Scoreboard Media Group, Internet Audience Development

Over the last three years, I have had a front row seat to the Venture Community’s adoption of The Competitive Internet Guy (aka SEO’s). In the beginning, they’d never admit to knowing us, but we were always on speed dial when one of their investments was floundering. Then, they started bringing us in to coach the management teams of their Internet investments. These days, I know more than a few VC’s who won’t consider an investment unless their Internet Consigliare (aka SEO) has signed off on it and a couple of VC’s who make more money on their private-backing of SEO projects than they do on their “carry”.

So, one of the things I wanted to do with this site as I started blogging was to evangelize the value in the relationships between these two communities. I won’t go as far as Valleywag in dogpiling VC’s who don’t “get it”, but I certainly want to introduce VC’s that do “get it” to Competitive Internet world who may not know of them. While many of us will never need venture investment for our projects, we may stumble into something one day that does need the capital and guidance of some these very smart VC’s.

I’m starting my series of interviews with VC’s close to home because, well, I’m lazy. Jeremy Liew of Lightspeed Ventures is an investor and Board Member of Tippit, where I play the part of audience builder by day, so he was easy to track down. Jeremy recently left the highest ranks of the online media world for the VC community. I spent Five Good Minutes with him over email this week:

BP: Jeremy, thanks for taking time out of your busy schedule. Last time we tried to do this, I got busy and you were headed to Sundance with some old college buddies. How was the trip? Everything I know about Sundance, I learned from Turtle and Johnny Drama on HBO’s Entourage.

JL: It was a good time. Got some boarding in and saw some great, though depressing, indie films. Since I don’t roll with Vince, I didn’t quite have the same experience that the Entourage boys did though!

BP: So, one of the reasons I wanted to talk with you is that I think you can provide a unique perspective to the Competitive Internet crowd.  Your online media pedigree is nothing short of spectacular, but I get the feeling there is an inner serial-entrepreneur inside of you…hence the move over to the VC side of the game where you can translate your gut instincts into solid investments. Maybe you can take a quick minute to talk about your past operational experience and your decision to go the VC route.

JL: I’ve been lucky enough to be in the right place at the right time a couple of times in the past. My boss at McKinsey started CitySearch in 1995 which got me into the internet industry in a variety of sales management and business development roles. This led to a job as VP of Strategic Planning at Interactive Corp after CitySearch got rolled into the IAC family. Then when Jon Miller left IAC to become CEO of AOL I went with him, initially as his Chief of Staff and SVP of Corporate Development and then as General Manager of Netscape where I got some great P&L experience being on the front line of running a business.

I wouldn’t mistake what I did at big companies for what true entrepreneurs do though. They are really slogging it out every day on minimal resources, being nimble and smart. That’s a way harder job.

Being a VC I appreciate the difference every day!

BP: Very interesting. You’re clearly skating by on luck rather than talent! This changes things entirely for me. Let’s do this. So, If I were to go buy some Powerball tickets right now, what 6 numbers are popping into your head?

JL: 1,2,3,4,5 and 40.

BP: Ok, back to slogging it out on the Internet. When you are considering investment into a business, how closely do you look at their ability to generate an audience for their product or their content? The reason I ask is that most of the VC’s I’ve worked with think that a good product or concept will just trip into a large captive audience. 95% of the calls I used to get started with, “We have this market-killing, next-generation, badass product…but nobody knows about us. Help!”

JL: It’s almost sacrilege to say this, but in the early days of a consumer internet category you don’t need to have the best product - a good enough product is sufficient. In a new category, a company’s ability to draw an audience matters far more. Whether it’s by SEO, SEM, distribution deals, a well thought out viral campaign, or some other mechanism, a new company has to find a way to draw new users as they likely won’t be showing up on their own. Later on, there is more truth in the adage “best product wins”. But if no one knows about you, your users never get a chance to discover that you’ve got the best product.

I’ve posted a little about this on the Lightspeed blog.

BP: That reminds me, I haven’t harassed you yet this week for hosting your company blog on Wordpress.com. Consider this said harassment. So, what drew you into blogging? And exactly what is it going to take for me to convince you guys to give it a home on lightspeedvp.com/blog/ ? While Guy Kawasaki has been focusing on Asshole-related topics and Top 10 lists…you, Ravi, and the gang have been banging out gold. I think the LSVP foray into blogging has been a great success.

JL: Thanks! Its nice to know that we have an audience. Well, it certainly wasn’t fame or fortune that drew us into blogging! As online media gets more social, participating is the best way to understand how it evolves. You have to write about what you know, and so we do. We started it as an experiment on Wordpress and we’ll eventually migrate it under the Lightspeedvp.com domain. You’ve said it a dozen times now; I get the point!

BP: This makes me very happy. Give me a holler when you do move it so we can ensure that all your hard earned links and reputation move to the new blog location.

So, you’ve officially reached, “My Hot Sister Status”. Every guy with a hot sister has to hear, “So, when are you going to introduce me to your hot sister?” from all his friends for his entire life (or until she gets ugly). I get about ten people a week asking me to intro them to you. I think I’ve passed you one or two and that’s mostly to save you from stuff like “Imagine a poker site…but with Ajax and everyone’s paid in Adsense.”

So, first, congratulations for being my Hot Sister and, secondly, maybe you can talk about what kinds of businesses out there WOULD interest you.

JL: That’s as questionable a compliment as I am likely to ever get…”Jeremy - you’re Brian’s hot sister”!

Venture guys are often asked what kinds of businesses we’re looking for.  It’s a hard question to answer because if we were smart enough to have great ideas, we’d be entrepreneurs not investors. Our job isn’t to have great ideas, it’s to recognize great ideas when we’ve been repeatedly smacked in the face by them.

That being said, there are some characteristics in companies that I like to see in an internet startup. One we mentioned earlier - a demonstrated ability to generate an audience. Another is a clear value proposition for users - ideally one that will fit in the 728 x 90 pixels that you get in a banner ad. If you can’t explain succinctly to a user why they should be using you, you have a problem. Other characteristics that I like to see include instant gratification (don’t make me do a bunch of work before I get a payoff), social approval (how can I look smart/cool/special by using your product), and ideally an offline parallel to the online activity (because users don’t like to change behaviour). A business model is nice too - ideally one that doesn’t rely on a “new form of advertising“…

BP: Great answer. One last question and then I’ll let you get to your extended weekend. What do you look for in management teams of prospective investments? The reason I ask is that the Competitive Internet crowd that is reading this interview probably comes up short on “pedigree”, but our body of work is such that we’ve been killing the Internet since Al Gore unleashed it. On the other end of the spectrum, I routinely see guys with “pedigree” run really good ideas into the ground because they just don’t get the Internet. I’m guessing you want to see a mix of operational pedigree and savviness before you cut the big check.

JL: You’re right, past isn’t always prologue, especially with startups.

An MBA or a big job at a big company isn’t necessarily a predictor for success. The one exception is that people who have built a startup into a big company before are easy to back. They’ve been to the front line before. There are many ways to fail but not that many to succeed, so they’ve usually learned a thing or two.

But the most important thing we look for is a passion to build a big business in which the founders truly believe. They are not looking to quickly flip something, and they are not doing something that they don’t care about purely for the money. Entrepreneurs are not employees. They are a different sort of person. In most startups there are rough patches in between the smooth sailing. Just as entrepreneurs need to look for investors who will stand by them when it gets ugly, so too are investors looking for entrepreneurs who will stand by the company in the rough times. Without that passion, the entrepreneurs may end up throwing their hands into the air and saying “its just all too hard”.

BP: Thanks so much for your time, Jeremy. I know you’re a busy guy, but I wanted to make sure some of the smart folks I work with around my world know there are a few VC’s out there that “get it.” Anything else you want to get off your chest while you’ve got the stage?

JL: Now is a fantastic time to be an enterpreneur. It’s cheap to start companies, and if you get something that is working, people will back you. The market is here in a meaningful way; enough mainstream people are using the internet to provide markets for just about any application. Whether you’re building a nice lifestyle business that flows cash, or taking venture capital to build the next big thing, there are opportunities everywhere you look. Fortune favors the brave!