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ELEMENTAL ACQUIRED from AMAZON for $500M

by Mark Dempster


Once the Founder’s Circle investment was conducted, there began the consistent flow of calls and conversations between Sam and Chris. The kind possible because Founders Circle was an investor in Elemental’s people rather than in the company.


IMAGINE being in Sam Blackman’s shoes last week, Founder & CEO of Elemental Technologies, at (Re)Invent, Amazon’s annual user conference. The sheer size of it was arresting. The volume of AWS customers present was breathtaking. And you (aka, Sam) were equal parts intoxicated and petrified. That, on the one hand, all of these customers now have easy access to Elemental’s streaming video technology while, on the other hand, bewilderment with how to handle it if all of them want it at the same time. That, in this vast hall, you’re witnessing Elemental’s mission—to be the market leader and most respected company in the video processing space —come to life into a single thrilling and sweat inducing concoction.

Now that Amazon has agreed to acquire Elemental Technologies, this is the high class problem faced by Sam and his co-founders Jesse Rosensweig (CTO) and Brian Lewis (Chief Architect). And having this moment occur at (Re)Invent was a fitting symbology for both how the company got to this point and where they go from here—by constantly reinventing.

As engineers in Portland at Pixelworks in the early 2000s, the founding team was progressively seeing the need for video processing power to be incarnated in a purpose-built semiconductor chip in order to deliver content to the expanse of mobile devices rapidly finding their way into consumers’ hands across the globe. They took their idea to the powers at Pixelworks where they were told that building a next-generation video processing architecture was not going to be a company priority. Instead, Pixelworks management encouraged the team to strike out on their own. In 2006, the founders took Pixelworks up on the offer as well as on some initial seed funding.

Sam Blackman / Founder & CEO, Elemental 

Sam Blackman / Founder & CEO, Elemental 

Chris Albinson / Partner, Founders Circle

Chris Albinson / Partner, Founders Circle

Thus began their first foray into a new architecture for video streaming. Unfortunately, customer and investors didn’t come along for the ride – they simply were not interested in a supporting another video processing chip architecture. So six months in, the company required a complete reinvention.

In short, the semiconductor business model was unlikely to keep pace with the rate of mobile device evolution, and founders decided to switch from a hardware-based architecture to a software-defined one. Pivoting to a software model could easily come across as a clinical intellectual business decision for the company, but arriving at that conclusion was gut wrenching for the team. And the price of that decision was high--the loss of a beloved co-founder and early company leader whose engineering passions lay in hardware, not software. But out of adversity comes clarity and determination. And Elemental has only known “up and to the right” ever since, as just about every media company of merit has adopted its technology and its model.

What also often goes unseen and untold in a startup success story is an investment of a different sort. One that is non-monetary but is a currency every bit the lifeblood to a company—the unflinching backing of a spouse and the economic compromise of a family. From Day 0, the founders would argue that Adriane, Holly and Anuradha were a step or two ahead of Sam, Jesse and Brian in setting out this journey. And for the next nine years these fabulous women had their men’s backs at every single step, regardless if that were a forward or a backward step. These founders know to their core that this company was only possible and only sustainable due to these women.

Along the way, Elemental was accumulating their unfair share of industry accolades and was quickly becoming a coveted Northwest startup to work at because of a hard coded value system—customer centrism, integrity, innovation —driving all company decisions.

Once the Founder’s Circle investment was conducted, there began the consistent flow of calls and conversations between Sam and Chris. The kind possible because Founders Circle was an investor in Elemental’s people rather than in the company. It was one of these conversations that led to Chris’ introduction of Sam to Bernard Herscovici. Bernard was someone who had walked a mile in Sam’s shoes, having ample experiences to share stemming from his own start-up acquisition, BelAir Networks by Ericsson. There was plenty of scar tissue to show Sam—nuances, intricacies and hazards that can occur both inside the acquiring and the acquired companies as they contort to combine.

It was mid last year that Elemental invited Founders Circle to provide the founders with personal capital and to provide an early investor with partial liquidity. The program was designed to include inside investors Neil Sequeira formerly of General Catalyst and Robert Abbott at Norwest.

Today Sam, Jesse and Brian are embarking on their third reinvention of video streaming. Sitting on top of the AWS platform assures Elemental of distribution far and wide to any media company that wants their content on mobile devices. And it will provide the team with the resources to imagine how to make the customer’s experience ever more delightful.

Please join us in extending a heartfelt congratulations to Sam, Jesse and Brian as well as the entire inspired Elemental team. And let’s not overlook all the backers who made this startup’s dream possible.
 

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