The 38-year-old Rick Marini can relate to startup entrepreneurs, but he’s no longer one looking for his own big break.
Instead, Marini is looking for his second home run with San Francisco-based BranchOut, a 10-month-old startup that leverages Facebook to help people find business connections. The startup has also leveraged Marini’s connections to become one of the hottest deals of 2011.
Just last month, after reportedly entertaining requests from roughly 20 venture firms, BranchOut chose Redpoint Ventures to lead its $18 million Series B round at a pre-money valuation of between $80 million and $85 million. The funding came just seven months after the startup raised $6 million in a round led by Accel Partners.
Other high-wattage investors in BranchOut include Norwest Venture Partners, Floodgate and roughly a dozen angels, including Michael Birch, co-founder of Bebo.com; Napster creator Shawn Fanning; and early Facebook employee Dave Morin, who has since co-founded Path with Fanning.
If BranchOut becomes the billion-plus-dollar company that Marini is expecting, it will be the icing on the cake.
Marini has already co-founded and sold one company in 2004 when Monster paid $100 million to buy Tickle. The company, which Marini started in 1999 with James Currier, his best friend from Harvard Business School, leveraged viral marketing to become an immensely popular purveyor of intelligence, matchmaking and personality quizzes.
It was also a lucrative endeavor for everyone involved, including August Capital, which provided the company with most of its $9 million in funding. The deal was led by Andrew Anker, today a senior vice president at Say Media.
It would have been more lucrative if Tickle management had seen an additional $50 million earnout as part of the deal. But as a public company, Monster needed to maintain a certain profit margin, according to Marini, and the margin was higher than Tickle had needed to produce as an independent company. Marini says that numbers made it impossible for him to spend money on marketing or growth initiatives.
“I don’t blame [Monster], but a great lesson [to other entrepreneurs] is that a misalignment of interests is going to happen every time, and it’s going to hurt your earnout,” he says.
A bigger lesson to Marini was that the world doesn’t stand still. Birch, who was an employee at Tickle after it bought his company Ringo in 2003, was starting to launch Bebo while he was still working at Tickle. Bebo, a social networking company, was acquired by America Online in 2008 for $850 million in cash when the startup was three years old at the time.
At about the same time, Marini went on a trip around the world, an adventure he says he still cherishes. But he says that even on his travels, he found himself “reading about all my friends, who were building and selling and funding companies, and I was like, ‘I’m missing it.’”
His first crack at a return to startup came in 2008, with a social entertainment site called SuperFan. But that didn’t go so well.
In fact, the bootstrapped service struggled. Then, last summer, a friend of Marini asked for an introduction for a sales lead to another company. As Marini recalls now: “I couldn’t remember who in my Facebook graph worked for that company and typing in the company name took me to its Facebook fan page.”
Marini asked one of SuperFan’s six engineers to create a widget to solve the problem. Four weeks later, BranchOut was born. Soon after, investors were lining up to participate in its first financing, including Matt Mullenweg, founder of WordPress, and Josh Elman, product manager at Twitter.
“I still have to prove the value of BranchOut” to potential partners, says Marini, who began doing some seed investing himself this year. “But if I want to do a deal with WordPress or Twitter [for example], I have an investor who’s motivated” to help.
He may need the help someday. Marini characterizes his relationship with Facebook as “strong,” saying that he’s “down [at Facebook’s headquarters] every other week” as part of a “handful” of privileged companies that are working on some “private beta partnership ideas” with the company.
But Marini wouldn’t be the first entrepreneur to misjudge circumstances by putting himself at the mercy of the big platform providers. In March, for example, Twitter told third-party developers to stop making any Twitter client applications. Meanwhile, Facebook’s constant redesigns regularly force companies to retool their strategies, if not abandon them altogether.
BranchOut certainly has a better shot of drafting safely off Facebook than most. Accel’s Kevin Efrusy, who sourced Accel’s investment in Facebook, sits on BranchOut’s board, which can’t hurt.
I still have to prove the value of BranchOut.
Marini also knows how to dodge a bullet. At least, Tickle had its own near-death experience between 2000 and 2002, when online advertising budgets disappeared. It saved itself by charging for the “extended results” of its IQ tests.
Whether either is enough to insulate BranchOut from Facebook should it start making real money is the question. It’s a risk that Marini is willing to live with.
“We don’t have control over [Facebook’s] communication channels. We have to play by Facebook’s rules. But there’s no way I would have created a site like BranchOut if I couldn’t balance the lack of total control with the benefit of a huge user base. It’s the biggest distribution platform in the history of the world.”
Rick Marini at a GlanceAge: 38
Hometown: Biddeford, Maine
Education: B.A., Business Administration, University of New Hampshire; MBA, Harvard Business School
Career: worked in M&A at Fisher Scientific; co-founder, Tickle; founder, Superfan; founder, BranchOut.
Quotation: “In some ways, Silicon Valley reflects Hollywood. In Hollywood, you have Tom Cruise and Brad Pitt. Here, [Mark] Zuckerberg and Larry [Page] and Sergey [Brin] are our stars, and they motivate entrepreneurs in the same way that Hollywood celebrities motivate all the other actors who are waiting tables and waiting for their big break. Most startups fail. But you want to dream, to believe you can get there at some point.”
Did you know? Marini keeps telling his employees: “Two-for-20; I say if they give up the next two years [for BranchOut], they’ll be set for the next 20.”
Location: San Francisco
Mission: Its labeling tool invites online publishers to label and share any person, place or thing in the photos on their site.
Funding: Raised $2 million, including from Kleiner Perkins Caufield & Byers, Floodgate and Justin Timberlake.
Location: San Francisco
Mission: A hyperlocal places directory bent on indexing the Web by location.
Funding: Raised $6.75 million, including from BlueRun Ventures and Comcast Interactive Capital.
Location: San Francisco
Mission: A cognitive neuroscience R&D company whose software aims to improving brain health and performance.
Funding: Raised $3.4 million, including from Harrison Metal Capital, FirstMark Capital and Norwest Venture Partners.