The Story Behind Haystack’s Investment In Downstream

Earlier this summer, my friend Michael told me about a small investment his team made up in Seattle in the Amazon ecosystem. We were about to move houses and with all the impending details that process was generating, I initially didn’t give it a proper look. As we were reviewing new deals, we flagged this one for being different in nature. And as we dug in more, we began to uncover how little we know about a new potential business line for Amazon.

Today, Downstream officially launched, though it is already in the market and helping Fortune 1000 companies get smarter about their spend on Amazon. You can read about their news today here in Geekwire, and I’m happy to be co-investing alongside friends like Michael, Micah, Dave, Chris, and others in Downstream’s seed round.

For me, there were two revelations in researching this deal – 1) That in terms of product search, it was astonishing to see the rate at which Amazon’s search business was growing, even in a world with Google PLA; and 2) It didn’t immediately dawn on me that the scale of Amazon is so massive, it could actually sell us goods at cost or even at a negative margin and, instead, sell ads against our product searches. It is a more elegant business model and, as Facebook has shown over the last decade, simply works. For those looking to try out Downstream, they’re currently offering a 30-day trial.

As I’ve been writing about, I’m actively investing both inside and outside the Bay Area, and this idea from Downstream in Seattle, as I was learning about it on the fly, made me realize how far away the Amazon world is. The team at Downstream had worked for many years at Amazon and developed a technical sophistication about their insights into the ad business, and it was this secret that led them to spin out, and Haystack is lucky to have picked them out of the many startups we have the chance to invest in — and we are pretty excited about that fact.