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Divx Networks – Profile

January 9, 2005

HQ: San Diego, CA
Founded: 1999
Management: Jordan Greenhall is CEO and Co-Founder – he was previously a VP at His co-founder is described as “Jérôme Rota (aka ‘Gej’) and DivX Guru – Gej has been involved in computing, graphics and digital video since the age of six and he has extensive academic training in cinema.” It gets better – the COO is a Wharton B-school grad who goes by the name of Kevin Hell – “Prior to joining the company, Mr. Hell most recently served as senior vice president of product management at Palm ™ Inc.’s Solutions Group.”
Investors: In January 2004, Samsung Ventures invested an undisclosed amount. The prior round was a Series C in May 2004 lead by Zone Ventures and included both new and existing investors WI Harper Group, Draper Atlantic, Wasatch Venture Fund, Springboard-Harper, Tim Draper, Cardinal Venture Capital, ALi Corporation, and Cyberlink International Technology Corp.
Business Model: DivX developed a video compression standard that represents a huge improvement in compression compared with MPEG-2, which is used by most broadcasters and in most DVDs. Using DivX, a standard 4.7GB DVD can be squeezed down to about 700MB without significant loss of quality. Microsoft and RealNetworks claim similar ratios but can’t rival Divx’s penetration. According to Divx, the company has the leading download numbers as consumers have downloaded more than 100M copies of the software and encoded more than a billion files in the format. Divx makes money by licensing its players to consumer electronics companies as well as by licensing Divx creation engines to consumers who want to create and edit Divx movies.
Competitors: Microsoft, Apple, Real Networks, Sony.
Dirt: Divx got its start as a tool for video pirates and was created by a lone, murky Scandinivian – Gej. It remains a tool for pirates, however, it has gone mainstream due to its great popularity and because it has incorporating into a real company. It is curious that Divx has never raised much venture capital given that their competitors are companies like Microsoft. We suspect that they are confident in their lead and feel that too much gas might flood the engine. If 2004, was the year of digital music, 2005 might be the year of digital video. If so, Divx will become a very hot company.

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