Joe Marchese has been saying for years that advertising is broken. Now he's creating a new holding company, Attention Capital, to fix it.
- Joe Marchese is CEO of newly announced Attention Capital, a holding company that is buying media and technology companies betting a shift is underway in how people spend their time and attention.
- In its first deal, Attention Capital is acquiring, with James Murdoch's Lupa Systems, a controlling stake in Tribeca Film Festival parent Tribeca Enterprises.
- Attention Capital is part of a new breed of holding companies, but for media and tech companies. Marchese said he wants to build "a new IAC," but for companies that value people's attention.
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Joe Marchese has been railing about the problems of online
He's the CEO of a new holding company, Attention Capital, that's focused on buying media and tech companies designed to promote healthy ways of spending time and attention. It just announced its founding and its first deal, for Tribeca Enterprises, with James Murdoch's Lupa Systems.
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The entrepreneur and media executive has long argued that we're living in an attention economy that's led to low-quality ads and ad fraud, destabilizing media companies. In 2007, he founded an ad-tech company, TrueX, which let people watch interactive ads instead of standard ads in exchange for content.
Marchese sold TrueX to Fox for $200 million in 2014, and in 2015, he and investor Heather Hartnett started Human Ventures, a $50 million fund and startup studio focused on companies that often have a community and wellness bent, such as Girlboss and Tiny Organics.
Attention Capital is a sister company of Human Ventures and will focus on later-stage companies. That's not unique as a model, but Marchese believes its combination of expertise will give it a leg up in an ad- and platform-driven world. He brings the advertising background while cofounders Nick Bell, an ex-Snap executive, brings platform and content expertise; and Ashlyn Gentry, formerly SVP at Peter Thiel-founded big data company Palantir, has operations, data, and strategy experience.
"We hope to be a new IAC," he said.
Attention Capital aims to invest in up to five companies in year one
Attention Capital didn't disclose the amount of equity it's raising or its investors. It's aiming to invest in three to five companies in its first year, Marchese said.
The challenge of changing online advertising can seem daunting. Two giant advertising companies, Facebook and Google, account for more than half the digital ad pie, and they don't have a close rival. TV viewers continue to be bombarded by more ads and efforts to innovate the TV commercial have been incremental.
It's also true that marketing giants like Procter & Gamble and Mondelez are increasingly questioning the value of online advertising and seeking alternatives.
Marchese said he isn't expecting to topple that whole online ad system necessarily, but rather to take advantage of other companies that are built on other incentives. Think of meditation apps Headspace and Calm and Human Ventures-backed TheSkimm, which are about wellness, curation, and community.
"For the past 10 years, I've been trying to move the market as a whole to this new system of quality," Marchese said. "Instead of screaming at the market that there's a ton of fraud, we're just going to beat the market. That's the opportunity. We don't need everyone to change. We can have models that can work for these companies, and diversify outside advertising to events, subscriptions."
Marchese said Tribeca was attractive because it's an influential company built around high-quality content, films. The investors' plan is to grow the film festival into a year-round, multi-city operation.
Marchese wants to back companies that challenge the ad measurement status quo
As for the tech side, Attention Capital is interested in backing companies that pioneer new ways of measuring attention, much the way Moat, which Oracle bought for $850 million in 2017, helped advertisers verify that their ads were actually seen by humans as intended.
Attention Capital doesn't have obvious direct competition. It's not looking to replicate legacy media companies, which are consolidating to fight the digital duopoly; and venture-backed digital media companies, which are looking for merger partners as they struggle to live up to their investors' expectations.
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The bet is that if even just a handful of big advertisers change the way they evaluate media and shift some of their spending accordingly, Attention Capital can be poised to benefit.
"It's almost like thinking of, what's the new bundle for consumers going to be?" he said. "It's not a cable company, it's not Conde [Nast]. It is this leisure time - what do people spend time with, and what are brands saying this is valuable to spend a sliver more with?"