I vividly recall a night in September 2008. I was having a beer with Pete Gombert, CEO of Balihoo, one of our portfolio companies. We were celebrating the recent stretch of good fortune that the company was enjoying. The company was on the verge of closing multi-million dollar relationships with a couple of the largest advertising agencies in the world and some of the best known venture capital firms in Silicon Valley and Boston were drafting term sheets to invest in the company at lofty valuations. Times were good.
Over the next week or so, Lehman Brothers filed for bankruptcy, the government took over Fannie Mae & Freddie Mac, and panic set in as the Dow plummeted. Just a few short weeks after we toasted the good times, Balihoo was faced with being “toast.” Multi-million dollar deals? Gone. Term Sheets? Vanished. Remember Sequoia’s “RIP Good Times?” Pete and his management team were left looking into a “start-up abyss.”
When we invested in the Company two years earlier, Balihoo’s focus was on becoming the standard platform for the buying and selling of media for advertising agencies and property owners across all mediums. At the same time, the company’s talented engineering group (led by Paul Price, Balihoo’s brilliant Chief Architect) had been working behind the scenes on a platform designed specifically for local affiliates of national brands. This platform allows affiliates to customize their marketing efforts for local markets while ensuring the national franchise’s brand integrity.
Shortly after the nuclear meltdown and a few weeks of some serious late night strategy sessions, Pete and his management team decided to completely change the direction of the company. They realized that market conditions wouldn’t allow them to succeed for far too long a time for a startup. They emerged convinced that their local marketing automation platform solved an enormous pain point for customers and built a thoughtful go-to-market plan on how to attack it. Less than one quarter after the the bombs dropped, the company completely abandoned their product suite and bet their future on Local Marketing Automation.
Today, Balihoo is the premier provider of local marketing automation technology and services for national brands with local marketing needs. Their software enables enterprise-class marketing at the local level and gives brands full visibility into all their local marketing activities and results. Balihoo allows brands to dramatically reduce their marketing expenses and immediately increase local sales revenue. For local affiliates, Balihoo takes the complexity out of local marketing—making it easy to quickly implement an expert, integrated marketing strategy that is consistent with the national brand.
Yesterday, Balihoo announced a $5 million dollar financing to help fuel their tremendous (triple digit) growth over the last couple of years. For me, the announcement was less about the capital than a confirmation of the successful completion of a 180 degree turnaround for the company. The Balihoo we invested in doesn’t exist anymore. Thanks to Pete’s courage and foresight, the Balihoo that’s emerged is one with a more reliable business model and a far greater market opportunity. Having a terrific investment partner in Openview Venture Partners and their unique Labs has given the company the capital and support to become a very important software company.
I’m incredibly proud of everyone at Balihoo. Shane, Andrew, Matt, Paul, Ron, Frank and especially Pete comprise one of the most dedicated and hard-working management teams I’ve ever had the privilege to work with and I’m excited to see the future unfold for them. Seeing this company grow and thrive right here in Boise makes it all the sweeter.