On a Cocktail Napkin: How Replay, the Israeli Startup Sold to Intel for $175 Million, Was Born

Six years ago, two Israelis sat in a London pub and sketched out an idea of how to see a soccer game from the goalkeeper’s perspective.

Replay Technologies founders Aviv Shapira, Oren Yogev and Matteo Shapira.
Itai Arbel

Last week, Replay Technologies fulfilled the dreams of startup entrepreneurs when it was sold to Intel for some $175 million. Yet its story began six years ago, in the perfect setting for a company whose sole product revolves around sports – a London pub.

Oren Yogev, Replay’s CEO, and Aviv Shapira, another cofounder and chief operations officer, had worked together on a joint project in Britain, developing drones for Elbit Systems and French company Thales.

The two met frequently in pubs, where they drank a few beers and watched the English Premier League. “We said, ‘It would be really cool if we could see the soccer game through the eyes of the goalkeeper,’” reminisced Shapira last week, recalling one of their recurring topics of conversation. The two began to sketch out ideas on a paper napkin – which they have saved – and raised preliminary funds from family and friends.

It’s unlikely either believed their conversation over drinks would lead to the meeting that took place two and a half months ago between Yogev and Intel CEO Brian Krzanich. Yogev and Krzanich talked about the CES consumer electronics show that was being held a short time later in Las Vegas, and then the idea of Intel buying Replay came up for the first time. After a few months of negotiations, the sale was confirmed last week.

Last Wednesday, just before the signing, Yogev gathered Replay’s 80 employees in the company’s research and development center in the Ramat Hahayal neighborhood in north Tel Aviv and told them they were joining Intel. The employees don’t have to worry about losing their jobs in the near future; Intel intends on doubling the number of developers after the purchase.

Yogev will become a vice president at Intel, in charge of the new and growing area of “immersive reality” – although very few people can actually explain precisely what that is.

Shapira is a graduate in aeronautical engineering from Haifa’s Technion – Israel Institute of Technology, while Yogev has a BA in physics and electrical engineering, as well as a master’s degree in electro-optics, all also from the Technion. He is also a winner of the Israel Defense Prize and has an MBA from Oxford.

During one of Shapira’s visits to Israel, in 2010, he told his brother, Matteo, about his idea of developing camera angles without a camera. Matteo was the one who came up with the technological solution of 3-D reconstruction of the cameras.

No startup dreams

Today, Matteo Shapira admits he never intended to be part of a startup; it all seemed a bit wild to him. He had a senior position in JVP’s Animation Lab in Jerusalem, and was not interested in sport. Matteo is considered a pioneer in the animation industry, and Aviv says his brother was already a senior lecturer at the Bezalel Academy of Arts and Design at 21.

Matteo says the question that gnawed away at him, though, was how to create a camera through information processing of the data from other cameras – where there were no cameras. The three founders started examining the idea and conducting tests. The first trial footage was of a vaulting gymnast, with the processing being done completely manually. Based on this demonstration, the company raised its initial capital.

At quite an early stage, Replay came across an opportunity that propelled it into the heart of the global sports world. In what they describe as chutzpah, or maybe courage, at an early stage they managed to secure a meeting with Alex Gilady, Israel’s representative on the International Olympic Committee (IOC). The meeting took place in London in the spring of 2011, a little more than a year before the London Olympics.

The three founders were extremely excited by the meeting and even booked a hotel room for the occasion. They showed Gilady their technological demonstration and recall that he was left speechless. He stopped the meeting and called Manolo Romero, the head of Olympic Broadcasting Services (OBS). Romero happened to be in London at the time, and Gilady told him he must meet the Replay people that very evening. This meeting was also a great success, and Romero informed them that if they could meet the milestones he’d set, their technology would be part of the Olympic broadcasts.

Today, Aviv Shapira and Yogev admit the company didn’t have a system ready when they met Gilady – in fact, they had nothing but the vaulting demo. When asked what the physical size of their systems were, Shapira made some hand movements in the air to show the estimated size and Romero approved it.

At this stage, the three founders still had other jobs but they immediately began sprinting for the Olympics. They raised money, rented a basement in Tel Aviv, and bought cameras and computers. In December 2011, they delivered a technological demonstration that was to be a test of their invention. Replay rented a sports arena in Madrid, where they presented members of the IOC with real-time images from a gymnastics competition. When the members arrived, the 3-D reconstruction was still not ready or working well enough.

A Replay Technologies camera at a baseball stadium in the United States.
E.T. Production

“It looked awful,” Aviv Shapira admits. “I told the team, ‘This is it, the moment of truth; good luck.’ And for the first time in history, the technology actually worked in front of them. There was applause in the hall, great excitement,” he recalls.

Within a year and three months, the company had a product. Replay decided on gymnastics as the first sport to use their technology. In Spain, it took 10 minutes to prepare the reconstruction after the filming. They were asked to reduce this time to less than a minute for the Olympics. Since then, the company has cut the processing time in half every year – their own version of Moore’s Law. The aim is to do the 3-D processing in real time by the time of the Tokyo Olympics in 2020, says Yogev.

In order to practice for the London Olympics, Replay rented a hall in Zichron Yaakov and worked to improve the technology. Ultimately, a billion people worldwide saw the results of their labors at the Olympic broadcasts.

Emmy Award winner

And this was just the beginning. In 2014, the company won an Emmy Award from the U.S. television industry for its technological achievements with the New York Yankees and Yes Network. Replay also secured a place at NBA broadcasts and even the Super Bowl.

The firm’s technology has three core components: First, recording the events in the stadium using a set of cameras – for example, 36 are used for an NBA basketball game. They’re connected with fiber-optic cables and use software to adjust colors and exposure, in order to allow for filming in all kinds of conditions. The second part is the 3-D reconstruction of the two-dimensional pixels captured by the cameras. The third part is turning all the pixels and other data into a realistic 3-D picture. Today, most viewing of Replay’s videos is on 2-D devices. However, in a few years the aim is to use it on appropriate virtual-reality devices.

The company has three main types of customers: Sports teams; television networks; and the leagues themselves. In addition to broadcasting games, Replay provides teams and networks with tools for analytical and professional analysis. For example, it’s currently developing a system that will allow a large U.S. sports league to know where every player is at all times on the field.

The cost can run to hundreds of millions of dollars per project. Before each game, a Replay unit installs the equipment, including cameras, broadcasting and processing equipment. During the game, Replay has two employees who run the equipment – a “pilot” and “navigator,” in conjunction with the league, network or team. They have 23 technicians in the United States and have also installed systems in Europe, South Korea and Brazil.

The company raised $27 million before last week’s sale.

Replay began working with Intel toward the end of 2013. Now Intel will take their vision and push it further, says Aviv Shapira. “This is one of the most important things for us, even more than the money – that people at home will use the technology and it will become a new video format,” he says.

Money no object

After the exit hit the headlines last week, many in the high-tech industry were quick to say Replay had missed out by not growing the company and keeping it independent.

“We weren’t motivated by money,” responds Yogev. “The price Intel paid was less important to us, because Kzranich and Intel promised they would invest larger amounts in the company in the coming years. This is the partnership I am looking for,” he adds. “We reached the stage where Intel is a very comfortable buyer for us. It’s at a crossroad in which it works with all the companies: Facebook, Sony, Microsoft, and others. We see it as the second chapter of the dream – not an exit where you go home. We believe that with Intel, we will fulfill the dream in a broader fashion,” he says.

Replay, for its part, has brought the Intel brand onto sports fields and into teams and leagues. Their first collaboration after the purchase will be an interactive player on which the user can record, edit and share material on social media. Replay has adapted its technology to work optimally with Intel’s sixth-generation chip, which will be installed in computers that are coming to the market soon.

In other words, Replay has designed its products to work optimally on Intel hardware, and based its processing power on Intel chips.

“The synergy with Intel is special, because it makes accessible to hundreds of millions of users and media consumers the content that will allow them to use it interactively,” concludes Yogev.

Even after the purchase, Replay will keep its freeD brand and continue to operate from its present offices in Tel Aviv. And Yogev will continue to manage it.