The secret to that success is easy to see.
"We're the only membership VOD site," says NakedSword CEO Tim Valenti. "Most models are based on pay-per-minute, buying time. We are a genuine consumer brand. Most other companies go through affiliate channels, but our original business plan was to be a consumer branded product. Up until this past year, when we merged with the affiliate program Guns Blazing, and with the production company Raging Stallion, 97 percent of our revenues were delivered directly from the consumers. We didn't depend on affiliates to bring us traffic or make sales."
"We're not a slot machine type of outfit. You pay one price with us and you have access to everything. We also produce our own original content, and we're the only VOD company on the gay side that produces its own behind-the-scenes content. We have special shows like 'Tim and Roma' and 'Dream Team' to give customers additional types of programming. We produce original content with studios like Jet Set to make Wet Palms the first gay porn soap opera. We produced a 12-episode series called "Dirty Tricks with Dirty Boy Video." We're like the HBO of online gay adult."
Although Valenti sits at the controls of a spectacularly successful venture — NakedSword revenues have jumped 22 percent since last June in a horrid economy — he's not your typical coat-and-tie executive. His office building is a gutted and redesigned former warehouse on South Market Street in San Francisco. The floors and walls are concrete. The ceiling is wood, high above and dotted with large skylights, giving the office a wide-open and well-lit ambience. This makes going to work a pleasure for Valenti.
"I like to get to the office a little before everyone else, because I'm an early guy," he says. "This lets me list all the things I need to accomplish. A good part of my day is spent strategizing with other people. I see what everybody is doing in the office, and then I get pulled into various creative meetings for promotional or sales strategies. But I'm not a deskbound type of guy. I'm a roamer. I like to go to your area and see what you're doing. And it's hard for me to be inside all day. At lunchtime, I literally have to go outside and walk to wherever I eat. I'm just not an office guy, but I've ended up being one."
To look at the cavernous NakedSword office, which employs 22 people now, one would never imagine how it all began. In 1996, Valenti and his former business partner started a company called Cubik Media, which specialized in website design and marketing development. They financed everything with credit cards at first. One of their earliest clients was the Mitchell Brothers O'Farrell Theater in San Francisco, when Valenti still didn't even have an office.
"We made friends with Jim Mitchell's wife," Valenti recalls. "In exchange for building their website, she gave us an office above the theater and some used computers. That's where we started."
Cubik Media grew in the next few years, building websites for such impressive firms as Hitachi, IBM and E-Trade. But the inciting incident occurred when Valenti's company was hired to work with a gaming outfit that owned the "Tomb Raider/Lara Croft" franchise — an experience which forced the team to learn how to stream video quickly.
"We thought, 'How can we use this for ourselves?'" Valenti says. "'Well, we're in San Francisco, and I know some porn guys.'"
This led to the launch of their gay streaming video site in 2000.
"As NakedSword grew bigger, we became our own Cubik Media client," Valenti added. "Soon we were our biggest client, so we just stopped building websites for other companies."
Now, a decade later, NakedSword celebrates its finest year in a long string of fine years. The merger with Raging Stallion is churning out new, exclusive content, and Valenti even strayed from his membership-only philosophy by partnering with the Guns Blazing affiliate program. Not surprisingly, it's been a success.
"We differed from all the other online companies in that they were affiliate-driven," Valenti says. "If the affiliate marketplace was having a tough time, then companies dependent on them would have a difficult time, too. But because Guns Blazing is such a great program, our product now is being sold through affiliate channels as well. We're seeing some really nice growth there."
"Growth" should be the NakedSword mantra. An example of this is the in-office feature called "the dashboard," which shows the real-time level of sales and how they stack up month-to-date: Valenti's co-workers treat it like a tote board to spur them on.
"If we see that we're even one percent behind last month in sales," Valenti says, "we think of special sales campaigns to boost the numbers. This just happened. We were just breaking even from last month, so we went to work and boosted the sales to a 2.5 percent increase by the final day. I went out into the office and said, 'We did it!' Everybody gets really excited about things like that."
This full-speed-ahead mentality bodes well for the coming year, as NakedSword will continue to add new assets to its portfolio.
"We've got a lot of really cool stuff planned for 2010," promises Valenti. "We'll be acquiring another production company, this will give us more opportunity to produce original content to add to the largest library of gay adult video online. Among the new videos will be a line of originally produced amateur content, exclusively for NakedSword members. We'll also feature new interactive things for our members, including polling, and rating movies and stars.
"We're also launching Silver Light in the first half of 2010, which could completely change the way websites are designed and presented. It represents a desktop-like arrangement for manipulating online content, freeing us from the constraints of HTML and CSS. In the end, it will allow us to replace our outsourced Flash content with Silver Light and provide simple new ways to view video on NakedSword.
"I don't see any other gay VOD companies going in this direction yet."
And that's why NakedSword is on the cutting edge.