CREATIVE ECONOMY

Limited by time? Here’s how Lumen5’s Michael Cheng broke the cycle

Jackie Gill - October 21, 2019 Michael Cheng, CEO and co-founder of Lumen5, has started over 11 businesses including his current venture, a video creation platform
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When the number of companies you’ve started reaches the double digits, do you have anything left to learn?

Ask Michael Cheng, founder of Covr, WittyCookie, Sniply, TEDxSFU, Beta Collective, QC Productions and most recently Lumen5, and he’ll say yes. Absolutely.

“By the tenth small business, you’re seeing similar problems, and you’re overcoming them,” he says. “But as you move from $10 million to $100 million, that’s going to be a completely different set of challenges, and I have no experience doing that.”

His first companies were mostly design, marketing, branding and video agencies, and while he loved the work, there was one problem: he just couldn’t raise them to that next step.

“I had built a number of small businesses, and every time I’d try to build it a little bigger. One limitation I always ran into, especially with a service providing agency, is you’re more or less capped by the amount of hours,” he says.

“I was so frustrated feeling like I’ll never beat time. Time is just this cap that cannot be conquered.”

That is, until now.

Lumen5 is Cheng’s latest venture, co-founded with Christopher Bowal and Nigel Gutzmann. It’s an AI-enabled video creation platform that takes a blog post, script or idea and creates a video ready for social media. And it’s growing fast – far beyond the other companies Cheng has started. Right now, they have over 363,000 users and expect to grow their team to 50 people by the end of the year.

In other words: it’s much bigger than anything he’s ever built before.

From car sales to software

When Cheng was in his late teens, his parents started looking for a new car. When they found one they liked, the dealership offered a trade-in of around $100.

Cheng, whose family moved from Hong Kong to Vancouver, BC when he was seven years old, knew they could have gotten more from the sale. “I knew at the time that if they were better at English, they would have just gone on Craigslist and sold it for 10 to 20 times that amount,” he says.

Sure, his parents accepted the offer, but maybe other people were running up against the same problem, he thought. So he started his first company, helping people buy and sell vehicles at prices that beat the dealership.

But it didn’t go very far, he says. “There’s so many things I didn’t think about at the time, like the unit economics, the margins involved, how much people are actually willing to pay for that kind of thing, how much do adults actually care about a couple hundred dollars versus the risks of insurance and trading hands of vehicles with strangers?”

Still, he loved the experience, which led him to start a series of creative agencies, first as a student in Interactive Arts and Technology at Simon Fraser University and continuing throughout his early 20s.

“I was so frustrated feeling like I’ll never beat time. Time is just this cap that cannot be conquered.”

– Michael Cheng, CEO and co-founder of Lumen5

That’s when he hit that cap on time. Even adding people to his team, he just couldn’t get his companies to grow.

From the outside, he saw the size and scale of technology companies. “I’ve always read about and have been fascinated about the fact that tech doesn’t exist in any physical form, and so there’s no physical limitation,” he says.

And around the same time, he learned about a tech-focused startup program called the Next 36, which connects 36 of Canada’s most entrepreneurial students and from business idea to launch, all within eight months.

The program not only introduced him to Bowal and Gutzmann, but it also introduced him to the world of software.

Or, as Cheng puts it, “It took me two decades of life to figure out that software is what I want to do and build.”

Creating thumb-stopping videos

After graduating from the Next 36, the three co-founders found considerable success with a company called Sniply. The idea there? Adding custom calls-to-action to any page on any website.

They knew they were doing something right when the founder of Adblock Plus came knocking. “It was on the unicorn scale. It was a small acquisition, and we will consider it to be a personal success,” Cheng says.

But there was still more they could do. “Having built and sold that company at the scale that it was at made us realize that we could have done something so much bigger, and the only thing holding us back is really the appetite and the hunger to build a billion-dollar company,” he adds.

“It took me two decades of life to figure out that software is what I want to do and build.”

– Michael Cheng

Cheng, with a media and design background that included video production, had been watching the growth of video across social media, through YouTube, Facebook and Snapchat and Instagram.

He knew the demand for video was growing, so the team dug deeper. Who was making these videos, and how?

“What we found through talking to people and doing our own research is that they’re all being made by hand,” Cheng says. “These processes take thousands, tens of thousands of dollars, multiple people are involved, and it takes sometimes weeks to complete a single video.”

He also had his eye on artificial intelligence, and how technology was being used to make arduous, time-consuming and repetitive tasks easier.

“That’s one thing that we always look for … Does this sound absolutely impossible, borderline insane?”

– Michael Cheng

There had to be a way to marry the two ideas – to create software that would make storytelling easier through automation and democratize video for those who didn’t have the means to afford the full hands-on treatment.

Crazy idea, right? “That’s one thing that we always look for, my co-founders and I, when evaluating ideas. Does this sound absolutely impossible, borderline insane?”

It did, so they got to work reverse-engineering how videos are made and designing AI for tasks that humans just don’t do well, like knowing how long text should stay on-screen so viewers have enough time to read it.

“These processes take thousands, tens of thousands of dollars, multiple people are involved, and it takes sometimes weeks to complete a single video.”

– Michael Cheng

Today, all it takes is a blog URL – plug it into their system, and their natural language processing will pluck out the subject of the post, pair it with assets from places like Shutterstock and Getty Images, overlay your content and spit out a video that’s Instagram-ready.

After a bit of tweaking – you might want to add your own human touches, after all – the whole process takes about six minutes.

“The complexity is not the same as what you would want in a Disney or Pixar film, which a lot of the existing video creation tools are built for,” Cheng says. “We’ve just been releasing more and more features that make it easy for the average user to be able to tell their stories in a video format, without any kind of technical training or technical background.” 

Breaking down that wall

Since becoming an entrepreneur, Cheng has made a name for himself in lists like Macleans’ Future Leaders under 25 and BC Business’ Top 30 Under 30.

And since launching in August 2017, Lumen5 has grown from a team of three to 21, with about 30 more hires planned by the end of 2019. They’ve acquired their 363,000-plus customers, including names like Forbes, Adidas and Shopify, through word of mouth, without spending a penny on marketing. And they’re completely bootstrapped, having never raised funding from an investor.

Michael Cheng, along with the Lumen5 team, accepts an award from New Ventures BC. Right now they number 21 employees and are looking to grow.

But the biggest lesson for Cheng is that building a business isn’t all about business.

“It’s about building people, building teams and teams of teams, and enabling people so that they can be greater than when they first joined the company,” he says.

Lumen5’s growth has changed his role as an entrepreneur, too. “My role now has transformed much more from working in the business, which is what you do as a small business owner, to really just working on the business” he adds.

And he’s learned how to break through the wall he kept hitting in his small businesses, he adds.

“What I try to do now is to solve bigger problems for more people, as opposed to try and solve problems for 20 people in my neighborhood.”

DRAFT CARD

Draft Card Logo
  • Name: Lumen5
  • Solution: A video creation platform that uses AI and natural language processing to automatically create sharable videos
  • Owners: Michael Cheng, Christopher Bowal and Nigel Gutzmann
  • Employees: 21
  • Headquarters: Vancouver, BC
  • Founded: 2017
  • Initial investment: $0
  • Contact: www.facebook.com/groups/lumen5/
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