Category Archives: Advertising & Marketing

Too Big To Fail

Monopoly (game)
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This post was inspired in part by a conversation I was having this weekend on Quora with an entrepreneur I totally respect and other articles I’ve bseen about the early stage ecosystem here in the USA.

I’ve said it in the past (here in 2007), and I’ll say it again, raising Venture Capital is part of the journey (if you so chose to), not a means to an end.  Raising an institutional round of financing or any round for that matter does not guarantee success. While in many cases, it helps improve the chances of surviving, it can also do quite the opposite.  Raising capital is validating but not a free ticket in Monopoly to pass “go” and instantly liquidate.

What ignited my conversation on Quora was when the other entrepreneur said [about] AdKeeper, “It’s too big to fail. They have a ton of money and they have filled their chairs with very smart people.”

I couldn’t disagree more.  I rarely hold such a firm ground but I don’t want the tech ecosystem to think that just because you have a ton of money (raised $43 million to date), it guarantees success.  They now have 43 million problems as Jay-Z would say.  While money within a startup allows you to achieve milestones potentially at an increased rate, it also can affect what I call, “VC Capital” blindness.  If you are going from having a bank account of $150,000 and everyone is eating Ramen to now having $10,000,000 and Del Frisco’s every night (not really, but you know what I am trying to say), the same scrutiny in which you apply to each decision of before/after is not the same, no matter how hard you try.  Money can be the largest lubricant to screwing up… quickly.

There’s a presentation I posted in The Media Kitchen‘s slideshare account talking about the history of digital and I highlight a few 90s web companies (even some in the 00s).  These companies had raised $50, $100, $200, $300+ millions of dollars both from VCs, private equity, public markets, and all flamed out.  For a more recent list of startups who hit the deadpool (that have had funding), here’s an article from Boston Innovation regarding some Boston based startups who hit the deadpool in 2010.

You can also take the analogy away from digital media and bridge it to sports.  Just because you have the highest payrolls in your league, does not afford you a championship.  As a loyal Yankees fan (lifelong), I certainly know they have a high payroll, an order of magnitude larger than their peers (plus a $2bln stadium!), but we do not win championships each year.  The Miami Dolphins, yes, the Dolphins, are another example.  They spend the most on player salaries but I didn’t see them playing football on television this past weekend.  Did you?

Moving onto the next point:  Filling the chairs with the smartest people.   I’d rather fill my chairs with the smartest and most passionate people than have an unbelievably large bank account with a set of knuckleheads running the company.  The one flaw to this sentence is that there must be chemistry.  Without chemistry, the smartest and passionate people are going to work in silos and in many cases, compete against each other.  I can’t stress enough how important team chemistry is.

Investors love to see prior teams assembled to take on new challenges.  Generally, this reassures us that these teams know how to work together and there will be less time for them to learn how to work with each other and that new found time will be focused on execution.

Rockstar teams without chemistry fail.  They fail hard.  Look at the New York Rangers from 1996-1997 season.  They lost in the conference finals but they had an all-star lineup.  80% of their starting line up is going to end up in the Hall of Fame.

Chemistry is what makes relationships strong and things run smoothly.  Focus on building great chemistry and things will fall into place.  No one is too big to fail (except for the banks & government apparently, but that’s a whole different story that I’ll leave to Sorkin to elaborate on).

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2010 Post Highlights

I’ve written a bunch of posts on this blog in 2010.   Not all are my favorites but below, I’ve highlighted the ones that are.  You can find a list of all-time favorite posts here ranging back to 2006.

Organizational Behavior

Data, Marketing Technology

Twitter & Social

Investing

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Internet + TV, not Internet OR TV

Worldmap digital television transition-2010-29-03
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The digital media world is jumping for joy.  Advertising agencies, publishers, technology companies, etc.  For the first time, the Internet has surpassed print as an advertising vehicle.  WSJ, Ad Age, Venture Beat, and others wrote about it recently. U.S. spending on online ads will hit $25.8 billion in 2010, compared with $22.8 billion spent on print ads in newspapers, the Wall Street Journal reported.

This is a big deal.  Many Venture Capital funds will forward these articles to their LP’s to validate many of their investments and I’m sure many entrepreneurs will reference this in their fundraising docs.  Patch (AOL) will reap benefits of this if they continue to kick butt and the entire ecosystem will thrive.

But lets talk about television, a media vehicle that has exponentially the amount of ad dollars invested within then Print.

I believe and have said it here and within keynotes many times that Internet will consume television.  Internet + Television go together like peanut butter and jelly.  Your set top box is a computer for all intents and purposes (edited: thanks Colin!) and the delivery of programming will be thru digital methods.  Once this happens, Internet + Television will be inseparable.  Additionally, the way in which marketers and their respective agencies purchase these advertising units will be through media platforms that triangulate many different data points to accurately target ads down to (or beyond) the household level.

The FCC might have something to do with the last sentence above, but I believe that addressable ad targeting is ultimately beneficial for the consumer and the entire ecosystem.

A bit more theoretically, I believe digital won’t be a channel in the future, but a backbone to all existing channels.  Digital penetration to television, print, radio, OOH, and others has obviously already begun and isn’t replacing them all per se, but enhancing the experience and making them more efficient.

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Congratulations to my friends at Fast Lane Daily

Image representing Emil Rensing as depicted in...
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I woke up to a warm email from one of my friends and entrepreneur extraordinaire, Emil Rensing announcing the thousandth episode of Fast Lane Daily and the chronicled journey of achieving that milestone.  For those that know the show, my brother was the first executive producer and helped them get their wheels in motion (no pun intended).

I got an outsider view of watching and hearing about Fast Lane Daily from my dinner table conversations with Kenny and Emil and it’s heart warming to read about the journey.

Instead of recapping it, I’m going to paste Emil’s email below.  For those who want to get in touch with Emil, his website is located here.

Congrats Next New Networks!

Hi,

Today is the 1,000th episode of Fast Lane Daily, the #1 car news show in the world.

You can watch episode 1,000 here:

http://bit.ly/dVEApd

Here’s how we got to 1,000 episodes:

In 2004 Russell Datz, Fred Seibert and I produced an interstitial car news minute for the newly launched Spike TV called “Zero to Sixty”. Albie Hecht, the then president of Spike introduced us to a then unknown Danica Patrick — and I learned my first lesson about producing TV: Place your bets early and invest boldly in talent. Alan Goodman, who directed our first shoots and crafted our first scripts taught me my second lesson about producing TV: Always wear a sport-coat so no one on the crew asks you to lift anything heavy.

Zero to Sixty Episode 1: http://bit.ly/eV2rxM

Rory Camangian sold 3 sponsors in the first 2 weeks: Valvoline, Castrol and Electronic Arts, but sadly we didn’t last long on Spike. The concept of short-form programming didn’t work well on the television, even though it was very slowly becoming all the rage with us nerds on the Internet… But that was just a fad, right?

About a year later, Fred and I were hot-to-trot on video podcasting and launched Channel Frederator and VOD Cars in the iTunes Podcast Directory — before iTunes supported video podcasting or Apple had an iPod that played video. I put up the first episode of VOD Cars late one night in August of 2005. I cut together the episode on a stolen copy of FinalCut Pro with some footage shot by Rob Ferretti. (That cop may be yelling at me. His name was Dave, by the way and he was a very nice man.) I even put a commercial in there — to teach my audience from day 1 that this was television-like and about making money. (God bless you, Trunk Monkey!)

VOD Cars Episode 1: http://bit.ly/ghMAdK

Fred did similarly with Channel Frederator — and even David Karp wanted to follow-suit with a Kung-Fu podcast but he was too busy with something called Tumblr.

Pete Alcorn from Apple featured our unique brand of 320 x 240 pixel video mayhem in the iTunes Podcast Directory. About a week later, I looked at my download numbers from pair.com who was hosting vodcars.com and, well, by the time the month was over, I owed them almost $20,000.00 in bandwidth charges. I recall having a great conversation with my now ex-wife trying to explain the situation: “You raced around like a lunatic with your friends in a Ferrari you shouldn’t have bought, video taped it, put it on the Internet and then paid more money than you have to let people watch it?”

Well, when you say it that way… (To her credit, she was always supportive of my insanity.)

For a brief time, vodcars.com was a directory of car videos on the Internet. Mike Glenn assembled a TON of those links from places like StreetFire.net, CarVids.com, RacingFlix.com and helped build those pages. Traffic soared — proportional to the bills.

Then YouTube came along and killed it all slowly but brilliantly with a much better, much more robust, much more consumer friendly video sharing service. Podcasting became second fiddle to web video when Flash won the format war thanks to YouTube.

But that was ok: It meant that someone else believed what Fred and I believed.

Fred and I wrangled a team together: Tim Shey, Herb Scannell, and Jed Simmons. We somehow convinced Spark, Saban, and Balderton to believe that television on the Internet was the next big thing of the moment — even after I told one of our VC partners, in our very first meeting, “fuck you” and essentially threw them out of our offices. (What? At least I’m consistent!) Next New Networks was born from our collective vision as creative, venture, development, production, programming, and management professionals. We started down the car road, among several other categories we still believe in to this day. “If you want to own a category, you want to own the news.” Herb’s words ring in my ears.

A daily car news show, shot in a studio every day, fashioned after Zero to Sixty… It made a lot of sense. We couldn’t and didn’t want to compete with Autoblog, World Car Fans or Jalopnik. We wanted to add something new to the community. How could we do something fresh, unique, and very different? How could we be the low cost provider of a great video news program? How could we be quality without being expensive?

Fast Lane Daily was born and became the cornerstone of our fledgeling internet-tv-automotive-video-media-empire. Garage 419, Global Motor Spies, VOD Cars, Bikini Model Driving School, Shakedown, FLDetours… Great programming with folks like Derek D., Matt Farah, Gene Sanchez, Alex Gizela, Tina Beth Pina, Ji Young Min, Andrea Feczko, Carrie Millbank and countless others who made it all go… We had lots of traffic, lots of audience, lots of fun for the next few years. We brought our audiences places they never saw before. All that cool stuff car companies do that you didn’t get to see? We showed it to you. All those cool videos from races, events, test days, factories, shops, and tracks? We had them just for you. Videos shot by the community of cool stuff caught on camera they wanted to share with the world? They gave it to us and we helped make them famous. Slowly but surely the industry saw what we could do for them.

Fast Lane Daily Episode 1: http://bit.ly/gOsWfm

A few years ago, I remember the launch of the Ford Mustang Bullitt in San Francisco. Ford staged an impressive “reveal” and posted the video on YouTube. Overnight they did almost 50 views and they were stoked! Mike Spinelli filed a report on the road during the drive and our version did about 5,000 in the same period of time. The consistency of delivery and the relationship with our audience made our channel valuable — and folks began to see that and understand and seek out our help in getting their message out with powerful video as opposed to just a press release, photo, and a few words.

It was working!

The one thing we didn’t have was a lot of ads… and with the down turn in Detroit things got even worse and automotive media fell by the way side across the board.

In November of 2009, Fast Lane Daily and Next New Networks changed their relationship. Fast Lane Daily joined the “Next New Creators Program” and I began funding the production of Fast Lane Daily, Shakedown, and FLDetours and shuttering Garage 419, VOD Cars, and most tragically Bikini Model Driving School (sorry, girls). The economic mess is a temporary condition. I worked very hard to get us where we were. I worked hard to get folks like JF Musial, Leo Parente, Alan Kaufman, Mike Spinelli, Kenny Herman, Ian Jenkins, Tom Albrecht, Donny Nordlicht, Tom Morningstar, Matt Farah and Derek D. on the team and I wasn’t going to let them go lightly. While some folks went their own way, some of the shows went “off the air”, some folks went to work wirth friends, and some folks went to work for me in other capacities. New people joined our team like Josh, Richard, and new Iain. We even got Alex Roy to come to the party regularly! Tangent Vector was born from the vision of JF and Christian — and he, Leo, and Derek never gave up hope and basically forced me to keep making Fast Lane Daily because none of them wanted to get full-time day jobs.

We changed what we do. We changed how we did it. We “fired” Derek. Got Leo on-camera and writing more often — and are back better than ever with a new tone, a new show, a new feel and a new Derek. It’s more fun. It’s more conversational and more intimate — and it’s working better than ever. November 2010 was our best month ever, up until December whch is looking like it’ll set the bar again as our biggest month yet! Automotive media is no longer a “dirty word”. BBC’s TopGear USA is on fire (say what you will, it’s doing very well for History) and rumour has it that Speed TV is trying to get in on the mix with a new pilot starring a former Internet star who all us car nerds know and love. Video on the Internet is becoming more and more of a preferred medium for advertisers and Fast Lane Daily continues to forge great bonds with our ever increasing audience and folks building new technologies like Autostream (but more on that some other day.)

So, as you watch Derek’s journey in Fast Lane Daily episode 1,000 to the automotive nirvana that is the Nurburgring… and as you watch him drive the world-famous Green Hell in a rented Citröen C4 “Picasso” mini-van… and as you laugh at the part where he can’t pump his own gas because he’s from New Jersey… keep in mind that we made this happen on a budget less than the catering service on a television studio shoot.

We do this because you love it. We do this because we love it. And we do this because we love that you love to love what we love to love to do.

And that’s how we got to episode 1,000.

Emil

Emil Rensing
Executive Producer, Fast Lane Daily
Co-Founder, Next New Networks
Chief Digital Officer, EPIX

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The Power of the Team

I attended the Dave Matthews Band concert here in New York City last night.  I’m a huge fan.

However, this post is less about the concert itself, but more about what happened.

I was about ten rows back from the stage last night when Dave came out on stage to begin the show.  He looked terrible.  Pale face, baggy eyes, and almost no voice.  2 songs in, he couldn’t hit most of the notes.   It was ugly.

Dave asked the crowd to help him out; he was obviously under the weather.  I’m sure that when they were planning the setlist half an hour before the show, he told the band he needed help.

The band pulled their weight and the crowd played a key role last night.  Everyone collectively stepped up and turned the night into a very special one.  It’s amazing what 18,000 voices sound like when singing all the words to The Song that Jane Likes or #41.

This is no different than when you are in a startup or corporation.  Your “A” game doesn’t come everyday.  No matter who you are.  You need to make sure that the team surrounding yourself is capable of picking up where you need help and if they can’t, reassemble your team.  This is extremely important.   I’m not looking for 100% skillset overlap/redundancy, but you should always have people who are strong enough that can step up.

Remember, there is no “i” in team.  If you have a solid team, there is very little that you cannot accomplish.

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5 Things You Probably Didn't Know About Darren Herman

Darren Porsche TurboI always enjoy reading tidbits about about my colleagues personal lives so I thought I’d share some tidbits with you (about me).  If you want to contribute (your own), use hash tag on twitter, #learnaboutme and lets start a meme

In no particular order:

1.  As a freshman in high school, I played center on a roller hockey team that made it to the NHL Breakout which was filmed for an episode in Baywatch.  We made it to the finals of the tournament (our team was called The Rage) and a brawl broke out during the final game when I took a cheap shot (given to me, not me giving it) and it was one of the only times I lost my cool.

2.  I love to cook, but I hate following directions or documenting what I do.  This poses a problem because when something actually tastes really good (~1/3 of the time), I can’t recall exactly how much of everything went into it.  This summer, I learned the art of smoking meat and had a great time with it.  My longest active smoke was 9 hours and it was St. Louis Style Ribs that I served for friends and family.

3.  I used to work on Sunday mornings at a bagel shop in White Plains, NY called What-A-Bagel Cafe.  The shop still exists and I still think they have one of the best bagels + chopped liver in Westchester County.  I mainly worked in the bagel shop because all of my friends decided to do it; so not only did we get to hang out with each other, we got paid for it!

4.  I really enjoy reading books but I do not do it nearly enough.  I primarily read non-fiction and business books.  I wish I could spend more time reading as it’s always inspiring (and relaxing) but there is only so many hours in the day.

5.   I much prefer small groups to larger groups.  I’d imagine that most people who read this blog know me from a business context one way or another and see me at conventions, trade shows, conferences, in the office, etc.  Those situations tend to be in large groups and I hate them.   I much, much prefer smaller groups at a coffee shop, cafe, or even in the office.

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Advertising Ecosystem Presentation for Startups

I was asked by my friend Gabe to present at the Founders Institute on ways that startups can utilize an ad-supported model as this is right in my wheelhouse.

While the presentation is not until Wednesday, November 10, I wanted to make available the actual slides for any feedback – both positive & negative so that I can make any tweaks.  If you happen to be coming to the Founders Institute and happen to find this preso, certainly read it ahead of time so our conversation can be much more involved.

Note:  This is a “talking” deck so there is little text on the slides.

Please leave comments below and I’ll be sure to follow them up.

Thanks in advance!

The Ad Supported Ecosystem for Startups (5 Thoughts, 15 Slides)

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Price and Value

This post is inspired by Fred Wilson’s recent post entitled, Does Price Matter.  When you purchase a product or service, it has a price tag associated with it.  That price tag is based on what the seller wants to make (cost + profit) based on what they think they could sell to their anticipated target market.

Traditional “price” for products/services though in itself is flawed, IMHO.  It only takes into account one side of the equation:  the seller.  There are a few promotions such as the recent one done by apparel seller Uniqlo but most [private] pricing is determined by the seller. And for financial instruments, an open market determines the cost:  NASDAQ and NYSE are examples for that.

There were a few websites back in the day such as Mercata (shut down in 2001) that allowed groups of users to purchase based on the demand that they have and almost dictate market pricing.   I’d imagine this type of service is coming back in some form or another:  the more people buy, the lower the price becomes.

I’d argue that price does not always reflect value.  Value is generally what you will receive once you actually buy something:  and that value should be at or better than the price that you paid for it or you will most likely look at your transaction with negative taste.

People say that paying >$4 for a cup of coffee is expensive.  While pricing sounds expensive, what is the value to me?  If that $4 cup of coffee allows me to sit at a table, read the NY Times or WSJ and answer emails early in the AM, the valued delivered is much more… at least to me.

$20MM Gross Billings vs. $20MM Revenue – Mad Men Style

This post originally started out as an email/Quora exchange between me and @jonsteinberg but thought that the world would benefit from reading about this so I decide to open it up.   Note:  These are my thoughts and not necessarily representative by my employer.

Here is the initial tweet by Jon.

Picture 13

Last night in episode 4.11, Sterling Cooper Draper Price lost it’s key client American Tobacco of which has been a loyal client for decades.  Like in most industries, the advertising industry is no different where they are a few “key” clients that make up the majority of revenue (I like to say “keep the lights on”) and then additional clients that are just as important, but are smaller in size.  For SCDP, this is a major loss because it’s a backbone client.

During the partner meeting in the episode, one of the agency partners mention that $20MM of gross billings is not enough.  To the uneducated agency world, this sounds like a grandiose and absurd statement (maybe why Jon picked up on this) so I’d like to clarify this.

$20MM in revenue is different than $20MM in billings.  How it was positioned in the episode was gross billings.  This in the digital media startup world would be like saying a startup has $50MM in gross sales, or Groupon did $500MM in gross sales last year (or something along those lines).   If a startup spends $50MM to achieve $50MM in gross sales, then it’s not a healthy business.

Within the agency world, the $20MM in gross billings may go into media placements, production (significant since most was TV), staffing, etc.  At the end of the day, a couple hundred thousand or million may be left over, but not much more.  Thus, why there is so much debate on Madison Avenue right now for alternative compensation models.

For SCDP, losing $20MM in gross billings from it’s backbone client has ripple effects:  all the things you can imagine.  Agencies like to leverage their scale to afford resources for many of their clients and when a major account is lost, sometimes that resource must be forfeited.  Examples of this resource could be research, talent, infrastructure, and other capital expenditures.  Without a backbone client, their service levels may degrade for all their other clients… thus, why you saw Glu-Coat (?) pull their business.

The way the agency should have phrased this was “we lost $20MM gross billings AND our backbone client.”

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