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Chris Moore is a partner at Redpoint Ventures, focused on the consumer Internet and online marketing. He led Redpoint’s investment in Right Media, which Yahoo bought for $680 million in 2007. He sits on the board of directors at BlueKai, Efficient Frontier and other investments. Most recently, Moore backed IntoNow, which Yahoo bought in a deal worth $20 million to $30 million. He spoke to DIGIDAY about why the current investment mania is a good thing, the Internet’s opportunity to attract brand budgets, and the tradeoffs of building new companies atop massive tech platforms. Follow him on Twitter @moorski.
Is there a funding bubble? There seems to be a lot of investments that can’t possibly be justified by rational business metrics.
People are believers again. That’s a good thing. There’s certainly some effervescence in the water now. Things are a little bubbly. Prices and valuations are increasing for new investments and the backend of companies we’ve already financed. Hopefully we’ll see liquidity in the public markets. People are starting to believe again. There are some reasons to believe that are rational. There are more compelling macro themes for us to invest against than in the last 10 years. Social enabling the web hasn’t played itself out. We’ve seen massive companies get built. We’ll continue to see more there. The mobile Internet is a new medium that’s enormous and just rolling out now. We’ll have ubiquity of smartphones in the next year or two. The consumerization of the enterprise is big. Building out the cloud and [software as a service] platforms to redo it for the enterprise are big opportunities. Those are four big drivers that are real. The reality is not everyone of these social apps is Facebook. That’s the dilemma that investors have.
How important is the separation of data and media in the emerging audience-based ad systems?
There’s a lot of value separating out the signal data from the media and optimizing the use of that data. I’m a believer in that with BlueKai and my experiences at Right Media. It seems like when you think of slicing it that way there’s a step function of value that can be created for the advertiser and publisher to better utilize signal data across the ecosystem for a specific media impression. We’re seeing that at Bluekai and across the ad exchanges that have emerged. There’s more liquidity at the data layer and at the inventory layer.
What’s the next wave of data-centric businesses?
Mobile is an area that’s interesting. It’s one area I’ve been trying to spend a lot of time. Also the performance marketing ecosystem. What about Coca Cola or P&G? How do they spend performance dollars? We haven’t seen that. That’s still largely in the realm of coupons, in the newspaper and aisle end caps in the grocery store. I’ve been thinking a lot about what happens when everybody has as smartphone and will whip it out at the grocery store. There’s loyalty card data that can be leveraged to deliver for the 95 percent of transactions that happen in the offline world. What’s the Google AdWords for that ecosystem. My guess is five years from now everybody will whip out their mobile phone will look at their shopping list. The other data area that’s fascinating is all the social data. How do you utilize social data to determine decisioning of ads? That’s still an unclear world. We haven’t sorted out the signal value of influencers. My guess is that’s going to be important data. Google taught us purchase interest is valuable. In search someone is leaning forward and they’re telling you what their intent is. It turns out 35 percent of those queries are commercial in nature. Purchase interest is a super-valuable signal. In social it’s far less clear what the signal value is. We’re just figuring those things out. I don’t know we’re going to see a signal that’s as strong as purchase intent but i do know there’s a lot of social activity happening. It’s far less clear and probably far less strong of a signal at least for the performance oriented marketers. Maybe the value is top of the funnel branding activity.
Why has the Internet sucked for brands?
It will be great for brands eventually. There are a couple problems. One of the reasons is we’ll have a ton of video running across IP. In a couple years you’ll watch TV on your broadband connection. That’s just a fundamentally richer experience. You’ll see those TV dollars shift to rich, immersive formats where brands can tell a story and you get measurement to boot. Brands aren’t going to be stupid forever. With banners and text links you can’t tell a story. When you have video and audio and can reach them at scale it’s different. I want to make one buy and run a rich 30-second ad. When you can do that those guys will spend a bunch of money. Creating that rich environment is important and being able to deliver it at scale is important. Selling 5 million uniques a month is a deterrent as well. The last click is a problem. There’s a lot of value Google is getting paid for that some of the upstream media aren’t.
Is it dangerous for startups to build on platforms?
You get companies like Zynga that get built entirely on top of Facebook. Some media companies like Demand are built entirely on top of Google. My guess is we’ll see an Angry Birds built entirely on top of Apple. We worried early about control and the rules changing. The reality is there are such powerful attributes of these platforms, like Facenook’s with user acquisition and distribution. Those are sufficiently compelling to make up for the scariness of building on a platform. Zynga was the largest advertiser on Faebook. Facebook needed them. It’s an interesting symbiotic relationship. Facebook takes its cut and Zynga gets to build the next EA on top of that platform. We think you can build large companies on top of these platforms. We have faith there will be large.
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