Betaworks is a fairly unique entity, as a holding company that creates, acquires and invests in a wide variety of startups and products, including most recently Marco Arment’s Instapaper. Betaworks founder and CEO John Borthwick took the Disrupt stage today to talk about his company and its investments, as well as the products it has created in-house like Giphy.
Borthwich says he sees how the Betaworks approach is strange, but on the other hand, it makes the most sense versus other models of investment and startup financing. The idea for how Betaworks operates was inspired by Borthwick’s time as head of digital at Time Warner, a company which had varying stakes in a wide range of businesses, a minority share here, a majority there.
“When I was at Time Warner running tech there, I appreciated that not everything was a wholly-owned asset,” he said. “It’s kind of a combination, and that’s what I’m building at Betaworks.”
Betaworks is a “collection of things,” Borthwick says, some of which it owns tiny pieces of, some of which it has created in house, and some of which are full acquisitions. Most of the things it does it builds, he says, including Poncho, Giphy and a new game to be released mid-week. But all the properties, both those built by Betaworks itself, and those that the company takes on ownership stakes in, are part of a larger puzzle.
“If you look at the products out there I think of them more as ecosystems or clusters of things,” Borthwick said. “There’s a strong relationship between the products that we build or invest in at Betaworks, they all fit together like a puzzle [...] Thinking about the entire puzzle instead of trying to invest everything in the highest growth piece is what we’re doing.”
That’s why Betaworks was interested in building a Google Reader replacement, since it fits right between Instapaper and Digg in the content space. At the time, they couldn’t talk about the Instapaper piece since that was still in progress, but that was the thinking around that group of acquisitions; they make up a larger picture. In general, Borthwick says that Betaworks is concerned more with high engagement users than with pure numbers, and all those apps have that dedicated, impassioned user base ingredient.
Borthwick says that there’s a new game coming from Betaworks midweek, so it’ll be interesting to see what comes out of that. He also seemed to suggest that Betaworks is currently in the process of raising additional funding.
In general, the Betaworks approach seems like an interesting variation from the traditional VC investment portfolio, and you get the sense that there’s a grand design. As Borthwick puts it, “it’s the puzzle that fascinates.”