TechCrunch

Luke Beatty has had a busy couple of weeks. As President of Media Brands at AOL, Beatty manages an assortment of online media properties, including Techcrunch, Engadget, and MapQuest from his home base in Denver, Colorado. And he’s been spending a good amount of time helping his teams make sense of Verizon’s acquisition offer. (Verizon’s plan to buy AOL for $4.4 billion has yet to formally close.)

Beatty’s ties to AOL run deep. He roomed with AOL CEO Tim Armstrong during and after college; installed Armstrong on the board of his content platform, Associated Content, which sold to Yahoo in 2010; and joined AOL as an executive in August 2013.

We asked Beatty if he could explain Armstrong’s thinking around the deal to our readers. Parts of that chat follow, edited for length.

You oversee nine different properties. How did people react to the news that Verizon is buying AOL?

When you have a big mixed group like that, and a big announcement like [we had], to try to bundle everybody’s perspective into a common theme is difficult. The majority of my brands have come to AOL by way of acquisition, so I think they already understand what it’s like to be part of a publicly traded company.

I think a lot care about the decision and they’re interested to see how it affects them both personally and professionally, particularly brands like TechCrunch and Engadget that are engaged in that world and are interested in knowing: Am I going to maintain my editorial independence? Meanwhile, with MapQuest, the implications of being owned by Verizon are very different and can present new opportunities that can be very exciting for them.

What is going to happen to the content sites? Reports suggest Tim Armstrong is leaving the door open to numerous possibilities.

I can firmly say there is zero intention on Verizon’s part to spin off the brands or sell them or to find a new home for them. They’re very focused on our media brands and there’s zero interest in divesting any of the brand outfits.

Does anyone’s role change? Does yours?

I don’t see any of our roles changing. We’re operating as an independent company within Verizon, run by Tim, and we plan to operate as we do now.

What about acquisitions? Will your pacing change as a subsidiary of Verizon?

We’re going to stay as active or more active than we’ve ever been [relating to] all three parts of AOL. I think that Verizon expects [it].

One of the secrets to our success: We have a very unique strategy in the sense that when we acquire brands like TechCrunch or [the web ad platform] Adaptv on the platform side, we keep the teams and offices and culture together. We’re not great at everything, but that’s something AOL is great at – retaining expertise and talent.

Given the beating that ad tech valuations have taken, might Verizon look to add even more pieces to its new ad tech business? Are there gaps it will look to fill?

As the market evolves and new publisher services are needed, I expect the platform side to continue to add where they need to. If you look at acquisitions that [AOL Platforms CEO] Bob Lord and the [digital advertising] platform side have made over time, it’s been a steady drumbeat of acquisitions, including, recently, with Vidible [bought by AOL in December for a reported $50 million]. We also build internally.

What part of the deal do you think people don’t fully appreciate or understand?

[The acquisition] is a huge opportunity for a lot of the brands at AOL, many of which are rooted in blogging and are now very popular brands that are moving to video. For example, “Crunch Report ” – a daily show on TechCrunch — [you’ll see] that stuff happening more and more. The move to video is extremely exciting, and to have a partner like Verizon that has a big [over-the-top] audience and video distribution [reach] is a huge advantage for us.

AOL made a big push into video last fall. What have you learned about what consumers want and don’t want, and what percentage of content are you shifting to video?

Video across all our brands has been growing every month but it’s not like there’s a template, [like] we have to get to the point where 25 percent of the content we produce has to be video. It depends on the brand and the topic and categories. Some things in the tech space are sort of short form. HuffPo is getting into more long-form stuff. It’s about finding the right format for the message.

What we are seeing, particularly concerning the tech brands, is that three years ago, they were [tailored] for [more niche audiences]. A brand like TechCrunch was for people who were in the business; Engadget was a site about the newest products, gadgets, and technologies, but it was for people inside tech companies. Now, people everywhere care about technologies and how they’re being funded. They want to see Marissa Mayer and Mark Zuckerberg [talk about] what they achieved in the last year. Video is helping that happen. It’s helping [people who don’t work in tech] get up to speed.

Photo by Kevin Abosch.

In Silicon Valley, entrepreneurs and investors are often rewarded for having outsize ambitions. Perhaps it’s no wonder then that tech industry veteran Keith Teare — who hasn’t managed any institutional money in his career – has set his sights on raising two new investment funds that he expects will total $800 million.

The first $400 million fund that Teare plans to open to investors next month is Micro Fund Capital, a fund of funds that will target micro funds; a second fund that’s also targeting $400 million will make direct investments in the first portfolio’s breakout successes. Its name: 2nd Round Capital.

Certainly, LPs could do worse than listen to Teare, whose background makes him as well-suited to invest hundreds of millions of dollars as many VCs in the business. In 1994, for example, he cofounded one of Britain’s first consumer-facing ISPs, EasyNet, which remains a large DSL carrier. Among other things, Teare also cofounded the Internet keyword company RealNames; the classified ad company edgeio; the media company TechCrunch; and Archimedes Labs, a small outfit that incubates, invests in and advises tech startups.

Not all of Teare’s companies have been unmitigated successes. RealNames was poised to go public just as the dot com bubble burst; it shut down operations in 2002. Teare’s startup edgeio, cofounded with famed blogger Michael Arrington, also landed in the so-called deadpool in 2007. The pair did much better with TechCrunch, which sold to AOL in 2010 for a reported $30 million.

Archimedes Labs –originally a joint endeavor of Arrington and Teare and today a company operated by six other business executives, including Kambiz Hooshmand — has also had hits and misses, though its portfolio holds promise. For example, Archimedes furnished M.dot, a mobile site building app, with its first check. (M.dot was acquired last year by GoDaddy in a mostly stock deal that could prove lucrative if GoDaddy goes public as expected.) Archimedes was also the first investor in Quixley, an app search engine that has raised roughly $75 million over the last five years, including a $50 million round led by Alibaba last fall.

The big question, naturally, is why Teare thinks investors will give him hundreds of millions of dollars to invest for his newest act. While he has raised some outside money for Archimedes, he characterizes the amount as “very small.” (Archimedes typically writes checks of between $25,000 and $100,000 and has 14 companies in its portfolio.) Most operators with a similar profile — including Arrington — start small and raise progressively larger pools as they prove out their theses.

Teare says that he; Hooshmand; and a third partner, Patrick Gannon, a founder at LendingClub, originally planned to raise a $25 million microfund. In fact, he says that “within about two weeks, we had $6 million in commitments.” But he says the interest was coming entirely from small investors — which gave him an idea.

“It’s clear that microfunds are too small for institutional investors” other than the few fund of funds that target them expressly, including Cendana Capital and Weathergage Capital, says Teare. With such firms already overwhelmed by requests — and many nascent startups left with a shortage of post-seed, pre-Series A funding choices, he says, “We thought: Why not do what [Cendana] is doing on a much bigger scale? Why not go and raise a serious amount of money for microfunds?”

Teare says he knows raising the money won’t necessarily be a walk in the park. “I’m a smart guy who knows which way the wind is blowing, but I’d say I’m highly challenged to justify to the world that I can be an investor in other people’s companies except [for showing] what I’ve done at Archimedes.”

Then again, the whole idea of investing in already successful micro fund managers is to “mitigate” investors’ risk, he says. “The issue isn’t whether I can pick companies but whether you think [top micro fund managers] can. No individual can really do better than the market.”

I ask Teare what happens if the leading micro VCs don’t take his money. I ask if he has shared his plans with several whose names he raises during our conversation.

He says he hasn’t. He doesn’t seem terribly concerned that he’ll be turned away, though. “These are people who I admire and know for the most part. The personal risk for me is, can I get access to these fund and companies? And that comes down to personal relationships, which I already have.”

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