The Agency as VC
An interview with Darren Herman of kbs+p Ventures.
An interview with Darren Herman of kbs+p Ventures.
Integrated marketing used to be about coordinating the various silos within an agency, but today the most valuable integration is what happens with partners outside of the agency.
That’s why one of the most interesting and exciting trends in the business is the growing intersection and line-blurring among agencies, VCs, and startups.
A handful of forward-thinking companies are redefining what it means to be an agency, and how we create value for ourselves and our clients.
Instead of just being the evaluator of an array of existing opportunities, some agencies are starting to take a much more active role in actually shaping the future of startups that are creating those opportunities.
The first big “agency as VC” announcement I’m aware of came from kbs+p. When I saw this I thought to myself, “Damn, I wish we’d been first to market with that.” I’m sure many others in the business felt the same way.
Darren Herman is managing director of kbs+p Ventures, as well as the agency’s chief digital media officer. He’s one of the brightest people in the business, and was nice enough to answer some questions over email while on a family vacation.
Here’s the conversation:
Adam Cahill: What’s the best way to describe kbs+p Ventures?
Darren Herman: Kbs+p Ventures is an investment arm of kirshenbaum bond senecal + partners, which makes equity investments into technology-backed companies that are creating business transformational opportunities within the digital ecosystem.
Our investment areas include ad technologies, mobile ecosystem, and next generation presentation layers (of large data sets). We selected these areas because they are core to what we do and have high growth potential over the next decade.
AC: Why did you decide to do this? What are you hoping to get out of it?
DH: Kbs+p Ventures is one of a handful of initiatives that we’ve either rolled out or in the process of rolling out where we redefine what the actual “agency” business is. An investment arm is traditionally very complementary to a business, as strategic investments such as the ones we at kbs+p Ventures are making help grow our existing clients, improve our internal processes, and help attract new clients and talent. We also view kbs+p Ventures as a barometer to the marketplace; it helps us keep honest and innovative, as it shows what’s happening in the marketplace at the earliest stages of technological evolution and will push us further, for all constituents: clients and agency personnel.
If you play sports as a kid (or even as an adult), you are always told to keep your head up, especially in ice hockey. I personally feel that many agencies keep their head down, looking only from within. The minute your head goes down, you lose perspective of the marketplace, which is very important. In sports, this is when you usually get knocked down to the ground. Kbs+p Ventures allows us to keep our head up and build bridges with the entrepreneurial community and keep our work at par or better with some of the best and brightest disruptors.
AC: What are some of the challenges you see or have faced in getting agencies to act more nimbly and work better with startups?
DH: We literally just gave an entire presentation to one of our clients about how to harness early stage innovation, so this question is very timely. The main challenge that we are faced with getting agencies to work better with startups is that they are organizationally not engineered to work with them.
If your agency has RFP’d a startup and sent over an Excel template to fill out, and yes, that’s almost 99 percent of Madison Avenue, then you probably aren’t best organized to work with startups. Why? Because early stage innovative ideas don’t fit in rows and columns and startups don’t have the time to bucket their opportunities into agencies’ approaches.
Agencies need to organizationally re-engineer. They need technology visionaries (and executioners) throughout the media and creative landscape that can understand what entrepreneurs are presenting and they need to create agency processes that account for the early stage innovation needs of startups.
One of the challenges I foresee with agencies working with startups is that of actually going beyond writing a check to the startup. How does a large agency leverage the resource of its organization to further the startup’s progress. In large agency organizations where the focus is elsewhere, how can you navigate this? At the end of the day, just taking a check (capital) from an agency is interesting, but the most interesting part is the commitment of resource from the agency to push the startup forward.
AC: Have you learned anything interesting since launching?
DH: We publicly launched in January 2011 but technically in late November 2010. We’ve learned that there is a lot of heart for what kbs+p Ventures is doing within the agency, our clients, and the startup ecosystem (inclusive of other VCs). I use the word “heart” here as I am amazed as I walk through the halls of our office and get stopped by people either a) asking about getting involved at kbs+p Ventures and b) following up with our different portfolio companies and c) getting pitched at least three times a week by agency staffers. I love it all.