Go ask Alice why tech startups spend big on Hype videos
On Monday afternoon in a warehouse in Oakland, California, actors dressed as Alice and the Mad Hatter and a man with a giant rabbit head sat around a table on a black-and-white checkered floor.
The Mad Hatter picked up the silver teapot and said in a loud voice, “What is our AI search strategy?” The director called cut and told the actor to look directly into the camera lens in the next shot.
Like many things in the Bay Area these days, the surreal scene on the bustling set of about 20 film crew members was funded by an artificial intelligence start-up. Daydream, an AI marketing services company, held an $80,000 video shoot to announce a $15 million funding round in a post on a social network.
Young AI companies in San Francisco have shelled out tens of thousands of dollars for film crews and camera equipment to create highly produced hype videos for social media. Fueled by the venture capital funding frenzy, founders are striving for memorable—perhaps even viral—videos to help recruit talent and simply get noticed in an increasingly crowded field.
And many of these AI startups embrace traditional video production instead of doing it cheaply with AI because they don’t want to look unprofessional.
“Everyone can build startups very quickly now, so it’s more competitive in a way, and the battle to get noticed is much higher,” said Thenuka Karunaratne, founder and CEO of Daydream.
Having a good story is just as important as having good technology, the people pouring money into their start-ups tell young tech entrepreneurs. Tech and venture capital firms are investing in new media businesses and “storytellers,” the technical term for marketers.
Mr. Karunaratne, 29, figured his tribute to Alice in Wonderland — which took two days to shoot and involved actors, a live white rabbit and a $2,000 rental fee per costume head — would pay for itself if it attracted just one new customer.
AI startups like Daydream are willing to spend on attention-grabbing stunts because funding rounds are bigger and founders have more money “to play with,” he said.
“The bigger risk for any of these founders is less of a lack of money and more of a fear around: Can you execute on the vision and scale of the company to win the category before someone else?” he said.
Lindsay Amos, a veteran marketing specialist for Silicon Valley startups and venture capital firms, said that “50 startups seem to be working on the exact same thing, and often the only difference is the marketing.”
Over the past year, she says, hiring film crews to shoot high-quality videos has become the default for startups looking to get noticed online. One of the most prominent examples that fueled this trend was viral video from Cluelyan artificial intelligence software start-up that cost about $140,000 to make, said Richard Zheng, 18, who directed the video.
In the less than two-minute stage sketch, he shows Cluely CEO Roy Lee using his AI software to lie to a woman about his age and life experiences on his first date. The date expires and the video ends with the company’s tagline to use AI to “cheat everything”.
A few months after the video was released, Cluely received $15 million in funding from Silicon Valley venture capital firm Andreessen Horowitz. The company continued to publish outrageous videos, but changed its tagline and markets itself as an AI meeting assistant and note taker.
A common feature of these videos, Ms. Amos said, is that the founders are often the main character or make a cameo.
Arlan Rakhmetzhanov, 19, founder of an AI start-up called Nozomio, he made a video of about a minute in downtown San Francisco that mimics one of his favorite parts of “The Social Network.” He plays a young Mark Zuckerberg-like founder who yells and swears at a room of investors to announce his $6.2 million funding round.
In the past, Ms. Amos said, tech companies would wait years before investing in a big TV ad. Facebook had its first ad in 2012, eight years after the company, now Meta, was founded.
Aaron Epstein, general partner at San Francisco incubator Y Combinator, said he encouraged founders to launch as early as possible to get immediate feedback from potential customers online. Don’t hold back by stressing for months about editing the perfect video, he tells them.
He added that high production values are not a requirement, but that they can help a young start-up look “like a serious company” to potential customers. Many of these AI startups are run by founders in their 20s who use AI to build AI software products that they want to sell to large enterprises.
“If people knew that it was just, you know, two people in a living room hacking this thing over the last few weeks, people wouldn’t believe it as much, so that’s one way to build trust with the audience,” Mr. Epstein said.
He added that video AI tools also allow more people to create creative videos on a limited budget and in a short time frame.
Still, Jason Zhu, co-founder of Nen Creative, the marketing agency behind the Daydream startup video, said startups have a lot of demand for human-made videos. Mr. Zhu, who runs the company with his brother Michael Zhu, said their team worked on an average of one or two video shoots a day, five days a week.
He said they lost one business with video AI tools after a potential customer decided filming was too expensive for the company’s budget. Customers sometimes ask if they can use AI to speed up production, which Mr. Zhu pushes back because the technology can’t give him the quality he wants. But he’s not worried about AI completely replacing his business, he said.
More companies are also hiring Nen Creative to make documentary videos about the startup or its customers, Mr. Zhu said.
“People want real stories to show real customers, and AI can’t do that,” he added.
While using artificial intelligence to create video is easier and cheaper, Kim Huong Tran, Daydream’s head of marketing, said he doesn’t want the company to look sloppy.
“I feel like people would know,” she said. “If we did it would be very cheap.