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Tuesday, Oct 3, 2023

Leaders: Investors Setting Up Their Own Teams

No sooner did GoTV Networks Inc. secure its first round of venture capital funding than the on-demand, mobile television company brought on three senior managers a new CEO, a chief strategy officer and a senior marketing vice president. The events were no coincidence. With the lessons of the dotcom bust still looming large, startups and the venture capitalists that finance them are realizing that no matter how good the technology, it’s the management that will make or break the future of the company. “What I hear venture capitalists saying, as opposed to the bubble when they used to think the technology is key, now they say the most important thing is the people,” said Randy Churchill, director of business development for PriceWaterhouseCoopers, who works with many VCs. “They’re really funding the team. You bet on the jockey, not the horse.” In some cases, VCs are insisting that company founders step aside to allow professional managers often hand picked by the financiers to manage the business. But even when they don’t install their own managers, VCs are paying as much attention to the team running the company as they are to its products and services. In many ways, GoTV is the quintessential new breed of tech startups. Founded in 1997 by a physicist, the company bootstrapped it for a number of years before receiving its first round of venture capital funding this month $15 million from Charles River Ventures and Bessemer Venture Partners. Three years ago, the management of GoTV passed to a marketing and operations expert, Steve Fowler, but with the venture financing, a new layer of management has been added. Sherman Oaks-based GoTV hired David Bluhm, cofounder of Mforma Group Inc., another provider of mobile entertainment, who also engineered the sale of WUF Networks to Yahoo!, as CEO. The company brought on Thomas Ellsworth, a former EVP from competitor JAMDAT Mobile as chief strategy officer, and it hired Elizabeth Brooks, former head of business development at Buy.com and a veteran of the music industry, as senior vice president of marketing. “You need different people at different phases (of the company’s growth),” said George Zachary, a partner with Charles River Ventures, which, at 25, is one of the oldest venture capital companies and now manages about $1.8 billion in funding. “What Steve (Fowler) was awesome at doing was growing the initial business so it created a cool product. “What David Bluhm is great at is scaling fast growth, mobile entertainment companies.” For a company like GoTV, which provides programming such as movies, news and sports that can be played on cell phones and other wireless devices, getting out in front of the pack means capturing three separate markets. Not only does the company have to establish partnerships with content providers to corner the best entertainment programming, it also must develop the widest possible distribution among wireless carriers and, at the end of the distribution line, successfully market those services to the end users customers who use cell phones and other wireless devices. “As we go forward, any company like ours is going to magnify the number of external conversations it’s having,” said Bluhm. “So just the sheer volume of conversations with content owners, studios, TV companies, anybody that’s got content, it gets pretty expansive. Just handling that, and (managing) the operations to scale, there’s just a sheer number of balls to keep in the air.” New duties Fowler, who relinquished his CEO duties to Bluhm and now becomes president and COO, began working with Bluhm while GoTV was exploring venture financing options. When it became clear that the company’s growth would require additional management expertise, the two struck a deal. Fowler will focus on the operational end of the business while Bluhm works on the strategic plans and programs. “There’s a huge amount of technology to make this work,” Fowler said. “Every carrier requires different software. There’s going to be a lot of activity in terms of hiring a technological group to do that. Especially when you get professional money, you have to clean up your external systems and technology, and make it bulletproof, more reliable and more scaleable.” While Bluhm was tapped by Fowler with the blessing of the VC backers, other additions to the management team were introduced by the venture capitalists. “Liz, who I introduced to the company, was a known commodity in music and consumer entertainment,” said Zachary of Elizabeth Brooks whose background includes head of creative operations in North America for BMG Music Publishing and a stint as marketing vice president at Napster. “Our role is to help the best content players get to the broadest group of carriers and get them to an audience of billions of people, not just herein the U.S. A lot of the value we’re creating is we’ve basically hired a bunch of people that are key carriers to make those relationships work.”

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