First, let me outline the few rules I had about business terms when I started my company:
1. We would always brand everything to WatchMojo. I felt it was a question of when, and not if, someone pirated our content, so I wanted to ensure we got some branding in that case, at the very least.
2. Not only we would never shoot bar mitzvahs, weddings or corporate videos, we would also never do custom work for other media companies: When you submit a bid for custom content, you're entering a downward spiral where you're competing with anyone with a camera and/or editing suite. There's absolutely no differentiation on what you can deliver, because in the end people tend to choose on price alone.
3. We own the rights: Ultimately, companies that produce and give up rights are valued at a function of those who retained rights and could relicense the content to others in perpetuity.
4. While it was tempting to forego guaranteed revenue for the upside of revenue share deals, the truth was that the explosion of user-generated content and proliferation of professionally-produced content meant infinite supply of video inventory, thus low CPMs, thus low revenue. As such, we always favored guaranteed revenue over speculative deals.
I rarely made exceptions in online, mobile and out-of-home deals, though naturally each platform's maturity and geographic market led to a case-by-case assessment of the best, most fair and win-win deal.
When the opportunity arose to take our brand and programming to television, I was willing to treat it as a brave old world. That was a mistake. I should have thought of Kevin Spacey's recent manifesto urging executives to treat the Web like television, and vice-versa.
Early summer, I reached out to a TV executive and asked him if he was looking for additional programming for his channel. After some back-and-forth, we signed a deal through which we would produce a pilot by taking one of our 10-minute videos and repurposing it to fit a 22-minute format. The other company wanted to own the rights in all markets and on all platforms to the 22-minute video; because "it was TV," I agreed. Bear in mind, this television channel was creating content for its own needs. So to get them to license content from us, we had to be competitive in our pricing. If we said, "Pay us $120 for producing content," they would say, "Well, we can do it for $100."
When I did the deal, we already had a five-fold increase from where we had started at the beginning of the year, but I was seeking more brand equity (which we eventually got by the end of the year without being on TV, anyway.). At that point, the opportunity to be on TV -- no matter how big or small the platform -- was intriguing enough for me to consider more or less anything.
We did the pilot, they liked it and ordered a dozen more. Our agreement was clear: If we wanted to produce this show at that price point, they would essentially have a right of first refusal on the show and own the franchise. However, we were allowed to walk from the deal or refuse to accept their option at that price. When the time came to renew, the aura of "being on television" and working with this company and executive had simply vanished. I realized that in fact, to do a deal like that and break my rules, they would have to pay a premium instead of us giving them a discount. We paid them back and took back the rights to the franchise.
I used to think that overconfidence was passing up on revenue that was in line with what business you were in. Now I realize overconfidence is thinking we could do it all.
We all have rules in life and in business. Every time you consider breaking them, think twice and ask yourself why you have those rules in the first place.