Innovators Wanted

Market indicators aside, the tried and true wisdom of due diligence still works.

Hank L. Torbert is a Managing Partner at Avondale Ventures LLC, a private equity firm focused on providing growth capital to select small and middle market companies in the media and communications industries. The Green Magazine took the opportunity of a recent conversation with him to field some questions on the state of the market.

TGM: Should media-driven companies be alarmed about the future?
There are certain businesses that have a defendable position. One particular company that targets event planning around sports is the only one of its type, so they are in a good position. For other players who try to focus on niche markets and only provide one service or provide a more targeted approach and are subscriber-driven, you want to make sure you have direct access, not round about. That is why the Internet is doing so well. Media companies, which are mostly driven by ad dollars, are getting rid of non-core assets and as a result they are focusing on Internet business that gives them a direct target and a guarantee to advertisers that they can get to the 18-34 market, for instance.

TGM: How would you describe the attraction of Internet marketing?
Targeted demographics. Those eyeballs are looking for more specific info, for instance with sites like LinkedIn. The whole social networking phenomenon provides a demographic with a specific income range and education. Those are things that will drive the media sector over the next couple of years. As we witness the pull back in automotive and some changes in that industry, if I am a corporation going through issues I want to make sure have the right suite of media. That’s why things like niche players are going to work; it’s the only way to go.

TGM: So would you say we will continue to see a major re-allocation of advertising dollars and a potential for some venues to become obsolete?
I would argue that you are seeing a shake out in the media industry. When you look at the continuum of traditional media all the way to telecom, if you were slow to respond to what some want to call the digitization of media there might be some concern. There are a couple of drivers in media space: The first is the localization or niche -focused local newspapers—advertisers know that you probably read the local paper more than The New York Times, the paper edition that it is. Next, you have consolidation. One thing happening in the digital landscape is that people are acquiring synergistic sites. Third, you have digital conversions in mobile media with the use of digital signage—even TV and radio stations. Anybody slow to respond appropriately is really in trouble. Generally television is doing OK but some smaller groups are not moving as quickly and they are having problems. The theme is same in any market in tterms of speed; I am amazed at how quickly things have changed. It’s about being able to flow like water and having the money to do it. Otherwise you’re going to face some issues.

TGM: So what do you think the next hot sector will be?
I recently went to the Washington International Renewable Energy Conference, and I have never been to one so big and so interesting. It’s amazing when someone says you can profit from something how many people will jump on it. If we are not environmentally smart we will lose our planet. Hopefully the U.S. will position itself to be the leader in that sector. That is one of the ways we can turn around our economy; we can no longer be dependent on foreign oil. Here is an opportunity for us to redefine the nation, create new jobs and new industry.

FUN AND GAMES ON THE FAR SIDE
I think golf is a fantastic sport; I love playing it as much as I can. I am not the most competent golfer but I find it to be incredibly therapeutic. I played a lot of sports when I was younger, but I am not competitive at things I don’t feel I am good at. Right now my score is high; I’m trying to get below 100. My favorite place ever was Pinehurst #2. That was an absolutely beautiful experience. The second is a course outside of Nairobi, Kenya called Windsor. Over there the joke is, “forget about rough—we have bushes