DivX was created to make it more efficient to store and distribute video through the internet. We invested in DivX in their first round of financing in 2000. Our thesis was that the inevitable increase in bandwidth on the internet would make online video a large and fast growing emerging market. Jordan Greenhall, having lived through the growth of audio technologies while at mp3.com, joined forces with Jerome “Gej” Rota, who had started to build a tool for encoding video more efficiently, and with a select team of other co-founders started DivX. By giving video tools away to the consumers for free, the company built a huge consumer following, which was the leverage for licensing the technology to device manufacturers for playing the video that consumers created. During the difficult downturn in the tech market in its early years we actually chose to aggressively increase our investment and ownership because we believed in the company prospects and its leadership. The company held its IPO in 2006 and has by now built a leading global video standard for storing, sharing and distributing video online, with 300 million consumer users, deals with all the top global device manufacturers and most major Hollywood studios.
Massive
Massive pioneered the in-video advertising market. As game consoles began to connect to the internet in sufficient numbers in 2003, and video game revenues exceeded Hollywood revenues for the first time, the games became a medium for real-time digital advertising to a valuable, captive audience. Massive built the largest network of game publishers, and became the one-stop-shop for advertisers to get their message delivered inside of video games. Microsoft purchased Massive in the spring of 2006.
Mobile365
Mobile365 enabled the first mobile data service (text messaging) in the US. We noticed in 2000 that text messaging was growing fast as a service in Europe and Asia, but had been lagging in the US. At the time, a US mobile phone could message another phone in the same carrier, but messages would not travel across carriers. Different carrier standards and lack of connectivity created these artificial barriers. Terry Hsiao (ex-Nextel) and co-founders Bill Backrach and Bill Peters started the company to solve this problem. We were the lead early investor in the company. Our thesis was that a reliable third party intermediary would catalyze action among carriers to connect and enable a large growing market. A per transaction messaging fee would allow the company to share in the growing market. Mobile365 is a great example of how we work with companies: we advised on strategy, helped recruit management, helped secure follow-on funding from other investors, recruited additional board members, and helped negotiate the sale of the company. The company was acquired by Sybase in 2006 for $425MM. It has become the global leader in carrier interconnectivity partner and enablement of new data services.
Trancentrix
Provides a B2B payment intermediary for making domestic and international payments. The Company offers software and services used by corporate treasury, finance, and accounts payable departments to process and execute domestic and international payments.
Vente
Founded in 1999, Vente is a leader in permission-based marketing. We bring together in-depth consumer information, creative excellence and technical expertise to help you get the most from your marketing budget.
Coatue
Coatue developed technology for semiconductor memories based on organic materials. They found technology in several academic settings for organic materials with multi-stable electrical properties that would enable fast, persistent, and low-cost multi-bit per gate memories; licensed the technology; and built a company in Woburn, Mass, bringing over several of the inventors from Russia.
The original team was Andrew Perlman (CEO), Avi Goldberg (CFO), and Aaron Mandell (CTO), who were then on the second leg of their career as serial entrepreneurs. Subsequently they have been founders of Sirtris Pharmaceuticals (acquired by GLAXO) and Great Point Energy (private).
Coatue quickly attracted the attention of the memory division of AMD (now Spansion), and they entered into a joint development agreement, which resulted in AMD acquiring Coatue in 2003, two years after it was founded. Our fund received a 2.5x return on its investment with a two year holding period.
AG Interactive
We invested in an email marketing company called eAgents in 1999. eAgents was led by Charlie Fink (ex-Disney) and Will Weil (ex-Nickelodeon). In 2000, American Greetings acquired eAgents. At the time they were building out their American Greetings Interactive unit, introducing electronic greeting cards to the broad swath of online consumers. We took stock in American Greetings Interactive, and continued to serve on the AGI Board of Directors for 5-years post acquisition. During this time, we worked closely with AGI CEO Josef Mandelbaum to introduce a subscription-based freemium model for the greeting card industry, which resulted in 4M subscribers and, coupled with ad sales, $100M in annual revenue. We also worked with management to consolidate the industry, with AGI acquiring Blue Mountain Arts, eGreetings and Beat Greets. Part of our investing premise was that certain emails (originally via eAgents) and e-greeting cards would help bring emotional expression online – whereas previously the internet was focused more on transactional interpersonal relationships.
AuctionRover
March 2000
Acquired by GoTo.com for $175 million