(Editor’s note: Megan Jones is a Director at Hadley Partners. A modified version of this story appeared on the company’s blog.)
For any industry in which scale is important – especially ones like media or consumer technology – consolidation concerns should be top of mind. Winning over a customer that’s dominated by a better-funded and more established company can be a losing proposition.
That’s why it’s often smart to seize an advantage early on once the winds of M&A begin blowing.
As a tech banker in Menlo Park, I saw a lot of consolidations early in my career. Recently, in discussions with a number of companies, I’ve heard potential acquirers are beginning to lurk nearby once more – even around businesses that have no interest in selling.
These companies are in industries that some people might think were still in the thick of a growth phase, which raises the question: Why do emerging industries sometimes evolve quickly into consolidating ones? I’ve got a few ideas…
1. Emerging industries that get press and attention tend to those that grow quickly. They also have large markets, attract talented people, have multiple and iterative stages of evolution and scale. All of those factors enable easier funding – either from business partners or venture capitalists.
2. Sometimes, as a result, those industries get over funded – with multiple VC firms each owning a similar company. All of those heavily funded companies then slug it out in a battle royale to win market share.
3. New industries or business segments are hard to build. Business models are often based on precedent – industries that targeted similar customers and monetized in related ways. In other words, you guess a lot, hopefully making reasoned guesses. A lot of mistakes are made (and some companies blow up) as a workable business model develops through trial and error. (Google, for example, wasn’t the first search engine.)
4. To build market share faster, some companies wisely merge. This action can enable economies of scale, a better customer experience (more offerings; better geographical reach; better or deeper management team) and add audience/customers. If the market conditions are right, the merger could create an entity that’s large enough to go public; thereby becoming better funded than its competitors.
5. The market can only support so many like companies – and other competitors in the sector realize it’s better to sell what’s left of a beaten company – and sieze some value from what you’ve built, rather than none.
6. Buying something (capacity; products; customers; geographies) takes less time and money than developing it. This factor can also lead to larger public companies buying into a new and emerging sector.
7. Selling late in the consolidation stage is often not as lucrative as selling early. The first companies to be acquired typically get more resources to build their presence in the industry, giving them an advantage (and making it more challenging for those that remain independent). The holdouts need to execute flawlessly in order to maintain any early leadership position they have.
8. VCs may push for a sale to ensure that their portfolio company partners with other stronger sector players, ensuring they get a good return.
Previous Story: RockYou spreads its “Deal of the Day” to other Facebook game makers
Social games are the rage these days, but making money from them isn’t easy. Gamers play these titles for free, but Adknowledge is figuring out how game publishers can wind up making money from 100 percent of the players.
Adknowledge’s Burlingame, Calif.-based Super Rewards subsidiary is launching a three-part system for making money from virtual currency in games. That could help boost the engagement of players in social games and help raise the revenue generated from each user, said Adknowledge chief executive Scott Lynn. Adknowledge can offer this money-making system as a one-stop shop for publishers and game advertisers.
The three elements include an in-game overlay, offer banners, and a new offer wall for online game publishers. Adknowledge claims the new platform improves the experience for users and increases the number of paying users in a game. Adknowledge is one of a number of companies that give users the option of accepting special offers in lieu of payment for an online game. You can accept an offer such as signing up for a Netflix subscription in return for virtual currency in a game.
But results show that roughly 75 percent of players do not use offers. Super Rewards can target those missing the offers with an in-game overlay, which brings a single, high-value offer to users within a game. The overlay shows up at strategic moments in a game, such as after the initial load. The offers can include promotional language such as “Get More Coins.”
The offer banner uses the space around the main game landscape, presenting a mini version of an offer wall during game play. Users can pay for virtual items at the moment with direct payment methods.
Publishers using the three-part system include The Broth, whose Facebook game Barn Buddy saw its revenue increase 25 percent after using the new system for just five days, said Broth chief executive Markus Weichselbaum. Other publishers have seen a 45 percent increase in the number of new paying users. Adknowledge said developers have seen a 40-percent increase in the number of first-time payers. Super Rewards’ rivals include TrialPay and Offerpal.
Adknowledge has more than 300 employees and $300 million in revenue, making it the largest privately owned internet advertising network. It was founded in 2004 and has grown through acquisitions. The company has raised $48 million in funding from Technology Crossover Ventures.
Next Story: Game media firm IGN Entertainment to give free office space to indie game startups Previous Story: DEMO: VentureBeat’s Matt Marshall touts tech and farming trends (video)
AllHipHop.com Daily <b>News</b> - : Jay-Z Lands On Forbes 400 <b>...</b>
(AllHipHop News) Hip-Hop mogul Jay-Z is one of 15 entrepreneurs Forbes magazine has predicted will be worth a billion dollars by the year 2015. Jay-Z was named amongst an elite group of tech moguls, hedge-funders, athletes and ...
Small Business <b>News</b>: The Times They Are A Changing
In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.
United Nations general assembly – live | <b>News</b> | guardian.co.uk
Barack Obama, Mahmoud Ahmadinejad and Nick Clegg are among the world leaders in New York for the United Nations general assembly. Follow live updates here.
robert shumake
AllHipHop.com Daily <b>News</b> - : Jay-Z Lands On Forbes 400 <b>...</b>
(AllHipHop News) Hip-Hop mogul Jay-Z is one of 15 entrepreneurs Forbes magazine has predicted will be worth a billion dollars by the year 2015. Jay-Z was named amongst an elite group of tech moguls, hedge-funders, athletes and ...
Small Business <b>News</b>: The Times They Are A Changing
In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.
United Nations general assembly – live | <b>News</b> | guardian.co.uk
Barack Obama, Mahmoud Ahmadinejad and Nick Clegg are among the world leaders in New York for the United Nations general assembly. Follow live updates here.
(Editor’s note: Megan Jones is a Director at Hadley Partners. A modified version of this story appeared on the company’s blog.)
For any industry in which scale is important – especially ones like media or consumer technology – consolidation concerns should be top of mind. Winning over a customer that’s dominated by a better-funded and more established company can be a losing proposition.
That’s why it’s often smart to seize an advantage early on once the winds of M&A begin blowing.
As a tech banker in Menlo Park, I saw a lot of consolidations early in my career. Recently, in discussions with a number of companies, I’ve heard potential acquirers are beginning to lurk nearby once more – even around businesses that have no interest in selling.
These companies are in industries that some people might think were still in the thick of a growth phase, which raises the question: Why do emerging industries sometimes evolve quickly into consolidating ones? I’ve got a few ideas…
1. Emerging industries that get press and attention tend to those that grow quickly. They also have large markets, attract talented people, have multiple and iterative stages of evolution and scale. All of those factors enable easier funding – either from business partners or venture capitalists.
2. Sometimes, as a result, those industries get over funded – with multiple VC firms each owning a similar company. All of those heavily funded companies then slug it out in a battle royale to win market share.
3. New industries or business segments are hard to build. Business models are often based on precedent – industries that targeted similar customers and monetized in related ways. In other words, you guess a lot, hopefully making reasoned guesses. A lot of mistakes are made (and some companies blow up) as a workable business model develops through trial and error. (Google, for example, wasn’t the first search engine.)
4. To build market share faster, some companies wisely merge. This action can enable economies of scale, a better customer experience (more offerings; better geographical reach; better or deeper management team) and add audience/customers. If the market conditions are right, the merger could create an entity that’s large enough to go public; thereby becoming better funded than its competitors.
5. The market can only support so many like companies – and other competitors in the sector realize it’s better to sell what’s left of a beaten company – and sieze some value from what you’ve built, rather than none.
6. Buying something (capacity; products; customers; geographies) takes less time and money than developing it. This factor can also lead to larger public companies buying into a new and emerging sector.
7. Selling late in the consolidation stage is often not as lucrative as selling early. The first companies to be acquired typically get more resources to build their presence in the industry, giving them an advantage (and making it more challenging for those that remain independent). The holdouts need to execute flawlessly in order to maintain any early leadership position they have.
8. VCs may push for a sale to ensure that their portfolio company partners with other stronger sector players, ensuring they get a good return.
Previous Story: RockYou spreads its “Deal of the Day” to other Facebook game makers
Social games are the rage these days, but making money from them isn’t easy. Gamers play these titles for free, but Adknowledge is figuring out how game publishers can wind up making money from 100 percent of the players.
Adknowledge’s Burlingame, Calif.-based Super Rewards subsidiary is launching a three-part system for making money from virtual currency in games. That could help boost the engagement of players in social games and help raise the revenue generated from each user, said Adknowledge chief executive Scott Lynn. Adknowledge can offer this money-making system as a one-stop shop for publishers and game advertisers.
The three elements include an in-game overlay, offer banners, and a new offer wall for online game publishers. Adknowledge claims the new platform improves the experience for users and increases the number of paying users in a game. Adknowledge is one of a number of companies that give users the option of accepting special offers in lieu of payment for an online game. You can accept an offer such as signing up for a Netflix subscription in return for virtual currency in a game.
But results show that roughly 75 percent of players do not use offers. Super Rewards can target those missing the offers with an in-game overlay, which brings a single, high-value offer to users within a game. The overlay shows up at strategic moments in a game, such as after the initial load. The offers can include promotional language such as “Get More Coins.”
The offer banner uses the space around the main game landscape, presenting a mini version of an offer wall during game play. Users can pay for virtual items at the moment with direct payment methods.
Publishers using the three-part system include The Broth, whose Facebook game Barn Buddy saw its revenue increase 25 percent after using the new system for just five days, said Broth chief executive Markus Weichselbaum. Other publishers have seen a 45 percent increase in the number of new paying users. Adknowledge said developers have seen a 40-percent increase in the number of first-time payers. Super Rewards’ rivals include TrialPay and Offerpal.
Adknowledge has more than 300 employees and $300 million in revenue, making it the largest privately owned internet advertising network. It was founded in 2004 and has grown through acquisitions. The company has raised $48 million in funding from Technology Crossover Ventures.
Next Story: Game media firm IGN Entertainment to give free office space to indie game startups Previous Story: DEMO: VentureBeat’s Matt Marshall touts tech and farming trends (video)
robert shumake
AllHipHop.com Daily <b>News</b> - : Jay-Z Lands On Forbes 400 <b>...</b>
(AllHipHop News) Hip-Hop mogul Jay-Z is one of 15 entrepreneurs Forbes magazine has predicted will be worth a billion dollars by the year 2015. Jay-Z was named amongst an elite group of tech moguls, hedge-funders, athletes and ...
Small Business <b>News</b>: The Times They Are A Changing
In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.
United Nations general assembly – live | <b>News</b> | guardian.co.uk
Barack Obama, Mahmoud Ahmadinejad and Nick Clegg are among the world leaders in New York for the United Nations general assembly. Follow live updates here.
robert shumake
AllHipHop.com Daily <b>News</b> - : Jay-Z Lands On Forbes 400 <b>...</b>
(AllHipHop News) Hip-Hop mogul Jay-Z is one of 15 entrepreneurs Forbes magazine has predicted will be worth a billion dollars by the year 2015. Jay-Z was named amongst an elite group of tech moguls, hedge-funders, athletes and ...
Small Business <b>News</b>: The Times They Are A Changing
In the 60's it was a song of revolution when change was just not as common. Today, it reflects a fact of life, at least for small business owners and.
United Nations general assembly – live | <b>News</b> | guardian.co.uk
Barack Obama, Mahmoud Ahmadinejad and Nick Clegg are among the world leaders in New York for the United Nations general assembly. Follow live updates here.
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