Who?s next?More importantly, why is so much venture capital that backed video start ups going down the drain when the amount of videos observed online is going thru the roof?Nowadays, it is trendy to discredit VCs as financial engineering hacks with no operational talent who are lacking the moral compass needed to lead folks ; but that will be prejudiced.

Fish Out of Water Last year I was talking about raising capital with a fellow Boss , Brightroll?s CEO Tod Sacerdoti, and he discussed the ?video industry is more media than technology?, to which I added, ?that is why VCs come across like fish out of water?Indeed, most VCs have a tendency to lack any significant background in advertising, publishing, sales or media.

This merits a post in of itself, but the types of things that VCs were drawn to in video have all become commodities, particularly : video aggregators, content delivery networks and content management systems, which are capital intensive, low margin areas always at risk of getting cancelled and shifted to a competitor.Making things worse is this ?crazy ass backwards? Investment contention that they should invest in ten firms and watch 7 burn to the ground, hope that 2 do ?ok?, and pray that one will be a ?grand slam? You win with singles, doubles, triples and occasioanlly home runs. Online video start ups have a tendency to fall in one of the following classes, with some overlaps:Content management system ( CMS ) platform technology companiesAdvertising creation and management companiesContent assembly and distributionVideo file hosting and sharingVideo content editingContent producersContent delivery network ( CDN ) Where are the grand slams apart from YouTube? There are not any. One reason could be that most high ranking media managers who were working in big media with high wages but minimal equity, never experienced the great paydays that would give them a trail to investing their own cash and afterwards setting up a fund to invest for others. They set up or joined VC funds to reinvest their cash and continue the cycle of interruption. The Web is Entering a Period of Great Content Consumption. There appears to be a large wedge between media and technology. It is like if you were all of a sudden asked to operate on your dog to get rid of his kidney. But today, Google is foremost an ad-supported business. Rather more likely than not, the model will be advertising based. Content is King ?The real barrier is content and the model critical to make more of it. Sure, some of the aggregators like Veoh did scale quickly but it was not all that defensive.