Seven years ago, Vimeo had Hollywood dreams. The internet video outfit—owned by Barry Diller’s IAC—had found a niche hosting flicks for artsy filmmakers who didn’t want their works to be tossed into YouTube’s unruly, ad-driven stew. But it was a tiny, money-losing business with annual revenue under $40 million. Vimeo was pinning its hopes on the booming streaming business, betting it could leverage its relationship with creatives to build a subscription service to rival Netflix, Amazon Prime and HBO. It hired studio execs from Paramount and Hulu and signed distribution deals with Lionsgate, CBS Interactive and Spike Lee for content to stock the new service.
But Anjali Sud, then Vimeo’s 31-year-old director of marketing, had a hunch the company’s future was not in Hollywood hits but Silicon Valley plumbing. Her plan: shift its focus from entertainment to entrepreneurs. “Vimeo had long been a software company for filmmakers, but the market was too small,” says Sud, now 37. “There was another, much bigger market—businesses. What Squarespace and GoDaddy did for websites, we could do with video.”
She pitched the idea to Joey Levin, Diller’s handpicked IAC CEO. “Anjali said, ‘This is a real business that’s relevant to a much larger audience than anyone thinks,’ ” Levin says. He gave Sud a small team to test the idea. “We like to find smart, talented, ambitious people, throw them into the deep end and see if they can swim.”
Sud was soon doing the backstroke, transforming Vimeo from a dusty web relic into the showstopper of IAC’s tech portfolio. A one-stop shop to shoot, edit, store and distribute video, Vimeo posted sales of $84 million during the fourth quarter of 2020, a 54% jump from the same period the previous year. Last quarter, net subscribers increased by 300,000, to a total of 1.5 million—a gain of nearly 25%. Annual revenue is on track to top $300 million. IAC shut down the streaming division in 2017 and made Sud the CEO.
In November 2020, Vimeo raised $150 million at a $2.8 billion valuation from Thrive Capital and GIC, Singapore’s sovereign wealth fund. Just two months later, it got $300 million more at a nearly $6 billion valuation from T. Rowe Price and San Francisco–based Oberndorf Enterprises.
This spring, IAC plans to spin off Vimeo tax-free to shareholders. It will be Diller’s eighth spin-off. Over the last 25 years, IAC has incubated, rehabbed, flipped and spun misfit web assets worth $100 billion, including household names like Match.com, Expedia and Angie’s List. The strategy has worked: A buck invested in IAC at its dawn in 1995 is now worth about $40, a compound annual return of 16% versus the S&P 500 Index’s 10% return over the same stretch. “In digital life and its possibilities, Vimeo’s not even in the first round,” Diller says. “It has extraordinary potential.”