Telestream COO Jon Wilson Talks Encoding.com Acquisition
Jan Ozer: I'm speaking today with Jon Wilson, president and COO of Telestream, who this week announced that they acquired Encoding.com, perhaps the pre-eminent cloud and coding platform. And that's what we're gonna talk about today. Thanks for joining us, John.
Jon Wilson: Thanks for having me.
Jan Ozer: My pleasure. So what attracted Telestream to Encoding.com?
Jon Wilson: Largely three things. First, the tech the people and then the customer base. So from a tech perspective, as you said, pre-eminent leader in the OTT streaming space for VOD transcoding and workflows. They've built a fantastic business over 13 years in really that product leadership. And that was certainly what attracted us most. But then I think about the people, who've been leading the business for those 13 years: Greg Heil the CEO and founder, and Jeff Malkin, who is the president of Encoding.com. One, fantastic fit from a Telestream perspective in terms of who they are, how they fit with our leadership team and how we roll as Telestream, but overall their cloud leadership and capabilities are what really attracted us from a people perspective and really, overall, their broader team that they've built across Encoding.com. That was great. And then last, but certainly not least, the customer base. They built their presence over the last 13 years initially with a lot of different corporate video users that were doing more simplistic and in some cases complex workflow-based transcoding in the cloud. But then increasingly they've extended that leadership into M & E and broadcast, and they've had some fantastic wins over the last three years that we saw as incredibly relevant for Telestream, as we see our customer base evolving into leveraging cloud/on-prem hybrid models. Those were really the three reasons that attracted us to the team and the deal.
Jan Ozer: Greg and Jeff were, were cloud before cloud was cool. No doubt about it. I remember meeting with them 12, 13 years ago and wondering, what the hell are you doing? This will never work. Clouds are too big. And then maybe six or seven years after that, it was like, Why aren't you in the cloud? They really did take that ball and run with it. So tell us the general details of the deal.
Jon Wilson: Certainly, as you can expect, we don't disclose the financial terms of the deal. But we bought the entire business of Encoding.com. So Encoding.com is now a Telestream company. We'll continue to run it at least initially as a separate standalone operation that provides our customers great flexibility to extend their use cases from a cloud perspective onto the Encoding.com platform. And then ultimately--and I think we'll get into it probably a little bit more as we go here--they'll provide us the ability to extend our suite of solutions from a cloud perspective that we've had native at Telestream onto the Encoding.com platform as well.
Jan Ozer: You mentioned that Greg and Jeff are gonna be joining your executive team. Is Encoding.com going to still exist just as a separate sub or is it gonna get kind of rolled in?
Jon Wilson: Great question. So, to be determined in terms of how we ultimately roll in the combined enterprises. As of now, and for a period of time, Encoding.com will continue to operate on a separate standalone platform. We'll be working through with Greg and Jeff and our broader leadership team how we integrate the platforms, the capabilities, the people. But for right now, it's all about customer focus, keeping our combined customer set moving forward and really allowing them to accelerate what they're doing in the cloud and then extending what they're doing in on-prem into the cloud, which again is increasingly relevant. So that's that's 0.1. I think 0.2 from a Greg and Jeff perspective, you mentioned it--they're gonna join our senior leadership team. As cloud has become increasingly important across the M & E broadcast space, Greg's gonna take over leadership for cloud across Telestream right. In the initial charter for Greg will be combining the capabilities of Encoding.com and Telestream Cloud and what we have there into a broader offering for our customer base. And then over time. It's an opportunity for Greg to really extend across our entire portfolio, our offerings from a cloud perspective, right. To really put our customers in a great position to be successful as they think about what does cloud mean to them, how do they extend broader capabilities from for their workflow needs? So that's Greg, and then from a Jeff perspective Jeff's done a fantastic job building the business from a customer base perspective. And so we're gonna put Jeff in a position, or we put him in a position to lead our sales efforts from a cloud standpoint across Telestream as well.
Jan Ozer: Interesting. When you say cloud, is that primarily encoding, exclusively encoding, or does it extend beyond that?
Jon Wilson: It will. Today I'll say it's largely encoding, but we've also got a number of solutions outside of just encoding that fit into the broader Telestream cloud platform. So whether it's cloud, it's QC, it's captioning, we've got a number of capabilities beyond just encoding or transcoding and workflow automation that we do in the cloud today that really Jeff and team will have the charter to continue to extend across our customer base as we go forward. Over time, what that will evolve into is more just broad capabilities across the platform for our customers, as we think about the broader suite of Telestream solutions.
Jan Ozer: Specifically, how is that going to relate to Vantage, which I know was your big desktop, and you've moved that to the cloud with your own cloud platform. So what do you see happening with Vantage across Encoding.com and your existing capabilities in the cloud?
Jon Wilson: From a Vantage perspective, you hit it on the head. We've extended Vantage to the cloud with our Vantage Cloud Port offering. So our customers today, if they want to extend what they're doing on-prem and continue do that in the cloud and have the ability to do that across on-prem/cloud hybrid models. They can do that today. I think as we go forward from a combined Encoding.com plus Telestream perspective, it provides the opportunity to give our customers a broader set of capabilities across a broader platform. So we've got an unbelievable base of transcoding technologies in our Media Library that we've built throughout the 24 years of Telestream's history, and having now the capability over time to plug that into what Encoding.com has been doing and give our customers even more reach to the most complex workflows across across their base is going to be increasingly important for us as we move forward.
Jan Ozer: Taking a step back--when we first met Telestream 15, 20 years ago, it was primarily--if not almost exclusively--encoding. And you went on a tear of acquisitions with Ineoquest and Tektronix and the caption business. What are the major lines of business for Telestream now?
Jon Wilson: It's a really relevant question for where we are today, from the standpoint that we've grown, as you mentioned, tremendously over the last five years largely through M & A, but also organically. And that has put us in a position to have solutions for our customers across nearly the entire media supply chain. And that's where we see, frankly, increasing value for our customers across the business, is to extend the solutions. Our customers are increasingly wanting us to do more for them. And how do we combine all the different piece parts that have come into Telestream over the last few years into broader solutions and capability sets as their workflows become more complex? Natively, we do a lot of transcoding and encoding, but we're a workflow company. We do a tremendous amount around workflow. And as we think about connecting all the different products and solutions that we have, that's increasing value that we can provide to our customers. So when you think about the base today, right, we start our tech video product line from a test and measurement perspective. We've got great capabilities there. You then move into the media workflow and and automation space, and that's where Vantage has been dominant historically on-prem, extending that now with our cloud capabilities. Plus Encoding.com gives us a great base again to extend from on-prem to the cloud and everywhere in between from a hybrid standpoint. And then you extend that. We talked earlier before we went live about the Ineoquest acquisition in 2017. So that's our monitoring capabilities. Really, from ingest of a file, we are monitoring that content right through our monitoring technologies. And so it's really a combined offering and solutions that for our customers that we believe again is increasingly relevant and we can add a lot of value for them.
Jan Ozer: How long have you been with Telestream?
Jon Wilson: I joined in April, 2019, so just over three years now.
Jan Ozer: So, give us the business school do's and don'ts for acquisitions that that you've picked up.
Jon Wilson: From a do's perspective and just overall, it's all about the people. And making sure about the people and about the customers, and so, as long as we maintain focus on the people and ensuring that they feel like there's a home, they won, and we wrap our arms around them to make them feel welcome. And that Telestream is not just a home, but it's a destination. It's a destination for all of the people that join us to really build and develop their careers. That's incredibly important for setting the stage for success in terms of combining bringing companies into a broader platform, and then from a customer-based perspective, not losing sight of at the end of the day, all of the acquisitions that we've completed and will continue to pursue is all about how do we provide more value for our customers. And so long as we maintain that focus on the customers as our guiding light, we can be successful from an acquisition perspective. So I think as long as we continue to get those two things right which we've done really well over time, right ... From inception it has been all about the people, all about the customer focus and we've maintained that DNA for 24 years. And so that where we'll continue to focus from an acquisition perspective, and how we make sure that they're successful, because if we don't get those two pieces, that's where a lot of acquisitions fall down.
Jan Ozer: It's remarkable that Dan Castle's been there since day one, which is almost remarkable, given the changes.
Jon Wilson: We've always been private. We're on our second ownership with private equity right now. So Thoma Bravo was the first private equity owner, came into the business in 2012 after the business had taken on VC capital in early stages. And then now our current owner Genstar Capital came into the business in 2015. And they've been incredibly supportive of enabling our management team to continue to build the platform. And really the strategy that we've been pursuing to extend our reach outside of the traditional Vantage transcoding workflow automation space to build a broader set of capabilities and then ultimately solutions for our broader customer base.
Jan Ozer: What's their exit point? We're starting to see some pretty incredible valuations out there. What happens in the next three to five years to kind of exit or liquidate or not liquidate, but monetize their investment externally?
Jon Wilson: To be determined in terms of where Genstar ultimately goes with their ownership. As I said, they've been incredibly supportive of what we've been building I think you look at vis RT, for example. They've been owned by Nordic Capital for a number of years and Nordic Capital just re-upped with them in terms of moving them into a new fund. And is that a potential for Telestream with Genstar? Yeah, it may be. I think we build a great platform that others in the space from a private equity ownership perspective would really value to see how do we continue to take Telestream forward and build on the foundation that we've established over our 24 years of leadership.
Jan Ozer: I think that's all I have. I appreciate you taking the time to discuss this.
The addition of Emmy-award-winning cloud media processing platform Encoding.com marks the 13th acquisition for Telestream. Terms of the deal were not disclosed.
Companies and Suppliers Mentioned