MongoLab’s offering capitalizes on two important trends we see impacting the vast majority of our portfolio companies: the rapid adoption of the cloud deployment model and and the increasing use of “Big Data” and NoSQL tools. While the benefit of adopting these technologies has been overwhelmingly positive on balance, many of our companies have struggled with adopting these technologies and have paid a “pioneer tax” as early adopters.
Companies like MongoLab who can offer critical pieces of infrastructure with utility-grade reliability and scalability to application developers can help solve the developers challenges of “operationalizing” their products while letting them develop applications more efficiently by allowing them to focus on the truly differentiated aspects of their offerings.
Of the many offerings in the “Big Data” and NoSQL universe, we like the fact that MongoLab has chosen to specialize in 10gen’s MongoDB. MongoDB’s scalability (in size and read/wriite volume), its ability to run MapReduce jobs and its accelerating adoption among developers are all compelling aspects of the MongoDB platform. Equally important is the fact that MongoDB stores its data as native JSON objects which makes it very accessible to a wide swath of the development community. MongoLab CEO Will Shulman blogs about this important aspect of MongoDB here.
While we are excited about our co-investors and the growing market that MongoLab serves, we are most excited about the founding team. Repeat entrepreneur and CEO Will Shulman was previously the co-founder and CTO of Merced Systems, a successful enterprise analytics software company. The core team all have strong academic credentials as well, with undergrad and graduate CS degrees from Harvard, Stanford and MIT.
MongoLab is currently in beta offering MongoDB hosting, developer APIs and web-based management tools on Amazon EC2 and Rackspace Cloud. They’ve recently announced a partnership with Rackspace and also have built a Heroku add-on that is currently in beta.
We are looking forward to helping the team at MongoLab build a great company.
Update: you can read more about the funding announcement at TechCrunch.
Foundry Group’s AdTech Investing: Adhesive
We’ve written extensively about our thematic investment approach and a handful of our active themes, most recently our Distribution theme which we’ve been working on for several years but had yet to formalize and discuss publicly.
Over the past few quarters, we’ve been thinking more about the online advertising investments that we’ve made over the last three years, which include AdMeld, Lijit, Trada, Medialets, Mandelbrot Project,Triggit and Integrate. While this is about 20% of our active portfolio, we’ve never considered AdTech a theme. Instead, we have included these companies in our Glue theme since each company is an intermediary technology – although in each case applied to AdTech.
While this underlying “glue” to our AdTech investing has served us well, we’ve decided to formalize this and introduce a new theme (or really sub-theme) that we are calling Adhesive, which for us is the guiding set of principles behind our investments in online advertising. To be clear, we’re not breaking out online advertising as a theme of its own – we still think of it as a subset of our Glue investing. Like all of our themes, Adhesive isn’t meant to be a rigid description of our investment in a discipline, but rather a guide to our thinking and a set of overarching concepts that drive our investment in a particular area.
The landscape of online advertising is a confusing one. Many people have seen the well traveled “Display Advertising Technology Landscape” slide prepared by Terry Kawaja (originally of SGA Savvian and now his own firm, Luma Partners) that is essentially a mess of company logos, somewhat loosely arranged by the broad categories which most easily label what each is doing. You’ll notice a handful of Foundry companies on the slide below, along with all of the major online agencies and platforms as well as hundreds of other companies that you’ve probably never heard of. Online advertising is a cluttered landscape and, from an investment perspective, picking out those companies that we believe have real potential vs. those that are simply interesting (or not so interesting) point solutions can be a challenge.
There are several key attributes we look for in our search for great Adhesive companies. They are:
Scale. Scale is key to many of the companies we invest in across the portfolio, but scale in Adhesive is at once more massive and more important. As such it is one of the first filters we apply when looking at potential advertising investments. In a business that makes money pennies at a time, you need to have the ability to quickly generate a lot of pennies.
Inertia. Related to scale is the ability of a company to quickly gain uptake in the online advertising ecosystem. The ability of Adhesive companies to insert themselves into the data stream, which existing marketplace players will enable and encourage this, and exactly who the ultimate beneficiaries are (not to mention who is being disintermediated) are key components to a company’s ability to gain rapid market share and scale.
Margin Dynamics. Everyone who plays in and around AdTech understands the concept of gross vs net revenue. And while many Adhesive businesses trade margin for scale, we pay close attention to the ultimate margin dynamics of the businesses in AdTech in which we look to invest. We’re particularly sensitive to customer concentration issues related to margin – aggregating demand from a small number of sources, for example, which may lead to significant margin pressure.
Performance. While a large amount of online advertising continues to be purchased on an impression basis, we believe that ultimately the success of advertising campaigns – and as a result the technologies that are implemented to enable those campaigns – is measured in terms of performance. Everyone contributing to the chain of events that result in an ad being served is ultimately at the mercy of the effectiveness of their product.
Technology Innovation. The pace of technology innovation in AdTech is startling and the ability of a company to stay ahead of this innovation curve is an important consideration in how we think about Adhesive companies. Many of the companies in which we’ve invested were pioneering new technologies into this market and as a result became market leaders in their segments. But even these initial leaders need to have the ability to continually innovate and push their products and markets forward. Today’s latest technology in AdTech is tomorrow’s legacy — often without a path to whatever is next. We try hard to find companies with the staying power to remain in front of the market.
In a future post we’ll talk in more detail about how some of our existing Adhesive investments have met the challenges above, and some of the more specific attributes of their businesses which originally drew us to them.
Our Investment in Openspace
We are excited to welcome Openspace to our family. We made a seed investment back in October 2010 and the company asked us to hold off announcing anything until they had a few things ironed out.
Openspace is a one-stop marketplace for buying apps, music, books and movies for smart phones, tablets and desktops. They are approaching building an app store from an open community perspective, via the Developers Cooperative, which we thought aligned well with our newest theme Distribution. The App Store market is maturing quickly and it’s been exciting helping founders Robert Reich and Randy Watler chart the evolving landscape.
The first version of Openspace is focused on, but not limited to HTML5 – the one real competitor to all existing device centric mobile, tablet and desktop app stores. The company’s approach to managing, syncing and discovering apps is really unique. Their client applications work across all devices and platforms, but leverage the local devices’ operating environments for launching apps, playing music, reading books, or playing movies. Pairing these features with a store makes for a seamless cross-platform user experience that does not exist today.
Robert also built this kick ass skateboard to celebrate the funding. Developers can register their apps: https://developerscoop.com and if you would like an invite to the closed beta of the store send a note to [email protected].
Foundry Group Invests in Attachments.me
Tired of not finding what you are looking for when you search your email system? If you know the person who sent the message you are looking for, you might have some luck. But if you are looking for information contained within an attachment, link, or if you’ve forgotten who the sender was, you are most likely in trouble.
But maybe not. We are pleased to announce our investment in Attachments.me, which is building a natural-language based platform to extract information from attachments and links contained within a user’s email store. The company has created an email enhancement tool to enable easy access to the treasure trove of valuable data currently trapped within email systems. Attachments.me indexes a user’s email account and presents an attachments-centric view of it, creating document thumbnails, providing search within attachments, and, above all, makes a user’s email experience better and more productive.
Imagine that you remember someone sent you a document about a particular subject or a funny video. You just don’t remember who sent it to you or what the email text was. Now, you will be able to search by subject matter embedded in links and attachments, and browse by content type, not just by sender, and the results will include not just data in the email body itself, but in the attachments and links themselves.
This mailbox crawling technology will allow for a single searchable interface to automatically group and filter the structured data and documents in a user’s email archive. This data will also be accessible via mobile applications for on-the-go access. Attachments.me recognizes the fact that for most users, email is their de-facto filesystem, knowledgebase and personal information manager, and that better tools are needed to access and manipulate the extremely valuable data in the messages a user sends and receives.
The company was founded by Jesse Miller, Benjamin Coe and has been advised since inception by our friend and colleague Joe Stump, who is also a co-founder of our portfolio company SimpleGeo.
Theme: Distribution
As we’ve written about in the past, we use what we call a thematic approach to what we invest in. Our current themes are Human Computer Interaction, Glue, Digital Life, and Protocol. We’ve been hinting about two new themes that we’ve been investing in for a while – one that’s a derivative from our Glue theme (which we’ll discuss in a separate post) and the Distribution theme.
In general, we avoid investing in vertical markets. The one exception is a set of companies that are in our Distribution theme and include Zynga, Topspin, StockTwits, and Cheezburger. Each of these companies is aimed at a specific vertical market and has the following set of common characteristics:
A Gigantic Existing Online Market: We are only interested in companies that are attacking an existing online market segment that is greater than $10 billion in annual revenue. These are market segments that generally (but not always) emerged in the first wave of commercial Internet and Web activity between 1995 and 2000.
Entrepreneurs Obsessed With Transforming The Way The Vertical Market Works: We want to back entrepreneurs that are completely obsessed with the vertical market. They must be thinking – every single waking moment – about how they are going to change the way the world interacts with the vertical market they are attacking.
A Clear Opportunity To Use 2011 Distribution Dynamics to Transform The Market: This could be Facebook, Twitter, user-generated content, contemporary Web approaches, mobile, or something we haven’t yet thought of.
A Vertical Market At Least One Of Us Is Into: Since we generally avoid vertical markets, when we do invest in one, it has to be a vertical that at least one of us is infatuated with.
If you look at the four companies we’ve invested in the distribution theme, you see each of these four attributes writ large on the companies.
Zynga: Video games + Mark Pincus + Facebook + Brad
Topspin: Music + Ian Rogers + Contemporary Web / Social Networks + Ryan / Jason
StockTwits: Stock market news and information + Howard Lindzon + Twitter + Seth
Cheezburger: Entertainment (starting with humor) + Ben Huh + user generated content + All of us
In each case, the distribution dynamics will evolve over time as the company grows. For example, Zynga now uses distribution channels beyond Facebook (e.g. mobile) and Stocktwits now uses distribution channels beyond Twitter, while Topspin’s widgets live not only on their artists’ own websites and music-focused sites, but are distributed via sharing through Facebook and Twitter. We believe we have real intellectual leverage understanding how these different channels work and have spent a lot of time internally synthesizing what we’ve learned as we continue to evolve this theme.
There are plenty of vertical markets we simply aren’t interested in. For example, the online jobs market fits criteria #1, but we haven’t run into an entrepreneur or a distribution dynamic that we think is powerful. And, frankly, the online jobs market bores us, so it’s hard for us to engage in it.
As we’ve said before, we don’t have a particular quota or strategy for which themes we invest in – we use them to help us frame the kinds of companies we actually spend time with as potential investments and where we spend our intellectual time trying to better understand markets and where they are going. While we only have about 10% of our overall investments in the Distribution theme, we are extremely excited about the overall potential impact on our portfolio and our continuing to look for more entrepreneurs and companies to back around Distribution.
