Category Archives: Startup & Venture Capital

Self Service Still Requires Service

In the ad tech space, you basically are selling against two service levels:

  • Self Service
  • Managed Service

Over the past five or so years, these have become en-vogue since most companies in ad tech sell platforms of some kind.

As a buyer (or user of the platform), you basically have a decision to make.  Do you want to operate the platform yourself or do you want to rely on the company selling you the platform to handle operations.  The former is self service and the latter is managed service, fairly self explanatory.

Over the past 4-5 years in the DSP space, the majority of the marketplace was managed service.  This is for a host of reasons including lack of talent to operate platforms, simplicity around billing, and expected performance.

I am witnessing the tide shifting.  Buyers of platforms are shifting to self service operations and building on top of and around these platforms.

A bit of advice to companies selling “self service.”    You probably want to sell “self service” because it makes your investors happy as it’s higher margin (less staff to service) and you want a tech platform multiple, not a service multiple.   Companies who have biased towards this have severely lacked in support, even to the self service users.

You need to support your users of your platforms, whether or not they are self service.  Over service them.  Because if you do not, someone else will.  Your technology will be a commodity in future years.  Your service will stand it apart.

* Reading:  If you want to read a good book about service, read Setting the Table by Danny Meyer, the owner of some fabulous restaurants including Gammercy Tavern, Tabla, and plenty of others.  Service transcends industries, so don’t fear that the book is not about ad tech.

Stuck In A Rut of Incremental Innovation

I have been in the digital media marketing ecosystem since its inception.  The first documented digital advertising was born as banners and buttons (1996) that lived on webpages.

Ad servers were built to deliver these banners.  Incrementally better ad servers were built to better serve these banners, video, and buttons.

Sites federated together to create ad networks.  Incrementally better ad networks were built around technologies such as contextual, behavioral, semantic, etc.

Boxes on websites were created to house advertisers’ creative.  These lead to banners.  Incrementally better banners were created that yielded rich media units.

Search engine marketing solutions were built to manage and optimize voluminous keyword lists.  Incrementally better SEM platforms now include Facebook buying

Lots of incremental-ism.  Being incrementally better sounds like a rat race.  Or the cold war.  I’m better today.  You’re better tomorrow.  Its a no-win game and becomes all about marketing and salesmanship where it should be about the product and performance.

So where is the 0-1 going to happen in this industry?

Maybe we focus so much on going from 1 to n because that’s easier to do. There’s little doubt that going from 0 to 1 is qualitatively different, and almost always harder, than copying something n times. And even trying to achieve vertical, 0 to 1 progress presents the challenge of exceptionalism; any founder or inventor doing something new must wonder: am I sane? Or am I crazy? (Blake Masters class notes of Peter Thiel CS183)

Its happening.   But it’s not overly obvious to all.

The social marketing space inclusive of content creation is unbelievably sloppy and inefficient right now, but I propose we will see tomorrows DoubleClick-like, Advertising.com-like and Google-like come out of the social landscape.

Why?  Because it’s fundamentally different.

There are no banners or buttons.  The way we’ve acted in the past is not the way we act in the future of this space.

Communication does not scale.  We need to re-think the way we communicate and participate in this space.  The role for earned and owned media becomes just as important as paid media.

The 0-1 innovation is going to come from the social places in ways we cannot imagine today (or some people already are).

 

* Note, I’m not down on paid media buying.  I’m all for it.  I work in it. It’s evolving quickly and there are some fantastic companies participating in the space.  But when looking out across the marketplace, and looking for disruption, this (s0cial) area is ripe.

 

 

 

 

What I’ve Learned Planning Events, Taken From the Silicon Alley Golf Invitational

This past Monday was the 2012 Silicon Alley Golf Invitational, which has been abbreviated over the years to SAGI.  The day was fantastic (here is a review) but getting to the day, especially in the last 48 hours before was one of unbelievable logistical nightmares.  I thought I’d write a post of what I’ve learned over the years of hosting hundreds of executives at a golf event.  Hopefully some of this can be used for your startups or companies for the events that you host, regardless of golf or not.

I am not a professional event planner, but having hosted 8 golf events for the past 8 years helps justify why I’m writing this.

Invites Early On, Reminders Consistently
Give people time to reserve the event date in their calendar.  The more senior the person, generally, the more lead time they need.  Since the invitation probably went out months before the event date, keep them reminded with a quick note each month so that the date does not fall off people’s calendar.

You Can Get Event Schwag Cheap, But Service & Quality Is More Important
I spend a fair amount of money on event schwag.  I remember walking around the early days of Ad Tech, MacWorld, and other conferences and coming home with some really cool tchotzkes.  While you can find dozens and dozens of vendors who can deliver you a personalized product (such as a golf shirt), and all might be Nike Dri-Fit, the difference is in the service and quality.  You cannot afford both in money and time to get your schwag wrong while planning an event.  You need to find a trusted partner who can service your schwag needs and get them right the first time and have only the highest quality schwag.  I’ve made it a rule of thumb to only give away a few things, but make them really useful and interesting in that they are used beyond the end of the event (I see people wearing our SAGI shirts on the streets sometimes).  I’ve also learned that people enjoy brand names – so having Nike or Footjoy golf shirts make a real difference.

Ask The Venue, They Are Full of Wisdom
I’ve hosted the Silicon Alley Golf Invitational at a different golf club each year.  This means that I’ve worked with different event planning teams from each club and all were full of wisdom.  Sometimes I ignored it and I paid for it in the end, and always thought, “man, I wish I had listened to them.”  What I sometimes forget, or any event planner for that matter, is that these event spaces such as the golf clubs are always hosting events.  They know best what works and does not work for their space.  I do not use an independent event planner, I do everything myself, and the event space almost acts as an event planner for me around very specific items.  Use the team as much as you can at the event space to make recommendations to service providers, tell you how other events have laid out the space, and other ins/outs of what went well and what failed miserably at their event spaces.  They will tell you, all you have to do is ask.

Hands-On Planning
The Silicon Alley Golf Invitational is my event.  I curate the guest list, I hand pick the quality of shirts, I pick the foursomes, and I taste test the food.  Everything.  I call this hands-on planning.  If you are going to throw and event, I believe this is the only way to do it.  Many people have asked whether I outsource this to an event planner and I’ve never done so.  I want to make sure that I have control over every aspect of the event but use help around logistics.  Over the years, I’ve had fantastic assistants who have helped but I was involved with every aspect behind the scenes.

Get Feedback Fast
At the end of each event, I let the crowd know that they should expect to receive a form asking how the event was.  I use Google Form (docs) to receive the responses.  I ask anywhere between 5-10 questions about all the details about the event (food, golf, overall, networking, etc) and I use this feedback to help make the next event better.  I send this request out no more than 48 hours after the event has ended so that the event is still fresh in people’s mind.  I cannot stress how important this feedback is.  It’s genuine.  It’s not all positive.  It’s real.  It will make you better.

My two biggest mistakes this year:

I was not ready with a Plan B in case of rain.  Sounds somewhat obvious but we’ve never had a rain issue in 8 years.  This year, we did.  What I specifically did not have was the cellphone or mobile device number of each attendee, so it made getting in touch with everyone hard at the last minute with an agenda change.  I learned for next year.

I used an event management software solution from Eventbrite on the front end.  I overpaid for it.  I think I spent close to $700 on this software and it was not worth it, IMHO.  I found that managing thru Google Docs as I have done in the past better to manage the final attendees.  I do give it credit for being able to “sell” three different types of tickets and that was all nice and such, but on the backend, it was difficult to manage the final event.   This is probably a contrary thought to manage who hold events, but just something I’ve found.

Hope this helps.  Anything that you’d add to this list?


 

2012 Silicon Alley Golf Invitational Right Around the Corner

It’s that time of year again when we’re just weeks away from the Silicon Alley Golf Invitational.  Or SAGI as I commonly refer to it as.  This event started ~7 or so years ago but only in the past 3 years have I used the fancy name.  It all started with myself and 3 founders of tech companies in 2004.  We played golf and chatted.  It was that simple.  The next year, each of us brought an additional founder.  And each year after, it grew.  The common theme each year was to keep it to either founders of Silicon Alley based startups or venture capitalists funding the innovation.

Fast forward to 2012, we’ve got an absolutely full event of 72+ golfers (can only fit 72 on the course at any given time) and about 30 non-golfers coming for the luncheon and awards ceremony.  We have amazing sponsors who enable the day to happen.  We even have a guest keynote speaker who will be announced much closer to the date…

A lot of planning goes into this event, especially because it’s a labor of love and not a business and I have very limited staff to pull this off.  I personally handpick everything for the event – the invitational list, the swag, the event location, the foursomes, etc.  It’s a lot of work but in the end, it pays off because of all the great conversations and camaraderie that’s had at the event.

Unfortunately, the event does not scale well.  It cannot accompany 1,000 people.  Or even 250 people.  With just one day and 18 holes, you can only accompany so many people on the course.  It’s a fact of life for the event but a good one at the same time – we do not always need to be able to scale in order to have a great event.  In this case, it’s quality over quantity.  This year in aggregate, we have founders representing over $1.2BLN in exits in the past 1,000 days.  Quality is important.  We’ll leave “scale” for the companies we’re building.

I’m super excited for August 6 and look forward to participating with everyone.  Here’s a link to the official video from last year’s event.

If you have any questions about the event, feel free to reach out through my contact form.

The Automotive Discovery Process Needs Innovation

I live in the suburbs so having a car is part of my daily life.  I sometimes drive the car to the train station or drive it into Manhattan, depending on what the schedule of the day and evening is.

Years ago, I was in Saint Martin with my wife and we rented an SUV.  When the rental agency pulled the car around, it was a Hyundai and I got a bit nervous.  I’d not heard much positive around Hyundai’s but after a week on the island, I couldn’t speak more highly of the specific Hyundai we rented.  It handled the off road segments great and all around was a solid SUV.  I’d consider purchasing or leasing it.

About two weeks ago, I was on a West Coast business trip and thru Hertz, rented a car that I would probably never go and purchase, but had a good experience with it.  I realized that the only way I really get exposed to automobiles to drive is through renting cars on business trips and vacations or my neighbors and friends exposing me to their vehicles.    Seems pretty limited to me.

The card discovery process needs innovation.  The are only a few discovery opportunities for cars: listen to friends talk, buy magazines or visit sites like Edmunds, go to trade shows, or to visit many car dealerships.  When visiting a car dealership, you can schedule a test drive but those last 15 minutes and generally are setup to be a positive experience.

I cannot believe there are not more chances to drive different cars and for a longer period of time.  Few if any dealerships are promoting the all-day or weekend test drive which you’d think would be a no brainer to the serious potential car leasor/buyer.  Why doesn’t an automotive brand put drive centers in major towns so more people can test out the cars in real-life situations?  If driving the car is so great, it makes people want to buy it, then get the car into more hands for trial.  Makes sense to me.  People might even pay for it.

Last winter, I was up in Manchester, VT and due to the thin cover of snow, I didn’t ski, but went to the Land Rover Experience Driving School.  I paid money to go in a Land Rover (and Range Rover) for a morning of off-road driving.  I not only got exposed to the SUV, but learned some skills and maneuvers that could come in handy on future trips to snowy places.  This was a great example of using an experience to drive evangelism.

There needs to be a solution to help people discover the right cars for them and a solution for people to try cars longer than just the 15 minute test drive.  Is anyone doing this right?

Golden Age of Ad and Marketing Technology

On AdExchanger yesterday, Terrence Kawaja talked about how Ad Tech was going through a potential Golden Age.  There have been some recent acquisitions/mergers that have helped validate some of this thinking.  But why?  And why now?

List of recent ad tech acquisitions or mergers, not complete:  33across/Tynt, SAS/aiMatch, DG/Peer39, OpenX/LiftDNA, Pubmatic/MobiPrimo, Rubicon Project/Mobsmith and Syncapse/Clickable, Google/Admeld, Google/Meebo, Yahoo/Interclick, ValueClick/Greystripe, Adobe/Efficient Frontier, Oracle/Virtrue, Salesforce/Buddy Media, IBM/Core Metrics

I was talking to a potential client yesterday and we were discussing advertising technology.  We talked about how media is transitioning into the paid, owned, and earned landscape and more importantly, the rent vs. own (audience) scenario.  In a world that’s becoming increasingly digital and platforms can help harness the audiences who engage with you (and your brand), then having marketing technology platforms will help you not only harness this audience, but it’ll allow you to segment, target, engage, and draw insights amongst many other things.

Gone are the days where we continually rent audiences from media companies and pay them significant dollars time and time again.  We should not have to do that continuously if we have platforms that allow us to engage with audiences, have them opt-in to participate with us (as a brand) and interact with them over time.  I’m not saying there is not a role for paid media as there certainly is a role for renting audiences to help us refresh out funnels.

Why this is so important for marketing and advertising technology is because most brands (and their respective agencies) are new to this.  An ad-server is not enough anymore.  Over the past few years with increased velocity, we are re-writing what it means to be a marketer from a technology perspective and using this technology to make ourselves more effective and efficient, which in turn, benefits the consumer.

The Golden Age might be here because many forward thinking strategic companies see the future and need to button and scale up their infrastructure.  The world is their oyster right now and we’ll continue to see additional acquisitions and mergers.

Friday Ad & Marketing Technology Insights

I thought I’d write a post before the weekend set in.  This weekend is going to be a special one as my brother, whom some of you might know, is getting married tomorrow night to an awesome bride.  I could not be any more happier for him.

Back to the post…

Some interesting insights that I’ve been uncovering and/or thinking about over the past few months:

1.  Large publishers are becoming increasingly wary of Google.  I’ve spoken to two major publishers in the past 7 days as I’ve been doing some diligence for startups we’re looking at and they are increasingly becoming wary of Google’s power in the marketplace.  “Monopolistic” is a term that I keep hearing about Google and it’s one that I think holds some ground.  One of the main reasons why pubs are increasingly becoming worried about Google is the amount of both demand/supply side data that Google has… if they were playing cards in a casino, they would be the player and the dealer.  It’s a ridiculously powerful position to be in.

2.  Amazon.  I’ve bought dozens of books from them over the years, but now, I’m starting to buy a lot of advertising from them.  And quite a few other agencies and brands are as well.  Amazon is becoming a quiet power in the advertising marketplace.  Why? Intent.  I wrote a whole post on this in March 2012.  Amazon has a search engine which it acquired and has millions of people with real intent coming to their platform.  Intent data married to advertising can yield very positive results.  A big reason why we invested in Yieldbot (not currently in relationship with Amazon).

3.  Social Media Monitoring.  We see a new platform in the social media monitoring space every other week or so.  We’ve not invested in this space because we feel that these platforms are becoming commoditized and are table stakes.  Yes, there has been some value created (i.e. acquisition of Radian6) but that’s few and far between.  In order for a platform to generate real value for shareholders, it needs significant market share at a fair price point.  I’ve not seen any significant breakout companies yet.

4.  Where are the $30-100MM ad tech and marketing technology companies?  Many companies I’ve seen lately are all $1-10MM organizations.  There is nothing wrong with that, but I’d like to see more ad tech companies maturing their business.  Randall Rothenberg has a hyperbolic quote in a Forbes interview he did with John Battelle that offers one reason why, but as many people point out, VC’s don’t force exits generally.

Battelle: What are the biggest obstacles in our industry?

Rothenberg: Venture capitalists. They create new businesses, but they incentivize companies toward short-term cash-out potential, not long-term growth. So if I were a marketer, my worst problem is chaos–not knowing what will make a difference. Venture capital has supported and financed a bunch of chaos.

5.  The next 12 months are going to drive returns to shareholders (including entrepreneurs) and continued investing will occur.  I’ve had first hand conversations with many companies who are sniffing around the marketing & advertising technology industries who are looking to acquire.  We recently saw this with Salesforce/Buddy Media ($800MM-$1bln +), SAS Institute/Ai Match, etc.  I think there is going to be another 3-4 deals by the time 2012 is over.

Just some food for thought going into this weekend.

Native Advertising Opportunities & Native Monetization for Publishers

Fact:  for the foreseeable future, brands are going to continue to spend dollars to reach consumers to try and convince them at some point to purchase their product or service.  Brands do this by using tactics to drive conversion or boost purchase funnel favorability (across different stages).

There’s been a recent meme, conversation, trend, topic, or whatever you want to call it around Native Monetization opportunities.  I’ve spoken about the opportunity publicly a few times including in a conversation started by Buzzfeed’s Jon Steinberg on Branch and most recently today in a Digiday article.

But what is Native Advertising?  According to iMediaConnection, native advertising is defined as, “advertising unit designed to integrate seamlessly with a user’s consumption experience.”

I believe that for most of the Internet, we’ve not found our native ad units.  Note however, a unanimous native ad unit across the Internet is a idealistic dream.  On TV, the unanimous unit is the “spot” and the equivalent of that in digital is the banner.  Note, these units are not native.

Recently, Tumblr announced Radar, Outbrain is gaining steam, Buzzfeed is showing strong Viral Lift, Sharethrough is penning a piece on TechCrunch about native monetization and Silicon Valley, and Facebook announced new native units.  The “native advertising” space is heating up.

Advertising is content and content is generally designed for consumers.  This means that advertising is essentially consumer centric, but is it.. in reality?  While creative might borderline consumer centric by the time it gets thru legal and business affairs of marketers, the actual media unit it’s being placed within might make the entire campaign fail.  All the hard work by the strategy agency, creative agency, production agency, planning agency all gone down the tubes because the placement of the media got it virtually unrecognized.    Yikes.  Many people believe that banner ads are dead and this is why*.

Native advertising as defined above are integrated within the user’s consumption experience.  It could be the holy grail of advertising.  When done correctly, it performs extremely well.  We’ve done it here at the agency and I continue to beat my drum about it.

However, native advertising is not without it’s limitations and issues.

  1. The biggest issue is that you need to work with every single publisher on a media plan independently, at least for now, because there is little to no scalability across pubs.  This takes a lot of time and has cost implications.
  2. Additionally, each publisher will require their own creative, produced in formats that might be unique to only one particular publisher.  This has production budget (non-working media) implications because these budgets are not infinite.  In one of the latest GM/Facebook articles, GM released that they had spent $30MM on non-working media and $10MM on Facebook ads.  The $30MM was on support and infrastructure to make that $10MM more effective.  While I think this number is grossly out of proportion, I do think in a more cleverly planned approach it is a reality.

These are two of many limitations.  Again, native monetization is not new.  Classifieds in newspapers are native.  TV Guide advertising is native.  Paid search is native. With all the new platforms emerging in the digital space, we’re going to see similar native models come to life.  I’m excited for those – and those agencies and marketers who can get thru the limitations will reap the benefits.  I’m excited about this as it’s going to keep me busy planning and investing.

If you are an entrepreneur who is building a platform or solution to address native monetization, we at kbs+ Ventures would like to meet you.

* I do not believe banner ads are dead.  I actually believe they are going thru a renaissance.

Going Upstream & Downstream as a Point Solution

I’ve been thinking about point solutions recently because much of the innovation we are seeing in the advertising and marketing technology space starts out this way.  It’s also not uncommon in the advertising world when agencies are first started:  they start out as a point solution servicing a certain trend such as “social media” and because of this, they become well known specialists.

When point solutions emerge, they tend to be the deepest in knowledge in that particular area.  It’s usually a founding team that recognized the opportunity while working somewhere larger and wanted to create a very specialist company dealing with this new space.  We are seeing examples of this today within the spaces around Pinterest, Path, YouTube, and mobile amongst other areas.

There is a problem with point solutions.  Once your customers get comfortable on your platform, they will ultimately will want more.  They will want service a bit above and below your solution and as a company, you need to make a decision whether or not you want to service this business or someone else (competitor) will come in and service this need.

In the advertising agency world, I see this all the time.  It was especially prevalent with the initial social media boutiques which popped up.  Their clients are now asking them for paid media, creative, and offline work.  Very quickly, these social media boutiques become less “boutique-y” and more like full service agencies.  And overnight, the social media agency is no more and it’s back to being a fully integrated agency.

Pros of being a point solution:

  • You’re a specialist and you’re genuinely good at what you are doing
  • Free from distractions surrounding the areas around your product

Cons of being a point solution:

  • You are looked at less strategically and more tactically in many cases (not all)
  • You might get commoditized quickly by larger entrants who will give away your portion of whatever “stack” you are playing in

It’s OK to be a point solution and if you are taking investment dollars from venture-type investors, make sure to keep the capitalization low (and valuation), in order to drive meaningful outcomes for your shareholders.  We’ve been seeing a flurry of acquihires of point solutions and no real big exits.