When MediaMath filed for bankruptcy on Friday, the company’s co-founder and former CEO, Joe Zawadzki, was on the outside looking in.
Zawadzki had been replaced early last year by MediaMath board member and former Sizmek chief Neil Nguyen, who took the reins as CEO with a remit to get the company sold. When a deal didn’t materialize by July, an embattled and insolvent MediaMath was forced to file for Chapter 11 bankruptcy protection.
MediaMath owes more than $100 million to at least 200 companies, according to the bankruptcy filing, including Magnite, PubMatic, Sonobi and Xandr.
Zawadzki is now a general partner at early-stage VC firm AperiamVentures and chairman of FxM, a fin tech startup for media financing.
AdExchanger spoke with Zawadzki just a few hours after the news broke about the bankruptcy.
AdExchanger: What would you say to MediaMath employees if you could address them directly?
JOE ZAWADZKI: There aren’t many companies in which the alumni are as close and on to doing amazing things. If you did a LinkedIn spider graph of where the people are now, it’s kind of awesome. So, I would hold on to that.
It [might] feel atonal right now because a lot of people unfortunately are going to feel like they’re scrambling and it might feel unfair. [But] I’m going to do my absolute damnedest across the Aperiam portfolio, and I think the community has already rallied. Friends of the company are LinkedIn posting and offering next steps.
MediaMath was early on a lot of things, including talking about transparency. Was it too early sometimes?
Sometimes, pioneers, they’re the ones with the arrows in their backs.
Does MediaMath’s bankruptcy mean the DSP market is pretty much just The Trade Desk and Google with a little bit of Viant sprinkled in? What happens in the market now?
We’re already heading toward a sort of natural oligopoly. Categories tend to do that. MediaMath ended up being the biggest of the smalls or the smallest of the bigs, and that’s sort of a niche offering for the enterprise.
There are lots of places one might have taken that, in terms of continued verticalization of media: retail media, B2B, pharma, gaming and entertainment, the SPO side of things and how to manage a more fragmented, complicated supply chain.
[But] Google, The Trade Desk and a challenger, Amazon – that’s to some extent what the DSP category looks like.
The second-order impact is that there will be a flight to safety. I can’t believe that my baby is going to cause another view on some of those dynamics, but [basically] every SSP has access to the same inventory.
Are you going to have fewer players on both sides of the equation? Probably.
Some of the things that were bundled parts of DSPs or SSPs will become unbundled, and people will innovate. We’ll end up with consolidation in the old categories as well as new category creation. But those categories themselves will get a bit more locked down.
What are you excited about right now with an eye on the future?
FxM is the outgrowth of a macro appreciation for how silly the financing and refinancing of the same Fortune 500 media dollar is, where it goes from advertiser to agency, agency to DSP, DSP to SSP and SSP … and SSP.
Right now, all of the financing is connected to those hops, which leads to a massive duplication of interest rates and a bunch of systemic risks in the backbone. SVB [Silicon Valley Bank] was one good example. Unfortunately, to some extent, MediaMath will be another spotlight on the fragility that creates.
I took lessons about alternative ways to finance the working capital needs of a company and said, “OK, let’s turn this into an industry utility as opposed to something that’s just inside of one platform; let’s make it available to all platforms and try to fix the real problem.”
To some extent, that’s kind of my third act right now. I learned a lot; let’s make sure that other people don’t have to learn the same lessons.
Answers have been edited and condensed.
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