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Justin Bieber-backed photo app Shots gave up on selfies and now manages internet stars

Turns out building a social network is hard.

Rudy Mancuso, who got his start on Vine, is working with Shots Studios to make internet gold.

Back in September of 2015, Shots CEO John Shahidi sank into a big leather armchair at a busy San Francisco cafe and gave me a look that was completely out of character: He looked defeated.

Shahidi, a Twitter maven, is soft-spoken, but he’s always upbeat and excited and passionate, especially when you get him talking about Shots, the Instagram-like photo app he started with his brother Sam back in late 2013.

But none of that was visible in September 2015.

“My energy was off,” Shahidi recalled this past week in an interview with Recode. “I had to figure out the next thing, I had to make a move.”

What Shahidi didn’t tell me that day, but what clearly weighed on his mind, was that Shots was bleeding. It was clear the app wasn’t growing the way Shahidi wanted, and competition from Snapchat and Instagram was starting to become unbearable. Shots had seven million users back in March. Now it has 2.5 million.

“I could spend the rest of the company money and resources and try and compete against Snapchat, who’s spending their money and resources competing against Instagram and Facebook,” Shahidi recalls thinking. “Or we’ve got this other side of the company that’s growing and it’s this content stuff.”

Fast forward to October 2016, and “content stuff” has restored Shahidi’s enthusiasm and taken center stage as the focus of his business.

Shots, the selfie app back by Justin Bieber and Floyd Mayweather, has given way to a video business, Shots Studios, in which Shahidi and co. manage some of the world’s most prominent internet stars, like Rudy Mancuso and Lele Pons. (They both built their initial followings on Vine, where they each had more than 10 million followers.)

Shots Studios helps Mancuso and Pons, along with a small handful of other stars and brands, write, direct and produce all of their YouTube videos, which generates two million video views per day for the company’s various YouTube channels.

Creating internet videos is not a new business. But it is for Shahidi, and it comes with its own challenges — and incumbents. We chatted with Shahidi about internet stars, the risks and rewards of building a social network and the future of online video. Here’s an edited transcript of our conversation.

Recode: So you’re no longer planning to build for or update Shots. What happened?

John Shahidi: It all really started when we launched our original content back in October of last year, so almost exactly a year ago with our show “Awkward Puppets.” The puppets are supposed to be a Shots original, but we also posted some of the videos onto YouTube and even Facebook at the time. The content was getting so much traction outside of our app, we just realized, “All right, it seems like we’re really great at creating content and we understand what our audience wants, so let’s focus on one thing.”

Why did Shots stop growing?

What happened was competition. We had a lot of features that others didn’t have when we first launched — there were no comments, full-size photos. Then about six months after we launched, Snapchat Stories came out. Then a few months later Instagram started supporting video.

In the social app world there’s this war between apps for features. “Who can build this new feature and who can do it first?” But at the end of the day, the big guy is always going to win because the user wants discoverability more than they want anything else. We didn’t want to be in that war as a much smaller company with a lot less money and a lot less resources.

Do you plan to shut down Shots?

I’m not quite sure right now. It’s there, it doesn’t require much updating, people are still using it. I’m not gonna visit that idea until early next year.

TechCrunch reported that you turned down a $150 million acquisition offer from Twitter. Do you ever regret that now given the app is no longer your focus?

I can’t really talk on Twitter. But there have been many offers and I don’t regret any of them because I knew we were going to get it to this place, I knew we were going to get it to the content side. If I had to guess two years ago, I thought the content and the app would parallel one another, but now it seems like the content is far ahead.

Making great internet videos are hard, too, though. Why do you think this is the way to go?

Our audience, which has always been young — the average Shots user is 16 years old — we know that this audience is [very] different than the traditional audience and we know who they’re interested in. We also know they don’t spend as much time on television. ... We know who the people are who create the best videos online, and we know YouTube’s the destination.

Why YouTube instead of Facebook or Instagram or Snapchat?

[Originally] we were thinking, “Do we bring this content into Shots, or do we go to YouTube?” The problem was, we could do it in Shots, but it [offered] the least amount of discoverability. At the time we were right around five million active users. Or we could get it on YouTube, which is the best discoverability, more than any platform. More than Instagram, Facebook, anybody. So that’s when we said, “All right, let’s go YouTube.”

Do you plan to publish elsewhere?

We’re only focused on comedy sketches right now and the best place to put those is YouTube. However, there’s a whole new world of other styles of video that we’re interested in but haven’t dipped into just yet. There’s VR, for instance, which is just around the corner. There’s music — people are starting to enjoy visually watching music more than before. And then there’s also live. When we get to these three other styles of video, we’ll look at what’s the best platform.

How much are you looking at video analytics for your content decisions?

We have a team here in San Francisco who will actually sit down and break down every video from the best time of day [to post it] to what joke in the video worked the best. Our team knows how to get into YouTube’s APIs and break down everything. The video [Rudy] just uploaded this week hit a million views in just 48 hours. So what our team is doing today is like, “Why did that video grow so fast? And what point in that video did it get the most engagement?” And we’ll share that data [and insights] with Rudy.

What’s your arrangement like with the creators?

We’re a studio that helps them create content, but part of that is also management. We don’t need too many chefs in the kitchen, so we [help] manage their business. These guys are internet stars so they’re not doing what a traditional celebrity typically needs to do, [like] show up to auditions and stuff like that. Although they get approached for a lot of that, our focus is to keep them focused.

How do you make money?

There’s definitely YouTube ads. There’s product placement — we’re only talking to the bigger companies about that. Then eventually there’s [helping the internet stars] create their own products. Something similar to Floyd Mayweather and The Money Team clothing line which is something that we helped him create a few years ago. So it would be something similar to that depending on who and what product fits their brand the best.

And Shots Studios takes a percentage of whatever you make?

Yeah, it’s similar to any kind of management deal.

So what’s the end goal here? What do you want Shots Studios to become?

Today we’re at two million video views a day and that’s jumped up from 400,000 video views a day in August. Our next step is to get that number to 10 million by early next year. Then also the goal is to increase the length of our videos, which now we’re talking about original series. If you’re getting to 10- to 12-minute videos and eventually 22 minutes -- now we’re talking about a TV show. In the past I wasn’t a big fan of live but now that we’re in this comedy sketch stuff, it makes me think of a possible live online series.

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