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Encoding.com Raises Series A Funding, Plans Marketing Mission

Encoding.com has 1.25 million reasons why you'll soon be hearing a lot more about it. That's how much the online video encoder just raised in Series A funding from venture capitalists and angel investors. How will it use the money? To make sure more people know it exists.

"Expanding the gospel," is how Jeff Malkin, Encoding.com's affable president, puts it. It's time to blow out the sales and marketing efforts, he says. There's no massive service overhaul or expansion into different service areas coming. The main goal is simply getting the word out. The funding was led by Metamorphic Ventures and also included angel investores Patrick Condon, Fred Hamilton, Zelkova Ventures, Dave Morgan, and Allen Morgan

Encoding.com is a cloud-based service for video encoding, one that asks clients to forego the burden of encoding their own clips and the expense of maintaining equipment, and to simply let it do all the work. The service has found a following mainly with smaller clients, but aims to broaden its appeal.

"Now it's time to continue moving up the ladder," Malkin says. The rap on Encoding.com has been that it's fine for independent and smaller customers, but that it can't handle the demands of major media companies. Malkin wants to change that perception, and that takes money.

His company is already used by many large clients, he notes, including some that encode 1,000 videos per month. The company currently handles more than 30,000 videos per day. That number has grown from 10,000 videos per day last summer with no marketing efforts.

Part of the Encoding.com team's marketing goals is to analyze business verticals and decide which ones make the most sense to target. Once they've picked industries, they'll go after them by attending conferences, creating market-specific product literature, and simply picking up the phone and making calls.

The company will have to be a little sly in its efforts. A lot of its clients don't like to be sold to, Malkin notes, but like to think that they discovered the company themselves.

Encoding.com has done well in the past year—or, as Malkin puts it, "We knocked the cover off the ball." It's been able to not only meet but exceed customer acquisition and revenue goals (Encoding.com is a private company, so Malkin won't say what those goals were), which helped it gain credence with potential investors.

The reason that Encoding.com has done well and competitors haven't, Malkin says, is that the business of encoding video is more complicated than many imagined. His company is the only one that offers service level guarantees against various metrics, he says, a critical factor for getting top tier clients.

And getting more top clients is now a major goal for the company. The enterprise market is just getting comfortable with the idea of cloud computing, Malkin notes, with some just beginning to dip a toe in the water. While he doesn't expect major clients to hand Encoding.com all of their video encoding business at once, he knows that taking the slow approach helps them measure results and get used to a new way of working. Once they experience Encoding.com's speed and security, he hopes they'll trust the software-as-a-service vendor with more videos.

The trend is for increased comfort with all manner of cloud computing, Malkin says, including cloud storage, computing, databases, and, naturally, encoding. That trend, plus a sizable round of financing, could make 2010 a great year for Encoding.com.

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