the economics of my life

Almost exactly three years ago, when I was but just a small town kid from California trying out life in the big city, I posted to my blog:

…what a great setting: a beautiful, sunny Saturday afternoon in New York City with The Shore providing my real life soundtrack. I’ve literally been sitting here for the last couple of hours relaxing, listening to music with a smile on my face because I can’t get over how much I love New York City.

It’s funny: somehow when you live here you are able to forgive, let go unnoticed even, all the obnoxious horn-honking, uncomfortable 8×8 boxes we call apartments, garbage-lined sidewalks, 8mm+ suits/hipsters/tourists constantly rushing toward their destinations (with no interest in seeming friendly), unbearable humidity, and lack of direct contact to sunlight. Instead, we relax listening to music on sunny Saturday afternoons with smiles on our faces, because we know that never before or ever again will we have as much fun as we are having right now.

Well I’ve decided I’m not quite done with the city just yet. So I’m back!

- – - -

It was one and a half years ago that I left New York to join a small start-up I had invested in at my previous firm.  The transition from NYC to a tiny suburb of Sacramento was tough (read as: unbearable), but being involved with MaxPreps was a privilege and an experience that I feel very fortunate to have… well… umm… experienced.

In 2005, while I was at a NYC-based venture capital firm, I developed the thesis that the Internet was not only enabling a dramatic shift in local media, but that shift was going to be largely realized in the coming one to three years. The infrastructure had been in place, but the timing of the market was beginning to feel right. Historically, traditional local media (newspapers and television) owned “the local”. They had built huge brands over the years and had a lock on distribution…but the Internet had/was changing that, especially with regard to the lock on distribution. Readers/users were simply finding their information sources elsewhere.

I wasn’t revolutionary in this belief by any means. Craigslist was already well established and there was a crop of early stage companies in the hyperlocal community space being funded: Judy’s Book, Insider Pages, Yelp, etc. Further, Google and Yahoo! had even begun working on their local strategies. In fact, many verticals once dominated by local media were being attacked by new media: classifieds, weather, traffic, business reviews, etc.

Generally, the model was to leverage the community to provide low-cost content and a centralized database to publish the data in a local manner. The geo-targeted content created a huge value proposition to local advertisers…and by aggregating the hyperlocal communities you also created an audience large enough to attract national advertisers. All of this (including the instant, on-demand information access aspect) at a cost structure that completely disrupted the traditional print and broadcast models.

However, most verticals already had a dominant leader or were crowded with well-funded start-ups. Further, it wasn’t clear to me how to pick a winner; most companies didn’t have any real tech differentiation and there was no clear home-run marketing strategy.

In the process of researching the different verticals, I came across high school sports. It was a large and established market: there are over 20,000 high schools across the country (each with a built-in, passionate fan base) and hs sports are not a trend, but rather a tradition, an institution. Also, it was clear that both local and national advertisers were interested because they had been spending money on local hs sports for years: it is a great way to reach a young demographic that has large spending power, especially in combination with the influence teens have over their parents’ spending. Further, it was a relatively untapped market. There were only a few players that had any real traction in the space and most players were still focused on the pro and college sports markets. Finally, there were obvious exits when you looked at traditional media because they needed properties to grow their younger audiences and/or extend their sports brands down market.

I had found my niche, vertical market.

MaxPreps, even in its infancy, had already attracted a decent sized audience and some major brand advertisers. More appealing was that MaxPreps had a real technology differentiation: they provided a free web-based platform to high school coaches allowing them to quickly and easily input their information (schedules, scores, stats, rosters, etc.). An important aspect of this model was that they didn’t have to try and dramatically change coach behavior…coaches have always kept records of this information, MaxPreps just provided a more efficient way of doing it. The service also provided other value added features (such as content syndication to local media, text-to-mobile messaging to players, etc.) that appealed to coaches and gave them incentive to participate. With over 25% of every high school football coach already inputting data into their system, MaxPreps had already built a large user base of semi-professional content creators/providers. And there was a clear marketing strategy to grow the coach network by acquiring coaches geographically and across new sports (there was actually a known cost per coach acquisition and a direct correlation between an incremental coach and traffic growth). Once you built the network of coaches you owned the market.

Meeting Andy Beal, the company’s founder/CEO, and the rest of the MaxPreps employees only solidified my interest. It was a team of coaches and tech professionals that truly understood their customer, market and technology. I found this to be of great importance because I knew a) the traditional leaders in the space, local newspapers, were not going to move fast enough, and b) even if a new group of savvy Silicon Valley developers, executives and investors ultimately saw the opportunity, they would not understand the market well enough to succeed. MaxPreps had all the right pieces.

Once we made the investment, I was able to observe the company much more closely and I just fell more in love with the team and the vision. Cut to a few months later and, after talking with Andy, I decided to re-locate to Cameron Park (CA) and join the company full-time to help execute on some new initiatives.

A year and a half—and a highly successful exit to CBS—later, I had had one of the best professional experiences in my career. It was my first entry into operations and I was lucky enough to do it with an amazing group of people. I truly am thankful for the opportunity.

However, now I’m ready for my next new adventure. So I’m back in the city ready to listen to music on sunny Saturday afternoons with a smile on my face, knowing that never before or ever again will I have as much fun as I am right now.