In this episode of the Inside the Strategy Room podcast, Erik Roth, who leads McKinsey’s innovation work globally, talks with Anjali Sud, CEO of Vimeo, about her experience reinventing the online video platform’s business model. It is the fifth episode in the ongoing series, which features interviews with leading innovators across a range of sectors. This is an edited transcript of the podcast. For more conversations on the strategy issues that matter, subscribe to the series on Apple Podcasts or Google Podcasts.
Erik Roth: Can you first explain what exactly Vimeo is and does?
Anjali Sud: Vimeo is the world’s largest professional video platform and community. We are not a competitor of YouTube. We are not a viewing destination. We are a platform that helps anyone create and distribute video anywhere on the internet. We think of ourselves as the mission control powering every professional team in the world that wants to communicate using video. As you can imagine, that has become more relevant during the pandemic.
Erik Roth: Let’s talk about your journey. Where did you start and how did you get to Vimeo?
Anjali Sud: I’ve had a pretty winding career path. To be candid, I never thought of myself as an innovator and certainly not as an entrepreneur. I started in investment banking and spent several years at Time Warner just as technology and media companies began unbundling. I then moved to Amazon, where I got to experience many different functions and jobs. I came to Vimeo to run marketing—a traditional executive job. There was a clear hierarchy of folks above me, and I never thought that three years later I would be stepping in as CEO to substantially pivot the platform. While I am not a traditional innovator, I’m quite proud of the amount of innovation that Vimeo has led in the past four years.
Erik Roth: What lessons did you take away from your time at Amazon that helped you at Vimeo?
Anjali Sud: I took a lot of the company’s values with me when I came to Vimeo. One that stands out is customer obsession, something Amazon is known for. We would always start with the customer: you would write a press release of what the experience would be like for the customer before you even built a product. The second is the willingness to forgo near-term profit in order to improve the value proposition. Yet another aspect is the ethos of continuous improvement: the internal tooling of everything to be operationalized and scalable, a constant desire to increase efficiency of every single thing you did. This is a hard area for smaller companies to master, but as we scale, I see the value of it more and more.
Erik Roth: What was it about a start-up like Vimeo that attracted you when it was so vastly different from investment banking and a big engine like Amazon?
Anjali Sud: I always define my experience at Amazon in terms of learning. When I went to Vimeo, it was because I was interested in impact. I could have a more outsized impact on a smaller company’s future.
I was drawn to Vimeo for three specific reasons. The first was that Vimeo was in video. I felt that video would go through the kind of disruption that e-commerce had gone through ten years before, and where there is disruption, there is opportunity. The second reason was that I was intrigued by its business model. At the time, Vimeo was the only open video platform that did not make money from advertising. Instead, Vimeo charged a subscription fee to video creators to access professional tools. It was an early version of the software-as-a-service (SaaS) model that we know today. I didn’t know if that would be successful, but I liked that the model was designed to create long-term relationships with customers. The third reason was that I’m a big believer in brands that inspire passion among their users. Vimeo had this incredibly creative community, and I knew it was a great foundation upon which to build a great company.
Erik Roth: You mentioned a pivot. Can you explain what happened and where you ended up?
Anjali Sud: Vimeo is a 15-year-old platform. When I joined six years ago, the company was looking to invest in original content and build a competitor to Netflix and Amazon Prime. The market at the time was not nearly as crowded as it is today, but as we worked to build this content play, a group of employees and I started to see many businesses coming to the platform organically. We weren’t marketing to them. Nonprofits, small businesses, and marketers were using our tools in ways we had not necessarily intended.
We developed a thesis that, just as video was at one time created only by Hollywood studios and then by consumers on smartphones, the next era would be organizations using video to communicate—externally to their customers and internally to their employees. We created an incubator within Vimeo, and our board gave me a team of 50 people and a year to build some tools. In that year we launched a product called Vimeo Business, and we saw incredible traction from users. At the end of that year, we all said, “This is a huge market. It leans into our strengths, it’s something no one else is doing, and it could be huge.” Our investors said, “Anjali, you have been championing this, we will let you run it.”
Erik Roth: So you had this journey from mini-CEO to actual CEO, which very few successfully make. And it started with a set of insights about your existing user base. How did you uncover these valuable problems to solve?
Anjali Sud: My job coming in as head of marketing was to understand who our customers were so we could speak to them better and attract more of them. One of the first things I did was dive into the data: Who was using our tools? What were they using the most? What did they like, and what did they not like? When our subscribers left us, where did they go? That data made clear that the fastest-growing customer segment were small businesses that did not have budgets to spend on external video production, that didn’t have video and storytelling expertise, and didn’t have time for it, but they were trying to reach their customers online.
That data helped point the compass, but data alone doesn’t provide insight. The other important unlock was talking to customers. I used to go to trade shows and work the booth and answer customer questions. Those conversations, that’s when it clicked for me: combining the data with the human anecdotes that build the empathy for their problems. I saw this huge disconnect between supply and demand. If you asked small businesses, “Do you want to use video in your marketing?” 100 percent would say yes. But only an insignificant percentage were actually doing that because it’s too complicated, expensive, and time-consuming.
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Erik Roth: So you uncovered, through these personal interactions, a real frustration point, and that frustration could only have been seen by combining the usage behavior data in your platform with conversations, correct?
Anjali Sud: The way I think about a strategy is, “Is there a problem to be solved? Is it a mission-critical problem? And can you solve it better than anybody else?” The first part you can usually develop with data and a theory, but the rest requires understanding your customers and the industry. True innovation requires you to then bring the solution to users—they are not going to tell you what to build. And you need to think beyond what they need today to what they will need tomorrow.
The way I think about a strategy is, ‘Is there a problem to be solved? Is it a mission-critical problem? And can you solve it better than anybody else?
Erik Roth: So you have this valuable problem to solve, you have a technology platform that requires some changing, and you have a business context that looks like a disruption is looming. How do you then pitch your board on incubating a new business that might disrupt your original business?
Anjali Sud: One, you need investors and a board that will take risks. Vimeo is fortunate to be owned by IAC, which is Barry Diller’s internet and media company. He has a track record of making gutsy moves. But we knew it was a huge market in an early stage and we had much work to do to show its potential to skeptics. That’s where having the data from your platform helps. If I had said, “make this the company strategy from day one,” the board would have said no. Breaking it down into smaller risks and investments made it low risk because we have another strategy we are working on and 90 percent of the resources are focused on that.
Erik Roth: What results of those early investments was your board most excited about?
Anjali Sud: The standard outputs such as subscribers, bookings, and revenue numbers were important, of course. But the stat everybody rallied around was customer satisfaction. We were able to double it by having a small team spend a year building products. If you believe the future market will be big and you believe you can build things to delight customers, you can figure out the rest: pricing, how to go to market, how to drive revenue. That was the galvanizing turning point for us.
Erik Roth: Once you became CEO, what did you put in place to ensure that this spirit of innovation continued to be alive at Vimeo?
Anjali Sud: That’s probably the most critical part of my job today. We have scaled a lot in the last three years. Suddenly you have hundreds more people and a different culture and business model. That forced us to adjust quickly.
When I was director of marketing, I could spot an opportunity because I was close to the data and the users. In the same way today, we try to include our product managers, marketers, sales teams, and customer support folks—the people closest to the trends—when we come up with plans. Another thing is creating the right framework. Our strategic planning used to focus largely on the financial impact. Now we are oriented more to asking, is this an interesting market? Is the problem we want to solve mission-critical? Empowering people closest to what’s happening to think that way about trade-offs and resource allocation is a great way to avoid the incrementalism trap.
I also spend a lot of my time understanding what’s happening in the market. I speak with around three start-ups a week in every kind of video technology. Some are potential competitors; some we might be interested in partnering with. With others, I am just getting to know the founders. What are they seeing in the market? That is extremely helpful in picking up on trends.
The last thing I will mention is, we have a version of a hackathon called Vimeo Jam. Its goal is to create a space where people are encouraged to think about things outside their normal jobs. In the past, everyone used that time to build products or resolve the backlog of bugs, but that’s not the point. And we never say, “it’s a one-week hackathon, let’s see how many products come out of it.” It’s about sharing ideas, coming up with things we can flesh out later.
Erik Roth: We all know that not everything works—you have to test and learn. So what hasn’t worked? And how do you instill learning and experimentation into your culture?
Anjali Sud: In order to succeed, you have to parse the things that require conviction from the things that have blind spots, which you should let go. I will give you examples. We acquired a company and had to shut down a business unit within a year. We tried to make it work—hard enough that I could say, “Even if we executed this at 100 percent, it is not going to work, because we are executing at 70 percent and I’m not seeing any signs [that it will work].” Conversely, we acquired companies that failed our goals at one year out, but by year three, they were the most successful drivers of our business. Nobody gets the luxury of nailing a product out of the gate—it takes iteration.
For me, distinguishing between the two requires having smart people around who will always ask questions because not everyone is blind to a blind spot, right? Somebody will notice it, and you need to create the channels where people are comfortable saying, “I think that’s a terrible idea,” or “We keep saying this is true, but is it really?” Culturally, that’s extremely important. The opposite goes for conviction. Something launches, we see no immediate success, and several times my instinct was, let’s give up. We have other things to do. But others on the team had a deep-seated conviction, which they sometimes couldn’t prove with numbers. When I see smart people who understand the business and the industry the same way I do with that kind of conviction, it forces me to hold off on following my instinct.
The other piece is the question of execution, because when a strategy is failing, you don’t know whether it’s because the idea is not right or the execution. At Vimeo, whenever something isn’t working, I put my best A players on it immediately because I want to decide as fast as possible whether it’s an execution problem or an idea problem. In fact, I was the one in charge of running the business we ended up shutting down. I put myself in charge because I didn’t want to have any excuses about not having enough buy-in or too much red tape. Being responsible for the business for a few months helped me parse whether it was an idea problem or an execution issue.
Whenever something isn’t working, I put my best A players on it immediately because I want to decide as fast as possible whether it’s an execution problem or an idea problem.
Erik Roth: Is putting your A players on the struggling parts of the business systematized in your operating model?
Anjali Sud: It’s consistent. What is systematized is being transparent with the organization about what is working and what isn’t. We open every meeting with, “What are the top three things that are working, and what are the top three things that aren’t working?” It destigmatizes talking about problems and turns the conversation into an intellectual one. Having a shared language for how you talk about opportunity as well as challenge is really freeing for an organization. It leads to more intellectual honesty, and that leads to better decision making in the long term.
Erik Roth: It sounds like you have a very inclusive, nonhierarchical, open culture. Would you say that’s true, and what have you done to explicitly create it?
Anjali Sud: I like to think we have all those things, but I also think we have a long way to go as an organization, as a community, and as corporate citizens to be more inclusive. One thing we do is have an open, but anonymous, Q&A at every town hall. That creates an opportunity for people to challenge executive leaders.
I have also surrounded myself with an executive team that is very comfortable openly disagreeing with me. That is massively big because when you are on a video call and you see your boss challenge their boss, you are more likely to then challenge your own boss. And never underestimate the importance of just saying explicitly that this is the culture you’re trying to build. But you have to back it up. You have to be comfortable with people openly challenging what you say. You need to be the type of leader to genuinely encourage it and not get defensive, and that is really hard to do.
Erik Roth: What are the biggest lessons you have learned along the way?
Anjali Sud: One would probably be to look where others aren’t looking. The reason I was able to champion the strategy we have today and why I think Vimeo has been successful at that strategy is that, while everybody else was focused on creating original content, my team said, what about all the businesses that need video to communicate? It wasn’t sexy, but it allowed us to not execute perfectly at the outset. We could throw things against the wall because nobody was focused on that market.
Another lesson would be to move fast. Everyone says that but I have never once looked back and thought, “Wow, I moved too fast.” I always think, “I moved too slowly, I wish I had made that decision earlier.” As organizations scale, you add so much structure and communication layers, and they slow you down. For me, this is a worry as Vimeo scales.
Erik Roth: Last question: What keeps you up at night?
Anjali Sud: I have been in positions where what kept me up at night were existential business questions. Do we have the right strategy? I am happy to say I no longer think about that. What keeps me up at night is execution and, within that, focus. Because when you are in a market like ours, at a time like now, the opportunity is huge. We are this nimble, fast-growing, fast-moving company and everywhere I look, I see opportunity. But I also know that to be great at something, you have to focus. And what I worry about most, as the leader of Vimeo, is, am I providing enough focus for my teams so that we can truly be great at something? You don’t want to miss a big boat, and it’s hard sometimes to say no to valid, exciting ideas that could be transformative. But I worry about too much distraction.