Roger Ehrenberg - Data Scientists at Work - page 133

Gutierrez: What did you see when they first came in to talk to you that
made you think they were the right team to back?
Ehrenberg: So I hadn't met Kass at first. I met Mike. Mike was very person-
able and was already a three-time serial entrepreneur. He had just sold GOLF.com
to Time Inc. and he had previously run a student loan marketing company
during the go-go days of the dot-com era. When we spoke he had a vision
for why this thing called Facebook was really going to change the way brands
thought about touching their customers. Obviously, I knew what Facebook
was, but it certainly wasn't a phenomenon. This was back in the middle of '07.
He talked about his knowledge of brands and marketers, and how he knew
that they didn't understand how to communicate in this new medium. They
didn't understand social media. So Buddy's raison d'être was going to be help-
ing them understand and speak to people on social media, initially Facebook.
That was the idea.
Now, they had this initial idea for how they were going to do this, but to me
that almost didn't matter. One of the most important things I've learned, which
I still carry to this day, is that as a seed stage investor you can get a lot wrong,
but you need to get a couple of things right. The most important is the right
people. Another is that there needs to be enough “white space”—opportu-
nities in the market to reach customers and be successful. It doesn't mean
there are no competitors. In fact, competition is validating. If people validate
a space before you arrive, you can do a better job and if there's enough white
space, then it's fantastic. What Mike did was identify an area that had so much
white space, and he himself was so great, that he could have lots of false starts.
The market was so nascent that as long as he got the big thing right—that
yes, Facebook was going to be a phenomenon, and, yes, brands and marketers
were going to want to speak to people on the social nets, Mike was going to
figure out how to make money—before running out of money!
What's hard is when you see the fifty-eighth NoSQL database company, where
the amount of white space is rapidly shrinking. You could put in an A+++
team, but if they're operating in a space that's now insanely competitive, super
crowded, and the ability to differentiate is actually quite small, it's almost a
waste of time. Conversely, let's say you have the Buddy situation again, but you
don't have Mike and Kass. You have a B team that identifies the big idea cor-
rectly, but as executors, they're B-players, they'll fail. So it's that intersection of
an A team with enough white space in the market that makes for a compelling
investment opportunity.
Gutierrez: When you invested in Buddy Media, were you thinking in terms
of a data play?
Ehrenberg: There was no doubt in my mind that Buddy would create a super-
valuable data asset by virtue of people interacting with brands and Buddy-
powered applications on Facebook. This data asset would then inform better