Technology and enterprise software firms have been snapping up social media management tools left and right — a sign, for many, that social media is officially big business.
In May, Oracle paid $300 million for Vitrue, a cloud-based firm that handles social media communications for McDonald's, American Express and Gillette, among others. Oracle followed that acquisition by seizing social media monitoring firm Collective Intellect in early June. That same month, Syncapse bought a smaller social media firm, Clickable. The most recent, Wildfire, was acquired by Google for $350 million (so I'm told) in late July.
But none of those firms comes close to the $689 million Salesforce paid for Buddy Media in June. The company, which was founded in 2007 by husband-wife team Michael and Kass Lazerow, along with Jeff Ragovin, was among the first to recognize social media's burgeoning value to brands. At the time of its acquisition, the company boasted that it was the social enterprise software of choice for eight of the top 10 global advertisers.
We spoke to Michael about Buddy Media's early days, and how the company stayed ahead of the competition. His responses, below.
Q&A With Michael Lazerow, Co-founder, CEO and Chairman, Buddy Media
To what degree were you (and your investors) anxious about launching a business dependent on the success of another's platform? Were you ever worried that you would encounter a fate similar to those who developed apps on top of Twitter's platform?
Anyone starting or investing in any business should be anxious. Most companies fail. At this point in time, however, the question is sort of like asking, "Are you anxious about building a business dependent on the telephone? Or the Internet?" Your web hosting rates or long distance call rates can change, right? Really the bet we were making was a sector bet, which proved to be true: Social media is now the number one global activity online. However, from the very beginning, we knew that Facebook was going to be very big and change two-way communications forever.
On May 24, 2007, Facebook introduced the Facebook Platform, and I knew I had to be a part of it. Just like that, Buddy Media was born. Flash forward a year, and Facebook launched business pages. Sensing that companies would need a way to manage their pages, we launched the first software product for Facebook page managers. We then quickly expanded into a full-service social marketing software suite, including supporting marketer's social content and ads across Facebook, Twitter, YouTube, LinkedIn and their websites.
The social media marketing industry at the time was barely an "industry." It was unchartered territory. We went with our guts, and it worked out.
Buddy Media has had, and will continue to have, many competitors. How did/do you stay ahead, differentiate yourself?
There's always going to be competition. That's business. If you're in a very hot industry, naturally it will be a crowded one. The key is to focus on your customers, build innovative products that make their lives easier, and never look in the rear view mirror.
One specific example that comes to mind is when we knew that we had to integrate paid advertising capabilities within Buddy Media software suite, which had previously focused on what is called "owned" and "earned" media. We were the first to integrate social ads via the acquisition of Facebook Ads API partner Brighter Option, and over the next few months, you saw almost every social marketing company in the space partner with a social ads company. That's just one example on the product side.
There are also examples when it comes to our marketing. Everyone knows our "Power Your Connections" branding. It's art. It's content that tells a story. Instead of just talking about product features, we focus on the big story, and the problem we help you solve. Today and in the future, brands that power connections will thrive, and those that don't will die.
Why was it the right time to sell?
It's hard to find a simple answer to that question. We weren't looking to sell. Business is booming. We had just acquired Brighter Option. GroupM had just selected us as their preferred social ads partner for all of their agencies. We had just brought on our new president, Susan St. Ledger, and were rapidly expanding globally.
In many ways, it comes down to the fact that Salesforce.com CEO Marc Benioff is not just another executive, and Salesforce.com is not just another company. It was clear that Marc had studied Buddy Media and the space we operate in. His questions were direct. And when he saw our software on his computer, he immediately got it. It was the business itself, and specifically, the fit between Salesforce.com and Buddy Media that really sealed the deal.
There are two types of software companies. This first, like Salesforce.com, innovate, educate, ship fast and often and are committed to openness and making people's lives simpler. Their software is easy to use, yet powerful, and is sold with passion and supported with excellence.
The second type moves slowly and spends more time protecting its position than innovating for customers. What matters to them most is not what customers say but how much they pay, often for products that are hard to implement.
You offered some great advice in a recent Inc.com article on choosing a co-founder. What about hiring the rest of a team?
In a startup, your business partners are your family. You have to pick people you can spend hours upon hours with, that mesh with your personality and have the same goals and mindset. They also have to be smart, creative and ready to devote themselves completely to the company.
At Buddy Media, the business partners Kass and I had on my first day are still my partners today. That's very rare. Our chief strategy officer, Jeff Ragovin; chief client officer, Michael Jaindl; and chief product officer, Patrick Stokes, and are some of the smartest people in the industry. They're also some of my best friends. Through the past four years, we've found that true teamwork — open communication, honesty and loyalty — still matter.
Buddy Media always seemed like an obvious acquisition target for Facebook. Was that ever discussed?
No. Facebook is an amazing partner to Buddy Media. And that is not changing. I am in complete awe of what they have been able to accomplish in so little time.
Any advice for other entrepreneurs?
When starting a business, it becomes a part of your soul. Your employees are your family. And if you build something successful, all of the blood, sweat and tears you go through on the way become worth it.
The best advice I can give is: Use your head, but lead with your heart. If you bring the right people in, you are far more likely to see success. Realize that this is just a business –- take some time to laugh during the day, to turn the office into a place people enjoy coming to. If you have a happy team, success is far more likely to come into your future.
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