It’s hard not to get attention when you’re giving away a free TV — and one valued at $1,000. But as co-founder and CEO Ilya Pozin points out, Telly’s real value, and excitement, surrounds the data Telly collects.

“The data is really at the heart of Telly,” says Pozin. 

Ads run constantly across a small second panel at the bottom of each Telly set, tailored to interests and other details people offer in exchange for the free TV. That creates a more seamless engagement with advertising. A viewer who has previously said they like Pizza Hut, may, for example, see a spot playing for the chain in the bottom screen and be able to have a pie delivered before the second half of the Super Bowl.

“Because we know your address, we know your closest location, and we have your credit card,” says Pozin. “You’ve just got to pick some toppings and then you’re eating.”

You can hear more from this conversation between Pozin and Signal’s John Battelle in the video below or read our lightly edited transcript.

TRANSCRIPT

John Battelle
Welcome to another Signal Conversation. This month, we’ve got a really interesting conversation with Ilya Pozin, the founder and CEO of Telly. This is a device that many of us here have been paying attention to, and it just got a lot of attention at CES recently. It’s a new kind of television. And Ilya has some experience in redefining television as a co-founder of Pluto television, Pluto TV, which, of course, was a successful streaming service. He’s moved on from that, and he’s now reinventing from the ground up, starting with the hardware, and of course, the software. We’re going to talk all about it. Welcome to Signal Ilya.

Ilya Pozin
Thanks so much for having me.

So tell us first, what is Telly?

Telly is a dual screen television, a 55-inch TV up top and a second screen on the bottom with a premium soundbar and a bunch of extra features. It’s actually the smartest TV on the market, by far. If we were to sell the device, it would cost over $1,000. Similar to Pluto TV, we’re disrupting it not only by building the smartest TV in the market, but we’re disrupting the price point where the television is actually completely free to the consumer.

That’s a big deal. These big screen televisions with all of the features, and just the sound bars are several thousand dollars. So tell me, how do you make that business model work?

If you go back to my last company, Pluto TV that you mentioned, we enter the market offering a free streaming service where everyone thought we were crazy. We had 93 No’s from every investor before we had a yes. All the media companies and content owners thought we were completely nuts. Because it seemed like the whole world was going subscription on demand, and here’s this little company that felt like it was going backwards 30 years to ad-supported linear television. But the fact of the matter, it worked, and we put it out there and the data was what we actually told.

The funny thing about me is I don’t actually watch a lot of TV, and I found myself to be in this television kind of media landscape. But I think the advantage that gives me is I don’t have any personal subjectivity. Everything I do is very objective. So looking at data is key.

At Pluto, we proved that you could build a very sustainable business on a single revenue stream where we’re not double dipping on revenue, where we’re offering a completely free and it’s supported by advertising. Telly is doing the exact same thing.

When a TV maker, let’s take a Samsung, Vizio, Roku, anyone, when they sell a TV, because TVs have hit this commodity state, there’s very little margin in the hardware. The only thing you can do when every television is identical and features is drop your price. Consumers walk into Costco, wherever they see what’s on sale, there’s very little brand loyalty, and that’s what they buy. When that happens, the company does a couple of things. One is innovation kind of halts, because there’s no margin to innovate. Frankly, right now, if you look at your wall, the TV there could be three months old, three years old, seven years old, you don’t know. They all look almost identical. But the other thing that happens is they try to find other revenue streams. For many TV makers, I’m talking to all of them, it’s selling data and advertising. So once again, they’re double dipping, they’re charging for the TV, and then they’re selling your data and they’re monetizing your eyeballs with advertising.

At Telly, we said, ‘You know what, let’s do the same thing as with Pluto.’ Let’s get rid of the one revenue stream, you don’t make any money on hardware anyway, why sell it? And let’s go all in on the data advertising revenue side of the of the business and make that offer very compelling and transparent to the consumer, and tell them look, you’re opting into this, you’re getting data and ads, everyone else already does this, we’re just giving you a TV that’s worth over $1,000 completely free. So there’s a very clear value exchange.

There are many features to tell you that that are unique. But probably the most notable is the second screen where you’ve got a permanent, fixed place to communicate with the consumer in commercial ways. You do other things with it as well, but that that is the place where you have sort of unique addressable space for advertising. Tell us a little bit more about that. What’s the unit? How does it work?

The best analogy I kind of use to explain it, it’s almost the second screen is the same width as the top, but the height is much smaller. It’s almost like tablet attached to your TV. These days, most people are already on their phones or, or some other device while they’re watching television. So we said, let’s just attach that screen to the television and use that as a way to enhance the content viewing experience, kind of like a car. The top is your windshield, it should always stay clean, so you can pay attention to the content. The bottom is, is your dashboard. That’s where your speedometer, your radio or navigator is on your car. That’s what we show you sports scores and weather and news, and lots of other types of widgets and ways to improve what you’re watching. So imagine, you’re browsing Netflix, you’re trying to figure out what to watch, and maybe Rotten Tomatoes reviews show up in the bottom right. Or imagine you put on your favorite, sports game, and boom, we automatically pull up your fantasy sports and maybe some sports betting or something on the bottom to once again, enhance that content viewing experience.

From a business perspective, there’s also a space for an ad, and that’s what makes our entire business model very disruptive, but also sustainable. Why it works is because the advertising is there the whole time. Somebody’s watching TV. So when you’re looking at other incumbents like the Samsung or Vizios in the world, when you’re looking at a single screen environment, they can only advertise when you’re inside their operating system, when you’re on their homepage. But for us, we run ads no matter what you’re watching. In fact, a big use case for us is people turning off the top screen and leaving the bottom on, right where they’re still engaging with the television, but not watching TV. But maybe they’re using their voice assistant, maybe they’re on a zoom call, maybe they’re playing games, maybe they’re just looking at weather news info, but the ad is still there, and it’s persistent. And we have a lot more hours and opportunities to engage with that consumer, thus driving a much higher revenue for the for the business.

What I find fascinating about that is how you basically got out of the game that everyone else is boxed into. Which is everyone is trying to get a piece of that main screen pie, whether it’s the TV makers like Samsung and others, it’s the streamers, it’s the networks, it’s the affiliate, everyone is splitting an increasingly smaller amount of attention in the main screen. You live outside of that world, and I imagine that so does all the data that you are capturing about how people are using the television, how they’re consuming shows. As a matter of fact, what I got excited about when I heard first heard about this was, it seems to me that for the devices you have installed, and we’ll get to how many and how you scale in a second. But for those devices, you may have a pretty unique view of television experience across every single possible streaming service, simply because you aren’t locked into the ecosystem where people are sort of fighting with each other about who gets what data, which seems to be stopping the ad universe from truly innovating in the streaming space. Is that a fair kind of set of insights?

I think you said it better than I could have. The data is really at the heart of Telly.  And because it’s free, there’s a very clear value exchange for the consumer. But that also allows us to operate a little bit differently. When you’re buying a regular television, the TV maker doesn’t really know who you are. Like what you’re going to Best Buy, you’re buying a TV, they don’t know who you are, unless you register and provide some basic information. But for us, that changes from day one. In fact, to get on our waitlist to get a Telly when you sign up, you’re filling out a questionnaire of over 130 questions. So these are demographics, psychographics. We go in deep, because at the end of the day, consumers don’t mind advertising as long as it’s relevant. In order to deliver relevant advertising, we have to know who you are. So we go deep into various types of questions across every category from your income to what car do you drive to? When’s your lease up? What restaurants do you eat at? Do you order foods you eat out, eat in? What are your favorite brands? Are you renting? It’s just everything that potentially is a targeted advertising. We asked those questions up front.

When you get your Telly, your data is automatically synced to the TV. And then as you mentioned, we have our ACR technology that allows us to see what’s being watched, and every other TV maker does this, but our secret sauce is we’re not under any distribution agreements from any streaming service or any any provider that typically those agreements blocks the TV maker from accessing and using them data. So that gives us zero blindspots. So not only do we have rich party profile data about the consumer, we also know everything they’re watching out on the screen, from shows to streaming to live to cable to broadcast to video games, doesn’t matter. Then finally, we have a motion sensor on the device that also lets us know when people are in front of it, or when the room is empty. And how many people are there.

That’s an elephant in the room when it comes to television.

It actually is, and we actually see what advertising people watch as well. So we can see that it doesn’t matter if you’re watching a Telly ad, or maybe an ad on NBC or something. But our data actually shows that for a lot of the commercial breaks, about a third of the room is often empty. And empty rooms can’t really buy much. But a lot of times those advertising dollars are still spent. And there’s a big inefficiency there on television, because it’s the last piece to this whole digital landscape that’s not fully addressable and fully measurable and fully digital. You’re still using panels to figure out who’s doing what. Well, the cool thing about Telly is we are a panel in a way. In fact we have a much bigger panel than the largest panels out there. Because every TV has an unbiased distribution footprint. Our audience is representative of the US population, we have people everywhere in all pockets of the country. In fact, they actually over index a little bit on income, but we pretty much mirror the US population. Because of that triangulation of data of who you are, what you’re watching, and when you’re there, it allows us to run a very sustainable data business on top of the advertising business.

A couple of things that I want to follow up there. One has to do with scale. You came out last year, and you announced that you were going to offer up to half a million televisions for free by the end of last year. You have plans to scale significantly beyond that. You have hardware issues, you’ve got to build a lot of televisions or I would say perhaps your OEM partners have to build a lot of televisions. How’s that going? How many are out there? And you know, how long is your waitlist? When do you expect to hit what you consider critical mass in terms of the number of people using this system?

First of all, we were always free. The 500,000 that was mentioned in all the all the media, when we launched in May was it was not just once we distribute that we’re done. Our business model will never be to sell a television. We haven’t publicly announced how many homes we’re in exactly. But what we did that’s a little bit different than most hardware is we launched the company into a beta program. That’s really never done. It’s always done in software. We’re all familiar with Gmail, or any kind of like major software launch always goes into a beta. We actually did that with hardware because we’re bringing something new and innovative to the market. We wanted to iterate and make the product ready before we go into primetime.

So what we did is we randomly went through our waitlist and invited thousands and thousands of people to be in our beta program, which ship devices now to over 43 state. We iterated on the product and the way treat it as kind of like a Tesla, where the car keeps getting better over time, but not because of hardware but because of software. We overloaded Telly with a bunch of extra hardware and sensors and things like that to in the future enable it to become smarter and smarter and smarter right. And we’ve shipped thousands of devices we have now validated and proven our business. 2023 was our year of validation if you will. Everyone’s extremely happy, our investors are happy. Everyone internally at the company is happy but most importantly our consumers are happy with 99% satisfaction rate.

Our TVs are used for more than double what the primary TVs are used typically in a home. So we’re almost over six hours of usage every single day. Which is which is phenomenal because typically a primary TV gets about 3.3 hours of usage and because everything is great, the engagement is great, return rates are almost non-existent and advertisers are happy, the ad recall rates are through the roof, our case studies are through the roof, we’re now entering our year of scale. This is where we’re going to make sure our entire waitlist is satisfied. We have almost 4000 people on the waitlist right now. That’s completely organically. We’ve spent no money on marketing. It’s what we learned at Pluto is that it’s not difficult to market a product that’s free.

Especially a good product.

And in this case, when it’s a free TV. So Pluto never really went viral. We launched Pluto. We’d prepped our servers, we’re like, we’re gonna crash, it’s gonna go nuts. Nothing happened. It took us time to build and iterate that service. The business is doing incredibly well now to over a billion dollars in revenue, multiple years in a row.

Telly was a little bit different, because it’s such a high value product. This thing just went viral. It was covered on every media outlet. It’s all over social media. We’ve never given up any to influencers, nothing. We never did anything, but it worked. We needed to make sure the product was good. So we also just signed with, with Foxconn, who’s the largest consumer electronics manufacturer, the company behind the iPhone. We now have the attention opportunity to grow very quickly, and scale to a very large amount. We’ve done paid tests, where if we said okay, if we wanted to acquire consumer, any demographic psychographic, how much would it cost us? We’re talking about two, three bucks to get a user. It’s very little if even if we have to do it. But it doesn’t seem like we have to just because of virality.

Tell us a little bit more about what it looks and feels like to be an advertiser on Telly. In particular, bear in mind that one of the large constituent audience here at Signal are folks at P&G. How might a company like P&G engage with Telly what what are the ads look and feel like and what’s different? And what might they learn?

I think we got to go beyond the 30. Typically, ads on TV are obviously in between content in Ad pods. Whether it’s streaming or broadcast, it doesn’t matter. That’s where they are. Not only are a lot of those rooms empty when those ads play, the engagements are also very low, right. It used to be a great way to reach a big audience. But with all this fragmentation, it’s no longer a great way to reach audience. That’s why most dollars are actually going to web mobile because that’s where you can actually get performance out of your campaign. That’s my background. I’m a performance marketer. I grew up on web and mobile, not on TV, and we wanted to what we wanted to build from Telly is a way for advertisers to actually intersect that those brand performance brand dollars with performance dollars.

First of all, when you turn on Telly, there’s a power on unit. We play about two minutes of ads. That’s a good example. That’s a full takeover. It’s not in between content. When you turn on the device, everyone sees it. That makes it very powerful, very engaging. And then on the bottom, we have both video units and display units and rich media units. But they’re one at a time. It’s not like you’re on the website scrolling, there’s 15 banners. That’s why those CPMs are so low, because once again, the engagement is so poor. With us, it’s completely opposite. It’s one out at a time, and the engagement is very high. In fact, any case study that we’ve pulled, where we’ve measured ad recall, it’s multiples above the ads that they typically see on television just because of that persistence.

You’ve also made these ads engaging literally in that you can engage with them, the way you can engage with anything on the internet. Which which creates the potential for that sort of fabled mythological T-commerce space that has yet to exist? Is that correct?

That’s right. The data at the core, allows us allows the ads to be super targeted. Not just what you’re watching data, because that’s just kind of directional, but the profile data and the survey data that we deliver to learn continuously learn more about the household. More importantly, when you see an ad, you can actually fully engage with it. So you can push on the action button on the remote and a full browser opens up right where you can opt in, purchase anything you could do on a kind of a web mobile experience. Because we captured all of that profile data at sign up, we already have your name, your address, your credit card, etc. That makes the T-commerce process on the television very easy.  Because no one likes using those arrows to fill out forms you need to get rid of login. You gotta get rid of the friction. So it’s working. QR codes are cool, but you’ve got to get out your phone. That’s why those conversion rates are low. Our conversion rates, because our ads are persistent, are more than double any other any other TV maker. But we believe that that’s not really a solution. The solution is to be able to purchase on the television.

We’ve actually built experiences where that all can happen in the bottom screen. Imagine you sponsored lunchtime, and you’re Pizza Hut. First of all, we already know you like Pizza Hut because we actually know when you sign up. So we’re going to deliver those ads to people who said they like Pizza Hut during lunchtime. You’re watching a game. Imagine engaging an ad and it doesn’t actually cover the game, and you’re purchasing your pizza in 30 seconds. Because we know your address, we know your closest location, we have your credit card, boom, that whole thing. So you’ve just got to pick some toppings and then you’re eating.

All I can say is I want one now. But I know that I’m number 400,001 on the waiting list. So it might be a minute. But at what point do you think you’ll get assuming everything goes as well as you want it to, get to what the television industry considers scale?

By Q2 of this year, we’ll be at a significant scale that advertising data folks love. Before the year’s over, we’re going to be past a seven figure number, because our demand is there. And now we’re engaged with a manufacturer that can help us get there. Everything got unblocked and we’re ready to go.

This is an exciting development and I look forward to tracking it. Unfortunately, we have to leave it there. But Ilya Pozin, thank you so much for joining us at Signal and best of luck with disrupting the entire television landscape.

Thanks so much for having me.