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Matt Douglas, Founder and CEO of Punchbowl.com

Why Punchbowl Acquired Vidhug

Today we announced that Punchbowl, Inc. has acquired VidHug. I’m humbled by the opportunity to bring this talented team and fantastic product under the Punchbowl® family of brands. This substantial transaction took many months to develop and we hit some significant roadblocks along the way. I’m so grateful for all of the people who believed in the vision, helped us overcome barriers, and close this transaction. You know who you are… 🙂

A transaction of this nature doesn’t happen without careful thought, conviction about the long-term, and a whole lot of execution. I know some people are interested to know more about why we acquired the Company. So let’s break it down…

Product Fit: This deal started with my exploration of the group “video montage” market. In early 2020, we had made the decision to add video recording into our Greeting Cards product, and with my long history in video technology, I was curious about the products that enabled consumers to create video montages for birthdays, holidays, and other milestones. I reached out to all of the players in the market in the Spring of 2020 and began to learn about each of the products. One stood out: VidHug and the team in London, Ontario.

Over several months, I learned more about the players in the market and how consumers and businesses use video montage products. I saw quickly that Greeting Cards on the Punchbowl platform were the perfect delivery mechanism for group videos. And I learned that consumers create group videos with the same seasonality and cadence as our core invitations and greeting cards products. Everything we know about digital marketing could be leveraged for a group video product, and we saw it as the perfect complement to our existing products.  

Core Financials: Any transaction of this size needs to make sense financially. We spent a lot of time sizing the overall market, and understanding the core financials of VidHug. This is a business that has been profitable since Day 1 — which in the startup world is rare. More importantly, the growth and the unit economics of the business are very compelling. The team at VidHug had already figured out how to scale the business with an economically sound approach. We saw value in what they had already built, but we saw even more value in the future. This is an impressive business on its own, and I am confident we’ll be able to improve the financials even more. 

VidHug Team: Early on in my conversations with VidHug, I said to a close friend of mine… “Zamir Khan is smart, thoughtful, and sincere. He’s exactly the kind of person I want on my team.” Those words ring true even more today. I’ve spent dozens and dozens (hundreds?) of hours with Zamir, and we have developed a deep mutual respect for each other. He’s an A+ technologist, and an even better person. And here’s the thing about people like Zamir: they surround themselves with great people, too. As I’ve gotten to know the team at VidHug, I’m thrilled. We have a new group of employees that are smart, creative, and thoughtful. The team at VidHug was a perfect addition to our existing Punchbowl team.

Technology Platform: At the heart of this great business and fantastic team is a robust technology platform. We spent time evaluating the platform from a few different angles: we wanted to make sure the platform could scale as we grow, and we wanted to be sure that the integration with Punchbowl would make logical sense. In addition, we compared the feature set to the competitors and felt great about our competitive position. Under the hood, the VidHug application is very impressive. We’ve acquired a technology platform that provides us with lots of flexibility and potential for growth. We’re aware of certain features and functionality that we want to improve, but these are small items compared to the core architecture. The VidHug platform is scalable and nearly runs itself. Pretty impressive for a relatively immature software product. 

Asynchronous Video: As the world finally fully adopted video conferencing platforms like Zoom, I spent some time thinking about how video would play a role in communication going forward. It’s obvious to me that Zoom and its counterparts are now here to stay as a primary method for real-time meetings. Despite some attempts to “go back to normal,” I don’t think business will ever be the same. If we can meet ‘face to face’ over Zoom, why would I bother traveling to meet in-person?

I believe the next logical step for communications is asynchronous video. Broadly defined, asynchronous video is communication by video where the consumption doesn’t happen in real-time. As I look at the consumer and business markets, I think we’re going to see a lot of platforms try to address this need going forward. Our acquisition of VidHug gives us the perfect platform to explore potential product-market fit for many kinds of video communications. I’m excited that Punchbowl will be a technology leader in this area. 

Expansion into Canada: A few years ago, I wouldn’t have believed you if you said that Punchbowl was going to acquire a company based in Canada. I mean, I’ve only been to Canada a few times! I knew very little about the tech scene in Canada, and even less about the country as a whole.

However, I quickly found an opportunity north of the border. We’re excited about the potential for our team to expand into Canada. Labor rates are less than in the United States, but more importantly there is a growing pool of talent centered around universities. VidHug is based in London, Ontario, which is part of the growing tech corridor near the University of Waterloo. During our due diligence, we found the people in Canada to be forthcoming, genuine, and smart. We’re excited to add to our team in Canada and grow the business in this unexpected way.

Variety of Use Cases: There are so many awesome use cases of group video montages, and I was drawn to how we can grow this business over time. We’ve seen people use the site for the obvious reasons: birthdays, anniversaries, baby showers, etc. etc. And we’ve seen incredibly emotional use cases like end of life tributes. However, we’ve also seen tons of use cases in the workplace, at churches, and with politicians.

As we got closer to finalizing the transaction, I saw more and more cases of people in my sphere using the product. In fact, it popped up in a Facebook Dads group, and our corporate attorney even got an invite to join a group video just days before we acquired the Company. As I told Zamir, it was the greatest “closing technique” I’ve ever seen. 😉

We’re thrilled with the acquisition, and feel great about the fit with our business. Alongside the news about the acquisition, we also announced the launch of Memento.com—a platform to record, make, and preserve memories from the most meaningful life celebrations and milestones. Technology from VidHug provided the foundation for Memento and is the beginning of the vision for the new platform. Give it a try today and you’ll see just how easy it is to use and the kind of unbridled joy it creates. Try Memento today!

©2021 Matt Douglas