But it's helpful to the marketer. It takes at least that many impressions to even register.

This is actually why I'm surprised by how little money online advertising makes. It would be possible for an advertiser to buy several impressions with the same user--or a series of ads being shown to the same user. Everything I've ever read about marketing tells me this would be more effective than an ad shown to five different people only once.

They need to 1) includes ads into small clips (3-5 min)

I recently built an HTPC with Media Center. When I first fired it up, I browsed to the "watch TV online" thing...clicked on the first popular clip. 30 second ad. 45 second clip. Never again will I browse to that option on my HTPC. Ever.

Anything less than 5 minutes with an ad is gonna piss me off.

But, I do love Hulu. The quality isn't as good as I'd like for most of the shows and movies (that HTPC is hooked up to a 46" 1080p TV), and I had to hit bittorrent to catch up on Battlestar Galactica this season when I missed the first couple--they only have the last three or four episodes on Hulu and scifi.com--but I still like being able to catch up on shows at my convenience.

2. I too don't understand why they play the same one or two ads for the entire movie. It honestly gets annoying, which seems like something you don't want your advertising to do. At this point I just mute them.

Having the access to that huge library of content, though, makes it pretty darn hard for other companies to play in the field.

I also had the chance to watch several movies on Hulu; once again I found the service started excellent and got progressively worse. Early on, movies downloaded quickly and had no ads. Towards the end of May, however, Hulu started interrupting movies with ads in seemingly random places -- not in natural transition points but right in the middle of an actor's words. Furthermore, as they apparently hadn't secured advertising yet, these "ads" were just 15 seconds of static white text on a black screen that read: "Brought to you by Hulu's advertisers" or some such. I found these pointless since they didn't even name the advertisers or feature their logos. Disgusted with these pointless interruptions, I've since swore off Hulu.

In short: They had a good thing going at the start, but have proceeded to muck it up.

Yep. $12.5-25 million will only support about 100-200 employees. Maybe more, if they're not high end people (but I suspect Hulu does not have a lot of positions that don't require some sort of high end expertise--very little call for consumer sales or tech support in a business like that).

100-200 people is still a pretty small business in modern terms. Google employs 35,000 (or something like that). Microsoft, Sun, IBM, and Intel probably dwarf Googles numbers.

I'm very interested in hearing strategies for keeping a company aggressively small without having to give up the ability to chase increasing revenue.

I don't have any real good answers for you there. We're still pretty much a two man shop, though we've just hired a part-time support and documentation person (five hours per week--extremely part-time, but enough to free me and Jamie up a bit from support roles so we can focus on other revenue-generating tasks).

I may have gone in an abnormal direction by hiring someone really experienced for the support role, rather than hiring someone really cheap and training them. He costs more, but we don't have to train him and I've got great confidence in the support he provides. He's a technology jack of all trades that happens to fit our business very well, and I believe he'll provide far more value to our customers than he costs us to keep him working.

We're torn on the "stay small" vs. "go big" question, as well. We know we're going after huge revenues...we're just trying to figure out how to maximize those opportunities without bogging down the company with a lot of unnecessary head count. I think the key is to boil it down to your core business. Our thinking is: "Why do people pay us?" And the answers are: Powerful software that gets better all the time, great personal support via our website, less painful licensing processes than our competitors.

So, those are the things we need to spend money on (plus marketing and advertising in order to let people know those are the things we provide). Everything else is not our job--we'll outsource it. In the next week or two I'm planning to hire a part-time bookkeeper to come in once per week to clean out my inbox, pay bills, and enter our accounting data into the accounting system, etc.

But, then again, that still doesn't answer your question, and doesn't solve the problem--at some point, if you have success, you have to hire more people. Full time legal, accounting, sales, support, etc. It just happens...but I do think it's worth fighting a few aspects of that. Hierarchy can be a problem, and should be fought against pretty strongly...I've seen an organization that brought in a new CEO, and she looked around at the general messiness and inefficiency of the organization (a ~60 person non-profit with a few tens of millions in managed money), and decided that what the company needed was more C-levels. Last I heard they had seven C-levels. That's less than ten employees per C-level, for those keeping count at home. I'm pretty confident this did not improve the efficiency of the organization.

I get the distinct impression from people I know who work at Google that they have a similar problem. MBAs look at the organization and think, "What this company needs is a little more management." And they hire more MBA-wielding managers, who look around the organization and think, "What this company needs is a little more management." And they hire more MBA-wielding managers, who look around...

I don't think any of those companies would have had that many employees 4 months after going live.

So 12.5-25 million? I'd say they're doing pretty well for themselves..