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Ripping Video for the Enterprise: Ripcode and MySpace

ripcodeAfter spending eighteen months in “stealth mode,” and burning through a chunk of $17m in funding, a little Texas startup called Ripcode Monday came out of hiding with a bang.  The company, which has been developing a network appliance for encoding video data streams, formally introduced their product and also announced they’d signed a whale of a first customer: MySpace.

For every well run startup there is always one question, one market problem that they are aiming to fix.  For Ripcode it’s been about efficiency and cost effectiveness.  Their question was how can an enterprise which hosts Internet video re-encode the files in a cheaper and more efficient way.  The standard practice has been to rely on server-side software on the network.  There, in single and batch processes, each new upload of user-generated (or professional) video is converted for different screen resolutions.    While effective, the method is slow.  Video formatting can strain even the most powerful of processors and relying on server-side data processing in a load balanced network can tax the entire network’s performance.  The method is also, given the cost of adding servers to a hosting environment and paying for bandwidth, hardware and rack-space, potentially very expensive.

It’s a matter of scale. To make a video is a one time process.  Take a digital camera, shoot some footage.  Any of a handful of software environments provide editorial tools and deliver the finished film in the format of choice.  If the file is big, the computer might be tied up processing things for a while but otherwise, not too taxing. One video, one computer, an hour or so, no problem.   For the enterprise, volume makes that different. They aren’t editing just one film but instead thousands, or tens of thousands.  They’re also not creating just one format for the video.  Even if all the audience relies on the same encoding format (flash, for example), the company still needs to create several files appropriate to the different screen resolutions in use (a low definition and small file size to embed on web pages, a bigger broadband resolution file for streaming, maybe a huge television file for download,  or a DVD comparable format, even one suited for mobile).  

Ripcode’s solution to this network chore is to offer a rack mounted appliance that takes the formatting (also called transcoding) burden off the server.  They also designed their hardware with digital signal processing technology that makes it possible, if so desired, for the hardware to handle the transcoding process on-the-fly. It’s flexible enough to allow a company the choice to encode on-demand, or go file to file or stream to stream in advance. 

Ripcode is the first company to offer network hardware with these capabilities.  Their pioneering approach could make them a big hit.  I might also tag them as  acquisition bait for a larger network hardware company like Cisco (which coincidently, was a prior proving ground for many of the company’s senior management )

Preparing for the launch, the company raised $10.5m in an August  14th series B round led by ATA venturesVestbridge Partners, Hunt Ventures and El Dorado Ventures also participated.  With that capital in the bank, the company should be sufficiently financed to move through manufacturing and sales for the next months without trouble.  After that, it’ll be interesting to see where they are; whether customers find value, or networking giants see takeover.

Hardware and enabling technologies aren’t always the brightest spots on the radar, they’re often dwarfed by higher profile consumer-focused applications, but Ripcode is first to market with a novel concept that addresses a real problem in a burgeoning marketplace.  They’re a company to watch.

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