Facebook Co-Founder Eduardo Saverin Bets Big on Asian Internet

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.


21 June 2011.



21 June 2011.

I first met Reza Behnam when he was the Managing Director of Yahoo South East Asia. Having worked with him closely on several projects there, we became friends and I have since tracked his progress as a VC, strategic consultant to governments and MNCs, and now as his online advertising marketplace, ADZ, launched at the Ad Trading Summit and Ad:Tech Singapore last week. I managed to catch up with Reza to talk about his vision for ADZ and the technology scene in Asia in general. As well as getting backing from the Singapore Government, Reza has also secured a star investor in the form of Eduardo Saverin, the Facebook co-Founder.

While Eduardo Saverin has been living in Singapore for the past 2 years, he remains low-key about his investments. He is also friend and mentor to Rachel Kum, Miss Singapore Universe in her cosmetics line start-up. You can watch the video here.

Note: Eduardo and Reza are not the only ones bullish on the internet. VC Ben Horowitz believes internet companies may actually be UNDER-valued.

Reza, good to be talking to you. What with both the development of ADZ and your consulting work for the Singapore Government, you have been a busy man!  First off, we hear that you have got a very interesting investor to both back you and sit on your board.

Yes, Eduardo (Saverin) has been very supportive of our vision, efforts, and team.  He also has a lot of great ideas about the interaction of social media and advertising.  He’s really passionate about helping entrepreneurs and we’re fortunate to have him on our board.

You have been doing a lot of work with the Media Development Authority (MDA) in Singapore, did they introduce you to Eduardo? What other support have they been providing you?

My previous experience as a business operator, investor, consultant, and now, entrepreneur, has allowed me to offer my expertise to some of my colleagues in the industry as an advisor.  So even though I’m really busy with ADZ, occasionally I partner with public and private sector companies, as a strategic advisor, to capitalize on business opportunities or to tackle challenges.  Occasionally, we provide white papers and industry point-of-views as well, which can be accessed through www.ddrxn.com.

I met Eduardo at an informal gathering of entrepreneurs in the digital space.  We just started chatting about the various things we were working on and the general trends in the industry.  It was only mid-conversation that I realized who Eduardo was.  We realized that we have a few common friends and colleagues in the advertising space and that’s how it all started.

The MDA has provided us with some really valuable support.  They have been housing our ADZ team in their “incubation” space and provided us with some financial support, in terms of a reimbursable loan, which encourages us to hire more engineering and product talent locally.

Do you see Eduardo and his social network experience as being strategic to the development of ADZ?

Absolutely!  He has a lot of great ideas about the interplay between advertising and social media. Besides being very knowledgeable and having great business savvy, he has exposure to many great opportunities and gaps in the ecosystem.  His status as the cofounder of the largest social network and one of the most successful companies in the space doesn’t hurt either.  The fact that he spends a lot of time in Singapore and is passionate about helping entrepreneurial teams achieve their vision, is also something that is very valuable to a start-up like ours.

Ok so let’s talk a little bit more about the product. I was at the excellent Ad Trading Summit a few days ago, and you introduced ADZ as an ‘Ad Marketplace’. What exactly does that mean?

[quote]As an industry, we’ve made buying and selling digital advertising very difficult.  Buying and selling search advertising or SEM (Search Engine Marketing) is somewhat easier than trading in the “display” part of the eco-system.  So while sometimes we like to blame the advertisers or agencies for not allocating enough spend to digital media, we need to do a better job of making the ecosystem a bit more intuitive and simple to use.  ADZ is trying to do exactly that.  We’re trying to make it easy for buyers and sellers of advertising to interact with each other and provide a “marketplace” for them to trade while optimizing the relevant metrics.  At a high-level, you can think of an advertising marketplace as an e-Bay or NASDAQ type of a model, where buyers and sellers congregate to trade online.[/quote]

Who are your main competitors?

This kind of business model and technology is pretty new to the Asia Pacific market, so it’s early days.  There are a number of strong players in the US who have emerged in the last couple of years.  Obviously Google is paying a lot of attention to this space and is well-positioned with its many acquisitions and its own capabilities.  However, there will always be room to innovate for new players.  The fact that there’s a strong player is good news because it means that there will be significant attention and education in the marketplace and it raises the “liquidity” in the space.


7 Reasons for Low Online Ad Spent in Asia

Why are so little of advertiser budgets in Asia spent on online display advertising (ie banner ads and the like), when Asians spend so much of their time online?

This is a very good question.  I believe there are several explanations for it:

1. The main differentiation between digital and offline advertising, of course, is its ability to be accountable and measurable in great detail.  However, this advantage of digital media can also make it very complicated and complex to administer.  In other words, because there’s so much accountability and customization, there’s a lot of scrutiny and detailed planning that often goes into a digital media buy.

2. Digital advertising has various “flavors”.   Search, display, mobile, social, video, performance, branding, email, and SMS are some of the modalities that one can use.  While each mode has its strengths, it’s often the combination of these modes that is most effective.   This is a fairly complex space which we, as an industry, need to make simpler to administer.

3. Historically, most of the innovation in terms of digital marketing has been driven out of the US and the UK.  There has been more experimentation, funding, and support for innovation since the early days of the web in places like the US. Asia is now waking up to the opportunity.   

4. The tolerance and acceptance of risk is probably lower in some of the developing Asian markets than in markets where competition is tighter.  In markets with fierce competition, companies try to maximize opportunities to get a leg up on their competition.  They do this by taking risk on new, innovative approaches in various areas including marketing.  Digital advertising and its various flavors are no exception.

5. Offline media is still growing, albeit at a much slower pace than online, in parts of Asia.  So, if a CMO or an agency is experienced with offline media, they can still find refuge in what they know best.

6. Asia is not one homogeneous continent. In fact, it’s very diverse. We have many countries with many local languages, cultures, traditions, government structures, and advertising ecosystems. A market like Vietnam is very different than a market like Singapore or Hong Kong. As such, many markets offer some scale but not enough to sustain certain business models. Companies and regional advertisers who find a way to benefit from Asia’s overall scale while taking into account the differences between countries will be in good position.

7. Digital marketing talent is not always easy to find in certain parts of Asia.

These factors start to explain why Asia is still trying to catch up on the digital side.   Too often “digital marketing” is discussed as an “add on” or an “after thought” to a major marketing plan.  With the ubiquity and pervasiveness of digital channels we need to elevate the discussion to focus on “marketing in a digital age” rather than talking about “digital marketing” in isolation.

Will ADZ help to correct this imbalance?

We certainly hope we can do our part in making it easier to buy and sell media.

Most people know that an advertiser uses an agency to place ads on websites that users then see and hopefully interact with. Most people outside our industry would not know what networks, exchanges, data providers and the rest of it are. In fact, a layman might look at this kind of industry chart and say this is ridiculous it will surely all get consolidated into singular, large platforms, what do you say?

I agree!   You bring up an interesting point. [quote] In the US, where the “display” market is approximately US$10B, there are a lot of “point solution” companies which focus on solving one part of the challenge. As a result, the display ecosystem in the US is comprised of many point solutions organized in a chain-like fashion.  Over time, there will be consolidation of these point solutions.  [/quote]We have already been witness to Google’s acquisition of Admob, Invite Media and Admeld.  More of this is likely to happen.  In Asia, however, we have the luxury of learning from more developed markets and not replicating everything that happened in the exact same order.  In other words, there are opportunities to “leap frog”.  That’s exactly why we talk about ADZ as a marketplace and not as an “exchange” or merely a “Demand-Side Platform”.  We are trying to provide a platform which provides most of the critical functions in the buying and selling of media.

Are you hoping that a Google will come in and snap you up, as they did AdMeld this week, or do you plan to ride the current internet IPO wave/ bubble?

We need to be focused on building value for our buyers, sellers, and partners.  We have a long-term view about building scalable product and processes.  If we can do this, opportunities for exit will always present themselves and then it’ll be up to us to decide whether an exit would be in the best interest of the company and its clients, or not.  We’re in this for the long-term and we’ll plan our products and services for the future but try to “live” in the moment and create the best results for our clients and partners.

Reza, it has been great to catch up with you as always, we shall be watching the progress of ADZ with a great deal of interest.

Visit ADZ’s homepage to find out more.

[and that’s a wrap folks!]

Keith Timimi



About KeithTimimi PRO INVESTOR

The free-spirited family-man internet entrepreneur who fell in love with the study of economics. And congas.