FADE IN: NewBlue Founders Bring FX Catalog to Mobile Video Platform

7/6/11Follow @bvbigelow

Melissa Jordan Grey and Todor Fay trapped lightning in a bottle when they sold their Atlanta-based music software startup, Blue Ribbon SoundWorks, to Microsoft in 1995 (for an undisclosed amount). As part of the deal, they joined Microsoft (NASDAQ: MSFT), which merged their audio editor software with its DirectSound technology. As they tell the story, the Redmond, WA software giant kept the Blue Ribbon team as a self-contained unit, and told them to integrate their interactive music technology with practically everything else in Microsoft’s product line.

“We learned so much while we were there,” Grey recalls. “We basically left there with another degree.”

Grey and Fay, who are married, moved to San Diego in 2003. Now the new media entrepreneurs are hoping to do for digital video production what they did for music software.

After working for years in their La Jolla home, Grey and Fey revealed their latest software startup, NewBlue, with the 2006 debut of NewBlueFX, a series of software plug-ins that automate the process of editing video transitions, light blending, and other special effects. Today NewBlue’s lineup of desktop digital editing products comprises 14 distinct video and audio plug-ins (for both Windows and Mac) featuring a total of 978 “presets” that are much like fixed palette tools for video special effects. The company sells its products directly from its own website or bundled with video-editing systems sold by Adobe, Sony, Avid, Corel, CyberLink, Magix, Pinnacle Systems, and Grass Valley.

Now NewBlue is on the verge of unveiling a new initiative in mobile digital video editing with the introduction of Vibop, which Grey says is scheduled to debut as a Beta version on Apple’s iPhone app store within the next week or so. In weeks to come, the company plans to follow its Apple debut with a similar suite of cloud-based, video-editing apps for the Android operating system. The move represents a substantial push by NewBlue into the mobile market that will allow smartphone users to enhance and share their video clips.

As NewBlue rolls out its mobile offerings, which include cloud-based storage for users’ videos, the startup also is moving to raise $1 million in early stage funding from individual investors in San Diego. Grey and Fay said they initially funded the startup themselves, and have largely bootstrapped NewBlue’s software development. Since 2006, the company has been operating purely off the revenue generated from its desktop video editing products, Grey says. The development of Vibop’s suite of mobile apps was funded entirely by a 70 percent year-over-year increase in revenue at NewBlueFX.

In developing Vibop’s catalog of mobile apps, Grey says they also were able to take advantage of years spent developing desktop video editing technology. “We are the No. 1 provider to the desktop video editing market,” Grey says. “It’s hard to believe that plug-ins can be a viable business, but there are a lot of video editors out there.”

The couple made other course corrections as well.

“Once we decided to pursue this very aggressive attack on the mobile space, it became evident that we needed to change NewBlue’s model from a virtual business to a geographic-based one in San Diego,” Grey says. Today NewBlue has 27 employees, including 10 at its headquarters in San Diego’s EvoNexus incubator, and two software development groups in Russia.

The couple says they moved here from Seattle in 2003 specifically for the quality of life in San Diego, and because of San Diego’s proximity to new media hubs in both Los Angeles and Silicon Valley, which is within an hour by passenger jet. After settling into San Diego’s La Jolla neighborhood, Fay says they intended to operate as a virtual company, chiefly because they were “very much inspired” by Thomas L. Friedman’s 2005 book, “The World is Flat: A Brief History of the 21st Century.”

“We planned to take advantage of the virtual economy,” Grey recalls, “so initially we were focused on the people we knew could do the job, and so we had employees in Seattle, Illinois, and Texas.”

Developing mobile apps on a tight schedule, however, led them to make NewBlue more of a geographically based company. “We really couldn’t have found a better place than San Diego because [mobile] is happening here,” Fay says. At the EvoNexus incubator, operated pro bono by San Diego’s CommNexus industry group, chairman Kevin Hell says the team that reviewed NewBlue’s application “saw a proven team of people who had done it before.”

Fay, in particular, also sees an “incredible parallel” in the potential democratization of digital video and a revolution in digital music that he traces to the 1982 New Wave single, “She Blinded Me With Science.” Fay says the British musician Thomas Dolby embodied “the democratization of the music industry” by producing the song at home, using musical instrument digital interface (MIDI) technology.

At that time, Fay says the music industry was dominated by major record companies that gathered musicians in studios equipped with costly audio production equipment—just as filmmaking today is dominated by major companies that require extensive capital, film crews, and expensive studios. Now Fay says if an under-capitalized filmmaker wants to create an “earthquake” special effect, NewBlue can supply a piece of its “motion effects” software that can make that happen.

With Vibop, Grey says, “What we enable you to do is automatically stabilize your mobile video, shine it, and share it. We took that vocabulary that is natural to us and put that into software, so that when you shoot your son’s soccer goal, it will fade in at the right time and fade out at the right time.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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