Uber-VC Mike Mortiz has a new BFF, and he’s moving to Silicon Valley. It’s Yoav Izhar-Prato, the co-founder and CEO of Kenshoo, an Israeli start-up that gives companies and advertising firms tools and services to manage sophisticated search campaigns. Sequoia invested in 2007, and Moritz has taken a personal shine to the company, according to many sources. “Search is untapped,” the Google investor declared when they were evaluating the deal. And apparently Kenshoo’s technology was “tapping” it better than the local competitor Marin Software, which sources say Sequoia passed on.
Sequoia doubled down on Kenshoo with a second round last March. That round came with a healthy valuation, a 50% premium over the previous funding.
Moritz isn’t alone. Kenshoo is one of the hottest companies in Israel. It’s already turned down two smallish acquisition offers and was the buzz of the investors and corporate Internet folks at Kinnernet. One executive said, “Google will buy them for $150 million to $200 hundred million once they figure out they need them.” There were nods all around.
Sequoia helped Kenshoo shift from a professional full-service model to more of a simple-to-use, cheaper-to-deliver software-as-a-service play. No doubt Sequoia can also help advise on the potentially thorny situation Kenshoo is in now that its biggest partner (Google) has acquired its biggest competitor (DoubleClick).
Moritz also advised Izhar-Prato to focus more on the U.S. market, hence the move. There’s a knock that Israeli entrepreneurs are only good at tech, but Izhar-Prato is actually a sales guy and apparently a pretty good one. When I met with him in Israel in April he told me the company was managing $20 million in U.S. search advertising budgets. He said they were managing more than $100 million total, but he also said that number was doubling every few months and that was a few months ago. Competitor Marin Software says it manages $300 million. But, hey, Marin doesn’t include Zappos in that impressive tally anymore. Kenshoo stole them.
And yes, Zappos is also Sequoia-backed. A good number of haters have noted that a lot of Kenshoo’s high profile U.S. customers are Sequoia-backed companies, suggesting that Kenshoo didn’t exactly earn the business. But isn’t that just the so-called “value add” of having connected investors? You think Sequoia didn’t play a role in the Google-YouTube deal?
Regardless, no start-up is going to pay a company that doesn’t deliver. Indeed, Alfred Lin, of Zappos, says the company was asked to check out Kenshoo, but their technology won the business, period. He says Zappos is discovering a whole long tail of keywords it wouldn’t have otherwise.
Lin, Moritz and crew are at a fancy party that started about two minutes ago to welcome Kenshoo to its new headquarters. I was invited…on Izhar-Prato’s provision that I behave. (Whatever that is.) I’ll update the post with anything new I learn.
Update: Look at what Moritz wrote on the wall:
Wearing your spock ears when you wrote this?
Just kidding.
Kenshoo is so fierce!
Rumors Zappos are already missing Marin. Kenshoo “all sizzle, no steak”.
Where did you hear this rumor?
Check out Tracking202 Pro as well.
Why isn’t this story about Twitter?
What a joke post. Kenshoo has no clients to speak of really. They can throw all the VC money in the world at them and it isnt going to make a difference. They don’t have a disruptive technology in SEM, google has no reason to buy them. Sounds like a bunch of valley guys stroking themselves.
good luck with that fellas.
i sense a bit of envy here…
Hey “TheD” — how have you seen Kenshoo? or have you just seen their marketing literature? Disruptive technology — Kenshoo does have, I use it everyday and it is pretty sick what it can do. Unfortunately my PR dept won’t let me say who I work for, but I use Kenshoo and it is a monstrous tool. I have used Marin and a few others and they don’t even compare.
Kenshoo’s handling of Zappos keywords is a joke. Go do some searches on shoe keywords and look at the awful landing pages that come up. Here is a great example. Search on google for:
asics cumulus 10
What comes up? Not a paid ad that takes you to the asicus gel cumulus 10, but an out of stock asics cumulus 5. Long tail keywords are worthless if they go to the wrong landing page.
Yet another SEM company that has great marketing but poor execution.
Zappos has no Kenshoo tracking code on its site either which means is dependent on the search engine analytics…so how much value add can they really provide? Why would Google buy them since Google already provides the same functionality within Google Ad Words editor.
As a previous poster said, all sizzle and no steak.
“NoSteak” — you aren’t technically inclined, are you? Kenshoo has some pretty nifty reporting, but since you are just speculating you wouldn’t know that now would you? You probably run Internet Explorer 5.0 or is it AOL 7.0? Funny how people try to lay claims about software they don’t even use. Unless you are a competitor trying to spread FUD around. Kenshoo has reporting that is far superior than what top tier web analytics packages have.
There’s been a fair bit of hype on TechCrunch about Kenshoo, with even a few commenters hyping them like a penny stock in a past post.
It would be great if someone (hint: a TechCrunch writer) would actually tell us what it is about Kenshoo that is so great that warrants all the love. Beyond the “end to end campaign management” capability that pretty much all other SEM tools also claim. There must be something to it given the Sequoia Capital love-fest. I genuinely would love to learn (and their website doesn’t really do a great job communicating any specifics).
My company indirectly competes with Kenshoo. I can tell you first hand that it is “kick ass” technology and that they are going to do very well. There is frankly plenty of room for lots of players and many approaches to solving the varied issues/opportunities that search marketers face on a day to day basis.
their other US customer, cafe press (also seq.) seems to have unhooked their bidding. check youtube /watch?v=xrFPfmIiiW0 one minute in
link not working…
kenshoo is not for real from what I have gathered. you guys are being spun again.
I like tracking202 better…
Kenshoo is a fine company with real clients and good technology, they are a direct competitor to my company so I’m quite aware of their hits and misses, which any technology company will have.
Frankly I don’t understand where all this kenshoo bashing is coming from, but it sure sounds to me like a lot of people here have ulterior motives.
I run SEM sales for Omniture and prior to that managed sales at Efficient Frontier. Both Omniture and Efficient Frontier are 4-5X bigger than Kenshoo in terms of spend under management (probably 10X bigger after you take out the Sequoia fluff). Likewise, there are 4-5 other SEM platform firms that are 3-5X bigger than Kenshoo. So first off, Kenshoo’s mice nuts right now and it’s for them to prove otherwise.
Second, I’m of the opinion that next-gen SEM is going to be all about integrating SEM management with other online & offline marketing, optimizing to online *& offline* conversion metrics, and conducting never-ending MVT & behavioral targeting to improve conversion rates. Kenshoo is a nice little SEM-only platform, but that’s all it is and yet search is less & less a standalone marketing channel every day.
I like the guys running Kenshoo and have a lot of respect for the initial sales team, but let’s be realistic – if they can’t clearly communicate what’s unique about them on their website, it’s probably not unique.
Lastly, SEM fees have dwindled as a result of too many VC-funded startups *already* in the space. There are going to be some ugly, gory, SEM startup deaths over the next 24 months, and Kenshoo’s main attraction is perhaps that they got their VC infusion latest. It’s like the board game RISK: he who has the most recent match can do a lot of damage, but good strategy ultimately triumphs.
Omniture’s going to end up dominating the space just as they have with analytics, that’s my bet ad that’s why I’m working for them.
“One executive said, “Google will buy them for $150 million to $200 hundred million once they figure out they need them.” There were nods all around.”
Why would Google buy a SEM company that works across search engines(again)? Google already bought DoubleClick which already has Dart Search which is a SEM tool.
Stopping drinking the kool aid!
Techcrunch is getting worse and worse.
“Why would Google buy a SEM company that works across search engines(again)? Google already bought DoubleClick which already has Dart Search which is a SEM tool.”
While I agree that Kenshoo’s not likely to be acquired by Google, Dart Search should not be confused with any modern-day SM tool. Dart Search hasn’t had any signficant development resource put behind it in 3+ years and agencies and advertisers are moving away from it in droves.
Google acquired DoubleClick for their display ad server, not the PPC tool. That portion is now dated and Google has no interest in investing in it — I know people who worked for that division (pre-acquisition) who have since been laid off.
Basically, Google sees having a PPC tool as a conflict of interest — why would they bother acquiring another one?