Entrepreneur Spotlight: All About AdKeeper Founder Scott Kurnit

Some might assume that a successful 56-year-old entrepreneur who has been enjoying semi-retirement for the last 10 years would be unlikely to launch a new startup that requires long hours every day, seven days week.

Or they might assume that the entrepreneur, if he did resume working, would be more likely to iterate on a proven idea rather than try to fundamentally change consumer behavior.

If they made these assumptions about Scott Kurnit, they would be wrong. It wouldn’t be the first time, either.

The one-time Showtime executive first encountered some wrong-headed assumptions after he was consecutively hired to lead two Internet services that stumbled. The first was a joint venture of MCI Communications Corp. and News Corp.; the other was Prodigy, which began as a joint venture of Sears Roebuck & Co. and IBM. MCI pulled the plug on Kurnit’s project; Prodigy, a proprietary Internet service provider, was slowly put out of business by Internet-standard ISP providers like AOL.

In 1995, when Kurnit announced he had founded own company called About.com—originally called the Mining Company—a Wall Street Journal piece observed that his history was “spotty.” It also noted that Kurnit’s startup, which aimed to help users make better sense of the Web by categorizing topics and their related content for them, was going up against then high-profile companies like Yahoo and Excite that “have [already] made a business of helping users find their way around the Web.”

Of course, as everyone now knows, Kurnit turned About.com into an enormous success. By giving freelance writers a monthly stipend of $250, plus a percentage of its ad revenue and the software tools to develop what became 800 different topic verticals, About.com became one of the most visited sites on the Internet and in 1999, enjoyed a successful public offering.

More amazingly, after hundreds of Web companies shut down the following year as the tech market imploded, Kurnit sold About.com, which had been backed by $34 million from DCM, Walden International and Zero Stage Capital, among others—to the publisher Primedia. The sale price: $690 million in stock.

Perhaps it’s little surprise then investors have thrown a stunning $43 million behind AdKeeper, Kurnit’s 11-month-old, New York-based startup, despite how Kurnit has largely been retired in the decade since About.com’s sale and that AdKeeper is based on a wholly unproven concept —that people will begin paying attention to Internet ads, then save them in a digital locker to savor them at their leisure.

And “thrown” is hardly an exaggeration. AdKeeper raised an $8 million Series A in September from a long line of investors that includes Spark Capital, Betaworks and the New York Times. In early January, it raised a $35 million Series B round, led by Oak Investment Partners and including existing shareholders DCM, Spark Capital, True Ventures and First Round Capital.

Kurnit says he was targeting $15 million, an amount that “would have carried us through launch to the next milestone.” The target changed after “discussions with VCs like [at] Oak who said, ‘What if you take all the money you’ll ever need? What if you do your B and C rounds all at once?’”

It’s no surprise, says Mark Josephson, the CEO of startup Outside.in and before that, a general manager under Kurnit at About.com. He calls Kurnit “one of the most dynamic, brilliant, engaging guys I’ve ever met.”

The question now is whether AdKeeper’s premise will even work, and the answer should come soon.

Beginning in mid-February, AdKeeper will roll out “keep” buttons on the online advertisements of dozens of major brand partners that include the Gap and Best Buy. Consumers who click on the ads to save them can then find them at a dynamic Web page that will enable sorting, sifting, sharing, ranking and buying, among other things.

AdKeeper will make its money the way online publishers do, by charging its clients when someone engages with an ad by saving it or buying through it. Kurnit says the company will have to “see market activity before we know more” about how it will charge its customers more specifically.

Kurnit also has plenty of ideas about how to make the ads irresistible, too. AdKeeper is developing a “tool kit” that will enable advertisers to do a number of things, including create an ad in which the price of the product that is advertised drops the more time it is “kept” by consumers. A second tool will facilitate scavenger hunts, ostensibly prompting users to search for and “keep” ads that make up a story. Whether the advertisers use the tools is up to them.

“It’s a very ambitious, moonshot-type startup idea,” says online advertising analyst Andrew Frank of Gartner Group. He also calls AdKeeper “compelling,” because it “solves one of the big problems of new media, which is the difficulty in creating a compelling value proposition for advertisers who see a lot of fragmentation and banner blindness and [who experience a lot of] problems with understanding what the right strategy is, especially in social media, which doesn’t create such great context for advertising.”

Kurnit argues that the idea—which nagged him for 15 years but whose timing “never felt right”—is now ready for prime time because of a number of changes in recent years. On the consumer technology side, he notes, there are no longer software downloads required or pre-registration requests. Also, thanks to people who tend to share tips about good deals via social networks to boost their own reputations, it’s easier than ever to spread news about a perceived value.

On the industry side, things have also changed.

“[It used to be a question of] could you get the ad networks and serving companies to partner with you in a way to make this work, and the answer was ‘No.’ It’s still largely ‘No,’ he says. “There’s too much friction, too much dealmaking. But then you say, ‘Wait, with pixel calls and cookies, I don’t need publishers or ad networks or serving companies.’ We can pass through all those systems [and nest instead] within the four walls of the ad [on publishers’ pages]. I mean, if I’m McDonalds and I buy the ad unit, I get to do what I want.”

VC is a stimulating business, but it’s not nearly as invigorating as running a company.”

Scott Kurnit, Founder, AdKeeper

Kurnit has certainly kept his pulse on the ad and Internet industries, investing in roughly a dozen startups in recent years, including Sphere and About.me, both of which were promptly acquired by AOL; Hot Potato was picked up by Facebook last summer.

He’s clearly aware, too, that the market is growing frothy, though he prefers to say that it has “moved very dynamically” in the last 18 months. “Are we in a bubble? I don’t think so, but it doesn’t mean we won’t get there. Things tend to bubble.”

Either way, it’s plain that nothing is going to slow Kurnit down at this point. Asked if he considered going into venture capital instead of creating a new company out of whole cloth, Kurnit calls founding a company “akin to driving the bus rather than sitting in the front seat telling the bus driver, ‘Why don’t you turn left?’”

VC is “a stimulating business,” he adds, “but it’s not nearly as invigorating as running a company.”

And what if that company falls flat? Kurnit gives himself good odds, predicting there’s only a 10% chance that AdKeeper will bomb.

“There’s this continual recognition that this Internet thing is so disruptive to businesses that if you hit [on] one of these things, it just prints money. Groupon just prints money. Facebook just prints money. And AdKeeper has one of those models that we could be printing money, too.”

Scott Kurnit at a Glance

Age:

56

Hometown: Long Island, New York

Degree: B.A., Communications, Hampshire College

Career: President, Showtime Event Television; executive at Prodigy and MCI; founder of About.com

Did you know: Kurnit’s father was also an advertising executive

Sample Investments

Sphere

Mission:

Syndicated and distributed content across the Web

Located: San Francisco

Funding: $3.5M, including from True Ventures, Trident Capital, Hearst Interactive Media

Exit: Acquired by AOL for $25M

SendMe

There’s this continual recognition that this Internet thing is so disruptive to businesses that if you hit [on] one of these things, it just prints money. Groupon just prints money. Facebook just prints money. And AdKeeper has one of those models that we could be printing money, too.”

Scott Kurnit

Mission:

Sells direct-to-mobile entertainment content

Located: San Francisco

Funding: $34.5M, including from True Ventures, Spark Capital, GrandBanks Capital

Exit: None

AppSavvy

Mission:

Sells direct advertising space on social media applications, like Playfish

Located: New York

Funding: $3.1M, including from True Ventures and angel investors

Exit: None

Hot Potato

Mission:

Social activity and “check-in” service provider

Located: Brooklyn, NY

Funding: $1.42M, including from First Round Capital, Betaworks and numerous angel investors

Exit: Acquired by Facebook for $10M

About.me

Mission:

Personal profile page service

Location: San Francisco

Funding: $425,000, including from True Ventures, AOL Ventures and Founder Collective

Exit: Acquired by AOL for undisclosed amount