In the beginning, San Diego’s Veoh Networks had the support of several prominent VCs, and some of the biggest names in the media business. Venture firms like Boston’s Spark Capital, and names like Michael Eisner, the former Disney titan. After five years, founder Dmitry Shapiro tells me the site had 23 million unique visitors a month, and was by far the largest Internet company that San Diego has ever seen.
But it all came to an end. Veoh Networks pulled the plug this week, even though it kept growing its advertising base and had a run rate of $1 million a month, Shapiro says. All this despite the fact that Shapiro had cut costs—and had been running Veoh with a skeleton crew of less than 20 employees since last April, when he replaced CEO Steve Mitgang as CEO.
“We had good backers,” says Shapiro, who served as Veoh’s chief innovation officer during the growth years, when the Web-based video streaming company had 120 employees in San Diego and Los Angeles. “We all had big appetites for what we were trying to do, which was create a multi-billion dollar Internet media company.”
Shapiro, who is one of San Diego’s most-visible techies, started the company in late 2004. Veoh officially launched its business in 2005, and raised close to $70 million in the ensuing years. But the business laid off its remaining 18 employees on Wednesday, and now faces a Chapter 7 liquidation in federal bankruptcy court.
Shapiro says he’s not even sure whether the paperwork will be filed in San Diego or Los Angeles. “It doesn’t matter,” he says.
Shaprio says he also doesn’t know what will happen with the millions of videos that have been uploaded to Veoh’s website from users around the world. A trustee who will be appointed by the bankruptcy court to oversee the liquidation will have to decide whether or not to maintain the vidos and keep the website operating.
In addition to Spark Capital and Eisner’s Tornante Co., the investors that will be writing off their bet on Veoh include
