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Rakesh Agrawal

Founder, SnapStream

Once upon a time (in 2001), the only way to watch a movie on your computer was by inserting a DVD and CS alumnus Rakesh Agrawal – the future CEO of SnapStream – had a problem. His first job after graduating from Rice University involved a lot of travel and he was missing some of his favorite television shows.

“That was back when TiVo was just coming out,” said Agrawal. “My friend and I were both traveling a lot for our jobs and we wanted to see the shows we were recording at home, but from our computers while we were on the road.”

Agrawal and his co-founder built a proto-type, then quit their jobs to focus on their startup. “We raised a little money, but primarily bootstrapped the company using our own resources and had to ship a consumer product soon after launching in order to produce income.”

The founders were advocating a change in consumer philosophy around the purpose of home computers. Agrawal said, “We were shifting a computer from a productivity device into an entertainment device and we turned first to early technology adopters. They will try almost anything once, and they really liked our product. Then Microsoft started marketing their PCs in a similar way and they were definitely our competition. The concept was called HTPC, for home theatre on a personal computer.”

Each unit could be set to record up to 10 shows at once and to continue capturing those shows. The consumer supplied the TV feed, and managed their own personal preferences for scheduling and viewing from their home computer. “It was strictly a personal-use type of product,” said Agrawal. “Over time, we learned of a few businesses who were purchasing the units, but they weren’t our primary market and we pretty much ignored them.”

After selling a few hundred thousand units, the founders realized they had reached a chasm. Agrawal said, “We had hit our peak profitability. Large companies are much better at retail sales than small companies. The margins are too low; the profit comes in mass production and distribution. We couldn’t compete with companies like Yahoo or Google, who were in a much better position to take advantage of the strategic value surrounding how people watched TV, so we looked for a new direction.”

Around 2007, they went back to the institutions that had been using SnapStream in an enterprise environment to learn why groups as diverse as government offices and entertainment executives needed access to DVRs recording hundreds of shows to accomplish their goals. “They would buy several copies of our software and then spend maybe 80 hours on building and tweaking it to make it work in their business,” said Agrawal.

The company slowly withdrew from the consumer market as they retooled their product for enterprise use. Access restriction was of their first challenges for an early customer. Agrawal said, “We didn’t have parents saying, ‘Don’t let my kids decide what to record’ for our consumer device, but in this political campaign office, some interns had started using their SnapStream system to record soap operas rather than scanning channels for mentions of their candidate. We had to find a way to segment and control access for scheduling and viewing.”

One of their most significant developments was a search feature. “People had become accustomed to searching for words and phrases on the Internet, but how could they search for something they had seen or heard on a show?” Agrawal said trying to find a specific clip from tens or hundreds of TV shows was like trying to find a needle in a haystack. “So we learned how to take TV –which is ephemeral and not at all permanent – and make it more like web searches so that you can link to it, copy, paste, and share – like a webpage. That is what the product has become today.”

Agrawal is most proud of SnapStream’s usability. “From the beginning, we were focused on making our product easy to use for the everyday consumer. Now, we’re used in K-12 schools and universities, in government offices like the White House, and in the entertainment industry. Probably 50 Daily Show writers, directors, and producers are using SnapStream as they plan their shows.”

His favorite aspect of his company is its impact on others. “I love the work we do here,” he said. “It’s fun to build a product that enables people to do things they could not do before and has such an influence on pop culture and politics.”

Four years ago, Agrawal began investing in new companies. He said, “After many years of reading tech industry news and being an early adopter of new technology, in 2012, I decided to start investing in startups. I attend Y Combinator demo days twice a year, looking for startup ideas and founders that get me excited.”

Agrawal has invested in more than 60 companies, including some through AngelList, a U.S. website that matches startups with investors. And Agrawal has had some success: a seed-stage investment he made in a self-driving car company, Cruise, resulted in an exit when General Motors acquired them for $1B.

He is also very interested in the startup community in Houston. In addition to investing locally, he also serves as a mentor at Station Houston, TMCx, and OwlSpark/RedLabs –the joint summer accelerator program for the University of Houston and Rice University.

“Houston has some amazing entrepreneurial talent and some great, unique opportunities to innovate. I spend my time in the startup community here, connecting with smart, driven people and trying to help where I am needed,” said Agrawal.

This article was originally written by Carlyn Chatfield on LinkedIn.