 16 he moved to the US – and he did so all by himself. That would prove to be training for his eventual path of becoming a great entrepreneur. Back then, he didn’t know what lay ahead of him except that he wanted to have a good education in the States. To survive in his new homeland, Hovaghimian worked multiple jobs – from being a certified sandwich artist at Subway to working from midnight to 8.00 am at a gas station.
Everyday felt like a new challenge, he says. “If that is not a startup education, I don’t know what is,” he says. “I knew where every Taco Bell in my neighborhood was, and where I’d get the best $0.99 lunches. It’s still hard for me not to stop by a Taco Bell when I see one.”
He didn’t apply to college after high school. Rather, he started his own businesses, such as a night-time pizza delivery service in which he used a bakery’s ovens after closing hours, and exporting used Levi’s jeans to Europe. Both ventures failed.
(See: How a high school dropout became a multi-millionaire entrepreneur)
He was eventually admitted to UC Berkeley as a political economy student, and minored in business administration, which gave him some background in the world of finance and marketing. He first heard about the term “startup” when eBay was doing recruitment at Berkeley.
“I was wondering what a ‘startup’ was – and they were talking about equity – a risk/reward model that was fascinating. I was paying foreign student fees though, and had a lot of help on the way, so I wanted to make sure I can pay it all back. So that led me to management consulting,” said Hovaghimian.
Hovaghimian heard from a friend about a company that was recruiting business analysts, and when he learned how much they would pay out of college, it was mind-boggling for him.
“I applied to that one company and somehow got the job. It was a phenomenal experience, and it challenged me at every level,” Hovaghimian says. “It forces you to really question your value-add to others, but at the same, teaches you that a fresh perspective or even a single executable idea can make a difference.”
A tool for language learning
After spending some time in the world of consulting in the US, Hovaghimian made a move to Japan working as a management consultant at ad agency giant Dentsu. That role gave him an inside view of working at an international corporation.
“That was a little bit like a startup. When I got to Japan, there were three people and by the time I left, there were 50 people. So I got to see how that shaped up and came together,” he reflects.
Hovaghimian headed back to the US to join Stanford Business School and was spending his time building things as a student. While at Stanford, he spent his summer working with the United Nations in South Sudan, living in a tent. When he returned for his second year of graduate school (‘06-‘07), his first ground-up startup was in the non-profit sector. He co-designed and patented Embrace, a premature infant incubator for the developing world that costs only $25. Embrace started as a class project at Stanford, went on to set up shop in India, and is now in 14 countries. Hovaghimian sits on its board.
He also started another class project at Stanford, where he met his co-founders, Changseong Ho, and his wife, Jiwon Moon, who was studying education technology at Harvard. The team was using YouTube videos and its crowdsourced subtitling technology as a tool for language learning.
“We thought users would engage more with subtitle creation for language learning if the video content and quality is more interesting, so we allowed fans to link to YouTube via their APIs,” says Hovaghimian.
Fans started creating channels on Viki (back then it was viikii.net, as the team couldn’t afford viki.com), and it became clear that Asian dramas were becoming very popular among its contributors. Seeing some initial traction, they were pumped up knowing they might be onto something big. Hovaghimian, Ho, and Moon agreed to work on Viki together but it was still considered a part-time project. They had no capital. The solution was to bootstrap. Viki also raised a convertible debt round from Charles River Ventures and some of the founders’ classmates.
(See: How Memebox bootstrapped to become a $1 million revenue company)
In 2007, Hovaghimian – who had graduated a year earlier than Changseong Ho – joined NBC Universal in their strategic planning group while waiting for Viki co-founder Ho to graduate. A year and a half later, he became NBC Universal’s senior VP, working closely with other leaders on their digital and international growth strategy. Meanwhile, the founders were also getting serious about Viki and Hovaghimian was ploughing in savings and credit cards just to keep servers up. Hovaghimian tells Tech in Asia:
“While at NBC Universal, I realized that for the studios to keep growing, they needed to look outside the US more aggressively, and in new ways, but didn’t have the data or risk tolerance to go really global or move fast. I felt there was an opportunity to focus on taking content global through our Viki model, by bringing fans and content partners on one platform.”
“We did not know what markets and what kind of content [would go global], so we started licensing content globally, so we can learn from the data. We started bringing Hollywood content to Southeast Asia, taking Latin America content to the rest of the world, taking Japanese and Chinese content to the US. And we created a little bit of this global content graph. The idea morphed from a language-learning model into a global TV one, but powered by fans. The spine of Viki remains to be the passionate community of volunteer contributors.”
Moved to Singapore for love and success
Hovaghimian moved to Singapore for love (his wife needed to move there for grad school) and also to stay closer to Ho and Moon who were then based in Korea. Hovaghimian and his wife have been taking turns to move for each other since high school.
Growing Viki in Singapore also made sense, as we were closer to Asian content producers and distributors. [The move to Singapore] also became a good competitive advantage actually, quickly hiring the first 10, 15 engineers would be so tough to do in the US. Singapore proved to be a magnet for getting great talent and visas for them, and the government was very supportive. It was also great to stay below the Valley radar and focus on the product.
In 2009, Hovaghimian left his job at NBC Universal to focus full-time on Viki. In the summer of 2010, Viki raised a US$4.3 million series A round from prominent investors that included Greylock Partners (Reid Hoffman), Charles River Ventures, Dave Goldberg, Sheryl Sandberg, Rick Thompson, Joi Ito (who was a Viki board member), and Andreessen Horowitz. At that time it had about four million monthly active users.
Hovaghimian was very thankful that Ito introduced him to Reid Hoffman (co-founder of LinkedIn). “It was very hard to track down Reid or get his attention,” says Hovaghimian.
Ito told Hovaghimian that he would be at Hoffman’s house in the Bay Area on a Sunday, and that if he can fly over from Singapore to meet him briefly, it would be a good chance to pitch to Hoffman. He did so, and they spoke for about an hour. Hovaghimian remembers that Hoffman even knew his LinkedIn ID number. He felt lucky that he had been a LinkedIn early adopter. After that, Hoffman invited Hovaghimian to join a Greylock partner meeting the next day to pitch. Later on the same day, he received a call that Greylock agreed to co-lead the round.
“When Reid and Joi said yes, we got oversubscribed by over $3 million. All of a sudden when you have one critical yes, it can change the game,” says Hovaghimian. “After so many noes, there always seems to be a yes, so it doesn’t matter how many noes you get.”
Prior to its series A round, Hovaghimian also had a one-year-old baby but it didn’t cross his mind that his kid was a factor not to go full-time in Viki.
“We didn’t have exponential growth at first. The numbers were not that indicative that it will become a successful company but we were very passionate about Viki. One, you need to believe that you can take it somewhere, and two, the parachute doesn’t open until you jump, right?” he says.
“Just jump. Worst case you’ll learn so much from it. Having a child also puts sharper focus on how important time is. You have to make every minute count.”
Viki founders in a meeting at their Singapore office.
After the financing round was completed, Ho and Moon moved to Singapore in August 2010. They set up their first office and headquarters in a shophouse at Tras Street and came out of beta in December 2010. Viki continued to grow fast, and in 2011, Hovaghimian and team raised an additional $20 million series B round led by the BBC and SK Planet.
“We had a strong growth trajectory and our original investors were happy to come back in. So that was a sign of confidence for SK Planet and the BBC,” he says.
“We had to give up a bit more equity though, as [SK Planet and the BBC] didn’t have anyone on the ground in Singapore and felt there was higher risk. I was happy to do it, as I felt fighting for board control for Viki was more important for our situation, especially since we were building a market that didn’t exist really. It was important to build [towards] our vision.”
In the summer of 2011, Ho and Moon left Viki and returned to Korea to start a company which Viki invested in. Hovaghimian sits on its board too. Despite Ho and Moon’s departure, Viki continued to grow under the leadership of Hovaghimian.
In early 2013, Singapore’s SingTel and the Cathay Organization invested in Viki via a convertible note while Hovaghimian was preparing for their series C round. But that didn’t happen. In September 2013, the Asia startup scene was rocked when Rakuten announced that it acquired Viki. Hovaghimian explains why he decided to sell:
I wanted to take the opportunity to play the long game. To do that, we can’t be chasing fundraising every 12 months or so, while based outside the Valley. Fundraising can be a huge distraction, especially in the video space and with an unfamiliar idea for investors. I wanted to focus on team building, culture, and product. I felt that with Rakuten, it made the most sense, and the timing was right. We actually had others interested, from funding to exit, but with Rakuten, it was very clear that Miktani-san, the founder of Rakuten, wanted to help us build Viki. He was asking, ‘How can Rakuten help make Viki a bigger success?’
Viki and Rakuten
Six months after the acquisition, Hovaghimian says that nothing has changed in Viki’s Singapore office. If anything, more people are keen to join Viki to help achieve its mission – which is also part of Rakuten’s larger vision.
“We are scaling Viki as the go to destination for global prime time content, agnostic of device or location, and where fans help open up the world for content owners,” says Hovaghimian.
“Like us, Rakuten is very global and together we are building a broader digital play, and we now basically have a massive funnel above us in the Rakuten family. We have Viber [also acquired by Rakuten] with 300 million users for example.”
“Viber could do a lot of things. It definitely makes sense on the ecommerce side, but it’s also a massive and fast growing platform. If there’s a content opportunity in play, that’s a much bigger funnel than Viki is, and that traffic would flow down. [Viber has] 300 million users, we have 30 million users. And there’s all the Rakuten premium content plays, like Wuaki, with let’s say three million users. So we’re adding zeros above us, and that becomes a massive funnel. Think a freemium play up top, an advertising play, and from there we go into transactional or subscription. We’ll see.”
Holding this all together, Hovaghimian explains, is the Rakuten ID login. “One thing we are looking at is to do a single sign-on across the world with Rakuten ID,” says Hovaghimian.
Besides Viki and Viber, Rakuten already has over 200 million people with Rakuten ID. With the ID, Rakuten is able to reward users with points which in return can be exchanged for services and goods on Rakuten. For example, users on Viki can earn credits which can be used to book a hotel in Japan if they were watching a Japanese show from Indonesia.
Hovaghimian doesn’t want to push ecommerce or advertising on Viki’s users. He is determined to keep the Viki experience seamless and frictionless. To Hovaghimian, it’s also important to put its volunteer community front and center, and for the product to pull all users in, rather than pushing the product to them.
“[An integration] that would make sense is optical recognition for example, like a dress or a bag or something you see on the video and we were able to bubble that up from Rakuten ecommerce sites, at the right time, seamlessly,” says Hovaghimian. “We are already exploring ideas like that as we speak,” he says, referring to Visenze’s object recognition technology, a startup that Rakuten invested in a few months ago.
Hovaghimian at the recent New Economy Summit conference organized by JANE.
(See: Why Rakuten acquired Viki, and what it could acquire next)
In December last year, Hovaghimian became a senior executive officer at Rakuten, where he’s the head of the global movie business and also a board observer at Rakuten. “Mikitani-san has given us the opportunity to have a real seat at the table and help shape the overall strategy,” he says.
Hovaghimian’s thoughts on building a great startup are simple. In a good company, you need a good team with a great organically cultivated culture. If he could go back in time, he said he would focus more on the main product and start earlier with data analytics as the driver for growth. He also advises entrepreneurs to “build around a core team of hitters.”
“It’ll be obvious very quickly who they are, regardless of what part of the team they come in at. The lows and highs of a startup can be so damn close to each other and it takes an amazing team to pull it through,” he says. “To build a billion-dollar company, you need to build a billion-dollar team. Team first, and always.”
Hovaghimian declined to comment if the Viki acquisition figure was $200 million. But he did share with me this note, part of an email he wrote to his team from a coffee shop in Tokyo, when news of the acquisition leaked:
Thank you for every ounce of sacrifice, brainpower, passion and even resistance you’ve put into Viki. I am in awe of what we have built. We’ve picked one of the toughest spaces and models (global content, video and a volunteer community) to build. It’s also been messy and not easy. It was simply crazy, and you know we like the craziness. Look around you, every one of you built this rocket ship.
So, here is to our next phase of growth. From Palo Alto, to our first chair at Hackerspace near Arab Street, to our shop-house on Tras, to our San Francisco and Korea offices, to where we are now — you are the founding team, and you did it.
I’ll leave you with a little drawing I’ve had in my head from my days in grad school. Had this on my Singapore desk for over a year now. We’re at the top right. Non consensus (it’s too niche, it’s too international, we don’t get it, it’s too expensive, it can’t be done, etc.) Those that took the chance on us and bought into our dream were right – that’s disruptive. Saw it on my desk again in Singapore last week on Saturday and it struck me that we are close. Here is to our moment in history! Now… go go go!!
“We’re at the top right. It’s too niche, it’s too international, we don’t get it, it’s too expensive, it can’t be done, etc,” says Hovaghimian.