An Interview With Joe Marchese

Please see the bottom of this email for information about an opportunity to join a special live event in New York on Wednesday, October 22 at 5:30pm, “AI vs. the Ad Tech Industrial Complex” featuring a discussion between Joe Marchese, Brian Wieser and Luke Stillman hosted by Casa Komos and Human Ventures.

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Who are you?

First, I am a Human who loves meeting, gathering, connecting and constantly learning from other great Humans. Feels more important than ever these days.

Sometimes I am a media executive or public company board director, more often I am working with founders/entrepreneurs.

Most often these days Human Ventures HQ (aka Casa Komos) is hosting and connecting leaders in media and advertising with the founders innovating in the space, especially around AI.

A lot of people in the industry know you from your time building out true[X] or your time running ad sales at FOX Networks Group (FOX, FOX Sports, FX and National Geographic) before forming Human Ventures. First, what is Human Ventures, and why did you go that path rather than simply build a new stand-alone business or retire outright?

Retire!?!? Ha. When Disney bought 21st Century FOX and my time as an “Ad Chief” ended, I was 38, so it would have been a very long, boring retirement.

Human Ventures has three main functions: Early stage investing (pre-seed and seed). Company creation (start-up studio). Corporate partnerships where public companies plug into Human’s network and perspective.

Every startup needs to understand sales and marketing, as does every Fortune 500 company. And it is only getting harder for all of them. There are a lot of ways to beat the market by taking smart positions in assets that are undervalued, or for executives/operators/founders to be smarter about marketing strategies and building real brands.

The truth is that getting to see so many different types of businesses, large and small, in advertising and media or out, you see the patterns for what works. Combine that with getting to hear 1,000s of pitches from entrepreneurs who have a view on where things go next, and it becomes a very unfair advantage for Human, our founders and our partners.

Going back in time, you were writing about attention a very long time ago. What got your, er, attention on the topic in the first place?

The common thread, going back to that 2009 article is that there is so much inefficiency in the Attention Economy, because the market for people’s time and attention (aka The Advertising Industry) is broken. It is broken because of terrible metrics, fraud and spoofed attribution to keep the market liquid. All of this has led to what I call the “AdTech Industrial Complex.”

This has only gotten worse over the last 15 years. I think people don’t understand how much of the global economy, and the stock market, is fueled by advertising revenue and companies looking to get more advertising revenue, or protect the advertising revenue they have. The battle for share of advertising revenue, has a knock on effect for every other industry. B2C and B2B. The massive opportunity to better value Attention is why Human led the investment in Adelaide.

When I was at FOX I tried to convince people of this. Now I just want to help my companies win by beating the current inefficient market and be well positioned if the entire market corrects/collapses. Which this new wave of AI just might cause.

Let’s talk tequila. What led you to your involvement with Komos?

Like all “Human” companies, a generationally talented founder/creator, Richard Betts.

Richard was one of only a handful of people in the world to pass the test for Master Sommelier on his first try, and is the only Master Sommelier to quit and focus on blending luxury wine making techniques and the art of tequila. Komos created its own lane as a modern ultra-luxury tequila.

It all started when I asked Richard, who had been making agave spirits in Mexico for 20 years, and wine for even longer, why there was no good tequila in Europe. The answer was that tequila hadn’t gone global yet. He said he could create a very special liquid that would have global appeal and I wanted to build that brand, and that is what Komos is.

And Richard was right, tequila crafted by a Master Sommelier led to Komos getting the first ever 100 point score from Wine Spectator. Komos is now in 40+ countries and more than 30% of Komos sales are outside of North America, which is unheard of for a tequila.

Advertising is a really important part of the spirits business. Brown-Forman allocates 12% of revenue to advertising. At Pernod-Ricard it’s around 15%, and at Diageo it’s 18%. Why do you think advertising is so critical in this space?

I have a lot of thoughts here. You’ll forgive me if I keep a few of our secrets to ourselves ;-).

Generally speaking, spirits are social brands, almost by definition. And all brands are built not just by the people that buy them, but that others around those buying know what they stand for.

Spirits marketing is as much, or maybe more, about arming the people selling spirits at retail and in hospitality with the story behind the brand. This means creating a shared narrative for the mass market brands, and understanding the quality and craftsmanship at the luxury level.

Who do you think is doing a good job marketing spirits and why?

Gallo with High Noon changed an entire industry, and people are still chasing them today. I also love what Gallo did with their NFL sponsorship. Bringing wine into the conversation with NFL fans. It wouldn’t have been intuitive, and that is why it stood out and got such great attention.

I think LVMH, with their new F1 sponsorship, is very, very smart. It is early, but there is so much that can be done with the canvas that is F1, because F1 combines experiential, media and sports, with global appeal. I am very jealous if you can’t tell.

Also, keep an eye out for whatever Nick Tran does with Ciroc and Lobos. He is a true master marketer. Excited to see what he does.

Some of the big tequila-makers are showing mixed trends. Diageo’s tequila business is up a lot, by around 18% during its last fiscal year, while Brown-Forman’s has been trending negative. Even within Diageo we can see Casamigos down -16%, albeit more than offset by Don Julio. What’s your take on the overall market for tequila and why some brands are growing while others aren’t?

There was a massive oversupply post COVID. Way too much celebrity and private equity money. The distribution system had way too much inventory, as did the retailers, so it was a negative shock to the system. Thinking that you can market/advertise/influence your way to success is very wrong. Especially in the spirits industry. It doesn’t pay nearly enough respect to the distributors and the trade/retail. The hospitality industry (another area we like to invest in at Human Ventures) really is where brands are built.

I think that people are drinking a little less, but are trading up. We see that with another brand in our portfolio, Doladira.

What’s next for Komos?

Richard has some incredible barrels aging new Komos expressions that will be extremely limited, and Komos is launching something special during F1 in Vegas in collaboration with our friends at MGM. And I’d guess countries 41-50 over the next year.

Last question: what’s your favorite form of advertising for the brand?

Everything Out of Home. Billboards, trucks, experiential, store windows. Things where people have a shared experience with the brand message. It is hard to scale, but it is effective when you nail it because it is hard. This is not just true for Komos, I tell a lot of companies in the Human portfolio this.

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Casa Komos and Human Ventures are hosting an event, “AI vs. the Ad Tech Industrial Complex” in New York on Wednesday, October 22 at 5:30pm with leaders from the tech and media worlds. The event will feature a brief main discussion with Joe Marchese, Brian Wieser and Luke Stillman followed by light bites and the world’s best tequila.

We’d like to extend an invitation to the first five people who are able to respond to this email.