Alex Castro of Delve Networks on the Future of Internet Video

“There are a quarter of a billion websites on Planet Earth, and most of them will want video.” Now there‘s a market to put hair on your chest—the stat comes courtesy of Alex Castro, the chief executive of Seattle startup Delve Networks.

I called up Castro last week, in part to ask him about his company’s recent financing. Wouldn’t you know it, he didn’t want to talk about that at all, since the round is ongoing. So instead we talked about some more interesting things, like the future of online video, Delve’s semi-recent strategy shift, and what he learned from working at Amazon, as compared to Microsoft, back in the day.

Castro got his start in the tech world when he did his undergraduate and master’s degrees in computer science at Cornell University, focusing on distributed computing. That’s where he first met Werner Vogels, the Cornell computer scientist who would become Amazon’s chief technology officer (and who would later hire him). Castro worked for Microsoft between 1999-2004 as a group program manager; he started the customer relationship management team there. He left to join Amazon, where he was a senior manager in Amazon Web Services until he quit in 2006 to start his own company.

That company was originally called Pluggd, and it focused on audio podcast search. By 2007, the startup was already making the switch to online video, but it needed some more oomph. “We weren’t seeing great traffic in audio and video. iTunes and YouTube kind of sucked the oxygen out for a lot of folks,” Castro says. “After a while, with no real prospects for getting a lot bigger, we started listening to our customers.” By mid-to-late 2007, he says, “we realized what we needed to do.”

The first step was to fully grasp the market opportunity for online video. “Video is not just about YouTube and Hulu, or media and entertainment. It will be pervasive, it will be the dominant media on the Internet in 10 years,” Castro says. Just as websites started out being used mainly by the media and academia—only to explode in popularity a few years later—so will video become the main online channel for consumers and businesses alike, he predicts. “They’re realizing video is part of the Internet, not just this thing that exists on YouTube. Back then, people thought the Internet was AOL. But the Internet was bigger than that.”

Last June, his company relaunched itself as Delve Networks, focusing on online video hosting and “search inside” video technology. It’s actually based on audio search (speech recognition), but unlike most algorithms, it has a “semantic layer” that tries to understand the meaning of what’s being said, not just match the exact words you’re looking for. So if you’re searching for “touchdown” on a football site, it will return parts of the video that concern people talking about scoring points, big offensive plays, and so forth, rather than just instances where someone says the word “touchdown” (which might also occur in some other context, like tornadoes or airports).

How is the new Delve doing? So far, so good, says Castro. He touts its increased revenue for the first three months of 2009—a 130 percent increase over the fourth quarter of 2008. Delve makes its money through a subscription-based usage model. “When you’ve been on the wrong track and realize how bumpy it is, and then you get on the right track, it’s kind of obvious,” he says. “This is kind of fun. It’s a pretty exciting time. The first two weeks of January were pretty slow, we were worried. But then we blew out the quarter.”

As for the competition in the crowded video hosting space, Castro says Delve is easier to use, cheaper, and more mainstream than offerings from companies like Seattle-based thePlatform and Cambridge, MA-based Brightcove and EveryZing. “We think of ourselves as the Salesforce of video,” he explains. “We’re a next-generation video solution, we leverage cloud infrastructure [Amazon Web Services] to do it better and cheaper, and we can look inside video to provide more value to advertisers and publishers…As the volume of video gets bigger and bigger, I can’t just watch all this stuff. So help me skim through this and just watch the part of the video I care about.”

Delve has 20-some employees and is now focused on growing its customer base. Castro freely admits his startup is smaller and newer to the video hosting space than some of his competitors. “There’s more competition than a year ago. That validates this is a big honking market,” he says. “People who sell picks and shovels will make a lot of money.”

Lastly, I asked Castro what he learned from his work experiences at the two biggest tech giants in town. “What impressed me most at Amazon—I had a lot of exposure to Jeff [Bezos]—was how innovative the company is, how willing they are to take risks. The Kindle and Amazon Web Services have worked out really well. Jeff is someone confident enough to take risks, go down a few blind alleys, and recognize that failure is a way to get to success,” he says. “That culture is a little different from Microsoft. Though I learned a lot of great stuff at Microsoft too.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] Follow @gthuang

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