Meet Edo Segal, the Willy Wonka of Tech
Originally published by Inc.
The United Nations delegation filed into Edo Segal’s office, took their seats on the black leather couches, and got down to the business of the day: They needed something–anything–viral. Unicef’s anniversary campaign was coming up. Yoko Ono had donated the rights to John Lennon’s “Imagine.” David Guetta, the French DJ and electro producer, was recording a cover along with Katy Perry, Hugh Jackman–basically any celebrity willing to sing in front of a white background. Did Segal have something to give it global traction?
Segal, 45, peered at them through his glasses. Then he smiled his smile. “It’s not about creating a beautiful music video,” he told them in a dry, isn’t-this-obvious monotone. “It’s about making something that all your friends have to see. If you capture that magic, then the viral signal starts.” He paused. What did he mean? He meant he just so happened to have invented a karaoke app that was precisely what they needed.
“We’re going to do the biggest sing-along in human history!” he said. Imagine Bill Gates singing, he said. Imagine Bill Clinton. All anybody needed was an iPad. Then he gathered them around his own iPad and sang “Imagine” for them in his Kermit the Frog tenor.
Segal’s vaudeville show of business-development meetings never stops: There was the aspiring reality star, looking to leverage her possibly fleeting fame (Segal offered up Paragraph, the magazine publishing tool he helped invent. “This is your O magazine,” he said. “Now you’re a media empire!”); the visit to Hot 97’s studios, where he regaled rapper 50 Cent and DJ Funkmaster Flex with how TouchCast, the interactive video software he’d made, could superimpose video clips, webpages, or dynamic graphics onto video of their radio broadcasts; and the gabfest with suits at a major internet player about a new ad network he’s building. In recent days he’d met with Hasbro to talk about his line of toys, with Unilever to talk about the meeting software he developed, with Walmart, with the NFL, with Accenture, with–well, you name it.
Segal’s company, bMuse Group, builds many things–toys, apps, mobile devices, 3-D printers–literally whatever he dreams up. So is he an inventor? An investor? A consultant? The answer to each, to some degree, is yes. Segal does what most entrepreneurs only fantasize about: Anything he wants to make, he makes. Part inventor’s studio, part incubator, his company has been built to maximize his creative freedom and minimize outside interference. He employs a group of workers distributed around the globe to turn his copious ideas into startups, one after another, the way a movie studio churns out feature films.
It is a gutsy strategy, to say the least, an attempt to strip away all the obstacles that can get in the way of innovation. And so far, his experiment in frictionless invention has been widely successful–at least measured by sheer volume of creation. He currently has no fewer than 19 little startup babies.
The problem is that’s a lot of dependents. Each new idea is hungry for staff, R&D, marketing. Determined to retain control of his little family, Segal has long bristled at the idea of outside investment (and the second-guessing moneymen who come with it). But to keep the lights on in bMuse’s Greenwich Village offices in New York City, the established businesses must get new customers and new revenue to fund the rest of the operation. That task, Segal is finding out, is easier dreamed than done, so he’s hustling. Cue the vaudeville show.
I first met Segal last June for a meeting that was supposed to run 30 minutes but stretched to two hours. That’s typical. His love of work knows no limit, especially not one written on a schedule. In person, he’s the quintessential absent-minded professor: His eyes glint behind his little spectacles when he’s excited about something, and an infectious smile spreads across his face. The rest of the time he switches to an autopilot monotone and stares toward the floor, presumably thinking some very, very deep thoughts.
Most of our first afternoon was show-and-tell, and Segal has some very impressive accomplishments: He showed me Kinsa, his digital thermometer, which works via sound waves beamed through the iPhone’s headphone jack. (In 2013, Kinsa became the first official bMuse company to be spun off, and raised $9.4 million in venture funding in a December round led by Kleiner Perkins.) Then he stood me in front of an iPad mounted on a tripod and showed me TouchCast, an app that lets anyone with a tablet or smartphone make a clickable video with links to other video clips–even to a live Twitter feed. He’s licensed that tool to the BBC and The Wall Street Journal, which are training their reporters to become roving production studios, able to build and deliver multimedia reports from the field. Then Segal broke out Telepods, the thimble-size figurines he built for Hasbro’s Angry Birds Star Wars game. The truly clever thing about these odd avian-rebel figures wasn’t what they did–sync up with a mobile device and download Angry Birds content–but how cheaply they did it: By using tiny QR codes and a magnifying-glass decoder, Segal helped Hasbro cut unit costs from dollars to cents, and Hasbro went on to sell $50 million worth. For that, Hasbro named bMuse’s subsidiary ReToy its 2013 Inventor of the Year.
A medical device, a video app, and toys–is there another traditional, venture-backed startup that has made so many wildly different products? Probably not. The reason is simple enough. “Every little startup falls into the same lemming’s trap,” says Segal. Entrepreneurs whittle their idea into a slick elevator pitch, all so that they can chase round after round of venture funding, ceding their vision and control every step of the way. But what if the entrepreneur forgot the VCs and remained visionary? “My mission is, how do we create a lab environment in which fundamental innovation can happen?” he says. “Not, how do we create a social network for dogs?”
His model works like this: Segal dreams up a product and his staff gets to work, toiling around the clock and around the world to make it a reality. He has industrial designers in Ukraine constructing prototypes, mobile developers in India coding apps, videographers in Los Angeles shooting promos. He recruits senior managers who share his vision to build a company around the nascent product with the understanding that he will eventually hand over operations to a full-time CEO and spin each venture off to do its own thing, whether that’s to raise capital to expand, as with Kinsa; get acquired; or just turn a tidy profit.
The proceeds go to fuel Segal’s next big ideas–and there are many. He gave me a peek at a 3-D printer that works without heat or chemicals, which he believes could retail for under $100; Thereo, a mobile device–neither tablet nor phone–that uses a 360-degree panoramic camera; and a technology that would reinvent lighting and sound in the home.
As Segal held or described each of these offspring, he got a fond look on his face, seemingly enamored of his own ingenuity, as if to say, Would you believe an art school dropout made all of this?
If Segal has an advanced degree in anything, it’s chutzpah. And chutzpah runs in the Segal family. When his father was a boy in Jerusalem–sayeth clan lore–he knocked on the office door of the nation’s first prime minister, David Ben-Gurion, and gave him a portrait he’d painted. Ben-Gurion was so taken with the work that he got the boy an art school scholarship. When the art school’s busybodies told Segal’s father that the boy’s fingers were too stubby to be a graphic designer and enrolled him as a silversmith instead, the boy kept drawing on his own time. When he graduated, he entered a nationwide contest to design Hebrew University’s new logo. He won.
Segal finds comfort in that story, how his dad flipped his stubby digit at the establishment. And as he grew up, Segal followed a similarly idiosyncratic path. As a kid he learned to code, allowing him to freelance for antivirus-software companies. When he graduated from high school, he says he entered the famous Golani Brigade to fulfill his military requirement–ultimately becoming a captain, despite a distinct lack of warrior zeal. After leaving active duty he continued to try many things but had trouble finding his place. He tried writing science fiction. He spent two years at the same art school his father had attended, but dropped out. He started a CD-ROM company, where he made CD-ROMs on a range of subjects, from martial arts to Christmas songs.
That far-flung, even quasi-random, experience turned out to be more useful than might be thought. Segal’s background as a coder, as a military commander, and as a small-business owner gives him the authority to ask the right questions and manage a staff, even if he doesn’t have the expertise to do it all himself. And he delegates fearlessly, almost recklessly: While working on an early website, Segal found a developer named Abhijith Babu on the website GetACoder. Without ever meeting him, Segal told Babu to go ahead and lease office space, and hire a couple of employees like him–in India. Segal did the same thing in Ukraine with industrial designers and engineers. Today there are 50 employees in Ukraine and 16 in India. Segal has been to the Ukraine office only once and never to India. “I just trust them,” he says.
“We can’t continue to do everything Edo can see in his mind,” says bMuse’s EVP of business affairs.
When Segal was 30, he found himself thinking a lot about what makes humans, well, human. He believed it was all about information–we are the only species obsessed with consuming it and sharing it, as though it were as necessary as food. Inspired by that idea, he moved to the U.S. in 1999 and launched a tech startup, eNow, to find a way of enabling people to index and search what others were saying on the internet at any given moment. “It was almost like a spiritual quest,” he tells me one day as we drove to Brooklyn to meet with a potential partner. “If you have a machine that gets the live feeds of everybody’s thoughts, and you derive insights from that, that’s really a form of collective consciousness, and that’s really a form of God.”
The company attracted $10 million from investors including CAP Ventures, CAA talent executive Sandy Climan, and Robert Wynne, the former COO of Sony Pictures. In 2000, eNow released a product called ChatScan, a searchable index of thousands of online chatrooms; Segal established an entity called eNow.org to search for insights in the data. The experience was a revelation to him: A company could be a creative medium, a way for him to explore life’s questions.
Then the dot-com crash wrenched everything back into reality. Funding dried up; Segal had to lay off most of his staff, suspend the pay of the rest, and go on a desperate hunt for money. Unsurprisingly, the venture capital he finally got came with onerous terms, including the requirement that Segal step aside as CEO, to make room for a professional manager. The company, by this time known as Relegence and focused on selling real-time financial data to Wall Street, was sold to AOL Time Warner in 2006 for a reported $50 million, of which Segal took home just a “small fraction,” he says. (Now, he points out, his spiritual quest has a name: “It’s Twitter.”)
Looking back, Segal says he believes those investors did what they had to do. But when he talks about how venture capitalists too often meddle and second-guess, and just generally “pigeonhole us into disciplines,” you can feel the sting vicariously. And his two-year stint at AOL after the merger left him with a similarly sour feeling. “I always think of that movie The Shawshank Redemption,” he says. “There’s this thing about how people in prison just can’t make it on the outside. It’s true of the corporate world: You spend most of your energy on not getting backstabbed.”
When reality stars and foreign dignitaries aren’t visiting, the bMuse office is library quiet. A row of headphoned young people on Macs sit at a long table by the windows up front, and a rotating cast of characters–partners in the various startups–come in and out to use a massive table in the open office, or to meet with Segal. When he started in 2008, he worked alone. He partnered with an old colleague, Michael Kohlmeyer-Hyman, a lawyer who helped define the structure of the company. (He is now bMuse’s EVP of business affairs.) At first, Segal simply offered consulting services. Then he ramped up to pitching mobile-app projects to ad agencies and toy ideas to Hasbro. Using the cash flow from gigs such as those, Segal then started developing his more ambitious, moon-shot technologies like TouchCast. Bit by bit, he started making more money and pouring it into still more projects.
As the businesses grew, he needed talent to help him. Although he has some money, Segal definitely isn’t rich enough to go out and poach whomever he wants. So like many entrepreneurs, he deploys dreams as currency. And he goes after people who can afford to dream, with the skill to deliver.
Mark Piesanen, now TouchCast’s chief operating officer, remembers how Segal wooed him in 2013. He had recently left a business-development job at Google, and planned to take a sabbatical and travel with his family. He’d been kicking around a business idea–a toolkit for journalists to self-publish online–when a mutual friend suggested he meet Segal. “I was just blown away,” Piesanen says. “He’d built exactly the toolkit I’d been thinking about.” Segal invited him to come to a preliminary meeting with the BBC executives in London. Piesanen watched as “their jaws hit the floor,” he says. “I realized my sabbatical was over.” He agreed to join Segal for a small salary–and a significant chunk of TouchCast equity.
Segal’s curiosity acts almost as a gravitational force that pulls talent toward him. Erick Schonfeld, the former editor in chief of TechCrunch, a website that covers startups and the venture capitalists who love them, now works at TouchCast as a co-founder; his story is similar to Piesanen’s: “I’ve interviewed everyone in technology, and I can tell when someone is just operating at a higher level,” says Schonfeld, who described Segal to Inc. as “the Willy Wonka of tech.” While Segal impressed him, the idea of interactive video–putting the Web inside the video–captured his imagination. “I thought, ‘This could be a new form of expression,’ ” Schonfeld says. Chuck Kalmanek, the former head of AT&T Labs Research, and Eric Pite, a mobile-technology executive who worked for TomTom GPS and Motorola, each got sucked in after hearing Segal describe his super secret Thereo device. Ziv Navoth, an early employee of social network Bebo (and a fiction buff), runs Paragraph, the publishing platform, not because he has to (he presumably made plenty when Bebo sold to AOL for $850 million) but because it is what he loves. And Kent Suzuki, after hearing Segal’s plans for Kinsa, decided that his shop, Right Brain Electronics, would take the job on, reducing its usual fee and taking a piece of future sales. “I’d never worked on a medical device,” Suzuki says. Plus, “Edo is just very fun to work with. He’s not restricted to decision by committee or answering to a board. There’s a real freedom to working with him.”
Of course, ideas aren’t enough. Segal needs customers, too. So over the past few years he has built what amounts to a flesh-and-blood recommendation engine, a loose network of highly connected people across a wide range of industries, from media to tech to consumer goods. These “operating partners,” who include some bMuse employees, are given a straightforward deal: Introduce bMuse to talented minds or well-heeled customers, and Segal will cut you in on any future business. These friends keep Segal’s calendar pretty much full.
The irony, of course, is that now, after devoting years of his life to hacking the traditional corporate model, Segal spends his days in the very kinds of meetings he once dreaded. But he looks at each one as a chance to lure clients out of their safety-first approach to business, to find some sliver of free spirit lurking inside the suits. One afternoon I watched him coach ReToy CEO Josh Shabtai for an upcoming meeting with a TV network. Shabtai was thinking of pitching the channel a connected version of a line of dinosaur toys it already sold, kind of a rehashed take on the Angry Birds Star Wars Telepods.
No, Segal told him. Too reasonable. “You need to come up with some crazy shit,” he said.
Shabtai looked a little confused.
Forget pitching something bMuse already did–pitch a whole show for the network, something that would wow everyone. “Like, we do Jurassic Park, but for real,” says Segal. Huh? “We find a scientist who’s wacky enough to try to clone dinosaurs, and follow him around with a camera.” The show could be timed to the release of Jurassic World next summer, he said: “That’s a hundred million dollars in free marketing! Who knows? Maybe we end up with a dinosaur!”
On the drive home to see his wife and kids one evening, Segal told me a story. When he was 10, his father moved the family to the United States, so he could try to crack into New York City’s art scene. Little Edo didn’t fit in well in Queens; he didn’t speak English and had trouble making friends. So he retreated to the school’s computer room, where he started learning to code. He also began running, pushing for longer and longer distances. His father’s bid to break into the New York art world failed, and three years later the family returned to Israel. But Segal felt that he got a lesson in self-reliance and the rewards of endurance in those three years: He could outrun the bullies. “It gave me the long view,” he says.
Part of the long view is recognizing that not all ideas are good ones, that not every baby grows up. The website of bMuse’s Magic Mirror, the mobile developer that built the app version of ElfYourself, now lists just two other apps. Vast, a digital fan-club platform for pop stars and other celebrities, seems to have been moved to a back burner. Paragraph, the digital publishing platform, recently shuttered its fiction magazine, but focuses on publishing tools instead. Even the projects Segal has the highest hopes for aren’t succeeding overnight. TouchCast, although it continues to wow in meetings and collect licensing fees from the BBC and The Wall Street Journal, has been downloaded fewer than 500,000 times, according to data tracker AppData, ranking it in the top 10 photography and video apps in the App Store, but behind other little-known apps like basic video editor Videolicious (two million downloads). Similarly, Unicef’s world’s-biggest-sing-along project got the green light, but it hasn’t gone viral, at least not yet. Originally scheduled to finish on New Year’s Day, it has been extended until September, says bMuse operating partner Eric Bland, as the project looks for “other opportunities to grow and take on a life of its own.”
In the meantime, financial realities are catching up with Segal’s prodigious imagination. Kohlmeyer-Hyman, the bMuse EVP, says, “We can’t continue to do everything Edo can see in his mind out of our cash flow.”
As a result, Segal is now seeking funding for projects sooner than he used to. His team worked on TouchCast for three years before he started shopping the technology to investors; today, he’s seeking financing for the Thereo device after just a year. If the company sells one of its startups for a substantial sum, it could revert back to longer development times, Kohlmeyer-Hyman says. But until then, he says, “the number of projects requires earlier funding.”
Given those realities, Segal has to take care that Willy Wonka doesn’t morph into Peter Pan. He can’t afford to confuse creativity with believing in fairies. And so Segal has begun considering something he thought he never would. Over the past few months he’s been talking to a private equity firm about making an “eight-figure investment” in bMuse. He still vows he’ll never give up control of the company, as he did with eNow–he’s offering an interest in bMuse’s subsidiaries, not in the company itself–but it’s a big step.
Over the winter, Segal was in advanced discussions with one firm about such a deal. But in the midst of that conversation, his father, now 82, became very sick, eventually slipping into a coma. Segal dropped everything and flew to Jerusalem.
But the old free spirit defied the Ultimate Authority, hanging on for weeks with Edo at his bedside. By the new year, it was unclear which way he would go. As Edo sat in that hospital room, he had time to reflect. He thought about how like his father he is–“we really are our parents in many ways,” he tells me. He thought about how he was different, too. On January 6, Edo Segal flew on a direct flight from Jerusalem to Las Vegas, to the Consumer Electronics Show. He had meetings to take, companies to run. He had a dream of his own to keep alive.
FROM THE MARCH 2015 ISSUE OF INC. MAGAZINE