Interview | Brian McAndrews of Madrona Venture Group - Part Two
Posted on Wed, Jul 07, 2010
We recently asked investor and new board member Brian McAndrews of Madrona Venture Group, a series of questions on the digital media industry, investing and "why Searchandise?" Here's part two of three of the interview.
What are some of the most exciting companies/solutions in the industry right now?
In my previous post, I mention several companies working in important areas including BlueKai in data exchange, AdReady in display optimization and Foursquare in location-based services. People have been talking about location-based services for a while now, but it wasn’t until Foursquare that we started to see people consistently sharing their location, and advertisers actively reaching out to repeat customers. There are a lot of players piling on to this model of checking in. Gowalla is another startup that I like, and rumors are Facebook will also offer a check-in feature soon as well.
Another company doing something interesting with mobile is Occipital, the makers of the Red Laser app. While it is still early days, this represents an exciting way to share information and get consumers to interact with advertising and products. Red Laser recently announced they were acquired by eBay. It looks like the future of the app will remain focused product search and shopping, but there are many other ways to utilize 2D tags, so hopefully other app makers will innovate beyond the traditional retail use case.
Lastly, I think that Wild Tangent, a Madrona-backed company, is doing very exciting things in the online gaming space, particularly with respect to advertising. The company has the largest game ad network in the world and is better than any other game network at monetizing its users. A recent Nielsen survey of 27,000 consumers indicated that 85% of gamers prefer to not pay for their digital content. WildTangent monetizes a majority of its traffic while still providing consumers what they want – free games. They count 75 of the top 100 advertisers as customers and are generating CPMs above $100, in some cases. This is definitely a company to watch.
What captured your interest in Searchandise Commerce?
- The value proposition is intuitive. Brands perform better when merchandized prominently. In the offline world, that means eye-level shelf space and end-aisle displays. For online that means at or near the top of search results. According to a Jupiter Research/NPD Retail Consumer Survey, 25% of all online shoppers use a retailer’s website as their primary source when researching products online versus 19% who start with search engines. Searchandise gives brands an opportunity to be more prominently displayed on an e-retailer’s site and give e-retailers a great way to monetize visitors.
- Merchandising is a huge business offline. Over $20 billion is spent each year on promotional and slotting fees in traditional bricks and mortar retail. Brands are used to paying for better merchandising positions. In all of our research Searchandise is the only company that offers that a similar opportunity to brands online.
- I have known John Federman, the CEO, for a number of years. Good leadership is a critical part of the success of a company, and John has built out a very strong management team. We often invest at such an early stage that we really are backing the people, more than the business model. In Searchandise’s case we were able to have strong conviction on both.
How long have you been working with Searchandise Commerce and in what capacity?
Madrona invested in Searchandise Commerce in the second quarter of 2010, and I joined the Board. John and I talk on a regular basis, and I try to be helpful as he works through both tactical and strategic goals of the business. Hopefully my experience and contacts have already been helpful and will be even more helpful over time. At Madrona we try to offer all the resources our firm has to offer to all of our portfolio companies, be it recruiting help, PR outreach, or customer referrals.
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Brian McAndrews, Managing Director, Madrona Venture Group
Brian McAndrews joined Madrona as Managing Director in 2009. Prior to joining Madrona, Mr. McAndrews was Senior Vice President at Microsoft Corporation, leading the Advertiser and Publisher Solutions (APS) Group, where his team was responsible for approximately $3 billion in revenue and for building and marketing the Microsoft Advertising Platform. He successfully integrated aQuantive, Microsoft’s largest acquisition ever, into the company to help create APS. Previously, Mr. McAndrews served as CEO of aQuantive Inc., one of the fastest-growing global digital marketing companies in the world. He held executive positions at ABC Sports, ABC Entertainment and ABC Television Network; eventually becoming executive vice president and general manager for ABC Sports. He also served as product manager for General Mills Inc., a leading consumer products manufacturer. Mr. McAndrews earned a bachelor of arts (A.B.) in economics from Harvard University, and graduated from the Stanford Graduate School of Business.