You met Michael Gaiss, Senior Vice President at Highland Capital Partners, in the last post where he discussed impressions of partnering with Pepsico on the innovative Pepsico10 event. We took the opportunity to ask Michael how HPC prioritizes opportunities with the idea that these same principals can apply to marketers trying to keep pace with the explosion of channels and technologies in digital. In each case the investor is putting their money on a bet and want to mitigate risk with a system that favors their investment.
At Real Branding we take an approach that’s worked for Google and most great marketers: “Follow the consumer.” Know what the consumer wants and needs, where they’re hanging out and where they’re going in terms of emerging media adoption to remain relevant. Following the consumer got us into digital in the first place. It brought us to distributed media, gaming, mobile, social networks and every successful 2.0 channel that informs or engages with one of our customers’ consumer segments. “Follow the consumer” doesn’t mean waiting for them to arrive in large numbers; if we’ve got the dynamics and insights right we’ve been better than most at calling what will stick. We’ve created a set of rules and tools to evaluate channels and new companies, and have always found it interesting to hear how other people making bets in new spaces prioritize opportunities. In most cases—even though we come at it from different perspectives and fields—we find alignment in approach.
Here’s what Michael shared with us from the VC perspective:
A) Top things 3 things you look at when evaluating companies to invest in?
B) How has that played out in execution—what are the top things 3 characteristics of your most successful investments in past 5-years?
- Exceptional leader/CEO and A+ management team
- Pursuit of a large, exciting, growing addressable market opportunity
- Relentless organizational execution once they’ve zeroed in on it
C) That’s great for proven and experienced leadership teams, but many emerging companies—including Facebook—are run by guys under 30 that have no track record to speak of. So, what are the top 3 characteristics of your <25 year-old lead/early stage companies like Scvngr?
- Passionate, compelling entrepreneur that is visionary and can attract high-quality talent and resources
- Big opportunity to disrupt an existing market or create a new one
- Game-changing technology and market leading potential on the product/service side
You get the pattern: talent first, market addressability second and product/execution/technology third.
That feels right for us as well. When you shake hands with a quality CEO of an emerging media company that commits to delivering a program/partnership/etc. you begin to satisfy a number of concerns: you have greater confidence that your deal is strategically aligned and critical for their next round/client/evolution/etc.; you can bet technology won’t be the challenge to delivery—a great CEO can find their way around these kinds of barriers; you can believe that the right resources will be deployed to make it work. Talent, quality of character, passion, drive, vision—these are the things we’re looking for in emerging media partners to offset the risks of a deal.
Market addressability is critical as well. Is the company prepared to take on a real partnership and leverage that opportunity up or not? Will they be around for the market or be passed by others? When we were buying media for our CPG and Entertainment clients, we used to ask how a company would manage a million dollar program—not that we had that budget or were asking them to put effort around pursuing that level of budget, just if they could handle it. You might be surprised how many flinched or stumbled. So, are they approaching it as a market and can it become foundational to the platform or is it just a feature or tactic?
When you’ve covered talent and market, we also want to understand what barriers are being scaled by the solution. Is it a network or technology advantage? Is it a brand or a platform? We’re keen right now on those solutions that look like internet-velcro that other solutions can be built over & stick to—much like Twitter’s model where thousands of applications sit over their base technology. What’s being created or changed and will it last?
Here’s where you take over: what are the top 3 things you use to evaluate emerging media opportunities? Same or different? Looking forward to your thoughts below or directly.