Zimmerman asked the panel if there was anything that can be learned from the Yahoo! experience, for new emerging companies. Deven Parekh of Insight Venture Partners answered unequivocally that Yahoo! has been inherently mis-managed over the past 5 to 7 years. He pointed to Yahoo! being unable to keep its entrepreneurial talent as perhaps the most clear signal of its failure.
Next up - semantic technology? Yes.
Zimmerman brought up DG's recent acquisition of Peer39 that was far less than the invested capital ($15.5 million versus nearly $27.4 million). Zimmerman wondered aloud if this was a warning signal for ad tech and asked O'Kelley if the price scared him in terms of the valuation of AppNexus. O'Kelley said dryly, "We're terrified. Truly frightened." In general, O'Kelley saw a period of natural contraction going on. He said that the significant part of the Peer39 acquisition was that the price was revealed since normally it wouldn't be. What O'Kelley appeared to leave explicitly unsaid - and likely the reason Zimmerman posed the question - "the reveal" will affect the ad tech landscape's ability to grow or sell their companies. For example, venture firms won't invest in a company when they think they're not going to make a significant, VC-like return (5x, 10x, etc.).
Hippeau piled on the ad tech discussion and said that he didn't believe there was much going on in terms of ad tech innovation - other than a few companies as he through a bouquet to O'Kelley.
Insight's Parekh followed up that MediaMind was his venture firm's former investment and successful from his viewpoint. He said it was bought for $500 million in 2011 (editor's note.. hmmm, had been thought to be $400 million-ish in the past. Rounding error by Parekh?). He agreed about a lack of differentiation today. Parekh didn't mention that DG's stock is now in the single digits with less than a $250 million market cap in the public markets and several hundred million dollars in debt.
Later, O'Kelley said that trying to make a comparison with B2C businesses and companies like his is tough in that his company is B2B with 250 "users" (clients). But he did let loose with a tidbit that his company has seen $40 million in media run through his platform in the last 30 days. O'Kelley talked a bit about how his company pivoted from a cloud computing company, too, and how the pivot into ads wasn't easy. He claimed Invite Media had a similar moment of crisis where he and others invested in Invite and helped them bridge through into the next phase, which ultimately led to Google's acquisition of the company for $80 million.
In spite of the negative talk about the Peer39 acquisition, the investment world still seems ready to pump cash into tech companies. Whether it's an investment bubble or not remains to be seen. It will also be interesting to see how the JOBS Act - crowdfunding for startups - in the United States affects the venture business later in the year and thereafter.
By John Ebbert