In Mountain View (CA), we meet co-founder and CEO of Peel, Thiru Arunachalam. Thiru talks about his story how he came up with the idea and founded Peel, how the current business model works, as well as he provides some advice for young entrepreneurs.

INTRODUCTION

Martin: Hi! Today we are in Mountain View with Peel. Thiru, hi.

Thiru: Nice to see you.

Martin: What do you do?

Thiru: Well, I am one of the co-founders of Peel and we’ll talk about Peel itself in a second. But what do I do is I wake up and live my dream every single day. This is my dream and I say that to every employees who comes in and say hey how’s he doing, how’s your day and I’ll be like I’m living my dream.

Martin: Awesome. Tell me a little bit about how you’ve started this company.

Thiru:  Yeah,  I think there’s a commonality in a lot of people starting up companies today. While that specific idea that they work on eventually  catches on, gets traction and scales, but more importantly this is a much more human drive that you’re trying to do something different, that you’re trying to prove something either to yourself or to someone else because nobody else cares about what you’re trying to prove. But I think there is a completely different internal drive that forces you.

I used to work at Apple for ten years and I remember going to the cafeteria at 12:20 and seeing Steve Jobs come in almost every day and I was so inspired to see him. But then I asked myself: “Why not me?”, “Why not go out and do something?” And you know I got together with co-founder Bala and we tried various different ideas to be honest and this is what… Finally, we both loved entertainment and we both went to the same film school and we—

Martin: After your time at Apple?

Thiru: After my time at Apple, Bala and I both went to film school and we loved media and entertainment, and making people happy, and TV in a living room space, and mobile phones sport was just about to take off at that time. So we said well, why don’t we try to do something and build something for ourselves and I’m fortunate to see that 128 million people now continue to use that product. So that was the initial part of the journey.

Martin: How much failured ideas did it take to build it?

Thiru: Oh my God, oh my God, yeah… We did crazy stuff, like we were going to source an mp3 alarm clock from Alibaba, and actually Alibaba is an investors right now, and sell it in the USA. I remember Bala having an idea of electric cars are going to become a huge hit, so every parking lot – how do we make the electric car just go and automatically just park and charge itself. Or why do I have to get soap separately and then wash it like this. Is there a way to make it simpler.

Maybe ten different ideas, but truly the time spent was probably on three ideas. We try to do something in the product placement, advertisement space, but finally we found out that it is very hard to build a consumer business, but once you’ve built it the height you get is unbelievable. Being able to touch 128 million people, there is nothing compared to that.

Martin:  When you started, did you raise funding immediately, or did you first try the bootstrap to show some traction?

Thiru: Fortunately, we had a friend at that time who’s now on the board of the company and he was about to become a venture capitalists. So fortunately, very early on we were able to raise very little money, maybe five thousand dollars, ten thousand dollars. Fortunately, we always focus… Because I’m a firm believer that if you’re going to build high growth business you have to raise capital. You can bootstrap and get to a certain point. But unless you get that kind of a hockey stick growth, you’re not going to be able to build a really high growth start up. So fortunately, we’ve been able to raise money from day one actually.

Martin: Great.

BUSINESS MODEL

Martin: Let’s talk about the business model of your company.

Thiru: Sure.

Martin: Can you please elaborate on your customer segments?

Thiru: When we talk about customer, the first set of folks that are super crucial to the ecosystem is our community of users. They use our apps, day in, day out to control everything in their  living room and they find the TV shows and tune into the TV show. For example, there is a very famous TV show called Conan O’Brien who gets about 800,000 viewers every night and we can increase his rating by 15% with a scale that we have. So we go to the TV studios and we tell them, “Why do you put out an Ad on a billboard or on freeway saying new show premiering this fall or this summer. Who cares, because its not being targeted it’s not measurable, it’s not accountable”. So we tell them, “You advertised on the remote control platform on smartphones, we will actually be able to report back how many people tuned into the show and stayed for five minutes”. In fact, recently Forbes magazine published an article where we actually predicted how many of the TV shows, how many of the new fall TV shows that just recently premiered will stay on here or not depending on the pilot. You know, fifteen minutes into the show, how many people are continuing to stay with the show or switching the channel. That is a huge indication of whether that shows will be successful or not. So the community of users is an important part and we distribute our application through the OEM such as Samsung, HTC, LG and some of these folks. But ultimately, our customers – the folks that we actually offer our advertisement business model are the agencies and the studios that promote their TV shows. They are our customers and that’s our primary business model at this pointing time.

Martin: The Interesting thing is, currently if you say the community which is basically the mobile phone users mainly—

Thiru: Yes

Martin: —and then you have the advertisers. Totally understood. And then you have maybe the content producers. Because I’ve  heard from another start up they are that able to also predict whether a movies is going to come hit or not. Because movie production is super expensive and maybe the same has been true for this (Peel) where you are recommending TV shows.

Thiru: Absolutely, we actually waited for an entire year, because we predicted last year, we did not actually make it public and we looked at how many of those TV shows actually stayed on air and not, and how accurate we were. And this year our model is so well developed and our data science reason behind it has gotten so high fidelity that we went out and actually said that certain shows will actually stay on air, or not.

Absolutely I think, I think a lot of focus is going to start becoming on the pilot. And Madison Square Garden runs the big process called ‘Upfront’ where a lot of dollars get committed and I think they’re going to start demanding to look at pilot and how do people get into the pilot into the first 15 minutes or so. And I understand what you’re talking about the movie as well.

Martin:  Are you currently only targeting the normal TV set or also other devices where you can consume content?

Thiru: Great question. So, when we talk about normal TV set it’s the traditional TV system that you see TV and setup box on the broadcast. So, we actually don’t care whether people end up watching TV using their live TV or a broadcast or they end up watching Netflix or streaming. We are actually all about pointing you to your right TV show, regardless of what kind of TV you have. You might have a chrome cast in which case we’ll switch and get you to your TV show. Our focus is enabling you to discover the TV show and get to it; so, discovery and control.

A lot of our current success, how we actually enable the broken broadcast TV system into enabling a really awesome experience to be able to get to that TV show. We’re going to take that same experience and get into that streaming experience as well. And when you talk about TV, we’re also thinking about not just “What if we actually expand beyond controlling these devices”,”What if we control these lights and thermostats and locks.” So we think we have a natural advantage of being in the couch and having access to these many users and can be actually now take advantage of that and control all the appliances and the devices in the home.

Martin: Because from my perspective, you could go two basic ways. Either you go and stay in the home and extend to further application. Or second option is “Okay, I will focus on the content stuff and then I go to every trial”.

Thiru: On the train or on the bus. I think we are more home driven company I would say.

Martin: Okay, I think one of the core things from my perception is the recommendation engine. Can you elaborate on that and what type of data are you using?

Thiru: One thing that we found out and I can clarify this with a lot of other thought leaders in the space, whether its is folks from Amazon or from Netflix. Even though search is now possible in the TV space when you come home and if you thought of an use case where: “Wouldn’t it be cool if he’s just searching 49ers game or a Manchester United game, …” People are not searching. People do not like to use search when it comes to their living room. And there is some sort of psychological reason behind it.

Because TV is such a laid back experience and for some reason consumers tend to lower their IQ to such a low level because they are unwinding and and they’re relaxing, so they’re not searching it. Essentially then the only other option available to actually let them discover is some sort of personalization or recommendation or artificial intelligence. And that is a hard nut to crack in the media space, because it is really hard to predict on a Saturday you’ll be in a certain mood, you’re ready to engage on a long commitment of a movie or on a Monday night you’ll actually looking for that football game or on the normal weekday you’re catching up on your shows that you want to catch up, and its quite hard.

So we use your past viewing history, social graph, but also some elements of human curation. Human curation is actually quite effective. We use social twitter signals and other signals and create this. We have a feedback system as to whether actually people tune into the show that we recommend, but also when we present certain option and they do not tune into. We actually look into that, when we present today seven to eight options and the consumer did not choose any of that. Well, in which case we need to go back and actually fine tune the algorithm.

Martin: So let’s talk about advertising.

Thiru: Sure.

Martin: What types of companies are advertising? Because if you look at only mobile devices, you would rather assume that the major share really would be TV shows just promoting a ‘hey please watch me’.

Thiru: That’s a good question. That is the sort of endemic bread and butter of our business. Because it such a fit between the TV shows wanting to promote and we have a captive audience of people sitting in front of TV and saying I’m here ready to be sold on a product and the product itself is a TV show. Its just perfect, and consumers actually do not mind it and they actually don’t even feel like its an advertisement even though we make it explicit. But brands are also extremely impressed and interest in working with us.

The way that we actually bring into brands is we actually… Say for example Coors Lite actually worked with us in promoting the Lakers game or the basket ball game, because they actually sponsored the actual game. So if we get the viewers to their game, there’s more Coors obviously on TV and there’s more sponsorship but they are actually interested in working with both the first screen and the second screen, and driving viewership. So we would say: “Tonight’s basket ball game is brought to you by Coors Light.” Tap ‘Here to change the channel and go there. But we are trying to really crack the brands. And the first wave of our progress has been around the TV shows and tuning in. There, I think, we have a really unique offering and nobody else can offer that. And for brands we are just starting to scale up that business.

Martin:  And are you only focusing on performance advertising or is it more also brand advertising?

Thiru: Great question. In fact actually we are the only ones who can actually provide brand performance right now. But unfortunately, as you may or may not know about the ad industry is that they’re not completely equiped to do a hundred percent performance oriented spend. So these are executed as campaigns. So you might start of week ahead and try to tell the consumer there’s a new TV show coming out and educate about who’s acting on it, and provide them with a sneak peak and things like that. but maybe a day before the show you remind them and set up a program (the DVR set up a reminder), or five minutes before the show you tell them “Hey, the show on, you want to tune in.” So it is a combination of that. But I think the world we go more and more towards automatically purchasing user advertisements, but also going more and more towards data driven performance in living room which was never possible before.

Martin: Did you get an auction advertising platforms like Facebook did?

Thiru: Great Question. So I don’t think we’re there yet from both from the scale of how big the purchase part of it, but I think that would be the ultimate vision to have a lot of people compete to get into certain night. TV has a certain element to it: there are only so many shows in a night. But that’s the ultimate goal if we can get there. There still some work going on, but right now we don’t do auction we are having a direct sale method right now.

Martin: Ok, cool. When did you stop the advertising? Because I would assume that it started like maybe after two years or x-million amount of users.

Thiru: I think in the USA, there’s sort of a thumb rule that you want to wait till at least 10 million monthly active users before you start cracking it. The advertising business has been less than 11-12 months old right now. But we’re crushing it in terms of quarter-over-quarter growth. In terms of revenues it is phenomenal. And especially the fit is very good and people sort of coming back and buying more is a phenomenon that were actually continuing seeing.

Martin:  What I really like that it seems to be very synergistic.

Thiru: There that’s right word, yes.

Martin: Cool. Let say with advertising.

For example, because the user, you can identify them easily based on their device ID or something like this. The second thing is you know exactly when he’s switching the channel. If then on the other hand have all the TV shows and advertisements spots and then you match them over time; and then you can also do some pattern analysis and say: “This advertisement at this time with these conditions is not working”… And then even you could broaden the advertisement market place. Are you currently working on something like this?

Thiru: Yep, so that is the excitement behind the company. I have to approach this from both sides, ultimately it has to produce the value for the consumer and it has to use their viewing behavior in the right way. But I think this is what you just said has never been done before. And there’s a lot of excitement around the company… But i’m sorry it’s a great idea.

Martin: Cool. You currently have 128 million users. Are they only in the US or?

Thiru: We’re global. We are one of the very few mobile first, global first companies. Our website product is not on the web. Our product is a one hundred percent mobile product. We are in a hundred and seven countries. We’re in Germany, but a third of the user bases in the US a third is in Asia,  dominated by China and the rest of it is in the rest of the World – Europe and South America and other places.

Martin: Cool, great.

ADVICE TO ENTREPRENEURS FROM THIRU

Martin: Imagine a younger brother comes to you and say “Hey, Thiru, I got a business idea, but I’im not sure whether I should pursue it. Can you give me any advice about starting a company?”

Thiru:  You know the first thing I tell people is like, “Can you quit your job?” And they say “Wait, I don’t know. I don’t know if my idea is good enough to quit my job.” Well, then your idea is not good enough.

You have to able to tie your hunger or your survival to your success. I always tell this analogy that if you go to Circque So Soleli or one of those circus type shows, you see those people who are actually coming down on a rope and then jumping onto the next rope. And if you notice, they’ll always tie their rope in such a way that you cannot hold them both together. So you have to let go one and then jump onto the other. So it’s really-really important that you actually give a hundred percent of your effort into whatever you’re putting in and think that this is the only option out. Because entrepreneurship is so hard that if you have a safety belt you’re going to push it like very quickly, like three months, six months.

I actually started this interview by saying “I live my dream.” I’m saying that to my employees every single day because the process of dreaming is a very positive thing. You sort of like: “Wouldn’t it be cool if did that?” But the act of living it s extremely painful, extremely excruciating, because to make your dream come true you have to work your ass off like every single day. That’s why I say to people: “I live my dream.” There’s a positive connotation to it, but there’s also the fact that you have to work really-really hard to make it happen. So I think my only advice is like; “If you going to do it give everything, but at the end of the day nothing is guaranteed.” Success is not guaranteed. Destination is not guaranteed as much as cliché you got to just wake up and be happy about coming and touching these many people; whatever drives your passion.

Martin: And this number of people is what touching you right now?

Thiru: Yeah, that may be what energize you. Some people are energized by the fact that you’re making money or building a software. Some people believe is that this is the technology that they solve. Whatever motivates you, you have to give a hundred percent of that. I can sort of talk about fundraising and things like but the core is that you got to chase what drives you and chase the dream with everything that you have.

Martin: Thiru, thank you very much.

Thiru: You kept it very casual and it was fun.

Martin: Awesome.

Thiru: Awesome, thank you very much.

Martin: Thank you and maybe next time you are thinking about: “What should I watch?” Just download  Peel  app and have a look at what it is recommending you. Awesome.

Thiru: Awesome.

Martin: See you.

Thiru: Thank you very much.