Can Buddy Media tame that mane?

Back in May, as it was on the brink of closing its first big round of funding, social commerce startup Spinback was acquired by Buddy Media, the 800 pound gorilla in the social marketing world. Since then, says Buddy Media CEO Mike Lazerow, Spinback has become tightly integrated into Buddy Media's daily work, especially when it comes to showing big clients what they are getting from the campaigns they run. Betabeat chatted with Spinback founder and CEO Andrew Ferenci, who is now director of product developement at Buddy.

How are things going with the integration of Spinback into Buddy Media?

It's going really well. Sometimes a product gets bought and the integration takes a long time. Or worse, the product never really gets integrated and then it gets killed off, like Google did with Dodgeball. We're only three months in, but the product fit just seems right, and we're getting close to the finish line for launching a brand new version of Spinback that will tie us into the larger mission here at Buddy. 

What's it like going from a small startup at Dogpatch Labs to a big company like Buddy?

Mike has created an real entrepreneurial culture, wrapped around a well oiled, corporate operating structure. It kind of feels like a big company built around a mini-incubator. When we’re not focused on Spinback, we’re working on new product.

Sure, but what exactly does Spinback is doing for Buddy?

Well we've always tried to give businesses a way to measure the dollar per share, the ROI for sharing on platforms like Facebook and Twitter, and the real world conversions retailers get from their social media marketing efforts. In the future it will be any and all conversion. For big brands its not always as simple as, how many sales did that tweet drive. You want to look at, for example, I share an interactive link to a Mini-Cooper to my wall. We can track how many people click through and customize, request a quote to drive it, or like that post.

Won't that change with the arrival of new platforms like Google+?

There is a lot of fluff out there for social media, especially around engagement, so we're focused on giving the client hard data around a customized set of conversions. We’re stretching what Spinback can do really wide, so it can cover all different kinds of content across more verticals than just retail. And while Buddy is best known for Facebook, we're working across all the big social networks, email and emerging platforms. As you’re seeing with Google+, social focus is growing, anytime a big network like that opens up an API,  be it Google or LinkedIn, we want to help our clients market and measure.

Parting words on being a new employee of Buddy Media?

I'm trying to avoid the Buddy 15, but its hard, just due to the sheer volume of tasty snacks and beverages. It reminds me a lot of visiting google, a work hard, play hard atmosphere.

Update: In response to our photo caption Mr. Ferenci tweeted: "My mane has been tamed. i.e. I got a haircut."

Who doesn't love a good D round?

Buddy Media, which has emerged as the dominant marketing platform for major brands on Facebook, just closed a $54 million D round led by GGV Capital, Insight Venture Partners, Institutional Venture Partners and Bay Partners.

It's clear Mr. Lazerow has an IPO as his end goal. He writes in a blog post that GGV has experience with the public markets, having backed companies like Alibaba and more recently Pandora, which went public just before the recent market downturn. And Bay Partners, he notes, have seen more than 250 companies to an IPO or $250 million+ acquisition. Here's our quick Q&A from this morning:

Q: Why raise such a big round now?

A: What this means is that no matter what happens in the markets or the macro-economic picture, we can scale the company aggressively. We are cash flow positive and none of this funding is going to pay back investors or employees. This is pure growth capital.

Q: Is this the first step on a road to an IPO?

A: No doubt the profile of these investors lends itself to being a public company, but that is just one option on the table, and we are not ruling anything out.

Q: Are you looking to take advantage of an overcrowded start-up ecosystem, especially at the early stage, to snap up some good companies, a la Spinback.

A: We definitely witnessed the rise of the seed investor over the last year or so. Everyone was an angel. That meant there were a lot of companies created, but its hard, once you have that business, to scale, market and monetize. We're not just going to start rolling up start-ups, but we do have the infrastructure in place to make thing work very well when we find a company, like Spinback, who's team and technology are a great fit with our business.

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As Lazerow wrote in his blog post this morning:

"We are in the midst of a massive shift online from a search and intent-based world to a social, people-based world. The last three years were about the consumer side of social platforms, as we watched Facebook, Zynga and Twitter grow exponentially," writes Mr. Lazerow. "The next three years will about the enterprise side of social, and how companies engage and grow their businesses by tapping into these massive platforms.  Buddy Media plans to help accelerate this movement by providing our clients easy-to-use and powerful tools to help them tap into these social platforms to increase revenues, find new customers, and build deeper relationships with current customers and more."

Interestingly, all of the money being raised is going directly into the company (versus being used to buy out existing shareholders). Buddy Media plans to double our product, sales and support staff in the next year as well as fund additional global offices and acquisitions.

Lazerow runs down some of the company highlights from just the last year:

• We added close to 200 new customers in 2011, including some of the world’s most recognizable global brands, retailers and media companies such as Ford Motor Company, Hanes, ESPN, Hearst Corporation, and Virgin Mobile USA.
• Our revenue has more than doubled since the end of 2010.
• We’ve maintained a net promoter score of 75 in 2011.
• Employee headcount has grown from 40 employees in 2009 to almost 200, with continued massive hiring plans for 2011 and beyond.
• We acquired social commerce and analytics leader Spinback in May 2011 and plans to complete its integration and roll out this month (a record for integration!).
• We recently hired Dennis Morgan as Chief Financial Officer. While at Yahoo!, Morgan led corporate finance efforts for more than $5 billion in acquisitions and business development deals .
• We opened our European Headquarters in London last month and hired Luca Benini, a senior executive from Comscore, as Managing Director, Europe.
• We won the TechCrunch “Crunchie” Award for Best Enterprise application in January 2011.
• WPP, the world’s largest communications services group, announced a $5 million investment and global partnership with Buddy Media in October 2010.

For better or worse what this means is that Buddy Media will be in a position to acquire more New York based ad-tech and social media start-ups during the coming seed stage slaughter. We'll check in with Spinback's Andrew Ferenci later this week and see how he's liking the big company life.

Mike Lazerow

You always remember the ones that got away. Tell us about the start-up you regret passing on the most.

Well I bought into Facebook pretty early, but looking back, I had the chance to get in much sooner. They were pre-revenue and the valuation seemed high, so I passed. Zynga is like that too. Mark Pincus is a board member of Buddy Media and was at the time he was founding Zynga. I could certainly have been more vocal, could have pushed harder, to be an early investor in that, but at the time I didn't really see it. Veterans like Fred Wilson or Brad Feld, who can separate the signal from the noise, they looked at Zynga and saw a company with a proven founder entering a wide open space with a huge market. I saw an online poker app. 

What “me too” trend should we avoid or invest in?

Inside the beltway consumer tech start-ups, these light apps that aren’t solving a real business problem or a deep human need, are going to get crushed. Foursquare is going to do very well, but even the largest check-in app is 10 million people, compared to Facebook’s 700 million. It’s really hard for me to believe that there is enough real business to support the explosion of mobile and tablet apps I see these days.

What’s the weirdest pitch you ever heard?

I like crazy ideas, so to me most pitches don't sound strange. I thought Netflix was the worst idea ever. I mean for years, the bigger they got the more money they lost. Reed Hastings had the balls to keep investing in the company and to ignore the markets and the naysayers. Turns out Netflix is one of the biggest and best businesses to come out of the last wave of the internet. Oh wait, I did get one strange pitch recently. Someone pitched me a shoe company for women with six toes. No, I'm not kidding.

What’s the best way to ride out a bubble?

I've been angel investing for about five years, but this is the first year I've taken it really seriously. I was just heads down with Buddy Media and now its running on its own steam to the point where I can blink, where I can take one percent of my time for something else.

Over the last year I have done a dozen deals in the spaces I know best, ad-tech and social. Because of my position with Buddy Media, and the way social has become central to everything, I am being invited into a lot more deals.

I'm not a very experienced investor, so I don't like to lead. I look for a great management team and strong partners in the funding. Having really big, smart money in your syndicate is the best way to avoid getting your ass handed to you.

I know I can't pick the next Facebook, so my strategy is to try and get into as many goo deals as possible and hope a third of them turn out to be hits.

The last thing you want to hear from a founder is?

"I can't." It takes someone to will these companies into existence and at the end of the day its not going to be the investors. I look for great DNA in a company, and so often when the founders leave, they take what was driving the business with them.

Explain, without jargon, what the word pivot means to you.

Pivot is a really annoying, overused word. But I think by definition what a good start-up does is to pivot, and to continue to do that until they are a real company and no longer a start-up. Your job is to become a mature, profitable business, and you react and you iterate until you reach that goal. That is the kind of approach that has driven the tech ecosystem in this country for decades. So even with a company like Sticky Bits, which became Turntable.fm, and that's maybe something beyond a pivot, its such a big change, but more power to them. Now when I see a big established company with 500 employees and they are telling people about how they plan to pivot from a location-based service to mobile games, that is not a pivot, that just means your company is fucked.

Andrew Ferenci, 24-year old founder of Spinback.

Buddy Media, the Facebook managing platform for businesses, announced this morning it had acquired the five-person New York start-up Spinback, which makes a social media plug-in and analytics dashboard that customers can enable by embedding a few lines of code on their web sites. "I've never seen a product that does what it does. It does what four or five technologies do in one," said Buddy Media CEO Mike Lazerow when Betabeat reached him by phone this morning at Disney World, where he was attending the Mashable Connect conference with Spinback CEO Andrew Ferenci.

The New York connection was essential to the deal, the two CEOs said. "New York start-ups understand marketers better than West Coast start-ups," Mr. Lazerow said. "Social media at the end of the day is word of mouth marketing on steroids."

Spinback raised a small angel round of funding and had term sheets in place for a Series A when Buddy Media made a "really compelling offer" that the companies chose not to disclose. The companies had been talking about a partnership since February and it quickly became clear that the services were highly complementary--and both companies were strongly tied to New York. "We really like working in New York," Mr. Ferenci said. There were some VCs that wanted them to move out to California, he said, but he felt the New York start-up scene was too vibrant to leave.

Spinback will move immediately into Buddy Media's Flatiron office, where the parent company has around 170 employees, and the products will become "tightly integrated" over the next year as the companies merge, Mr. Lazerow said.