What makes an attractive MarTech Investment — Erik Huberman // Hawke Media

Quotes

• “I invested in the MarTech space for strategic reasons. We’ve invested in consumer brands and Medtech but where we can be on our best foot in terms of investment is in marketing technology. For us, we have over 500 clients and we manage marketings for. So if I invest in a fashion brand, I can do their marketing, I can do their marketing without investing too. So the strategic angle of that isn’t very high. So where it makes sense for us to invest in those companies is when there’s something really unique going on in the company and it’s showing a lot of early success and they let us in as investors because they know who we are.” - Erik “So we talk to them and we invest and we make it a part of our funnel and we’re gonna use this tool because we like it a lot but now we’re gonna use it as a service. So all of a sudden, we’re responsible for 10% of the brands on that platform because everyone we onboard for SMS marketing we put on postscript. So we become the strategic partner that they become part of our sales funnels.” - Erik“Generally we’re investing in a small company so they’re a lot smaller than us so we’re actually a very big partner that can get them that pre-seed seed stage to that Series A very quickly because we can onboard a bunch of customers.” - Erik“You’re essentially your own flywheel for some of the brands you’re talking to.” - Ben“Number one is do we like the tool? That’s the big check box for us that most VCs don’t have. They don’t have a marketing team that’s doing this day-in and day-out. Number two is there actually a scalable business out of it? What is the vision? Because there are features that we can use across our companies.” - Erik“Here’s the one thing that I never understood about the investment strategy, the shooting for the unicorn, the billion-dollar valuation. What matters should be the return, not the valuation so if you’re putting in and getting out a larger sum upfront. If you put in $50,000 into a company that becomes a $500 million dollar company but you got 30% of that company for that investment, it’s worthwhile.” - Ben “We just want to know if they can get some customers. I don’t want to be the person in an industry that is their first customer. I want to see some traction, something happening and I’m also a believer that if a core downing team can’t get a company to launch and actually get some money coming in, they’re not a good founding team. There’s nuance to that. I’m speaking in hyperbole. Almost all the time, if you don’t have a team that can actually start generating money without raising money, I’m worried about what I’m investing.” - Erik“That is the problem with these funding companies. They need to show that they can execute and don’t get me wrong, again there’s nuance. If it’s deep technology or something very specific maybe you do need to raise some money, even product companies are gonna need some supply.” - Erik“In marketing technology, if you can’t develop the tech to get to the market why am I investing in you? You’re obviously not the right jockey.” - Erik“I look at the other partners and the founders’ backgrounds, do they actually understand the ecosystem they’re stepping into. Have they done something like this before? Good ideas even good products, you still want some of the connection that gets through it. It doesn’t necessarily mean I’m afraid of a first-time founder but I want to know what’s their strategic advantage tier and not just mine.” - Erik“I’m keeping my eye out but we invested in postscript around the SMS marketing. I’m not yet sure what that next thing is. I think AR and VR are going to continue to be interesting and I think the adoption of Oculus has become more interesting and I’m not sure from a marketing standpoint what’s gonna be in that space. I really like speech. In advertising, we invested in a company called Instamatic where you can actually talk to your advertisement and they are already powering a bunch of major apps. You can talk back basically. I think that’s obviously coming and a no-brainer and these guys seem to be leading the charge.” - Erik“Also, AI-driven site optimization. Websites are still such a manual thing it’s kinda crazy to me. So I think a lot of automation around that is going to start to happen. It goes back to what people have been talking about for a few years in terms of automation AI.” - Erik“These are all things that become interesting because I think the more you can create a lever on people being able to more creative and have high-brain thinking, and take off the mundane optimization tasks in their plate, it will be interesting.” - Erik“People use intent and it’s just like pattern recognition and not the intent. I think the intent is Google.” - Erik“It’s about having good people. I have a great partner on the VC arm. We also launched Hawke Capital which is actually a financing arm that is giving loans to the people for their marketing. I read the Richard Branson biography and read more about him and his whole model of building a business is to hire the COO of your biggest competitor.” - Erik“Get someone who knows everything you need to know about, add your little nuance, and let them run it. I have no problem with delegation so I’ve never been the bottleneck.” - Erik