News & Views

 

Partnering from Day One with Founders
AUTHOR: Matt McIlwain

There is something very special about being part of the team that builds a company from Day One.  We at Madrona have been both dogged and fortunate in our pursuit of Day One opportunities.  Placed is one of those.  The company’s acquisition by Snap! which closed last week is the beginning of another journey for the company and a huge endorsement of the path the company has taken to this point.

In the past twelve months, five of the companies the Madrona team has been involved with since Day One  had significant positive M&A activity or have entered the public markets.  These companies are Apptio, Impinj Turi (fka Dato), Lattice, and the aforementioned, Placed. In every case, these companies had exceptional founders who were with the company at day one and continue to be key executives at those companies or their acquirers today. It is also true that these founders and their companies had moments of despair, uncertainty, exhilaration and ultimately success.  These stories are truly incredible journeys and we are thrilled to have been there from the beginning to participate in the evolution and support at many points along the way.

Placed – A Day One Journey from Sewichi to Snap

Placed is a great example of how these companies grow. While many of our companies have a founding team, Placed was initially founded just by David Shim.  David had previously worked for two other Madrona portfolio companies, Farecast and aQuantive, and we had recognized him as a talented “rising star” in those companies.  After a short stint in California at Quantcast, he moved back to Seattle in early 2011 and shared an idea he had for creating a company focused on location analytics.  We had liked David and his scrappy approach at Farecast so we jumped on board.  David set up shop in our innovation space (then more limited than now) and got to work.

David understood that mobile and the cloud made it possible to create intersections of data between digital and physical locations.  With that he started coding, testing and talking to potential customers.

Soon after he came to Madrona, we helped found and seed fund Sewichi (Korean for Location, Location, Location) and then set to work helping David refine his ideas and recruit his team.  Initially he hired engineers and data scientists to help work with the data they would obtain – people like Nick Gerner and Weilie Yi who he connected through his network.  And then David added Andrea Eatherly who he had worked closely with at WebTrends and Quantcast to lead audience recruitment and customer success. Over time, Madrona helped recruit other key team members such as Elliott Waldron and Aaron Averbuch.  All of these core team members are still with Placed today.

The early days were hard as the iOS and Android ecosystems were nascent and applications that measured location were prone to using battery life.  In addition, it was not clear what economic incentives would be required to build a meaningful panel of consumers.  And, then there was the challenge of figuring out what model would be best to monetize the location-related data – research, measurement, or becoming an ad network?

By listening to customers (in this case the combination of advertisers, online publishers and ad networks) and making a strategic decision to remain an independent measurement company, Placed began to gain traction in the market.  In the past five years, Placed transformed the way brands understand the impact of their marketing investments in the digital and physical worlds, and the company has consistently grown revenues 100%+, beat their operating plan and done so profitably.

There have been many important strategic and partnering decisions to make along the journey as the world of digital advertising continually was shaped by trends like programmatic buying, the shift to mobile-first customer usage and the rise of social media engagement.  Last year, Placed added another industry expert and long-time Madrona friend Brian McAndrews to the board to help navigate these changing market dynamics.

By early 2017, Placed was pulling away as the market leader and the board sensed an opportunity to “step on the gas” with an expansion round of capital.  Multiple options emerged, and one of those options turned in to a conversation with social media app company, Snap!  Placed ultimately took the route of acquisition by Snap, which closed last week.  We are really excited to see how the Placed team, as an independent line of business, will help Snap continue to innovate and differentiate in the markets where they compete.

It is a privilege to work with companies from Day One – and we celebrate the founders who have the persistence, grit, and humility paired with the conviction to build a business, nurture a team and partner with both us and also the important industry stakeholders to move their company forward.  We have been on a similar journey with many other companies including Rover, Redfin, Turi, Lattice, Apptio, and Impinj – to name just a few that have been recently in the news, and look forward to applying our learnings and experience to working with new Day One founders.

If you are a potential Day One founder interested in working with a Day One partner, give us a shout!  Check out the bios here and reach out.