“Spain needs a unicorn,” says Pablo Hesse, CEO of Teltoo, a Madrid-based startup that earlier this year joined the ranks of Liberty Global's Virgin Media accelerator startup programme. He has a point. Most countries outside of the US do need a unicorn. With Asos, Zoopla, Spotify, Rocket and Skype, Europe has done fairly well, but that can easily change. Hesse of course is dreaming that Teltoo may join the unicorn ranks of companies with a $1bn-plus but he has a long way to go.
For one there are considerable challenges, both economically and technically. At least the Spanish economy is looking a little brighter, at least according to Federico Steinberg, economist at think tank Real Instituto Elcano. Speaking to the Financial Times recently, he said: “Spain has everything working in its favour right now — from cheap oil and low interest rates to a great year for the tourism sector and last year’s tax cuts, which have helped domestic demand. With all that, and the reforms that were done by the government in the past, the economy is flying on autopilot.”
Autopilot is not bad given the past few years but Hesse suggests it needs more than a recovering economy. Spanish startups need early stage investment and supporting regulations, which he says currently “do not match” and are “a real handicap for people wanting to build unstoppable juggernauts from scratch.”
Making P2P work
So can Teltoo be a juggernaut?
“Teltoo has put a new twist on an old technology,” says Neil Illingworth, head of innovation and acceleration at the Liberty Global's Virgin Media Accelerator which is being run by entrepreneur ecosystem TechStars. “Peer-to-Peer has had a chequered past, but Teltoo has brought it bang up to date with an innovative method of improving live video streams without the buffering and at the same time reducing bandwidth requirements and associated costs.”
So why is that important?
“People are changing the way they consume content,” adds Hesse. “The internet changed the rules and now we want content immediately, in good quality and on all devices. With the current infrastructure it is very unlikely we can meet that demand and that’s why we have to find sustainable ways to give the people the content they deserve. Teltoo will change the rules of the market because it leverages the current infrastructure available to give people that content and one of the pillars to achieve that is because we are compliant with all the requirements broadcasters and studios demand in terms of security and implementation.”
It’s probably more a perception thing but once you mention P2P you start to think that maybe this is a short term fix and that at some point the hole will be plugged by one of the big service providers. Hesse admits that the market is “very aggressive” with content delivery network players (CDNs) offering low prices, which tends to turn heads. However, he points out that a technology that can increase the bandwidth availability, provide a better performance than a CDN and can reduce costs surely has a long-term future.
Illingworth of course agrees. He says that Teltoo’s P2P solution is primarily aimed at content producers and distributors, challenging the conventional and more costly approach of using CDNs.
“Whereas CDNs require more and more servers, power and space to meet increasing bandwidth demands, Teltoo’s P2P technology is inherently scalable. In fact, the more people who use it, the more effective the technology is,” he adds.
It makes sense but it’s a tough sell. So is the market moving in such a way that hands will be forced?
“In the coming years we will see a boom in video distribution. Not only traditional broadcasters and ISPs will demand more bandwidth but new players will emerge,” Illingworth says.
Teltoo, of course, will aim to be the solution of choice when this happens. Certainly it is in a good place, at least for the moment. Deals with Spain’s RTVE network and Virgin Media, to name just two, are proving the concept.
Hesse mentions Akamai and Limelight, the two companies recently involved in a very public spat over copyright infringement, and suggests that Teltoo is different.
“We’re flexible,” he says. “That is our advantage in comparison to Akamai or Limelight. Their business model is linked to their capex while we can always adapt to the needs of the market at every moment, so we will be aware of how the distribution evolves and adapt consequently.”
Being flexible is of course the virtue of a startup still in its infancy but there is something grown-up about Teltoo. It’s playing in a big league from the outset which means it has to get everything right quickly and scale. There is little room and patience for error.
So what does the future look like? Hesse has a vision.
“More personalized, on demand and multichannel content is what people are demanding and the problem is not only to produce it or bid for successful content rights but how to serve it,” he says. “Who cares if you have the rights to stream the Premier League if you cannot provide an unbeatable user experience? The key is to find sustainable, cost-effective ways to attract subscribers and advertisers.”
Hesse is not alone in his thinking. Earlier this year the Boston Consulting Group claimed that “the global television industry is in the midst of a digital revolution”, and that demand for content and the distribution of that content is changing, forcing the hand of the industry. Anything which improves the delivery of content should stand out in this increasingly busy online video world. Teltoo and Spain could be onto something.
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