Dr. Zeev Farbman (CEO), Nir Pochter, Amit Goldstein, Yaron Inger, and Itai Tsiddon
Insight Ventures Partners, ClalTech, Viola Ventures
Last month, Lightricks announced the completion of a $60 million financing round, led by Insight Venture Partners with participation from ClalTech, the investment arm of Access Industries in Israel.
The round was another vote of confidence in the Jerusalem-based company, which has increased its staff from 30 to 150 since 2015. The company says that its revenue has grown 270% in the past two years, and is projected to reach $55 million in 2018.
Lightricks develops mobile video processing apps for amateurs, artists, and professionals. "We're democratizing creativity," says Lightricks founding partner and CEO Dr. Zeev Farbman. "This is a big story, because many companies will say that they're doing this, but we were able to find the people interested in creativity on the most popular platform of our time - mobile".
Farbman says that Lightricks has three main target markets. The first is people who care about their personal branding on social networks, from selfie addicts to people who obsessively photograph their children. The product aimed at them is called Facetune, a portrait pictures editing app that is simpler and easier than Photoshop, but has more sophisticated capabilities than Instagram. "It has passed 60 million downloads," boasts Farbman.
At the other end of the spectrum are those regarding themselves as artists of mobile, and who use it to produce pictures, clips, and music. Lightricks offers them the Enlight apps package. A third market is small businesses. Lightricks says that they are not much interested in creativity; their emphasis is on easy preparation of marketing materials.
"Usually, every product has someone competing with it, but no one fulfills all of the needs," Farbman explains. "The only company that does have the technological basis to compete against us is Adobe. This company dominates creative tools, but less so on mobile. Right now, this is our big chance. While they're still dozy, we want to establish ourselves, in the hope that when they wake up, we'll be able to give them a real fight." Farbman, who worked at Adobe, presumably knows what he is talking about.
Aren't you competing against Instagram?
Farbman: </i>"Just as we're simpler than Adobe, we're more complex than Instagram. Our trick is to spot what's relevant to 5% of Instagram users. This is too small a group for Instagram, but it's a huge market for us. When we said two years ago that we'd reach profits of $100 million a year, most people responded with raised eyebrows, even in the venture capital community. We're pretty close to that now."
"Lightricks was born when we were doctoral students in computing at Hebrew University," says cofounder and CTO Yaron Inger. "Even when we were undergraduates, we had the startup urge, but not much came of it. Then, late one night, when Zeev had already planned his post-doctorate abroad, we couldn't catch a cab and had to walk home. On the way, I told Zeev that if we had worked that hard on something of our own, we'd already be millionaires. It got him going.
"We looked at the existing products on mobile, and I remember that we laughed and said that Instagram's filters at the time were the equivalent of work by a student in an introductory computer science course. We thought about we'd build a set of products that would be easy, look good, and give results not previously available on such accessible platforms. So we crossed the Rubicon and told our doctorate supervisors that we were leaving. It wasn't an easy conversation."
How did you start?
"We took two apartments in Nachlaot and started working. At the beginning, we built a tool for smoothing skin in facial pictures, and later a tooth-whitening tool. Our field is very practical, not just a marker and whiteboard, but there's also a great deal of algorithm writing involved in using a finger movement like that. For example, you have to know where the teeth and the lips are in a picture. It all happened from there."
Are you more than an app that's nice to have?
"People laugh at social networks, but a large part of their lives today takes place on them. It can be life-changing for people and businesses."
Lightricks received proof of that two years ago, when the second version of Facetune was launched. "We switched to a freemium model, and that has had a significant effect on revenue. We asked users to pay $36 a year instead of a one-time $4 payment," Inger says. "At the same time, we offered a lot of free tools, but there were still users who complained. Many more people now understand this model, in which if they want updates and features, they have to pay."
Did you think at all about moving from Jerusalem to the center, especially when you had momentum with growth and financing rounds?
Farbman: "This is a painful point. Our answer is that there's no other place like us. With us, in addition to the development and marketing teams, there's an enormous design team from the Bezalel Academy of Arts and Design. It's a little different from a conventional company of Unit 8200 alumni. Today, we have 30 employees from the central region and Tel Aviv, and they travel to work in shuttles." Many of these employees, the Lightricks founders say, quickly discover that they can get more quickly to Jerusalem than to Herzliya.