Twelve Labs

How 3 Founders Built a $27M Video AI Business from Scratch

February 28th, 2025

Founded By

Jae Lee

Founders

Profitable

Yes

Year Started

2021

Customer

B2B

Founded By
Jae Lee: Founders
3

Profitable
Yes: Year Started
2021

Customer
B2B

Who is Jae Lee?

Jae Lee, the co-founder and CEO of Twelve Labs, was born in Seoul and later moved to the United States, where he attended the University of California, Berkeley, studying computer science before founding the company during his military service.

What problem does Twelve Labs solve?

Twelve Labs helps customers by making it easy to find specific video scenes and understand video content, solving the frustration of sifting through hours of unwieldy footage.

Twelvelabs

How did Jae come up with the idea for Twelve Labs?

Jae Lee came up with the idea for Twelve Labs while serving in the Korean Cyber Command, where he collaborated with others passionate about AI. Immersed in a setting ripe with innovation, Lee noticed a glaring gap in the world of AI: there was significant focus on text and image processing, but video understanding—a growing data type—was understudied. This insight prompted him to explore multimodal video understanding as a key area to advance AI capabilities.

Through discussions and research with peers, Lee realized that the market needed a better infrastructure to handle the complexity of video data. The burgeoning volume of video, coupled with the inadequacies of existing video AI models, highlighted an opportunity to create powerful tools for video comprehension. Early on, Lee and his co-founders were not deterred by their limited resources; instead, they used their strong conviction and the support of like-minded individuals to lay the foundation for their startup vision.

The journey was not without its challenges, particularly in validating their core ideas and obtaining necessary funding. However, Lee's determination and clear focus on unexplored research potential in video understanding helped Twelve Labs carve out a niche. His experience teaches aspiring founders the importance of identifying underserviced needs in a changing technological landscape and leveraging personal expertise and network for innovation.

How did Jae Lee build the initial version of Twelve Labs?

Twelve Labs was built by developing a cutting-edge AI model aimed at understanding video content comprehensively. The team, led by Jae Lee, embarked on creating a "multimodal video understanding" infrastructure, which integrates visual, audio, and speech data. This involved building several custom AI models from the ground up, including the Pegasus-1, which can perform tasks like generating summaries and extracting topics from videos. They faced the challenge of processing vast amounts of video data, necessitating an innovative tech stack composed of robust AI models and APIs that allow for domain-specific fine-tuning. The initial phase of development was marked by financial constraints, with the founders using a small amount of initial capital and leveraging partnerships for compute power, such as their collaboration with Oracle Cloud Infrastructure. Despite these hurdles, their deep technical expertise allowed them to push the boundaries of what was possible in video AI, resulting in a sophisticated solution that attracted notable industry attention and partnerships.

What were the initial startup costs for Twelve Labs?

Funding: Twelve Labs raised a $10 million strategic funding round from Nvidia, Intel, and Samsung Next, bringing its total funding to $27 million. They later secured an additional $30 million in funding from Snowflake, Databricks, and other investors.

What was the growth strategy for Twelve Labs and how did they scale?

Developer Community Engagement

Twelve Labs has significantly engaged with the developer community by providing open access to its APIs and fostering a user base of over 20,000 developers. Their APIs allow developers to integrate powerful video understanding features into their own applications, fostering innovation and experimentation.

Why it worked: By focusing on developers, Twelve Labs taps into a community eager to build and innovate using cutting-edge technology. Providing accessible, powerful tools for free or minimal cost allows the company to gain widespread adoption and feedback, fueling growth and product improvement.

Strategic Partnerships

Twelve Labs has formed strategic partnerships with major corporations such as Nvidia, Intel, and Samsung Next, which not only provided funding but also bolstered their credibility and reach within the industry.

Why it worked: These partnerships offer Twelve Labs access to advanced resources, including Nvidia’s computing power and AI expertise, which accelerates their R&D efforts. Credibility from working alongside giant tech companies also attracts additional customers and developers looking for reliable and powerful AI solutions.

Competition Participation and Exposure

Participating in the ICCV (International Conference on Computer Vision) helped Twelve Labs gain significant exposure and credibility through competition wins, drawing attention from potential investors and customers.

Why it worked: Winning prestigious competitions helped validate Twelve Labs’ technology in the eyes of the AI community and investors. This recognition not only boosted their profile but also led to inbound interest from venture capitalists and enterprise clients, accelerating growth and adoption.

Word of Mouth and Direct Demos

The company effectively used word of mouth and direct demos with potential clients to showcase the capabilities of its technology, particularly for those in media, entertainment, sports, and security.

Why it worked: Demonstrating the product directly to potential customers, especially those in industries ripe for disruption by video AI, allows Twelve Labs to tailor their pitch to specific use cases. This hands-on approach engages clients who can immediately see the benefits and potential ROI, leading to faster sales cycles and higher conversion rates.

What's the pricing strategy for Twelve Labs?

Twelve Labs employs a tiered API pricing model tailored for developers, offering a free tier with limited access and paid plans starting at $49/month, scaling with usage.

What were the biggest lessons learned from building Twelve Labs?

Be Selective with Mentorship: Founders often get a lot of advice, but it's crucial to have the courage to say "no" to suggestions that don't align with your vision. Trusting your gut and staying true to your core mission helps prevent your company from veering off course.
Optimize for the Right Customers: It's important to focus on customers who genuinely need and value your product rather than pushing sales to those who aren't ready. This approach helps streamline resources and enhances growth with truly invested clients.
Learn from Failures and Feedback: Twelve Labs learned that overselling can backfire and that finding innovative customers who already understand the value of your product saves time and resources. This lesson emphasizes the significance of listening to customers and adapting accordingly.
Stay True to Your Core Competency: Instead of diversifying into areas that don't excite or suit the team's strengths, focusing on core competencies like infrastructure and developer solutions can lead to more meaningful progress. This focus can safeguard against distractions and ensure sustainable growth.

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