Shervin Pishevar, the Silicon Valley investor who has put early money in hot startups like Uber, is making an unusual play of late by buying up shares of much beleaguered content and e-commerce company Demand Media.
Why Is Investor Shervin Pishevar Amassing a Stake in Demand Media? He Likes the CEO.
What is the Silicon Valley fixture up to?
In August, Pishevar wrote a letter to the public company and its new CEO Sean Moriarty that he was “personally buying up a lot of shares” and that he “will continue to buy more and will end up [with] 1% of the company but might continue to buy more.” He apparently is now nearing a two percent stake and is interested in a board seat at the Santa Monica-based company.
In an interview, Pishevar said he is making the move because of his admiration for Moriarty and he thinks recent efforts to turn around the troubled company are promising.
Demand could certainly use the help, though Pishevar seems to be catching a falling knife in terms of stock. Shares have been hitting a 52-week low this week, opening today at $5.36. The market cap of the company is now just over $102 million, a far cry from when it went public in early 2011 at a $2 billion valuation.
Much of the drop has been due to major algorithm changes by Google, which hurt Demand traffic badly. The company also spun off its domain registry business from the content side earlier this year and sources said it was considering selling some of its big content properties like the Cracked comedy site.
Moriarty, the former CEO of Ticketmaster, was hired by Demand in August to help turn it around. He replaced interim CEO and co-founder Shawn Colo, who held the job after co-founder Richard Rosenblatt stepped down as CEO last year.
Moriarty came from Saatchi Art, an Internet art gallery that was owned by Saatchi Online, which Demand bought for $17 million. Besides its better known content offers, Demand also owns Society6, which sells clothes and other goods.
Unlike a lot of shareholder attacks on Internet companies — Shervin ain’t no Carl Icahn! — Demand seems to be welcoming the Pishevar interest. “Shervin is a sharp and savvy investor and I appreciate his support for our business and belief in me,” Moriarty told me. “We’re all in on building the company for the long haul and very happy to have investors of Shervin’s caliber joining the shareholder base.”
Pishevar, who was also a VC at Menlo Ventures, is initiating this effort personally, he said. But his day job is as one of the principals of San Francisco-based SherpaVentures, which recently closed a $154 million fund to invest in early-stage startups aimed at e-commerce, software and digital media. Launched in early 2013 by former Goldman Sachs banker Scott Stanford and Pishevar, the firm has already been investing actively, with bets in a series of startups, such as Munchery, Coin and Shyp.
This article originally appeared on Recode.net.
