The Man Behind Madrona’s Investment in Searchandise: Lessons in VC, Company-Building, and Selling to Microsoft

4/20/10Follow @gthuang

If you live in Seattle and follow technology trends, you know who Brian McAndrews is. If you’re a Boston techie, though, it’s possible that you don’t. Luckily, you have Xconomy to help bridge the gap between East and West. (Bear with me here.)

McAndrews is a relatively new managing director at Madrona Venture Group, a Seattle-based VC firm, and he led the $7 million investment in Beverly, MA-based Searchandise Commerce announced last week. It is his first deal with Madrona. In a previous life, McAndrews was the chief executive of Seattle-based aQuantive, the digital advertising and marketing company, before becoming a senior vice president at Microsoft.

I’m always surprised by how many people outside Seattle don’t know the story of aQuantive (myself included, until I moved here). This company built some of the pillars of online ad-placing and tracking technology, went public in February 2000 (talk about good timing—any later and it might have folded), and was bought by Microsoft for $6.4 billion in 2007—the largest acquisition Microsoft has ever made. McAndrews led aQuantive for eight years and was in charge of the sale and integration. He ran the advertiser and publisher solutions group at Microsoft before leaving the firm in early 2009.

Last week, I spoke with McAndrews about a range of topics: what makes Searchandise Commerce a compelling company for Madrona; his personal investment philosophy; the broader future of venture capital; and a little more about the aQuantive and Microsoft story.

McAndrews (see photo below), a Harvard University alum, says he first became aware of Searchandise Commerce through its current CEO, John Federman, and his board members Ross Goldstein, co-founder of DFJ Gotham Partners, and Sarah Fay, the former CEO of marketing agencies Carat, Isobar U.S., and Aegis Media North America; Fay had been an aQuantive customer for years.

Brian McAndrews

What intrigued McAndrews about Searchandise is that it combines e-commerce and online product search with the kind of display advertising and positioning found in offline retail, where you’ll walk into a Best Buy or Whole Foods and see certain products or shelves arranged to make them more prominent to consumers. (Manufacturers and advertisers pay some $20 billion a year for this kind of positioning.) With Searchandise Commerce, a manufacturer of flat-screen TVs, say, can bid to improve its ranking within a paid search engine like Buy.com.

This pays off in the real world as well as online. “A huge number of people search online even if they buy offline,” McAndrews says. “What’s appealing to retailers is that the vast majority of people who come to their sites don’t make a purchase.”

Searchandise aims to change that. As my colleague Wade previously reported, the company was founded in New York in 2000, and was formerly called Decidia and Guidester. In 2008, Federman started as CEO and moved the company to the Boston area. The firm’s strategy also shifted away from product navigation tools and towards paid search. McAndrews calls the company’s recent direction “an important wave of product search,” and he notes that it’s the kind of approach that would make sense to a huge e-retailer like Amazon.com. “It’s a very ripe area, though … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • http://www.dailygrommet.com Jules Pieri

    As a Boston e-commerce startup founder, it’s great to see Madrona investing in an e-commerce-related company in Boston. (You are right…I had not heard of Brian McAndrews…thanks for the education.) Given Madrona’s Seattle location, and ties to Amazon, they can actually add new and meaningful expertise to the Boston entrepreneurial ecosystem. I look forward to seeing what Searchandise develops over the next year with this funding support, and to how Brian McAndrews takes advantage of his new Boston ties.