SoftBank-Backed Jellysmack Eyes Global Expansion, Acquisitions
(Bloomberg) -- Jellysmack, a startup that got a starring role in SoftBank Group Corp.’s most recent earnings presentation along with funding from Masayoshi Son’s firm, is preparing to scale up operations with acquisitions and a global expansion.
The New-York based company helps online content creators and brands promote their offerings across platforms like Instagram and YouTube, taking a share of revenue in return. Its focus now is on strengthening its operations in Europe, including France, the U.K. and Germany, while targeting Mexico, Brazil and India too.
Jellysmack is also looking to invest in or acquire companies that are building the infrastructure for influencers and the social media economy, co-founder Michael Philippe said in an interview, without giving further details. While he declined to disclose specific details of SoftBank’s investment, he said the money put Jellysmack among the ranks of unicorns -- companies worth $1 billion or more.
SoftBank founder Son spent six minutes lavishing praise on the startup during his latest earnings presentation, calling it “a 21-century-style creator collective.”
The social media ecosystem has flourished over the past few years, turning young and affable YouTube personalities into multimillionaires. Gamers streaming their play sessions on Twitch and amateur choreographers on TikTok are already a big part of the media diet for millions of people. A survey of 8 to 12-year-olds commissioned by Lego in 2019 found that children in the U.S., U.K. and China are three times more likely to want to become a YouTuber than an astronaut. That creates a lot of competition for any one individual to get noticed.
“We really believe that we are in a new creator revolution,” Philippe said. “The big challenge is that very few make a living of it. And talent is not enough.”
Recommendation algorithms are the new gatekeepers and figuring out to how be successful on more than one platform is too time-consuming for most social media personalities, he said. Jellysmack, whose roster of 200 clients includes mega-stars PewDiePie and MrBeast, helps artists expand revenue streams by tailoring their content for multiple outlets, including YouTube, Facebook, Instagram, TikTok and Snapchat.
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Jellysmack scans millions of video channels and uses machine learning to uncover promising new talent to recruit. The company has come up with its own scoring system that takes into account content category, engagement, the channel’s growth velocity and size of its library. The use of artificial intelligence has become almost a mandatory feature of SoftBank investments in recent times, with Son stressing its importance to future technologies and breakthroughs.
The algorithms that decide what content rises to the top of internet platforms may be inscrutable, but there are some rules of thumb for creating a hit, Philippe said. Getting the thumbnail right is key to success on YouTube, for example, while cutting a 10-minute clip down to three minutes helps it do better on Facebook, where retention in the first 30 seconds is decisive, he said. Jellysmack helps with the editing, a major pain point for content creators and a part of the process that’s difficult to automate.
The company plans to spend half of the money it raised from SoftBank on global expansion and split the rest between investing in its technology and acquisitions, Philippe said. In March 2019, the firm raised $6 million in a debt-financing round, according to Crunchbase.
SoftBank earlier this month reported a profit that was the highest for a listed Japanese company thanks to a string of blockbuster initial public offerings by portfolio companies including Coupang Inc. Philippe said he expects Jellysmack will have global presence in about two years and that an IPO is possible in the next few years.
“While we believe they could IPO tomorrow as far as the business model and financials are concerned, they still have substantial room to grow as a private company,” said Yanni Pipilis, a managing partners at SoftBank’s investment arm Vision Fund. “We strongly believe in the macro tailwinds in this sector.”
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