Will We Pay For Social Media? with Hovhannes Avoyan (PicsArt)

Thank you So there's this perception that nobody Would pay for social media and but with 45 million dollars in funding 500 Employees across five different offices And now a 140 million users many who are Paying or some who are always paying You've proven them wrong and shown that People are willing to pay for social Media how have you done that Okay so maybe I should start with the Founding Story how how it started uh no Why don't you ask tell me just like if You're you're an app that lets people Edit their photos uh add all sorts of Really cool artistic elements but how Have you been able to make people pay For this Yeah I mean there are a couple of Beliefs in Silicon Valley that uh first You cannot compete with Adobe and second You cannot charge for people using Social media I think both are wrong So uh honestly uh you know we when we Pivoted to a subscription model we were Expecting to see like to grow our growth To be slower but it's not happening so We see strong growth we still see Increase of monthly active users now We're approaching 150 million actually Most active users If you compare with the country will be Bigger than Russia yeah in terms of our Monthly active users and we have about

700 million in stores Uh so again like to put in a perspective It's like every uh smartphone users in The United States installed us three Times right so yeah we are we are not Seeing the any impact on our growth when We switch to a subscription model A lot of companies worry that if they Add premium features then all of a Sudden they're going to lose a lot of Their growth because people are going to Say oh I don't get everything for free I Have to pay for the good stuff the bad That's only the the less useful stuff That's free so why would I even use this App or get my friends to use it but did You guys see that and how do you decide What features should be free or premium As you try to balance growth and Monetization Yes that's a very good question uh when When we switch to a subscription model Uh actually our users some of our Advanced users ask us to switch to the Subscription model because first they Don't want to see ads and second they Want to see more premium features when You are building a product for for free You are really not thinking about your Users as your customers because your Customer is a business advertisers who Is paying for using the the product Right so basically you are optimizing Your product not for the your end user

You're optimizing your product for the Business right and That's why you you know Facebooks and Other social networks they measure like How much how much time people spending In their app because that's the the time They can monetize Uh in our case because we are allowing People to create stuff Uh we see like it's not about how much Time they spent but how many edges they Did right and if we provide them better Tools they can do more edits they can do More creative stuff and optimizing our Product for end user who is also a Customer we're making the product better For them so that makes sense for why you Had the freemium features but I must Imagine it's difficult to decide does This feature like your sketch feature For instance which lets you draw kind of Like a an automatic silhouette of Somebody next to their body it gives This really cool kind of ghostly effect Uh you made that free how did you decide To make that free instead of making a Premium so that when people came in and Wanted to use it they'd have to pay Right that's a very good question uh and And I believe people in this audience Probably notice our effects in Instagram And other social networks because it's Very viral uh filter so it's a if you if You don't see it uh it's like a you know

You you take a selfie and it's kind of Outline your you know like a face and It's make it like a sketch Uh so we Often decide If it's this feature is as free or Premium based on the potentially to be Viral Because sketch is supposed to be such a Viral feature so it's contributing to Our growth And that's why we make it free and it's Also I mean we should because we never When we convert uh we switch to Subscription model for example we didn't Take any thing which was free and movies Behind the paywall No actually we did exactly like Technology so we just initially Initially we just you know uh remove ads For a premium user premium users and Provide premium content That was our initial move right I'm yeah I think that's a really smart strategy Because if you if you take the things That are going to grow your app and make Them free but then you take the things That might drive a lot of value for a Few users the most hardcore users and You make those premium you can still Grow and use that as the top of the Funnel to convert people and I'm Personally really happy that TechCrunch Didn't do what a lot of blogs did with

Extra Crunch and instead made it so There's new types of content that we Have there rather than just taking Existing articles and stuffing them Behind a paywall which I think we all Know is really annoying and by the way I Really enjoyed that feature so that's it Okay are you guys profitable now we are Not profitable but we control our Destiny I mean you know we are we are Still spending on our marketing and rnds Etc etc we can became profitable we Decided but are we still investing in Our growth cool so let's talk about you For a little bit you founded and sold Four companies before Pixar which is Your fifth so what is your superhero Origin story as both a Serial Entrepreneur and is the creator of this Artistic program Okay thank you for asking that uh and uh Allowing me to share my personal story How a Pixar was created Uh I have a four founding stories as you Can understand but Pixar is a very Difficult is different because it's very Personal story And uh every time when I was you know Creating a store a startup I am solving A problem So when I was selling one of my previous Company moneties to German company TeamViewer and by the way I should stop Here say okay I sold two of my companies

In Germany to TeamViewer and baltusman So when I was selling my company I saw My daughter crying And the reason was she posted one of her Drawings online and get very bad Comments oh it's terrible so she was Very discouraged she was almost about to Give up because she was 10 years old and She thought oh maybe I'm not very good On drawing so probably I should give up And I try to encourage her as a father But also I mean I did something which is Quite unusual for a father but very Natural for entrepreneurs you build a Company to solve your daughter's problem That's adorable yeah so I don't know how Successful I will be as a Pixar uh CEO But as a father I succeeded by the way My daughter didn't give up And now she is graduating college California College of the Arts and she Will be a professional illustrator soon Oh it's amazing that's really cool yeah Okay so uh I would like I would bet that A lot of entrepreneurs out there would Love to know how to sell a company let Alone four companies you know what what Advice can you give to entrepreneurs in The audience who want to know how to get That exit You know I really contribute My Success To three important skills I have First of all uh on my first companies I Did a lot of coding myself

So I would say coding and ability to Build your own product yourself without Asking her you know developers and Engineers to do that will be super Important so I would say first we'll be You know get good coding skills or if You can't or it's too late just find a Good co-founder who can do the coding That's opposed to like hiring outside Development exactly because it's a lot Of iterations lots of Trials you better Have a control over that right second Things is to understand what kind of Problems you are solving Is it a real problem or it's you think It's a problem so understanding what Customer needs is super important skills And you need to spend time to understand If the problem is real or not so my Daughter's problem appears to be is not Only my daughter's problem it's very Common and I believe maybe people in This room which they have a keys they Can probably associate with this kind of Issue when you know kids are giving up Not becoming creative because early they Didn't get this encouragement So understand if the promise you are Solving is big enough And the third skill will be I'll say When you going to the like more mature Stage is marketing understand how to Sell and Market your product what Distribution Channel you can get uh and

Who is going to be your channel and what Channel you are going to use to sell or Get your your users that's really good Advice I think everyone should take that To heart is like if you don't have the Coding skills yourself get a great Technical co-founder rather than hiring Mercenary developers who aren't going to Do the iteration with you don't guess at A problem you want to solve actually do The research and make sure people really Have that problem themselves and make Sure you know how you're Distributing And marketing and selling your product Not just how you're building it because I think a lot of great entrepreneurs and Product Builders and Engineers forget That last step but I think one of the Most important parts of distribution is Finding great allies and you as an Armenian startup and an Armenian founder Have found a really amazing Ally in Kim Kardashian one of the world's biggest Celebrities how did you guys get Involved with her because I've seen her Posting on Pixar and posting your guys Hashtag to other social networks No I should say talk about you know Overall how we were working with Celebrities So Pixar is not just a tool Pixar is a Combination of three things we have a Strong and powerful tools which are like People are talking you know saying we

Are like Photoshop for mobile Photoshop for Mobile Generation even But second and third components are Super important tool we have a community Of users which are using our product to Collaborate and co-create and we have Unlimited content a library created by Our community so we are collaborating With different celebrities in terms of Because we already have different Fandoms within Pixar like K-pop is a Super popular you know category for us Like we have a BTS you know groups Ariana Grande especially in Germany Actually it's Germany I should say is The second most active community in Pixar and we have a in our local Celebrities uh also you know within Within our pixel so Celebrities finding they're already like Super super popular so we we cannot give Them even more kind of uh popularity or Recognition but what they can do with Pixar they can get engaged with their Fans in a much more intimate and very Kind of a creative way because they we Are creating challenges for them and our Community is creating like super uh Posters or coverages for their albums Etc etc and and at the engagement level Is like tremendous It's like you you you share your love to Your idol to by creating something That's really cool because I feel like

So much of fan and Stan culture on the Internet is about just liking and faving And retweeting but you're actually Asking people to get involved in the Creative process make something of value For their the celebrity that they love The most and then there's a more of a Back and forth relationship plus what You end up having is those people Promote the things that they create and Use generates a lot more distribution For both the app and for those Celebrities exactly yeah we have a very Good partnership with Taylor Swift Before Kim Kardashian we have a you know Many interesting and very cool you know Contents uh and challenges uh and and we Have our like you know millions of Millions of views of around this these Challenges so is Kim Kardashian an Investor in the company she is not she's A partner she's a partner says that is She being paid in equity for her work With the company no we didn't pay Equity So you guys are paying cash for it no we Didn't you know I cannot disclose Details we do a kind of collaboration With her and but most of our you know Other celebrities are small like Co-marketing we didn't pay anyone we Just promote uh in our Channel and they Promote us in their channels got it so You guys are promoting Kim Kardashian so That she harasses her her level of

Status but she's also promoting you guys Kim Kardashian slightly different story But yes in general we do the work like What do you mean a different story yeah There's a some you know uh you know we Have some contract with her but uh I Cannot disclose details I'm gonna have to ask some people about That all right um so let's talk about a Much easier topic uh China so you guys Have 15 million users in China now uh That can be extremely tough for a Foreign startups to accomplish you know What advice can you offer into breaking Into this country which can seem really Monolithic and difficult to penetrate Yeah it's an interesting question uh you Know we probably one of the biggest if Not the biggest foreign company in China I mean like in terms of monthly active Users Etc and we were in China even Before we start anything of doing in Official in China So before we start it like two couple of Years ago we have a lot lots of pirated Versions of uh for Pixar in China and we Didn't find what this uh pirated version So basically it was like if you see Pixar in average the shop Uh cracked versions and and and uh Uh you know like modernized versions of You know by third-party developers so When we go to market we go to China like First year the only things that we're

Doing just replacing this illegal Versions with the illegal version of Pixar so when by the time we start our Presence in China we already started We're already quite big in China and it Became like viral because of you know It's it's I mean we are growing like Everywhere because it's very you know Fundamental nature of people to share Pictures and communicate through Pictures Okay so that's the the good side most Use most companies most startups don't Have a presence they aren't being able To monetize China you guys are but at The same time you clearly must have to Deal with China's sensors which can be Quite restrictive and on Pixar it's not Just a set of tools users can upload Their own photos and their own stickers That other users can use and so do you End up having to take stickers or images Down because of Chinese sensors Right now we are focusing more on uh Being safe platform for our kids and uh And for uh Uh you know like uh gen z uh users so Our moderation is mostly about adult Stuff so we because we are you know People can share like anything we really Like using AI especially to do like this Kind of moderation sure I mean taking Stuff like nudity or graphic violence Out you know AI can do a pretty good job

Of detecting that stuff but things that Might offend Chinese sensors that can be A lot more nuanced and difficult to do So do you guys have human moderators who Are sifting that stuff out is China Asking you to take things down We haven't had any case for now uh you Know especially there was a kind of like You know semi nudity stuff which kind of Uh you know uh skip our you know Moderators we do have a uh Uh manual moderations but right now it's More focused on others nudity stuff not On the political things so we don't have A we didn't have any issues with the With the political thing so far uh and I Think that's by because of the nature of The content we are having is about Creation it's not like a so people are Not expecting like you know if you post There like a few the thousands people of See see the content it's more about you Know like the we are really like Filtering the content in terms of Usability so you say that you haven't Had problems with China's sensors yet I Hope that I haven't started these Problems I posted right before this Panel a photo that I found uh on your App of the Hong Kong protests and then I Took a sticker that I found on your app As well which was the Chinese president Dressed as Winnie the Pooh which Apparently is not that into uh and I

Shared that to your guys feed is that The kind of thing that could get your App banned or if the Chinese sensors Come and say you have to take this down Will you remove it Uh that's a tough question I mean you Know there are you know There are two extremes right like Google And apple uh Apple is still in account To be compliant with the government and Google you know decided not to and They're losing the kind of presence and Get replaced with some other services It's uh uh yeah I mean it's not only us I mean when we are serving our content To China we're also using different Services in China like cdns and they Also have their own moderation got it so It's another you know level so would it Be that like maybe that photo of Hong Kong or that photo or that sticker of The president wouldn't even appear to Users in China exactly that could be but Not because of us because of the hosting Servers or or vpns even got it so you Guys are kind of able to dodge that Question of doing the policing yourself By using third-party vendors in China Who take the responsibility if they're Going to be hosting the images to make Sure they're not having stuff that would Offend the sensors we didn't do that for That particular reason we did just to Provide better and faster services to

Our clients As a side product you get that too okay Yeah uh I'm fascinating to see if more Companies do that but I also think you Should probably make sure you know if You're going to operate in China you Know it's you're going to have to come Up with some pretty hard line policies About how to deal with that stuff Because it can't be something that goes On a case-by-case basis as we've seen With with all of these companies with Tick Tock dealing with this right now it Can become a really big Global issue Really quickly Um so I want to ask one more thing you Have a tab in your app that's for Beautifying yourself you know removing Blemishes making your teeth whiter my Question though is do you think that the Seeing those kind of images that are Beautified can make other users feel Ashamed of their own bodies and do you Feel a responsibility for that by Offering those beautification tools You know I mean if you it's it's a it's A it's a very natural I mean uh you know You want to look much more beautiful Because I mean if you're using makeups In the first place it's like it's about Beautification right so sure yeah so we Are not really like invented that uh We're just providing tools which make it Better than anyone else

So but does making better beautification Tools is that good if that makes people Think like oh all these other people Look beautiful and I'm so ugly I'm never Going to be beautiful like these people And you can go into kind of a shame Spiral and it can be really bad for your Own personal well-being you know do you Guys do anything to help offset that or To tell people that like you shouldn't Expect to look like this person who's Obviously been manicured with your app Actually yes we actually have another Feature we're just planning to do is Like uglify yourself yeah so you know Not only just beautify but make you ugly And just have fun uh we so we're Providing tools I mean how people are Using them I mean just to make you nicer Or you know you sometimes we have a very Large group of our uh users which are Moving to prosumer market right and for Prosumer they start doing like banner Ads Etc and for Banner us they need to Use like models and nice faces to put on The other Banner right so it's not only Like make yourself nicer it's more so Like you know make a nicer face for your For your display out cool I would Definitely like to see you guys doing More to make sure people know it's okay To be themselves even if they want to Beautify themselves or others so one Final question you know you guys have

Succeeded in being a premium social Network selling tools yet very Surprisingly Facebook Instagram even Twitter where it's all about hardcore Users they don't offer any real premium Features do you think we're gonna see Instagram or Twitter launch their own Premium versions and what kind of Features would they give that people Would want I wish to have that kind of option when I'm using Facebook or or Twitter to have A like premium subscription and opt out Of this ads and maybe having some even Like premium Advanced features uh so Like a couple of networks that's pretty Successful including us so like YouTube Or LinkedIn they are they I'm I'm paying For these two networks and I'm using These networks and uh and and uh it's Good if uh for example if Facebook Decided to switch to or switch to or Provide the option to opt out from the Ah from the Arts and and provide some Like maybe it's like premium content Etc I think you know I'll be happily paying Like 10 15 a month to use this feature And even like even like five percent of People who are just converted to the Paid it would be like 15 billion dollar Revenue for Facebook alone Quick raise of hands in the audience who Out there would pay to stop seeing ads On Instagram or Twitter or something

Like that Seem yeah it's maybe it's only five Percent but that still can be a lot when You're talking about billions of users So I also hope that by providing these Kind of Premium features the way that You guys are are pioneering we'll see uh These companies stop relying on Surveillance and data collection and Give users an opportunity to say hey I Want to be able to use your service I Want to connect with my friends I don't Want to have to give you all my data in Exchange for that and you guys have Managed to do that so congratulations to Pixar and thank you guys for watching Cheers thank you thank you very much Thank you

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