Jennifer Brown is tearing up. She’s converting early-2000s camcorder footage into digital files, watching as a woman’s colleagues celebrate her promotion until the woman’s boyfriend appears out of nowhere, gets down on one knee, and proposes. When a group of passersby interrupts Brown quietly weeping at her computer screen, she gestures at the proposal by way of explanation. “She is totally surprised,” Brown says, “and now I’m all flustered.”
Brown is a digital media specialist on the operations floor at YesVideo, one of the most curious companies in Silicon Valley. There are plenty of digital transfer services that rescue the old home movies and fraying photographs an estimated 90 million U.S. families are keeping in their closets and basements, usually converting them to DVD. Some are mail-order services; many others are local operations for people who don’t trust FedEx (FDX) with their memories.
What’s different about YesVideo is its scale and technology: In the past decade it’s become the go-to company where Wal-Mart Stores (WMT), Walgreen (WAG), Costco (COST), and other retailers outsource customer conversion requests. (Prices vary according to media format; for example, YesVideo will convert two hours of VHS videotape or 125 feet of movie film for $20.) Now under new management, it’s planning to go well beyond the DVD and make all video available to customers at any time via their smartphones and tablets. “We think there are 1.5 billion units of old media in the U.S. alone sitting out there,” says Michael Chang, an entrepreneur who took over the company last year in a $5 million buyout of some of its original investors.
YesVideo was founded in 1999 by Sai Wai Fu, a Shanghai-born microchip designer who’d worked at Intel (INTC) and reasoned that families besides his must also have piles of home movies gathering dust in obsolete formats. The startup made slow progress over a decade, striking deals with retailers and opening footage-processing offices in Santa Clara, Calif., and Atlanta. In its early years, YesVideo raised $20 million from a group of investors including now-bankrupt Kodak and Polaroid. The operation has been profitable, but modestly so, and in 2012 Fu sold out to Chang and his partner, Andy Choi, who’d sold mobile-ad network Greystripe the year before to online marketing company ValueClick (VCLK). They have bigger plans. “Within the next five years everyone will have connected televisions, and our belief is that personal movies have to be the killer application,” Chang says. He wants YesVideo to become a kind of premium YouTube—a one-stop service for storing and sharing favorite videos.
In the past year, YesVideo’s new managers have rebuilt the company with an eye toward cloud services and exploiting the latest in online sharing technology. One of the first moves by Choi, who is now chief technology officer, was to use his personal credit card to open an account with Amazon.com’s (AMZN) cloud computing unit, Amazon Web Services. Customer video now resides on Amazon’s servers, and its content delivery network streams YesVideo to customers. It also says it will soon start using its Elastic Transcoder service to convert video to formats that are playable on any smartphone, tablet, or PC. “I imagine we are a midsize account at best,” Chang says, “but we’re growing quickly and Amazon has been giving us a lot of attention recently.”
Surrounded by chip companies and Web startups, YesVideo’s 25,000-square-foot Santa Clara production facility sticks out. It hums with the staccato rhythms of old movie projectors and slide carousels. There’s dedicated floor space for VHS, Betamax, 16mm, and Super 8 film, and even standard 8mm film, a format invented in the 1930s. One room is devoted to photo albums, with each page digitized using a high-resolution camera. In another, used to convert slides, YesVideo engineers have cut holes in the sides of a half-dozen vintage Kodak Carousel projectors and inserted Nikon (7731) D10 digital cameras to directly capture each slide. The company buys many of its retro players and replacement parts on EBay (EBAY). “You won’t be able to recreate this business in about three years” because there won’t be enough working equipment, says YesVideo engineer Rolf Breuer.
Overhead video cameras monitor YesVideo’s operations floor, and batches of customer media are stored in gray trash cans, which are secured with locks and labeled in large letters: “Caution: Customer’s memories inside.” The company’s 300 employees are supposed to review each video to ensure a high-quality transfer and to prevent infractions of the user agreement, such as its ban on home pornography. Like the weeping Brown, employees sometimes find themselves drawn in further during the conversion process, when the videos play out in real time on their computer screens. They say they see many birthdays and weddings and a lot of bad dancing, but some clips stand out. One employee recalls seeing an old 8mm black-and-white film of a safari that encountered a lion on the savanna. The movie ended abruptly, with the lion charging the group and the camera falling to the ground.
Over the next two years, Chang wants to expand YesVideo’s nascent operations in Japan and Britain. In February the company introduced an app that lets customers view their converted media on the iPhone, and it plans to release a similar app for the iPad this summer. Chang says YesVideo is developing premium services such as video editing software and a facial-recognition tool—to allow customers to quickly identify all their videos in which specific persons make an appearance. Another service coming this summer, called Snapshot, will let users print a photograph from individual frames.
“We think that once we’re able to access more of those 90 million households with old media in their closets, we can pivot the business from storage and add value on top of the video,” says Chang, who imagines charging $10 a month for the service and sharing that revenue with retailers. “Not to get too cheesy about it, but I think everybody here has the thought that what we are doing is pretty special. We are unlocking people’s memories.”
The bottom line: The go-to digital conversion company for major U.S. retailers wants to become a premium YouTube for users’ favorite videos.
