Having a business idea and bringing it to fruition is the hallmark of being an entrepreneur. A few years ago I began seeing movie trailer embeds from a website I had never heard of before. The embeds were snazzier than most and had high definition options. That website, as you probably have already guessed, was Trailer Addict. We previously wrote about Trailer Addict here: 7 Movie Trailer Resources and here: Movie Website Traffic: Trailer Addict NewsDesk. Many things have changed in the interim between then and now and TrailerAddict has become a player in the movie website game. How did the people behind Trailer Addict accomplish this feat? They did what any good entrepreneur should do: They saw a need and filled that need with their product. In this case, HD movie trailers. Before starting a movie website, it would wise to keep that in mind. What niche does your movie website encompass? What need does your movie website fill? If you can’t answer these questions, re-think your approach to your film website and its purpose.
I recently had the opportunity to conduct an interview with Ryan Parsons, the founder of Trailer Addict, about his website and his answers provide plenty of insight into start-up organizations, planning, having a vision, and finding capital to fund that vision.
1.) What sparked the idea for Trailer Addict?
Working on a film blog back in 2007, I noticed that film blogs have begun a new trend of embedding movie trailers from 3rd party sites. Though a cool idea, the trailers were always in a low resolution that was easy to stream. The original concept behind TrailerAddict was to be the first video site to allow embeddable HD content. Today just about every video site offers HD content, though TrailerAddict specializes in film.
2.) What business or consumer need does Trailer Addict fill?
The fanboy, or anybody that considers themselves a fan of high-production video. We’ve come to understand that plenty of our visitors are bigger fans of movie trailers than they are of the movies themselves.
3.) How long did it take to build Trailer Addict?
The initial design phase took a full five months. We went live January 2008 with our first pop on Digg. At that time TrailerAddict was running on a system that only required 7 tables of information. Today we have just over 40 tables in our database.
4.) Who built Trailer Addict? Who programmed Trailer Addict?
Save for the flash player and menu, all the design — graphics and coding — was done by myself. It was a big learning process, but it’s nice to know exactly how the system works from back to front.
5.) How many servers does Trailer Addict utilize?
The site is run on one primary server, which is soon to become two. The files are delivered from two different systems. The first system is our virtual CDN that now consists of only three file servers. We now also utilize an actual CDN company, who should (hopefully) better syndicate our videos across the globe.
6.) What company hosts Trailer Addict?
The company that hosts TrailerAddict is a datacenter in LA known as PacificRack.
7.) When was Trailer Addict launched?
TrailerAddict was launched January 2008.
8.) How was Trailer Addict financed?
Bootstrapped. I took out two lines of credit with Wells Fargo the summer of 2007. The site went a little over $80K in debt before it started generating positive revenue.
9.) What was the process to taking out the lines of credit at Wells Frago? If your personal credit rating played a part in getting those lines of credit, what was your credit rating at that time? Was your personal equity an issue?
My credit score was about 794 when I took the credit lines at Wells Fargo. I’ve been using the bank since 18, and have a few higher-up contacts there that made sure I got the credit lines without difficulty. Once I maxed out the credit lines, I believe my credit score did lose something like 50 points. The lines are now paid off.
10.) Did you write a business plan for Trailer Addict?
Yes, there was a business plan.
11.) How did you handle the financial section of your business plan since you were a first mover in the HD Movie Trailer delivery industry? How did you project cash flow and repayment of investment? How did you construct your balance sheet, etc?
When it came to exact money figures, it was sort of a crapshoot.
I didn’t even know what to expect, and the ad market was plummeting thanks to bad economy at end of 2008 and all of 2009. We didn’t want to run pre-rolls, which are the #1 revenue source for video sites, so I just played the gamble of losing it all. This was going to be my final web project if it didn’t work out, and I saw it as good experience, though it would have cost me huge.
I bet big on it, and it worked out. But I also made sure to work hard to have it happen. 14 hour work days are the average, and there is still no sign of letting up.
12.) What was the key differentiating element (sale’s point) for your business plan? What sold people on its validity?
The key sales point, when I pitched to investors, was the fact that, after enough research, I could create a bandwidth system that would not only be incredibly cheaper than any other video site, but support higher resolutions of video. HD content was not being done at that time, so we had our niche.
13.) Which investors did you pitch and how did you get them to sit down with you?
I used to serve tables to make ends meet while working. Helps a web guy to stay social. I served tables at a nice steakhouse and always found myself in extended conversations with patrons. I was prone for making contacts and friends through guests that visited the restaurant. I ended up becoming friends with a wealthy investor who, after I pitched one day, wanted to help me out.
So I started going all over Southern California with him to investor meetings and just general “Meetings of the Rich,” as I called them. It was cool. We also went out and had dinner and drinks a lot. Awesome guy. The only thing I really learned, however, was that these big investors don’t get impressed by upcoming web properties. It was sort of a field they didn’t entirely understand, and they wanted a huge chunk of site for not that much invested. So I passed on all of it.
I did use LinkedIn to approach some angels also, and I did hear back from a few. But that only got me invited to more investor meetings, which I passed on. Then I was introduced to a guy in LA by my Wells Fargo contact, who ended up giving me a job at an LA datacenter — that focused primary on porn — instead of investing. I did that for a few months and then went back entirely to site. By the time all that was over, imagine a period of 8 months, I decided that bootstrapping it entirely was best way to go.
14.) Was your experience or lack of experience an issue? If so, how did you overcome that in your business plan?
Been doing websites since 2003, and have seen just as many failures as successes. I also ran a humor video site in 2006, a site we sold for pennies due to too much competition.
15.) What type of business is Trailer Addict? A Limited Liability Company, a Sole Proprietorship, etc?
It’s in the process of becoming a corporation, though ran as a Sole Proprietorship through 2010. The shift has been long over do.
16.) How does Trailer Addict generate revenue?
Strictly on banner ads. Unlike all the other video sites and blogs, TrailerAddict does not take advantage of pre rolls; the video ads that play before video. We find those to be the most annoying, and have hence passed on them in favor of user experience.
17.) How many people work at Trailer Addict?
There are two primary administrators — Ryan Parsons and Shawn Lewis — and a small collection of “little helpers.”
18.) How did you meet Shawn Lewis?
Shawn Lewis is my brother in law, so it wasn’t exactly a chance meet at the workplace. He and I attempted an internet partnership with two others, but that ended with no success. He had the experience necessary after that to join TrailerAddict and help run it.
19.) How many pageviews does Trailer Addict get per month?
Approximately eleven-million page views per month.
20.) If someone wants to read more about your company, where can they find you?
As you can see, there was much to learn from this interview. A.) Have a good credit score if you approach a bank for a line of credit. Mr.Parson had a credit score of 794 and still needed the help of someone on the inside to get the credit he needed. That was before the market fell. My business advisor told me that if you do not have a credit score of around 700 (minimum) in today’s economy, you are not likely to get a loan. B.) Have a niche, a differentiating factor in your business plan. It can’t be that your running it or that “its going to be cool”. C.) Having a background in websites will help with your creditability and will mitigate some of the risk associated with lending you funds to get your idea up and running.