The One(s) that Got Away: Third Screen Media

I was speaking to Ben Levitan about blogging the other day and he pointed out to me that Bessemer really had the first blog. For years, Bessemer has kept a site dedicated to their “anti-portfolio” or the ones that got away. Every vc does this in an informal way, lamenting the good ones decided not to do or did not pursue preemptively. Some of the more data driven vcs will go back and analyze why they decided to pass on a company that went on to achieve greatness.

 I dare you to look up Cisco or Google in any vc’s database. Actually, most vcs will not have this information in a database (which is fairly ironic since we are a tech loving industry), but if they did, it would either say something serious like “competitive space, concerns about management team, are routers really necessary?” Those with a little humor, who either never got a look at the opportunity or saw the need to alter the past for posterity, would probably have something more like “started by a wacky husband and wife team from a little college named after some guy called Leland Jr.”

I did not make much of this conversation until I read the cover of the WSJ marketplace section yesterday- “MSN is in Talks to Buy Provider of Wireless Ads.” After an exhaustive review of this sector, my eyes raced down to find the name, which turned out to be a company called Third Screen Media. And saw the latest example of one to put in my personal anti-portfolio.

I had the privilege of spending time with CEO Thomas Burgess about a year ago. Third Screen is a first generation mobile ad server that as of a year ago had signed up top 40 publishers including MSFT, CBS Sportsline, Marketwatch, TV Guide, and a variety of other major websites for weather, news, sports. Third Screen worked with both on and off deck content providers, generating introductions from carriers and agencies. Third Screen is focused on the ability to target, traffic, report, optimize for both push and pull. Historically, a majority of the business has been on the pull side with ad tags embedded in page views, primarily for WAP inventory (though they can serve all types). Third Screen developed a robust platform that acted as an inventory management system for pricing, publishing, trafficking, reporting, frequency capping, performance marketing and behavioral targeting. 

There are 200M handsets in the US literally appended to a person’s body at all times. And over the past couple years, we have seen the early emergence of killer wireless aps- ranging from SMS search to location-based applications to mobile TV- it just felt like mobile advertising was about to take off. Where there are eyeballs and actions, ad dollars are sure to follow. A $45M industry in 2005, mobile advertising was far from big. But you could feel it in the air as companies like Third Screen and its newer competitors- Ad Mob, Grey Stripe and Digital Sidebar- began to see campaigns in the high six digits, verging on seven. 

Now if I took you back to my notes from a year ago, you would see an email that went something like this- “Very interesting mobile ad serving company. I have only had my first meeting with the company but there is something real and exciting here. We should move on this one quickly. One to follow!” In 2005, I think I may have used a total of 2 exclamation points in an email describing a first meeting with a company. What happened from there is a sob story every VC has to tell… the one that got away.

Now I am not even quite sure what Microsoft intends to pay for Third Screen as it has not been reported. But if you assume MSFT paid $200-$400 for Massive, which is reported to be generating revenues <$5M, then we can only guess that a high growth company generating revenues of $5<x<$10M probably has a nice offer on the table.

To be fair, vcs will speak about the ones that got away and then went away for good much less frequently. The unknown question is whether the pitfalls avoided make up for the ones that got away. Congrats to Third Screen.

Comments

[Jeremy]

i like bessemer's approach: http://www.bvp.com/port/anti.asp