On building Hulu

Kilar preferred to build the site with a handful of people he knew -- "the Ocean's Elevenapproach," he called it. He hired Amazon and Microsoft veterans and former classmates from Harvard Business School, folks who were willing to work long hours scribbling ideas on whiteboards and writing software code in a push to get the site up in less than 90 days.

"Customers won't tell you what they want," Kilar says, citing a Bezosism. "But their behavior will tell you if you capture and analyze it."

Because Hulu's player was easy to embed in other sites, users could spread its videos (and ads) to tens of thousands of places on the Web, expanding a distribution network that included huge portals like AOL and Yahoo. By January of this year, Hulu had nearly quadrupled traffic, without spending a dollar on advertising.

"He always thinks about the customer and the customer experience," Zucker says of Kilar. "That's his singular focus." Pause. "I wish he were as focused on the monetization."

Zucker says flatly that the amount of advertising and the ad rates on Hulu must increase. Which seems pretty harsh considering how successful Kilar's model has been so far. Indeed, in many ways it has been so successful that it threatens the traditional TV model as much as YouTube's viral "Lazy Sunday" did.

Broadcast TV remains the easiest way to reach a mass audience. The online audience for a given show is dwarfed in comparison. Consequently, online ad spending on video, though growing at a 43%-a-year clip, represents a pittance -- around $1 billion in 2009, compared to around $46 billion in broadcast ad revenue. 

Kilar learned one thing at Amazon about changing an industry, he says, it's patience. Bezos used to say, "Online commerce is the worst it's ever going to be." Online video, Kilar knows, can only improve. Kilar insists that Hulu's Amazonian mission -- to help people find and enjoy the world's premium video content -- hasn't changed. 

It was the same at Amazon. I was there when people were calling it Amazon.bomb, and everybody was saying that once Barnes & Noble goes online, the game is over." At Hulu, he says, "we're creating the kind of service we want. We're some of the biggest media consumers on the planet. This is the way we think media should be."(via fastcompany)