04 Aug Success Stories: Omny puts radio on the Internet, faster
For those of you that didn’t get the title, HBO’s Silicon Valley has this sensational character called Russ Hanneman who made a ton of money in the dot com boom and bust and went on to become a VC. More important than his backstory is his catchphrase – “I’m the guy that put radio on the internet”.
Make no mistake, Omny is not the Russ Hanneman of YBF in attitude, inaptitude, or taste in cars. But they are helping radio stations stay relevant in the internet age with their radio-to-podcast platform.
You’d be hard pressed to find a startup with more resilience than the Omny team. Their journey epitomises everything good and bad about the startup world: multiple pivots, endless reiterations, dizzying booms, terrifying slumps, and all the impact on their mental health that comes with that sort of journey.
PROBLEM CASE AND STARTING OMNY
Why start a media tech company? “People [were] consuming a lot of audio content”, explains Omny co-founder and Head of Product, Long Zheng, of the initial idea to create Omny. “People listen to radio stations, listen to music, listen to podcasts, and they were all in distinct silos. We thought it would be great to personalise the experience and make it a little bit simpler, to combine it all… into a personalised audio feed.”
For Long, the potential to resolve this problem through Omny intrigued him, and he wanted to pursue the idea with the full intensity he could give. So in early 2012 he teamed up with co-founders Andrew Armstrong, CTO, and Edward Hooper.
Back then, Omny’s amalgamated audio feed was one of few players in the space. But one of the challenges of creating something that is truly ahead of its time is that you can leapfrog the customer, and not grow quickly enough to survive. “The main problem was that they were just too early,” explains Sharon Taylor, Omny’s CEO.
Early days and early raise
While they perfected their product in their early days, Omny became one of YBF’s first tenants. This kicked off their lifelong involvement and critical role in shaping our vibrant startup ecosystem.
Through their time here at YBF, they’ve been a role model startup, giving back to the community the whole way through. Some of the highlights include their involvement in Startup Weekends both as participants and mentors, regularly hanging out at local events like Silicon Beach Drinks, pitching at the Aurelius Digital angel investment network, and mentoring a number of fledgling startup businesses in Melbourne.
Over time, our commercial ties deepened. Way back in 2012, YBF incubated the business by taking a small stake early on in their history, and provided ongoing support and advice ever since. Omny now holds a very dear place in the heart of the York Butter Factory, its members, staff and founders, due to how intertwined they have been with YBF’s many activities.
Fun fact: Omny was also Adventure Capital’s third investment, which brought with it board representation and ongoing advisory assistance to the team. Consequently, we’ve continued to contribute to and shape their direction since their inception, just as they shaped us back in those early days.
B2C Audio Streaming
Fast forward five years to today, and players like Spotify, Soundcloud and Pandora are attempting to master and monetize B2C audio streaming. However, if Soundcloud’s recent brush with death and potential impending downfall taught us anything, it’s that the consumer audio play is incredibly hard to get right.
“It’s going to take a lot of money behind it [the winning platform],” Sharon says. She points to the success of Google Play and Apple Music as evidence of the need for serious capital to back a successful consumer audio streaming service who could take on the big players in the market.
Even now though, Sharon believes “the consumer’s still not ready for it”. “You have your way of listening and it’s hard to change that,” she points out.
To the people who know of Omny now, this consumer play will sound entirely alien from what Omny is today: an enterprise radio-to-podcast platform known as Omny Studio. But on the way to becoming an enterprise SaaS company, Omny had to change and pivot through three different products to find the right product-market fit.
Product iterations, finding product market fit
However, the team’s biggest challenge has never been product. Through the company’s life cycle, they’ve had three different products, each of which had fantastic traction. Their biggest problem has been turning their fantastic products, into money.
Of the three products, the two consumer apps have been sunset (RIP SoundGecko and Omny Radio). SoundGecko was a freemium text-to-speech service that let people listen to web articles and feeds online and via a mobile app. Omny Radio built on top of SoundGecko to realize the vision of letting you “marry spoken word with your favourite music along with calendar, Facebook and other notifications”.
Their current enterprise SaaS podcasting platform product, Omny Studio, is only a couple of years old and was built to optimise the process by which radio networks share their content online. Long describes that when radio networks did make use of podcasting, it was mostly through traditional means of audio sharing, which involves keeping it in giant multi-hour chunks. Omny’s aim was to splice these streams into individual pieces of audio, and add metadata around each piece to make it more searchable and archivable.
Not only was the “big fat chunks of data” approach not particularly user friendly, it was also uploaded in an incredibly inefficient manner. “Several years ago, the podcast was a day-after thought”, Andrew tells. “The content was already too big at an hour long, and also not relevant anymore because that episode was from yesterday.” Omny Studio made that process instantaneous.
Realistically, though, Omny’s pivot into enterprise radio was driven significantly by the fact that customers were unwilling to pay for consumer audio, making their first products unsustainable from a business point of view. The team had to go to where the money was, and that was in content creation and management for large companies.
An initial request from Southern Cross Austereo to send podcasts straight to their consumer app sparked the build of Omny Studio’s MVP. In six weeks, the team had built a platform that could capture live-streamed radio, make it searchable and archivable, and repurposed for audio-on-demand – instantaneously.
“We’ve had lots and lots of changes”, laughs Sharon. This ability to successfully pivot proves without a doubt what a gun company Omny is. While other start-ups throw in the towel when their product doesn’t match the market’s appetite or ability to pay, or worse, they try to continue along the same track until they’ve destroyed the company, the team gritted their teeth and focused on the product that worked. The company now services many of the largest radio networks globally, who reach tens of millions of listeners every month.
Startups are crushing
It’s this ability to adapt to changing circumstances that has seen Omny survive the great start-up extinction events – 2 and 5 years. However, five years of operation and multiple pivots don’t come without their psychological impact.
Very few entrepreneurs feel comfortable sharing this side of the entrepreneurial journey. Maybe because the industry’s bravado can make it hard to admit vulnerabilities, or perhaps it ties into society’s broader stigma around discussing mental health. But when prompted, Omny were more than happy to share how despite being a “Success Story” now, they were not always in such a favourable position.
“The rollercoaster analogy’s really good”, says Long. “During any phase of the start-up, there’s always ups and downs, and it’s never consistent.”
“Obviously when you have downs, things can be very depressing, can be very frustrating, can be very painful. But at the same time, you are working to make it better. And then when you do see growth or traction, it does become very exciting, and you can feel like you are at the top of the world.
Making sure you can recognize that you go up and down is really important, because otherwise you can kind of spin out control... Even though you are definitely capable of kind of getting back up, you will just defeat yourself.”
Sharon points out that while there’s a naturally cyclical aspect to all business, what is particularly damaging in the startup world is the added stress of having taken “in some instances, a great deal of [investment] from these people. It’s a gamble for them… that also puts a lot of pressure on.” This adds to all the normal stresses of being a small business owner, where the responsibility for your team and for the bills to pay can lay heavy on the leader’s shoulders.
The overarching mentality in the industry is that you can get away with burning your cash, raising again, and failing hard. “That’s all good and well as long as you have that hockey stick growth,” says Sharon. “But if you’ve burned through your cash and you are still trying to find market fit or product fit, you are not going to be able to rise again. Then it becomes stressful.”
Guarding against burning out is also incredibly important. Andrew describes how at the start of working on Omny, he would arrive early and leave late, until his energy level “just goes, and it’s a domino effect of being miserable, depressed, super stressed out and not motivated – and yep, burnt out.”
“I think all of us here have been burnt out multiple times,” he continues. This is far from unheard of among startups, and the entrepreneurs that lead them.
It remains as important as ever to put in place some internal measures to keep tabs on one another’s mental health. For Omny, it’s as simple as checking in with one another and redistributing workload among their small team when it becomes clear that someone isn’t coping.
On a personal level, it’s important to set boundaries of when to work. Aware of the downsides and risks of burning out means Andrew, for instance, has a rule against checking emails after work, and actively avoids working on weekends.
Despite the tough times, where the team felt like they were going through a “those downward drops” (keeping with the rollercoaster analogy), Omny has come out the other side and is alive and thriving. While it’s hard to say what the future holds, the tens of millions of podcast downloads they get each month stand as testament to the fact that they have a quality product, and a market to service.
Figuring out pricing
Part of this upward incline has involved nailing down the pricing for Omny Studio. Long describes how even though they had a “successful product in terms of usage, [they] couldn’t find the market fit in terms of revenue initially”.
After piecing Omny Studio together in its early days, the team didn’t know how receptive customers would be to paying for the product, if at all. Sharon refers to this period as “horrific”. “It was freemium model and we had the typical best-laid plans for how we would monetize it,” she explains. Andrew adds that they were, again, ahead of the market in this area as “the (audio) advertising market wasn’t mature enough yet, so we had to change our revenue model to be based on something else.”
And change they did. “I can think of more than one time over the last year and a half where we’ve change pricing models,” Sharon confesses, admitting that they’ve “probably changed too much if I’m being honest.” But through their strong client retention and industry-leading product, the team pulled through and settled on their current pricing model.
Reshaping the business model
Key to making the model work is finding the right balance of value and cost in a SaaS platform, especially when that same platform supports customers as small as an individual podcaster all the way up to a national radio network.
Omny didn’t just change the base platform price, but evolved the business model to consider a multitude of fixed costs, variable costs and even the variables itself. The founders point out that although servers and bandwidth are getting cheaper, it is still expensive at the scale of serving millions of downloads a day, and you will never be able to recoup the cost to serve if you don’t price your costs out correctly, let alone achieve profitability.
“You’ve got to be wary of your market and industry’s appetite for enterprise services,” says Sharon. Until the industry had matured in how it monetises podcasts (which is still hard to do and largely misunderstood), it would have been doubly hard for Omny to hand their clients enterprise level invoices.
“[Our clients] were so successful that if we weren’t careful, they would run us into the ground!” Andrew laughs. Now, their pricing model scales with the customer’s success, enabling them to support the biggest radio networks around the world.
In terms of scaling, though, Sharon points to international sales as being one of their biggest challenges. Omny’s early international expansion was more of a “scattergun” approach than a concerted strategy. They received interest from and were introduced to networks in Canada, the UK and Singapore, with the resulting global adoption map looking more like “little lights on a map” than concentrated areas of adoption.
The team turned a corner when they realised that the meat of their market is in the US and Canada. “Because of the industry that we play in, we needed to really be in the States looking back. Australia and Asia Pacific only has so much that you can do… we’ve secured most of the Australian radio networks, but the States are where the big fish remain.”
This reiterates a common problem for Australian startups: our national market size is at an awkward mid-point of being large enough to support a small business, but too small to create the economies of scale to emerge as a global leader.
Having realised that the US and Canada is critical to Omny’s ability to achieve economies of scale, and ultimately become profitable, the team appointed an exclusive reseller and partner in the form of Triton Digital, to take care of their business in North America and Canada. This enables them to compete on an even playing field with their audio-on-demand SaaS rivals overseas.
Despite being their biggest opportunity, however, the US is simultaneously Omny’s biggest forthcoming challenge. Between them and their major competitors, it’s neck-and-neck to gain the most market share possible, in the shortest time possible.
But as Omny goes broader internationally, they are deepening their market hold regionally. The team has signed a partnership with streaming giant Spotify to bring Omny’s network of Australian podcasters to the Spotify podcast catalogue. For now, it looks like the Omny rollercoaster is taking off again!