Wednesday, October 19, 2011

VC's and entrepeneurs need to know how agencies really work

Ad tech companies are getting a bad name with agency folk - and I don't blame the agency folk.

Way too many companies get founded, funded and operated by people who have never sold a dollar of business to ad agencies. These people then proclaim to understand "what's broken" and to render the agencies obsolete. These same people then realize that brands generally want their agencies to solve the "big problem" the VC invested in solving. So these people end up having to sell to agencies. Whose models they don't understand and whom they have pissed off royally in the initial go to market process.

How do I know? I was one of these operators. I thought I knew a lot more than I did. I thought we could do it without agencies. Our investors thought we could sell into the ad market from Seattle without living out of a suitcase in NYC. We were wrong. Luckily we had smart advisors and clients, a dynamite strategic partner in London, and a hell of a NY VP, who helped us figure it out in time.

The ones who end up doing this well get exits (not outsized exits, but good exits) for investors. The ones who don't, turn into zombies.

No comments:

Post a Comment