Future of AI and Creative Industries

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This is where PWC makes things happen Working with you, combining the industry expertise, data insights, AI capabilities and business change experience. to help you reinvent and lead from the front PWC accelerates what's possible so you can turn vision into value. Discover more at pWc. coot uk. Welcome to The Business, the podcast about doing business, making money, risk and reward. I'm Hannah Prevz. This week, the chief executive of one of Britain's most exciting AI companies, Synthesia, Viictor Rip Pbelli is going to talk to us about the company's soaring valuation, the future of the UK tech sector, and what lies ahead for creativity in an AI world I sometimes think of Europe as like the trust fund kid of the world. We inherited a lot of money because The previous generations built great companies. and now we've kind of forgotten a little bit that it takes hard work, it takes trade offffs to have a thriving economy Welcome to the B Vixor Thank you. excited to be here. Thank you so much for coming in today. So the company syynthesia, tellell us a little bit about it because You describe yourself or you're described as a video communication platform book. Exactly does that mean ure So we found the company nine years ago in twenty seventeen, back when AI video definitely didn't work. We saw the early signs in twenty seventeen of AI being able to not just analyze patterns and data. Most people kind of call it machine learning back in twenty seventeen But that these AI models actually eventually be able to also generate data they can generate data, That means they also got to be able to generate content like video and speech and so on. And our bet back then was that where I can generate data and videoos specifically That's going to have a huge impact on how we produce video and how consume video, right? The first thing that's going to happen is that the marginal cost of producing video is going to drop to zero, more or less, but also very importantly in the time it takes to make a video and the skill required to make a video So the app we've built is, you know you log in and then like you would make a PowerPoint slide, you select one of these avatars, you can create yourself You type in the script of the video, you put your video together And you can share it with the world. You don't need any cameras, don't need any actors, no studios. we now work with more than ninety percent of forun one hundred on helping them create All sorts of videos, but a lot of it sits around things like enablement, training marketing internal communications. And of course later on we'll talk about what that means for kind of creativity, I guess and video and film more broadly. But just describe some of these videos to us. So you talk about training videos. How good are they? Because most people probably have in their mind's eye that these would be like you know terrible, that it wouldd be really obvious that it was AI, but they're actually incredibly human like, aren't they? They are. I think when you look at the results today, it's very, very difficult to tell that it's an AI video. Of course that has improved significantly over the years. The one thing that's important to understand about synthesia is most people, if you close your eyes, we think of video. You think of like the cool Netflix series you saw, a great YouTube video. like that's what most of us go to when we think about video, right? And that's of course a type of video Generally these are more like storytelling, cinematic veryer high quality, takes a very long time to produce a single video. But if you look at the entnterprise and Ble B right It's more about high volume videos, which aren't necessarily at the level of quality that you would produce if you're doing a TV ad. And so the type of content we created at Sthesia is more kind of informational, explanatory, almost like a PowerPoint version of video And so it's about the avatar, of course, talking, but it's also about all the kind of graphics you have in there. So to make it real, customer like Zoom, the video calling platform, they use them these to train their sales force. So when something happens in the market, they launch a new product, you know something that's going on. Additionally what they would do is they would send out an email to people with some information, maybe a document And what they and many of us realized was that very few people actually read the document. And even if they do, they don't remember that much of the information Now what they can do is they can produce these kind of short punchy video clips instead And they just land so much better. Because when people are not at work, they're watching YouTube videos, they're watching TikTok videos. been it is the default way most people prefer to engage with their information right. So where did the idea come from initially So we started out in twenty seventeen. I wanted to I was interested in like doing film What were you doing? What were you doing before then? So I grew up in Denmark in Copenhagen and I did a bunch of like smaller business before that worked a bit in the startup ecosystem. And when I was twenty five I knew that I wanted to buil my own company and I knew I wanted to do something with frrontier tech. So it decided to move away from Copenhagen to Loby place, but not really the place to build an AI company, they moved to London and I basically spend a year and figuuring out what company it wanted to build. This is just when virtual reality was sort of the hype cycle of the time. Everybody thought that probably we would be doing what we're doing right now in a VI headset back then And I lo the technology, but I had this feeling that it's just not really there Then I met this professor. Emeta Nis, who's my co founder And he had done some of the very early work on training AI system to active generate video. And of course, the quality back then wasn't very good But I kind of saw that and I felt there's something magical about this. And if The rate of progress is going to continue They were not that far away from these No networks active being able to generate video. It was a very crazy idea back then, very like non consensus. Now of course, everyone is doing it. Well, and timing is everything, isn't it, right when it comes to doing a startup. And you said it was hard in those early days. I think I've seen it written elsewhere that you did a hundred pitches to try and raise investment. What was that period like? And how do you kind of handle those rejections So in tech, you always have these cycles, right? Right now, AI is the only thing anybody wants to invest in. If you look at the public markets today, if you're not like an AI native company, The multiples have just gone down by an astronomical amount, right? And back then, you know everyone wanted to invest in FintTech We were kind of going for an AI winter because the previous cycle of AI in twenty seventeen hadn't really delivered. It was just too early So going out to the market in a space that were not hot and it was not very obvious how anyone was actually going to solve this problem I was twenty five years old. I'm not an AI researcher, right not a PhD. like that's not. my background. I think a lot of people just looked at us and thought it was crazy idea. And it was And I think ultimate my learning from that was that What we were trying to do was both convince investors that The world's going to look like this in five years, and I and my team are the right people to build for that vision That's really hard to convince someone both on both of those things if they don't believe in any of them initially What we ended up doing was we got a contact with Mark Cuben And Mark Guban was very interested in this space, and he one hundred percent agreed with us on what was going to happen in the world. We didn't have to convince him that AI video was going to be a thing. We just had to convince him that we were the right team to do it I think when you're doing these like very hard, very non consonsensus ideas, it's really important to try and filter for investors that already share that vision for it because its just it's such an uphill battle convinced otherwise, especially if you're twenty five years old and don't have, you know like two exits on your CV already where people will be more lenient to listen to someone with a crazy ARI. And just give us an idea of the scale you're at now. So I think you're about eight hundred in terms of headcount. And what about kind of revenue wise We don't disclose revenue, but we're growing super fast, We're nowounced ton of million R. lastast year Yeah we work with more than ninety percent under four thousand one hundred. We're just about to launch our second product, which evolves video from being something that's a broadcast E everybody watches the same video So a video you can actually talk to. which is very exciting. The businesses is really flourishing. What's driven that growth? Is it in part because businesses are looking, frankly, to cut costs and what's a really difficult time kind of economically Um For sure, actuallyually when you ask our customers, like what's the What's the number one reason they love the product? It's actually not cost, it's speed So think about making videos the traditional way Even if you had all the money in the world, right, it still going take a long time because someone has to like write the scpts, then you have to get in front of a camera recorded that in front of the camera, you cant go back and edit it if something changes in your business, it's very hard to translate it. There's all these sort of like secondary problems of working with video. And what this enables right is that You know, if you used asszoe example from before, a new product launches or something a competitor does something, you need to communicate that to the field You can now do that in two hours, right? If you want to do that with a video before, it will be probablyrobably weeks. And so what a lot of people, you know, kind of ran into before AI video was that by the time the content was done, it was almost irrelevant already That's a big one. cost is of course another big one, right? L for the same amount of video budget if you go to an agency. You can now create one hundred times the video, right? Because you can actually have The people who are the experts in the business create the content, they don't have to rely on third parties to sort of bring their ideas to life. And I think this is a general theme we're seeing with all these AI tools, right? that you enable the individual to do much more by themselves And how does the revenue model work? Is it a subscription? So if I was you know if I had a subscription, could I create as many videos as I wanted in a year or is it per video? How does that work? Yeah, so we have both a self service product, which means anyone could go in, you can try it for free and you can sign up for your credit card be how much video you can create and on our enterprise and business plans Bically also buy seeds, right? And then I receipt, you have unlimited video equation. And what's been really amazing to see is that just how many different types of people are now creating? know we have accounts with more than thousand people creating videos And that's the big unlock. That's why we're growing so fast because we've massively expanded the amount of videos that's been created in Enterprise. The way we've done that is by massively increasing the amount of creators that sit in the enterprise And that's something you very often see right with these new technologies. We've seen it obviously with the we have computers and internet, right All all of a sudden everyone's job is to write things like emails, you know Eone writes much more than it did before. And the world is just shifting into videoos And when you talk about the kind of speed of adoption and how it's being adopted across organizations, are you worried that that could slow down? And the reason I ask is Danny Fortson, who I know you also know, who's the West Coast correspondent here at The Sunday Times and hosts the tech podcast with Katie. He wrote a really interesting piece a few weeks ago which showed that some of these huge organizations that were spending tens of millions pounds on various AI licenses are scaling that back now because it's actually costing them too much money and being much more targeted in who they put those tools in the hands of. So do you worry about that at all Not really, I think we've always had this sort of internal mantor called utility of a novelty, which is that we've always focused. driving real business value, you' not selling just pilots and demos. which is has happened a lot the last eighteen months. And that's not necessarily a bad thing. You know I think for companies makeakes sense, buy a lot of products. These products are so accessible. that most of them can be used by anyone in the company. So you can very quickly learn what is valuable and what's not valuable. So I think we've been in this very expansive phase where companies just like bought a lot of tools and now we're in this more consolidation phase where Clearly companies want fewer vendors. They want to focus on the tools that actually work provide value. And they want to set some godrails around that. There's this idea of token maxing U which is essentially, you telling people in the company, just use as much AI as you possibly can We just need to like transform our business to be a native And I think that's a good thing, but that doesn't necessarily mean that's the most valuable thing for the business, right Now there's things like token costs, how much money are you actually spending on tokens? and what are you getting in return for it? So I think we're just in this very Um very normal and very healthy phase of any new innovation where it starts off being a campaign explosion of ideas, creativity, use cases, ideas. and then slowly we' got to begin to consolidate what actually has like lasting value And that return on investment piece is really important, isn't it? And I see lots of Chief Ecs kind of grappling with how to measure the success of some of this stuff. How How do they measure success of you know, they're synthes of subscriptions. So video is kind of an interesting thing because video is ultimately like a medium to communicate a message And so it depends a lot on what the business is, right If you're training your sales team, a very common thing people look at is can we reduce the ramp time for a salesperson? know Inead of spending know two months on training someone from zero to one canan we reduced that by two weeks? By taking out some in person classes and replacing them in video. Some people look at cost, right Some people look at engagement If you have a website and you want to have a video explaining all the details newsure of your product, you can visibly measure like how many people clicking on those videos? Do they have a better understanding of your product after it So it really depends on the use case. And those are very different from team to team and from business to business I see the speed case, but do we risk losing anything? So you know in person training sessions, we've all been to them where they're absolutely terrible and it's a total waste of a day. So I totally see that in terms of efficiency, in terms of building relationships and all of the other things that make face to face interactions really great. Do we have to be careful not to lose some of that kind of special source, if you like Yeah, of course. I think most of our customers are really smart And they're not just saying like, let's just like get rid of anything in person, right? It's more about can we be smart? If we're flying everyone in and we have eight hours with them What should they actually be doing? Should you be sitting in like reading things in a classroom robably not the best use of your time, right? You probably want to talk to your colleagues. spend time with your manager. So it's more about just being more efficient. I'm a big believer in the human connection and human relationships. I think Silicon Valley generally underestimates how much that matters in business I think The the core DNA of a great company is great people, and I think that's going to remain the same in the next five or ten years. So I think it's more about just being smarter, reducing busy work. and increasing the efficiency of the communications, right? A classroom training, like people learn at different paces. sitting in a classroom and having someone just one way communicate for two hours Maybe some people need those two hours, Maybe some people just needed twenty minutes of that to really understand it And we're now rolling out this new product, which is a real time video. So instead of just sort of sitting back and consuming, you're actually interacting with it And so the training use case just came from one of our big fashion customers in Milan. And what they're doing is They train you sort of the curriculum like if you were in a classroom or university or something, you have to learn a body of content first And then what you can do is you can do these like AI roll plays We actually talk to an avatar in real time, so it's kind of like you're on a video call. And that' how I can pretend to be a customer. And then we give you the learner a score What are you good at? What are you less good at? That could be product knowledge, building empathy, setting up next steps. that depends on the use case in question And so you get a way to actually practice and for the executive managerial team, you begin to actually be able to map out the talent in your organization in a way you haven't really been able to do before,? And so we're seeing these amazing things with our customers where But one particular really big customer, And they told us, we're scoring across these dimensions when we evaluate the performance of someone. And we think that these two dimensions are the most important one to determine the success of in this case a salesperson So we ran this thing with it, we rolled it out to four hundred sellers. We got all the data back on what people are good at and what they're l good at looked at the actual data of how much people are selling, right, which is the sort of ultimate metric for how well people are doing And we learn that it' acted through other dimensions. was the best determinator of highest correlation with success when you're actually out there selling right. That's something you couldn't really have done before. And so now of course, that business is like, okay, those dimensions are probably we should focus more in the way that we train. So this is a good example of like being able to go further than just like communicating with someone. Now we can actually have a conversation with the learner and that massive increased the efficiency of training. I think everyone Well, not alone when you say to people, like the best way of practicing something is actually practicing it. And so you mentioned before about the large majority of the four thousand one hundred are your clients. Is the adoption much quicker in the US? Do you think that we're kind of lagards in the UK? The thing that founds say to me a lot is It's absolutely shambolic that the UK goovernment, for one, isn't a bigger consumer of AI. And also large corporates here aren't consumers, aren't customers of companies like yours that are amazing that are building here in London. Do both of those seems to resonate with you? Yeah. look I think if you look at the data there's a report released recently where that adoption greatreat ecosystem in the UK. I very firmly believe that London is the second best place in the world to build an AI company in Silicon Valley. But if you look at the actual adoption of AI, it's low, right? And I think there is a general theme in I'll say Europe, not just the UK, where in Europe, people want to reduce risk And in America, people want to increase their competitiveness Those are two very different mindsets when you buy technology and you roll it out and how experimental you are, what are the budgets that youre kind of put towards it So I do think that is real. I think there is a bit of a vibe shift. I think everyone knows understanding that AI is not just a Fat, it's here to stay and it will transform businesses But unfortunately, I think as much as I wish it wasn't like that There is for an element of like, It just moves slower and Europe. Does that mean you have to adapt in any way? Do you have to sell slightly differently to Europeans versus Americans America is our biggest market, right? We have a huge presence there. I do think there's Probably something a little bit different than that, maybe in Europe. Business is a bit more like relationship and trust driven. Whereas in the US, it's a bit more like transactional. What do you have? what's your product? what's your pitch? How can I try it? Whereas in Europe, it feels like there's still a bit more this element of like There' the old school sort of business relations, which I think has a lot of charm to it, and I think, you know kind of in many ways makes sense What we do see is then once you're in and you're working with our European customers, right Th then there's very deep trust And they'll stick with you, they've invested in you, they believe in you. And of course, it's on us, other companies to deliver on that Whereas in the US, it's more fickle, right? You buy something If the competitor comes out with something better, three months later, you might just switch There's a tradeoff in those two things, but the US, I think in general does move a lot faster. So the obvious question is, if the large majority of your customers are in the US., why haven't you moveved to the US? Why haven't you moved the headquarters to the US? and why haven't you personally moved to the US I haven't seen a good reason to do that. know I think we're running a business from here and it's going really well. I'm also proud to build a European business. As a European. I'm from Denmine, right? I think we need a tech ecosystem I'm worried about the future of the EU I think we're stuck in the past. I think the We really need to build a tech ecosystem. And my sense is that A lot of people have kind of been playing that drum for a while But I think and feel and hope there's a little bit of a shift in that we're starting to realize that having a great economy is not a luxury We want to maintain the quality of life that we have in in the European region, we need to build great companies and we need to build great tech companies And I think to the extent that we can be a part of that, I think that's great. But you generally see these ecosystems, right is that Once you have a few big success stories, they make some money, they go out, they start their own companies. It's that flywheel effect, right? flywheel effect, you know, angel Nveette, like I've done. I don't know, maybe forty angel investments in young aspiring founders like you want to help build that ecosystem, right? That's something that that's important to me. You know, I always do what's best for the company, but I'm very proud that we're here I thinking about boom tos, I don't think that's ever going to happen. But for sure there there's pros and cons right Do you think we're not very good at communicating the message to the kind of wider public? whyy should they care about kind of a handful of high growth scale ups? in the UK in a way that they don't really have to communicate the same message in the US, right? The point you made about economic prosperity and how important, you know kind of nurturing these high growth companies really is. I just feel like that message often gets lost. If you ask somebody on the street, why does this matter? They probably won't be able to tell you You know I tend to think so much of the problems we have in Europe ultimately. I think everything is downstream from culture. ultimately And u I love European culture But I'm not sure what we believe in Europe. know In the US, they believe in capitalism Good and for bad China, they believe in technology, for good and for bad I'm not sure what we really believe in Europe. I think it used to be climate change, maybe U. Maybe now we believe in like work life balance or saving the world. I'm not really sure what it is that we believe And I think that's actually is a problem, you know, because As you said, most people don't have the understanding of how economies work U and I sometimes think of Europe as like the trust fund kid of the world. We inherited a lot of money because The previous generations buil great companies Um, And now We've kind of forgotten a little bit that it takes hard work, it takes trade offffs. to have a thriving economy And we all want to be artists, save the world, save the climate. And I want to do all those things as well But it just bec comes a little bit from this. like we've kind of forgotten, I think, what actually made Europe the place that it is today whichich is something you typically seeive trust fund ks, right So and you love being based in London,? when we talked about this before at the tech summit a couple of years ago, and I said, I think I probably asked if you were going move to Dubai. like your co panelists on that day, Sat and Google then upsticks and move to Dubai. But your message is you're very much here to stay, right I love live in London. I mean I live between London, New York, and that's a great setup for me. I love Europe, I love European culture and as I said, I'm proud to be part of building the ecosystem here And so on the subject of New York, at the last valuation or at the last funding round in January, you offered employees the option of selling their shares in partnership with the NASDAG, right? Talk to us how that exactly worked and how many employees took advantage of that? Yeah. So the cl kind of Silicon Valley playbook ride, which is the same one I think we're running the best companies in Europe are running, is that in general, like all employees have stock options in the company. that's part of the compensation in the US People love this. They basically look at their career as building their stock portfolio, That's very important in Europe. We' lacing behind us a lot of people who look at it as purely just like a lottery ticket And you know, we were dealing with this in the earlier so much that people would rather have like a five percent increase in their base salary rather than get options in the company because they don't understand like why And no one knows anyone who's made any money off working in a startup because we don't have that many success stories in Europe, right But basasically what it means is that you get stock options and then when we do these like funding rounds, you can do kind of employee liquidity, which means that everyone gets a chance to sell some of their shares Just like if you worked in a public company, you know like Google or Ma, you also compensated with stock can go up and down and you can sell that for real pounds in your bank account And I think to the point around building the ecosystem before This is really important, right? Because what you want is that peopleeople who are in tech companies who are successful, like they First of we'll tell the story of like, hey, I worked in a startup and I got like x amount of stock options when I joined three years ago and now they're worth much, much more I sold some of them, they start angel investing. You get this sort of ecosystem going, right? That requires like liquidity for not just investors and founders, but for everyone else. So why now stack was the same option not available to you in London Damn I mean, it's ultimate it's more just like a software platform to do it. It's not because it's like listed on the NSTAC stock Exchange right I actually have to say I don't know the details of exact the mechanics of the artworks. Okay. And so we shouldn't read it as a kind of precursor to when eventually you IPO that you're going to do that in New York rather than here But that has nothing to do with that But I think, u You know, I got up in hot waters for saying this some time ago But I generally do think that there's not a lot of of incentive to list on the London Stock exchange compared to the NASDA Yeah. Well, we've talked about this before, right? and you don't think that that's changed at all because obviously there's a lot of noise around it kind of reviving the city, trying to get kind of IPOs in London going again. But as things stand, if you're going to IPO tomorrow, there's no competition between London and New York I think in general, capital markets work best when it's a single provider, right? Like it's a market making function ultimately. and I mean, the London Stock exchange have lots of good arguments for why they think it's not maybe like that. We're not at the point where we're thinking of IPO into the near term future. So maybe it will change up until then. But I think it remains true that most liquidity is on the NASTA and there's not a lot of recent success h startors on the London Stock Echange for highy grow tech companies. In general, I think goes bit back to the point around the mindset in Europe, right where If you look at it from like a multiple perspective, what are people what are investors looking for? what are they willing to pay for? and in the US. There is much more optimism and looking for growth stocks And I think That mentality is also something that prevails all the way to the public market How big could syynthesia get? Be you were valued at four billion dollars? I think earlier this year, right? So and I think I remember you saying somewhere else previously that you hoped it would be a twenty billion dollars company. You know whereere's the vision now No I think the ceiling is really high We feel a great business on using AI to create a video as we know it big next push right is this thing of like What always happens when we invent new media technologies as humans is that we invent new media formats native to those technologies. The idea of a TikTok video would never exist if it didn't have phones with front phasing cameras, for example The first websites look like newspapers on screens because that's kind of what we could imagine. And then eventually we figured out that a website could do a lot more than our newspaper right It could be personalized just to you It can be updated in real time. You can do all these things on a website. you can't run and news paper And what we're in the very early days of now is figuring out what are those AI native media formats? Chat, for example is a big one in text, right? That's a new modality. The idea of like chatting to your computer didn't exist before Re check GBT. That's now a very common way of interacting with it With video it's going be around real time, right Everybody, when you go into a training, you watch a marketing video or something like that, it's actually personalized to you. You can interact with it. Today iss about like watching a video. It was just made with AI. In the future it's going feel more like you're like joining You know, a video call where it's an interactive experience And that's still very early. But if we're the ones who managed to like know crack that format and roll that out, I think the ceiling there is very, very high. If you believe that a very significant amount of the agent experiences that we're all going to have in our daily lives not just going to be chat. it's not just going to be voice. it's going to be video driven, right? And I want to hear more about that in just a minute. We're just going to take a very quick break and we'll be right back. This episode of the business is sponsored by PWC. Every leader is looking for that next opportunity for growth. It requires bold action, but the path forward isn't always clear. This is where PWC comes in. transforming your operations and supercharging your workforce to building resilience and more Working with you side by side to bring the deep tech and AI expertise, strategic insight and industry knowledge empower you to reinvent Create new value and lead from the front PWC accelerates what's possible so you can turn vision into value. Discover more at pwc. co. uk You want to get your backyard summer ready, but you don't want to break the bank? Wayfair gets it, planning on dining alfresco or relaxing poolside Wayfair has everything you need to prep your space. Shop now and save up to seventy percent off during Wayfair's Fourth of July clearance. sccore huge deals on outdoor furniture, area rugs, and more. We're talking thousands of products for every style and budget. Plus, sururprise Flash Deals July sixth. Don't wait. Shop Wayfareair's fourth of July clearance now through july sixth at wayfare dot com d Pay fair, every style, every home Welcome back. We are talking to Victor Ripa Belli, Chief Executive of syynthesia