Brand People for Startup Boards: A Q&A with NY Investor Michael Duda

2/22/12Follow @xconomy

Michael Duda uses the word fun quite a bit when talking about what he does. It’s not hard to see why. He’s co-founder of Consigliere Brand Capital, a New York-based investment and consulting firm focused crafting great brands from the ground up. Duda comes from the advertising agency Deutsch, and is joined by others from Madison Avenue (Brent Vartan), Wall Street (Andrew Mitchell), even the NBA—Phoenix Suns player Steve Nash is co-founder of the firm.

So far they’ve invested in startups offering subscription services for beauty products (Birchbox) and kids’ activities and toys (Kiwi Crate); a jewelry e-tailer (Chloe + Isabel); a company developing online customer service ratings (StellaService); and an online platform for connecting writers and publishers (Contently). Consumer-oriented businesses are a major focus, as are entrepreneurs who are genuinely nice people. In addition to backing and advising startups, the firm works as a consultant for companies like GNC and Under Armor to develop their brand messages.

Below are Duda’s answers to some questions I threw his way about his firm, his co-founder, his portfolio, and his ad agency past.

Xconomy: What’s the mission behind Consigliere?
Michael Duda: We launched in September 2010 with the premise that money and marketing were not on the same page. We were really amazed that brands, no matter what size they were, would come to agencies with big issues and big problems, and compensation was fee for service. The agency got paid the same amount if things go well and if things don’t well. With publicly traded companies, if you didn’t make your numbers, people were going to start looking at deck chairs to throw off the Titanic. Marketing is an expense that people cut. But marketing strategy, when done right, can be an accelerant to business success.

X: How does Consigliere work with its companies?
MD: We invest at the Series A and seed level. We work with bigger companies on the marketing side and in the marketing practice within publicly traded companies. We’ve made eight investments in five companies.

VCs write checks. We’re a service-oriented VC. We’re not leading deals right now. We’re looked at as the brand people who can bulletproof a board. Consigliere can be attractive because we’re going to be focused on building your brand at a profitable foundation level.

We’ve seen over 850 deals and invested in 5 companies. I don’t want to do a portfolio size that’s so big that we’re struggling and don’t know what’s going on in each of the businesses. We want to work with them to build brand phenomena. With five companies, we doubled down on our investments three times. Why wouldn’t you want to stay involved with it for as long as possible?

X: How did Steve Nash get involved with the firm?
MD: Steve and I met in 2007 on a potential business deal he wanted to do. I had known his agent for a number of years. He was not just a name on a deal; he was vested in each phase of the initiative presentation. Steve was unafraid to be working late at night. It was clear that he was an inquisitive, sensationally curious, creative person at heart—and shown a lot of strong instincts about the ad agency world. We told him to come do an internship at the agency [Deutsch], and other than getting his own office for privacy, he was treated almost like any other intern. He was briefed on real life projects. He was so into it and contributed. There is no doubt in my mind that his drive to win will lead to having more impact off the basketball court than on it.

We officially all got talking about this idea [for Consigliere] back in May 2009. We’re a bunch of expats, bonded together by the same belief of what the Consigliere is about, but we bring different superpowers to the equation.

X: What has the move from the advertising world been like?
MD: The VC role has been a natural blast. People kind of look at us like they get what we do. We focus on the consumer. The ‘ecosystem’ as the kids call it has been absolutely wonderful. Coming from the agency where it’s the backstabbing, winner-take-all kind of model, it’s fun to be in a syndicate. It’s a tremendous amount of fun.

It’s pretty interesting how there seems to be battles [between different startup communities]. It’s just capitalism. We’re seeing it happen in Pittsburgh, Syracuse—places that have great college towns and talent, there’s some really cool stuff emerging. It’s so much bigger than Boston and New York and San Francisco.

X: What catches your eye as investments?
MD: We want to fund business and brand propositions that are for my mom who grew up in upstate New York. Rockmelt fascinated me. That’s cool to VC geeks, but the average Joe doesn’t want or expect that out of a search engine. And at the end of the day, it’s the people that we believe in. We have to trust the people first and foremost. Even if it’s a great idea, if we don’t believe in the team, we wont do it.

We look at people and ideas that are disruptive, and give a better consumer experience or behavior, like Birchbox, which gives a curated experience. We don’t look at them as a tech business—they’re in the beauty business. Technology is an enabler to anything these days. Apple is not a technology company, it’s a design company. It’s a better experience company. Of course, technology is the major platform they sell, but they do such an amazing job in factoring in design for people to get a better experience.

As much as we like to brag about the science of things, it’s much more of an art.

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