Reflecting On 20 Years Of Developing Video Streaming Solutions [$1.2M/Year]

Dmitriy Alentev
Founder, Modelnet
$100K
revenue/mo
2
Founders
50
Employees
Modelnet
from Jackson, WY, USA
started October 2001
$100,000
revenue/mo
2
Founders
50
Employees
604K
alexa rank
309
followers
347
followers
106
subs
market size
$17B
starting costs
$11.7K
gross margin
90%
time to build
210 days
growth channels
Organic social media
best tools
AppSumo, Coursera, Semrush
time investment
Full time
pros & cons
39 Pros & Cons
tips
2 Tips
Discover what tools Dmitriy reccommends to grow your business!
Discover what books Dmitriy reccommends to grow your business!
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Hello! Who are you and what business did you start?

Hello, my name is Dmitry Alentyev and I am the founder and CEO of Scrile, a software development company that focuses on B2B IT products for business. At Scrile we help our clients to create new IT startups 10 times faster than people usually can do traditionally.

I’d like to tell you about one of our products – ModelNet – and the results that we managed to achieve over 15 years of the product's existence.

We have developed a ready-made platform for online video conferencing with real-time communication functions and various built-in payment methods. With the help of our product, online entrepreneurs can create their marketplace, where performers can sell their services to customers via online video communication. This way performers can make a living from the comfort of their homes.

This industry has always been popular and with the Covid-19 pandemic influence, the demand for it has grown so much, as more and more people are forced to turn their businesses into the digital world. Modelnet platform can be used for different business niches such as online expert advice and consulting, fortune-telling, psychic and tarot readings, telemedicine as well as the adult entertainment industry using live video chat.

We provide 16 extra monetization tools or addons that allow creating a unique system that will reflect the requirements of your business. Moreover, we offer a custom development service and our team of professional UI/UX designers and developers is ready to bring any idea to life. Our client is an entrepreneur who has a desire to open his own online business and not just make a living but form a company that effectively promotes its service and grows.

Our market is quite narrow but we are accelerating and expanding into new markets and niches where our products can be used. The total earnings were quite stable annually, and in 2021 we did $1.5M in sales, while the margin is quite good, on average 40-50%.

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What's your backstory and how did you come up with the idea?

My story started at the beginning of the millennium which is rather symbolic. I was a student at the university and worked part-time in an IT company as a Java developer. I was working on some small internal projects that were not destined to generate income for the company and I was given the additional task of finding feasible projects in the international market.

Even though it was a completely different task, it did not scare me at all, because I was always interested in doing something new. As a result, I began to look for the projects and develop them myself. I was so much into it, but the tragic incident happened on the other side of the planet on September 11, 2001. The 9/11 terrorist attack took place in the WTC and a large wave of financial restrictions swept the world, which affected the results of my work as well.

It didn’t take me much time to think about what to do next, and next month sitting at New York Pizza (a popular Russian fast-food pizza restaurant chain) I told my friends about my desire to start a company. The idea behind the company was pretty simple – I will find clients for custom development orders in the international market, and we will implement them. First on our own, and then by hiring employees.

We had everything we needed for a start! I have been developing software since I was 12 years old and I was the winner of city and regional Programming Olympiads during school and university. I had the same guys like myself in my environment because we trained together for the Olympiads. I already had experience in finding clients and I was familiar with this process. That is how we got started. The first year we worked in a rented apartment, then we moved to a small office and after 2 years we had a team of 8 people.

In the third year, we realized that we can work more efficiently and faster if we do not take on all orders in a row, but only those for which we already have a pre-built software basis. This is how we started to create our first business product WebVideo, which later brought together all of our customers and turned into ModelNet - a network of independently operating live video chat websites that come together for win-win benefits.

Later, reflecting on how we came to this, I realized an important thing: we never suggested hypotheses or tested them, we did not brainstorm to create breakthrough technologies and we did not do any custdev interviews. We just did the work that clients ordered from us around a certain product and received money for it. But this is a great way to build demanded products because each customer votes for the necessary features with their own money. We do what our clients need, and those features that are ordered regularly by different clients are included in the core product – this is an effective approach and we follow it up to now.

As a result, we have managed to build up the following processes:

  • generation of hypotheses for incoming requests from clients
  • ranking hypotheses based on payments from clients
  • testing hypotheses on the working client websites
  • product improvement according to the most demanded requests

Some customers were dissatisfied with the fact that we are improving the product at their expense, but this is not a correct judgment. We initially set a low price for the basic version of the product, and these improvements help to achieve a high-quality result. We do not mind if our clients choose to do customization and improvements with the help of their development team, but still, our professional developers will do it better and faster because they are acquainted with the product better than anyone.

Take us through the process of designing, prototyping, and manufacturing your first product.

We started developing software for video streaming in 2002, at that time it was an innovation of such a level that few people understood how to use it. Our first client faced such a problem that his customers did not even have a webcam to broadcast video, a microphone, and suitable headphones. To solve this problem, our client supplied his customers with a set of standardized equipment so that it was possible to work normally, and we reached the first users of the platform, tested and improved the streaming and payments.

It took us about 6-8 months to create the first version of ModelNet platform, but our client did not manage to promote his site and soon closed it down. The market was quite small, nevertheless, we decided to develop further and began to study who else we could offer our solution. At the beginning of the Internet era, the adult segment and the entertainment industry were the drivers of development. They had money and the opportunity to take risks, so our first clients were entrepreneurs who created their webcam sites. And we started to adapt the product to their needs.

As a result, we invested $200k and it took us 3 years to build our product.

In 2008 we changed the broadcast technology and switched to Flash Player, which later became outdated and by 2016 we switched to WebRTC (Web Real-Time Communications).

During these almost 20 years, the technology of online video broadcasting has changed a lot, and the approach to communication using online audio and video calls has firmly entered our life. Today at Scrile we are developing a wider range of products:

  • Scrile Connect - a turnkey full-featured software for launching a social network platform for influencers and creators who can monetize their content and interact with their fans on a paid subscription basis.

reflecting-on-20-years-of-developing-video-streaming-solutions-1-2m-year

  • Scrile Meet - all-in-one software for creating a consultation marketplace where experts can provide their services online via private live meetings, group sessions, and webinars with the integrated payment system.

reflecting-on-20-years-of-developing-video-streaming-solutions-1-2m-year

  • WebVideo - our original but updated product for the entertainment business niche that includes all the needed tools for running a webcam site and can be customized and adapted to any needs with the help of addons.

reflecting-on-20-years-of-developing-video-streaming-solutions-1-2m-year

Describe the process of launching the business.

Our process of launching the business was quite fast but gradual. In the beginning, we started with custom development, the first clients were found from freelance exchange websites and all the money we earned came from these exchanges. This went on for some time, but soon other clients not from freelance exchange websites began to appear and it was necessary to find a way to accept payments from them in Russia.

It is not as easy as it might seem at first glance. Opening a company in Russia is not difficult, but as soon as you start accepting payments to your сurrent account, additional currency regulation requirements appear. And we had to go through these difficulties on our own.

Then we opened a company in Scotland and an account in a Baltic bank. For a certain period, this was a very successful option, because LP companies in Scotland organized by an offshore partnership of companies from Belize are not taxed (because of offshores) and at the same time they are completely credible because they are protected by British law. But this period also came to an end and we opened a company in the USA. Everyone trusts this jurisdiction, there are no problems with registration in payment systems, and it is nice to pay taxes for it!

It is difficult to be the kind of person who can think from different points of view at the same time, so there must be several different people in the team who want to interact and negotiate to find the best solution.

We have never attracted external investments because the structure of the company was arranged in such a way that we had profitable directions of financing for the development of new innovative products. This scheme was the only one possible at the time of the company launch when I was still a student and it was preserved in the future as a convenient and safe work format. During the entire existence of our company, there has never been a salary delay and I am proud that our employees can feel safe working with us.

Since launch, what has worked to attract and retain customers?

Since the company launch and for several years from the start we did not have a marketing team at all, and our main channel for attracting customers and sales was the word of mouth recommendations. Many clients who have worked with us for some time recommended our product to their friends and it still works.

Today we have clients who have been working with us for ten years and are very satisfied with our services. We always cheer for the success of our customers, study the market trends and improve our products. Also, for our current customers, we offer a service of customization and adaptation. They do not need to attract any third-party specialists for their successful business, because from the technical side we provide everything they need: development, technical support, maintenance, and updates. This is our key advantage, which gives the client confidence and keeps them with us for a long time.

Nowadays we have a team of marketing professionals who are in charge of promoting products through different digital advertising channels, such as SEO, social media marketing, email and content marketing, outreach and PR, Google and targeted ads, etc. The combination of all these channels gives us a stable and constant growth in traffic and sales.

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reflecting-on-20-years-of-developing-video-streaming-solutions-1-2m-year

The surprising fact is that in our case, crowd marketing (for example, on Quora and Reddit) is very effective in promotion, increasing traffic to the website, and forming a brand image. We actively share expert opinions on topics related to our products on these platforms and recommend our solutions to users without spam.

reflecting-on-20-years-of-developing-video-streaming-solutions-1-2m-year

We have also practiced partnership with industry leaders like Webcam Startup and participated in Xbiz and other industry-related events like Webcam Training Forum. Modelnet was nominated for Xbiz Awards 2019 as Innovative Web Product of the Year.

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How are you doing today and what does the future look like?

Over the past couple of years, the Covid-19 pandemic has accelerated the emergence of new services based on online communication, so the demand for our products is growing as well. There is an evolving growing market trend on decentralized interaction between the seller and the consumer and monetization of online content. More and more experts prefer to live where they like and turn their business into the digital world. That is why we expect only growth in the future!

Most importantly, there is no need to seek the perfect offer or solution. Start testing your hypotheses as early as possible to make sure that these are not just your hallucinations.

The platform for adult content creators OnlyFans is a billion-dollar business that is growing at an incredibly fast rate with up to 500,000 new users joining the platform daily. There are over 100 million registered users and over 1 million content creators. Google Trend data indicate that OnlyFans has grown over 500% in 2020, with the global pandemic playing a major role in this growth.

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Our product Scrile Connect provides an opportunity to launch an independent platform for content monetization of creators without any commissions or restrictions. Our clients want to join this trend, especially since there are practically no competitors in this niche now. In October 2021 one of Scrile Connect based adult entertainment content platforms was sold for $30 million.

Regarding our plans, we are going to continue our direct-to-customer strategy, but we also intend to try all possible methods including integrations with other platforms.

As I mentioned at the beginning of my story we did $1.5M in sales in 2021. We are gaining momentum right now, sales of all our products are gradually increasing, but development and marketing costs are growing along with them. However, I am sure this is the indicator of our growth.

Through starting the business, have you learned anything particularly helpful or advantageous?

I would like to highlight 3 important lessons from my own experience:

  1. Pick the right team
  2. Find funding
  3. Focus on your goal and go to it with full speed ahead

I was very lucky that from the very beginning of the business I have been working with a partner who has a different character and approach to business. I am a visionary person and I see the result, but I do not always understand the path to this result and the problems that one may encounter. It is difficult to be the kind of person who can think from different points of view at the same time, so there must be several different people in the team who want to interact and negotiate to find the best solution.

We simultaneously worked on our products and orders from our clients. Custom development is not very promising in terms of developing the company's capitalization, because everything that we created went to our clients, but this work gave us money to reinvest in the development of our product. After all, we had no other way to receive investments at an early stage of the company's development, and this was not so common at that time.

We were also very lucky to get one large client, for whom we developed a startup project that was called Mavishare at the MVP stage, then Trialpay, which was later bought by VISA and we worked with this company quite successfully for several more years. We tried to invest the money we earned in creating our products and promoting them.

At the same time, there is also the other side of the coin. When everything is quite good and stable, it is difficult not to relax and simply start to go with the flow. This is a dead-end, if you do not develop, then sooner or later you will die among competitors who are more active than you. It is important to have a goal, write it down, declare it to the whole team so that they can move in the same direction.

What platform/tools do you use for your business?

First of all, I would like to draw your attention to the fact that it is not so much what tools you use that matters, but how you use them. For example, we use Jira Software to plan, track and manage development. It is a powerful tool that helps to visualize all teamwork. But for this to be effective, all work processes must be also properly aligned.

Our company is thoroughly imbued with the spirit of Agile. All teams, both service, and production work according to the Scrum framework. Not only development teams, but also support teams and even the sales, marketing, and HR departments are Scrum teams that have all the artifacts for the successful completion of tasks, growth, and development of each employee.

This methodology is successfully used by us and we use Jira Software to implement it. But I want to note that it is not so important which platform we choose, the most important thing is the culture that we create in the company. A culture aimed at achieving results in a short time, a culture of continuous improvement, a culture of mutual assistance, development, an optimal balance of quality, and speed of task completion.

We use HubSpot – a CRM platform that combines the automation of marketing, sales, and customer support processes. It is feature-rich, highly customizable and I regularly thank the developers of this platform (in monthly payments), but it would not have helped us to cope with our tasks if we did not have streamlined processes and professional people who know how to create these processes and improve them as part of the work we do.

We also use Upvoty for collecting customer feedback, Mailchimp for marketing email campaigns, Zoho for billing and accounting, and other services that help us speed up our work and provide a better service.

What have been the most influential books, podcasts, or other resources?

Read more good books about self-development and business – it helps to keep the energy up, form an entrepreneurial mindset, and very often gives practical advice that can be applied here and now.

Being an Agile company, we have already been practicing the Scrum approach for several years and are very pleased with the result, but last year we decided to implement it at a higher level of management and create something with a similar effect for middle managers.

And we got acquainted with OKR (Objectives and Key Results) – a collaborative goal-setting methodology that organically complements Scrum. I recommend reading the book Start Less Finish More by Dan Montgomery and then Measure What Matters by John Doerr.

Here are some other books that I can recommend:

Advice for other entrepreneurs who want to get started or are just starting out?

The world is evolving so rapidly that constant self-development cannot be neglected. Choose a convenient format for yourself and always set aside 30-60 minutes a day for self-development. This is a long-term path that will not give an immediate effect but will help your head to always be on-trend (and also save you from Alzheimer's).

Books, audiobooks, podcasts, or video courses - any form that is convenient for you. For example, I love running in the gym with an audiobook, and I think this is the best way to use the time for exercising wisely. And the blood that comes to the brain while running will help you better understand the material.

There is a lot of information on how to start a new business the right way. Start with Lean Startup, move on to other books, build a Lean Canvas, do customer development interviews. Most importantly, there is no need to seek the perfect offer or solution. Start testing your hypotheses as early as possible to make sure that these are not just your hallucinations.

Entrepreneurship is a series of trials and errors. Fail fast, fail cheaply. I believe this is the key to success.

Are you looking to hire for certain positions right now?

We always welcome professional developers, sales, and marketing specialists at Scrile and they can drop us a line at [email protected]. We are also looking forward to meeting new entrepreneurs who are ready to start their online business with one of our products. Message us on social networks, using a contact form on our website or email and we will do our best to make your dream come true.

Where can we go to learn more?

-  
Dmitriy Alentev, Founder of Modelnet
Pat Walls,  Founder of Starter Story

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