[Preface: I wrote this c.18 months back but didn’t publish it - for whatever reason. Anyway, I found it & re-read it last week, and it’s ever relevant and true - so here yo go . . .]
$1.4 billion / $15 million
Last month a company called TripleLift sold itself for $1.4 billion to US private equity company Vista Equity Partners. 2 months earlier a company called Sharethrough sold itself for $15 million to a Canadian company called District M. TripleLift and Sharethrough are both US companies competing in the same vertical market of Native Advertising Technology.
I was a shareholder in Sharethrough (after selling my company VAN in 2014). I wasn’t a shareholder in TripleLift (sadly).
At the time of joining Sharethrough in 2014 it was valued at c.$35 million. At the time I left in 2016 it was valued at c.$100 million. In 2016 Sharethrough was c.x2 the size of TripleLift. 5 years later Triplelift was worth x100 more than Sharethrough.
Here’s my analysis of what went wrong for Sharethrough and what went right for TripleLift . . .
Deep expertise and market connectedness
The fundamental difference between the two companies was the comparative levels of market expertise & market connectedness. Sharethrough went out on a tare with its vision of 'native advertising'. This vision was visionary in 2013/14, but within a couple of years the actual 'value' of native from a commercial perspective were found to be challenging. Yes, the Sharethrough founders were correct in their early view of how content consumption was moving to the 'feed' and mobile, however beyond this general observation they failed to execute on what this would practically mean for the market and especially how market ad dollars would be spent.
The importance of market connectedness and deep expertise is especially important in maturing markets. TripleLift’s founders were all at AppNexus - another ad tech company. Sharethrough’s were smart Stanford grads. Sharethrough stole a march early doors in the immature early stages of native advertising, but TripleLift accelerated way past Sharethrough after a couple of years - having a much better and deeper view of how the market would play out and where the real long term demand and value was.
And this value was in x2 areas:
Programmatic
Connected TV
Two areas Sharethrough was under-invested in.
Decision-making
The x2 core bad decisions by the Sharethrough founders were: 1) Wrong people decisions 2) Wrong product decisions. And I'd say that these reflected Sharethrough's founders lack of deep passionate knowledge of the market.
Wrong product decisions: a random - but on reflection important - conversation I remember having with an ex-colleague in our New York office was around a decision at the time to try to sell programatically using a vCPM - rather than a standard CPM. This colleague was one of the smartest and industry-connected guys in the company (an ex-AppNexus guy himself). When I asked why we were trying to sell against the grain of the market on a vCPM (a broadly alien concept) rather than a CPM, he simply shrugged his shoulders and said he didn’t understand either. 2 months later he left to work for Google's ad team.
Wrong people decisions: there was an ever-long line of 'wrong hires' in Sharethrough. Something I myself was v.much guilty of. It was always interesting to see who stayed and who left at Sharethrough. Those that left tended to be industry insiders - progressive types. Those that stayed tended to be industry outsiders. Case-in-point: the commercial director for the last few years of Sharethrough's existence was an ex-publisher type, with little programmatic experience, when the future of the industry was clearly programmatic?!
Wrong location
Sharethrough was born, bred & HQ'd in San Francisco. San Francisco isn't an adland town. It's a tech town. Triplelift was born and bred in New York - the home of American adland. The influence of geography can have a big impact on a company: from culture, to hiring to industry connectedness, to decision-making (influenced by all of the above).
Naval-gazing & being too internally focused
Another long-lasting memory was the obsession of the founders on updating Sharethrough’s logo and branding. A lot of time and energy went into Sharethrough’s image. Sharethrough was supposed to be big and think big, meaning that Sharethrough needed to act big - which seemingly meant that more time was focused on font size rather than getting down and dirty with the market and market opportunities.
And Sharethrough didn't just stop at a new logo, they also went all out with an outdoor ad campaign around San Francisco and New York - something that spoke volumes of the hubris of a company that had raised $15 million . . .
Thinking big in the wrong way & being awkwardly sized
Sharethrough’s founders were always obsessed by head count. I guess the simple view being: 'we're successful because we're a team of 150 people'; or 'we're successful because we've got 7 offices across the US and Europe'.
The downside of headcount was a management bandwidth overhead and financial overhead. The waste of Management bandwidth was perhaps the biggest issue here. More people and more offices, meant more time spent looking in the wrong direction, and limiting the chance of making the best decisions.
Sharethrough was also obsessed by 'thinking & acting big' when in reality the company needed to act like an agile hungry start-up. Endless layers of management were added whilst I was at Sharethrough, with more time spent on internal meetings, rather than out hustling.
More sizzle than sausage
Sharethrough was fast out of the blocks when it came to 'native advertising', but then as the market matured very much struggled. A fundamental issue with Sharethrough was that it was more sizzle than sausage; it was a company built on a vision - a very good vision, the idea of 'human-centric ads / ads that 'fit it' - but which then discovered that it was a vision that was very hard to defend against. Although first to market, without any defensible tech, competitors both big and small chipped away at its position.
People & overhead heavy; margins tight & sales light
The ultimate practical undoing of Sharethrough was a convergence of tighter margins (driven by programmatic), lighter sales (driven by changes in the market and a weakness in the programmatic space) matched by hefty fixed-overheads (driven by over-ambition) - resulting in an unsustainable and ultimately worthless business.
It was a sad end to a fun journey.
[Image credits: Sharethrough]