Innovation is not enough.

By Andrew Cross, Ph.D, All opinions expressed are those of the author and not their employer.

For some reason that I never quite understood, NewTek always seemed to collect an incomprehensible number of cardboard boxes that ended up lying around the office. As the leader, I put in place endless initiatives to get people to throw them away, but nothing seemed to make any noticeable difference. One of the upsides of our box obsession was that an entire generation of our employees still have unforgettable memories of their children building castles in them while visiting our offices during the school holidays.

NewTek always understood that no matter how much employees loved their jobs, the most important thing in their lives was always going to be their family. If we treated our employees like they were part of our family, they would be there for us when we needed that final push to ship a product or a few extra hours to solve a problem for a customer. Any amazing company is built on the dedication and creativity of its employees, and we knew that this was key to our success. As counterintuitive as it seemed, our boxes were part of what made us special.

As the company leader, one of the moments that I always dreaded was the "mid-year ritual healthcare renewal saga." NewTek would end up fighting it out with an endless number of healthcare insurance providers and brokers to try to keep some reasonable semblance of fairness. We had always worked very hard to protect our employees from seeing the pain associated with this process and had absorbed almost all the cost increases ourselves for over a decade. Over that time, this had become part of our family culture.

I still remember the year when the healthcare cost increases came in at almost 50% and, after having endless rounds of getting new bids and fighting with the insurance providers, the sense of inevitability started to set in. To me, it also became clear that even if I decided to go out on a limb as an employer and protect people this one year, all I would be doing was delaying the unavoidable and making the situation down the road worse as the compounded increases would become even more unsustainable.

Despite the obvious need to reduce healthcare coverage and start shifting more of the burden onto our employees, finding the way to do it was excruciatingly difficult because it contradicted who we were.

As I struggled with how to communicate this, it occurred to me that, as we go through life, we are trapped in a "metaphorical bubble." All good bubbles can stretch and contract with the changes that we go through day to day, and if you remain inside one long enough, it gives you a sense of protection and stability, and after a bit, you start to forget that it is even there.

There are always moments in our lives when some external event causes the bubble to burst. For some, it is when our children are born; for others, it might be when a friend or family gets sick. Those are the moments when our lives often change. NewTek was about to go through one of these changes when we had to reduce the protection we had always given to our employees.

As I thought about this, it became clear to me that NewTek was trapped in a much bigger bubble that I had been entirely blind to for years. I was proud that we had a solid, stable business of building and selling our software-based integrated live production systems within the professional video market. Each year we grew our sales, our customers and channel partners loved our consistent innovative releases, and our sales team had become experts in how to present our company and products at each tradeshow. This all felt very comfortable until I realized that this trap of good organic growth was a bubble of its own and for us to be something fundamentally more ambitious, we needed to burst it ourselves.

When looking for incremental market opportunities, one tends to look at how technology and customer workflows are changing. While these often have some predictive value, it is the economic trends underpinning the broader market that help one truly understand what is likely to happen. True market disruption almost always occurs when change is driven by the economics from adjacent markets, and these are the changes that are almost always far more than incremental.

Within the market for integrated live video production systems, for decades everything had been based on "traditional purpose-built hardware." Companies like NewTek have contributed to significant disruption by embracing the general-purpose computer revolution to build software-based real-time products to replace traditional hardware ones. Like all disruptive changes, this was driven by the economics of the adjacent "computer game market" in which millions of gamers seemed happy to pay for ever-faster CPUs and GPUs to play the latest version of id Software’s games. Although no customer workflow suggestions would have ever seen this coming, it was the computer gamers that truly changed the professional video market.

As I considered the market, I had the important realization that the ultimate endpoint of this disruption was not going to be with general-purpose computation. The real change was going to be that general-purpose computing devices would all become affordably connected with high-speed IP networks and that IP would become the native language of software. For almost half a century, the world of live production systems has used "traditional purpose-built cables" like HDMI or SDI to interconnect all our devices and move video around. The market economics made it entirely inevitable that these connections would be replaced with IP networking. If one company could control the connection between all video systems, then it would be that company that would effectively control the entire market. NewTek needed to burst our own organic growth bubble and become that company. At almost midnight I sent a meeting invite to all my key people for the next morning to let them know I had had "(yet) another crazy idea".

At that meeting, everyone gathered in the company front conference room. I started by outlining how IP video was inevitably going to become the way that all live production video is transmitted and that we could choose to lead the market or watch others do it. I proposed that we take the components of our products that enabled our own proprietary IP video interchange between us and certified partners and open it to the industry for free.

Predictably, people were very comfortable in our organic bubble and had real concerns about letting our IP technology be used by competitors which might make our own products less competitive. I explained my belief that this was a feature of the idea - and not a bug: by allowing competitors to use our technology, NewTek would immediately become relevant in installations we never had been a part of before.

It is my strong belief that the mission of any company should be to disrupt the industry in which they operate if they wish to truly make a difference. The inevitability of the move to IP video was such that it outweighed any competitive concerns and was something that needed to become our primary company mission and purpose. A free IP video standard called NDI was born.

About 6 months later, at one of the largest industry tradeshows, we put out the press release that launched NDI and made it available for download. This SDK allowed anyone to build a software application that could easily communicate with any other application on the network and share real-time video between them. Back then, I think that almost every other company in the industry wondered quite what was wrong with us: broad IP adoption was obviously a decade away, and yet NewTek somehow felt compelled to just make a new standard and release it instead of joining the SMPTE working groups and committees to plan out a roadmap.

From this very first release, we told the story of how we believed that in making IP video accessible to everyone, we would let entire new markets produce video. By making it quick and fun to produce high-quality live shows with software on the computers and networks that people already had, video was no longer confined to TV stations but could be used in every company and school in the world.

At each tradeshow, I would walk up to people at all the other booths and ask to be introduced to someone within the product team so that I could talk to them about NDI. I would then tell them the story of what we were doing and why it mattered; how our goal was to grow the entire market for video and how this could benefit their products. Once they started implementing support, we would do everything we could to help them technically and once their products shipped, we would help promote them to the growing NDI community. I flew out to Japan to sell Panasonic on my vision and evangelize them on how it could make them an IP leader, and, 6 months later, they announced NDI support.

Our strategy was very simple: drive adoption. If we did this, then nothing else mattered. In software markets where there is no cost of distribution, the company that reaches a 51% adoption rate has already won the market even if it might not be known to others at that point. This is because as new companies choose a standard, they are always most likely to choose the one that gets them the most users, creating a positive adoption feedback loop.

Many of the large companies in the industry would argue that it was still too early for the market to adopt IP, that it needed to go through the slow SMPTE standardization process, or that we lacked critical functionality with NDI. All of this was probably partially correct, but we kept the focus on adoption knowing that every day that went by with these arguments, we got one step closer to hitting the 51% tipping point.

At some point, we silently crossed that tipping point and at the time of writing, NDI now ships within almost every piece of video software in the world, including those made by Apple, Autodesk, Adobe, Epic Games, Zoom, Microsoft Teams and Skype, Vizrt, Avid, vMix, Ross Video, Evertz, Open Broadcast Studio, and thousands more. Every manufacturer of cameras and devices, including Atomos, Panasonic, Sony, JVC, and Canon now uses NDI.

Today NDI has more users than every other production IP standard combined. NDI is used in all video markets, from the kids in schools all the way up to the world's largest broadcasters. It is used by game streamers online and the huge LED displays at Times Square. The combined value of NDI products sold is now billions of dollars each year and licensing income has grown 1000% in just the last two years. The enterprise value on the standard is more than the entire rest of NewTek. It is hard to imagine quite how we could have been more successful.

Years later, I did one of the hardest things that I have done – leave NewTek. This felt like leaving my children behind, but it was time for there to be new voices and new crazy ideas, and the next generation of leaders.

At 8:00 p.m., on the Friday of my last day at the company, I was sitting in the same front conference room that gave birth to NDI. I was having a very emotional discussion with friends that I had worked with for over 20 years. One of them asked me a question that has stuck with me: “Over time, how did you see where the market was going so often and get so many decisions right?”

The honest answer is that I am not sure if the decisions were right at all or that they even mattered. Innovative or right decisions alone are not enough without the story that sells them to people and makes them real.

The only remarkable thing about NDI was never the technology or the innovation, it was the decision to create it and tell the world the story. It is that story that changed the way the IP video is done today.