By Frank Addante
OK, I know I haven't posted in a while but, I'm hoping I can make it up to you with a change that I am making in the style of this blog. (By the way, thank you to all of you that I have sent emails letting me know that you miss my regular posts, it keeps me motivated to keep writing.)
The reason that I haven't posted in a while is because we're preparing to finally start talking about what we do here at the Rubicon Project. It’s been really hard to keep quiet about something I love doing, so I’m really excited to tell you all about it!
A New Vision for This Blog:
Before I get into that, as I alluded to in a previous post, I want to tell you about my new vision for the blog. To date, I have been posting more “lesson-oriented articles”. I don’t post as often as I’d like given the demanding lifestyle that comes along with building a new company. It doesn’t allow me to dedicate much time to the blog. So, I decided that I’m going to change the blog to be more “in the moment” versus “article style”. As I set out to build this new company I am going to give you a peek into my daily life, the lessons I learn and insight into the decision-making process as it happens. I will post more frequently, but less formally. I may post something before a meeting, after a meeting, perhaps even during a meeting or even while boarding a plane… I don’t know how it will work out, I’m just going to go with it and see how you like it.
the Rubicon Project Funding Announcement:
So… about the Rubicon Project... First off, I have a confession to make. Five months ago, we raised a round of venture capital. We’ve raised a total of $6 million, $4 million in equity funding from Clearstone Venture Partners and $2 million in venture debt from Square1 bank. Clearstone’s capital was used to incubate the company and develop the product. They are one of the best investors I’ve worked with. They have a strong entrepreneurial spirit and are very supportive. Square1 bank is a newer bank with a fresh approach and are entrepreneurs at heart. I didn’t want to announce the funding earlier because I’m not a big fan of talking about what we’re “going to do”, I prefer to talk about what we “have done”.
When we started the company in May, our original plan was to launch the product in April of 2008. We didn’t plan on talking about what we’re up to until later this year. But, things have moved much faster than we expected. In fact, we’re going to be launching our private beta invitation site next week on October 8.
Today, I’m going to tell you a bit about the problem that we’re solving. Next week, I’ll dive more into the solution. Then, I’ll move along into more frequent postings to give you the play by play.
The Problem with Internet Advertising:
My founding team is a group of industry-experienced, aggressive and passionate renegades that are dedicated to bringing a new level of efficiency to the fragmented internet advertising space. We shook up the online advertising industry in 1998 when we created L90/adMonitor, one of the most successful internet advertising platforms that served over 3,000 of the web’s most recognized sites, reaching 65% of the internet population before DoubleClick acquired it.
Before starting the Rubicon Project, I talked to about 100 websites about their challenges with internet advertising. I learned that even though $27 Billion was spent advertising online in 2007, it’s still too hard for websites to sell their ad space online. While internet advertising is an explosive market, it is an incredibly inefficient one with advertisers spending money with 300+ disparate advertising networks worldwide (e.g. Google AdSense, Yahoo! Publisher Network, Tacoda, HispanoClick and Adtegrity).
From my conversations, I discovered two trends: first, there is a lack of advertising technology solutions for website publishers; second, there has been a rapid growth of advertising networks. Seven years ago, when I was in this business, there were 15 ad networks. Two years ago, there were roughly 150 and today there are over 300!
There are small and large networks; CPA, CPC and CPM networks; text, display and video networks; local networks and international networks, broad networks and very niche networks. The point is that there are a lot of ad networks, all with different strengths. Advertisers are spending money with all of them. Some more, some less, but if websites want to maximize the revenue potential of their ad space, they need to be able to tap into and access all of them.
Case in point, between 30-50% of U.S. based websites’ traffic is coming from international visitors. If a site isn’t sending that (international) traffic to an ad network that has international advertisers, it’s like they’re throwing those ad impressions in the trash.
It is absolutely shocking to me how inefficient and manual this market is. The best way for me to describe it is that it’s like the stock market without a NASDAQ system. Surprisingly, most business in the advertising world today is transacted via Excel spreadsheets. It needs to be automated.
In order for web sites to make the most money from ads on their site, they need a simple solution to access and manage all of the places that advertisers are spending money (these 300+ ad networks). To make that management effortless, they need smart technology that understands the strengths of all these networks and automatically deciphers every ad impression (using demographic, geographic and contextual information) to match each impression with the best money-making opportunity. Guess what we’ve built?
Private beta site coming next week. More then…
By Frank Addante
My team is sure to crack a smirk every time someone asks me what our timeline is. They smirk because they know exactly how I’m going to respond. I say, “we like to go fast, but we don’t hurry”.
A startup company’s strengths are centered in its abilities to move quickly and be agile. I believe that the success-rates of all of my companies is largely due to speed being ingrained in the company culture. Having said that, there is a very, very fine line between “going fast” and “hurry”.
At my current company, the Rubicon Project, our top priority is product development. The very first day that we opened our doors, we started developing. We didn’t wait for planning meetings, we didn’t discuss strategy, didn’t discuss architecture, didn’t talk to customers, didn’t look at similar or competitive products , didn’t write specs or requirements. We just started developing. Our goal was simple – get a product to market as quickly as possible so that we could get real market feedback.
You, like most people, might be thinking - how’s that work? How do you ensure you develop the right product? Well, it’s simple. First, acknowledge the fact that the first version of your product is almost NEVER the right product. It’s simply an exercise for prospective customers to tell you what they DON’T like about it. Second, we talk about the product every day. It is top of mind for everyone. We plan and develop in real time. Third, we acknowledge that we WILL waste time. What was waste in “redo” we gain in momentum and speed. Speed is contagious.
Having said that, while we make speed our mindset, we are careful never to hurry or move at a pace that we are not comfortable with. How do you know when you go from moving fast to hurrying? First, it’s when communication breaks down. It’s like running a long distance. You always want to be running at a pace where you can still speak. If you are running so fast that you are out of breath and can’t speak, your body is going to tire out and won’t be able to go the distance. Continuous communication is key. Second, it’s when you make careless mistakes. You will make mistakes, many of them in fact, but careless mistakes are a sign of hurrying. Third, and most importantly, it’s when you’re moving faster than the market.
Pace is something that is top of mind for me personally right now. My team’s ability to move fast and execute has astonished me and, as a result, gives me new found levels of confidence in the business. In less than three months, we have developed a “whiz bang” prototype of the product, have had about 30+ high quality meetings to solicit (positive, encouraging, constructive) market feedback from website publishers, have hired over 10 A++ people (all of which are firing on all cylinders), have planned a big upcoming event with an overwhelmingly positive response and have already started working with ad network partners. All of this in less than three months time and ahead of plan. It sounds like I am bragging, but that is not my intent. I’m trying to give you a real world scenario of balancing fast with hurry. The team has been exceeding my expectations, therefore, we are moving at a pace that’s faster than I had originally planned. That combined with the fact that the online advertising market is on fire these days and the problem is only intensifying, makes me anxious to accelerate our plan. Do we launch the product and the company sooner? Do we invest more capital into the business to grow it faster? Do we hire more people? How much insight should I give the board into the fact that things are moving faster than planned? (and risk elevating expectations) These are all questions I ask myself. My emotions tell me to go faster, logic and fear tell me to stay the course. My gut tells me to set some short term additional “accelerated validation” goals and measure ourselves against these accelerated goals in the next 30 days. If we can step up the pace (go fast) and it doesn’t break (hurry), then we’ll accelerate the plan.
Every team, every company and every market has a different pace. “Fast” and “hurry” are different for everyone, but you should always recognize that there is definitely a line. It’s a fine line, but there is one. Know what it is, always be aware of it. Use it to push you to move faster, but also let it humble your over-zealousness.
By Frank Addante
My apologies for not doing a posting sooner, I have been "communication challenged" due to an office move for the Rubicon Project. Most would agree that moving is always a big distraction. So, I've decided to do a post about setting up an office space and all the things that go into the decision making process: what's the right size? location? type of space? lease term? configuration? feeling? decorating? etc.
It's a tough market in L.A. for finding office space. And, we were very selective about the kind of space that we wanted. It was important for us to find the right space. As they say "dress for the occasion", I believe your office space is a very, very important part of building the company's culture. It doesn't have to be "the perfect" space or anything that's over the top, but it has to suit the company's personality. It defines the company's image and it's everyone's "home away from home" -- especially for fast growing, hungry, hard-working, late-hour-driven startups.
I'll break it down into sections:
1. Location
The two biggest factors for us in picking a location were: a) something central for future employees and b) something near other companies in our industry that we might want to recruit from. For us, being near Santa Monica was key. We ended up with a place that is at the intersection of two major freeways (the 10 and the 405). Also, having something walking distance to lunch/dinner/happy hour options was also a key factor.
2. Size
It is always tough to "right-size" your space requirements. You don't want a space that's too small because you don't want to be moving every 6 months and wasting rent (for the remainder of your lease term). Yet, you don't want a space that's too big and sitting empty. Around the Santa Monica area, it happens to be a landlord's market with less than 6% availability. Space is tight. Expansion possibilities are slim. We looked at spaces that would last anything from 4 months to 18 months. We ended up choosing a space that would last us 6-9 months, based on price, the "feeling of the space" and availability. We had to sign a 1 year lease, but, we figured it is better to eat 3 months rent if we can't sublease it than to get an over-sized space and keep half of it empty for 6-12 months.
3. Type of space
For me, this was one of the most important factors. We really wanted a space that was very creative, fun, interactive and open. We didn't end up with the perfect space, but we ended up with the "perfect space for now". We heavily personalized it and made it our own. We painted, we selected creative furniture and we arranged the furniture in such a way that it gave it a very open and interactive feeling. We thought of creative ways to turn it into space where we could host a couple of parties/events, in addition to the ones that we'll be having at restaurants, clubs and bars in the area. (Office warming party to come soon!)
4. Configuration - offices, cubes, meeting areas, etc.
We wanted to create more of a "lounge" than an "office" (a comfortable place to work). Moving into a slightly smaller space, we didn't have a lot of options or space to waste. Especially, since we will likely end up cramming a lot of people in as we prepare to move into a larger space in the future. Another big factor was offices versus cubes and desks. We decided against cubes, as we wanted to create a very open environment for active communication. So, we set up a bunch of desks in different shapes and put them together in a way that gives people their own personal space, yet keeps an open feel.
Another thing we considered was how to use the actual offices. In our space, 80% of it is open space and the other 20% is 4 offices. We turned one into a conference room and another one into a "lounge" with sofas, ottomans' and comfortable, funky chairs and a flat-screen TV. We put whiteboards in the "lounge" and it doubles as both a place to socialize/rest/play and a great meeting area. The TV doubles as a projector for presentations. The two remaining offices are actual offices, and the only two. I thought long and hard about whether I should sit in an office or in the open area. While I really wanted to sit in the open area, I realized it wouldn't be practical. I spend most of my time on the phone or in meetings or interviews. So, I'd likely be a distraction to people. As a compromise, I set up my office as 25% desk for me and 75% open meeting area. I want to be careful not create a culture of "offices and cubes". So, I made the office very open and inviting and I plan to keep the door open all the time (I even considered removing the door altogether). Also, I have a laptop, so I'm going to work in the open area as much as possible. I need to absorb the information and energy of the team and participate in the cross-communication.
Lastly, we selected office chairs that are easy to roll around so people can move from desk to desk to interact and meet with their fellow team members, again, encouraging active communication.
5. Decorating and style
Presentation is everything, whether it is how you dress, a power point or how an office is designed. Our office is part of the way that we present ourselves to prospective employees, vendors, clients, partners, etc. It is an extension of our company's personality. We are a creative, Internet advertising company, so we wanted to design our office to reflect that. Being a startup, of course, we needed to design on a tight budget. We were able to find great stuff at places like Ikea, Craig's list, Target and local discount furniture stores. We painted the walls, which is an easy and inexpensive thing to do and it made a big difference - vibrant colors such as purple, bright green, red and even gray and black...
6. Getting it done fast!
We knew that moving into the space was going to be a big distraction. So, we decided to divide and conquer. We did the majority of the heavy lifting in the first three days. On the first day, we had everyone in the office building desks, unpacking boxes, etc. and got the painter started. If we were on the TV show, "The Apprentice", our team would have definitely won that task! We were like a machine. On the second day, we organized all the furniture and on the third day we put in the finishing touches and setup Internet, phones, etc. On the 2nd and 3rd day, half the team stayed home and continued working (to keep the product development momentum going) while the other half finished up the office. Now, it's done. It was a distraction, yet it was important to get it right, but we tried to make sure it had minimal impact to our progress. (photos below)
All in all, I think we ended up with a great space that really suits our personality and will serve as a good home for the next 6-9 months to foster the kind of culture that we want to create and promote. And, we did it all for very little cost! Now, it's time to work on filling those seats with A++ people.
I think a lot of people underestimate the importance of the office ambience and feel. It's important not to rush through it and really think about the feeling and interaction you want to create in the office environment...
I'm curious, what do you think are the important elements for creating the right office environment? If you have any thoughts/suggestions that you want to share with others, please add your comments to this post.
Here are some pictures of our work in progress:
By Frank Addante
OK, as I eluded to in my previous post, I have decided to take the plunge, yet again, and start another company. So, I am on to Startup 6.0...
This one is so new, we don't even have an official company name, yet. So, we decided to code name it "the Rubicon Project". Rubicon is a popular idiom that means to "go past the point of no return". The phrase "crossing the Rubicon" has come to represent the moment when people commit themselves to a risky and revolutionary course of action. If you want to read more about the history of the name, click here and go to About Us.
As I mentioned previously, I am taking a slightly different direction with this blog. I plan to do more frequent, informal updates to document the events and decisions that need to be made from the inception of a startup company. I will try to be as transparent as possible while still preserving the level of confidentiality that the company needs to maintain its edge.
This new company is in the Internet advertising (technology) space. See my previous post for some background on my thinking: GoogleClick - Who owns your cash register?
I'll go into our plans in future posts, as they unfold.
Today, I figure I would give a little background on how and why I decided to start a new company.
Let's start with the "how". After being involved in the start of 5 consecutive (fast-growth) companies, I really thought long and hard about how I wanted to do this next one. My initial thinking was that I was going to either do more of a "lifestyle business" (slower growth, complete control, but steady growth that would give me a lot of flexibility and low stress, presumably) or an "incuabator" (invest in multiple ideas, lend my experience, vision and network to each of the ideas and expect to hit a bunch of singles and doubles and hopefully a triple, home run and maybe even a grand slam). I debated this with myself for a while.
As I was talking with someone about my internal debate, they said to me -- "why don't you just keep doing what you're good at?". That struck a chord with me. I quickly came to realize that I'm not the "slow-growth" guy, I'm not the kind of guy that can do things part-time (as in the incubator model). I'm the 0-60mph, go as fast as you can, pedal to the metal, stop at nothing in my path kind of guy. Every time I try one of these slow-growth or incubator type models, I've always ended up jumping into one of them and going full force. So, I figured, why fool myself into thinking it would be any different this time? So, here I am, getting ready for 0 to 60 again.
So, now the "what" part. I'll get into details on the business idea itself in later posts... But, here's what happened. I've ALWAYS been very passionate about the Internet advertising space. I just love the space. Big opportunity, cool people, creative, dynamic and it is very much a relationship driven business... I recently took some time off to reconnect with old friends. I met with my old team from L90, the team that built adMonitor (the advertising platform that delivered billions of ads per month for over 3,000 blue-chip customers, where we had a successful $112 million IPO and then DoubleClick acquired it). I've worked with some of them in more than one of my companies, so we all have a long history of working together. After a few lunches, dinners and drinks, it turned out that they were all ready and eager to get the "old team" back together, jump back in and do something big in the Internet advertising space. This all happened in a matter of days, by the way... I had no intentions of starting another company so soon. We were just catching up... Next thing you know, not even two weeks later we're rushing around looking for office space, building a website, hiring, etc.
So, the "what" is simple. I'm getting back into a space that I love. I'm working with a top-notch, first class, A++ team (Craig, Duc and Julie) -- that just happened to fall into place. They are all rock stars. And, the market that I love just happens to be on fire right now and the gap seems to be widening. The stars just came into alignment all at once. I always say that first thing to do is to find a big market and then connect an army to that market. So, that's where I'm at, and that's what got me into doing Startup 6.0. If I only had 1 part of that equation (big market or great team), I wouldn't be here -- having both is essential.
As I said, I'll get more into the vision later. But, the short of it is that while the Internet advertising market is an enormous market ($27 Billion today, and growing), it is a highly inefficient one. We are going to make it more efficient through highly innovative technology. There is a lack of technology innovation available for website owners and publishers to most effectively monetize their sites through advertising. Because of this, the websites, the ad networks they use and the advertisers are not working together as efficiently or as effectively as they could be. We are going to target the publishers, arm them with the smartest, most innovative technology and help them work more efficiently with all of the advertising networks and advertisers that are available to them today.
To learn more about we're up to, you can visit http://www.RubiconProject.com.
If you have any comments, thoughts, ideas, insights, questions or concerns about the Internet advertising space, I’d love to hear your thoughts. Please leave your comments on this post.
PS - We are looking for great, A++ team members in the Los Angeles (Santa Monica) area. If you know anyone, please send them to: http://www.RubiconProject.com/hiring.html.
By Frank Addante
(Part 5 of a 5 part series: "So, you need to develop a product?")
Outsourcing has become a popular topic and practice these days. I have been outsourcing to India since before it became popular. Cost was definitely one of the driving factors, initially. However, these days, the cost benefits are quickly declining as prices in India continue to rise and productivity decreases due to factors such as declining loyalty and retraining. I am still a big fan of outsourcing. Why? Primarily for the intellectual capital and the flexibility.
I’m going to break this down into 8 areas, give a little background on each and give each area a rating (1-5, 5 being the highest). I will give each area a rating for today and a comparable rating to what it was 5 years ago. Since India still seems to be the most popular place to outsource, I will give my ratings based only on my experiences (directly and indirectly) on outsourcing to India:
Cost (Today = 2; 5 Years Ago = 4):
Costs in India have been rising as competition for resources grows. While still considerably less then the U.S., it is important to consider the efficiency (see below) of the engineers and working relationship while assessing the overall cost benefit. Personally, I go to India now for the intellectual capital as a primary benefit instead of cost. Recently, a number of companies I’m involved with have had good success, from a cost benefit perspective, outsourcing to other countries such as China, Vietnam, Latvia and the Phillipines.
Intellectual Capital (Today = 5; 5 Years Ago = 3):
Intellectual capital is my primary driver for outsourcing to India. I have been able to find extremely talented engineers in India. They tend to be much more disciplined and have developed a deeper expertise than many of the engineers here in the U.S. This is probably due to their extreme focus on education and the lure and competition of their quickly growing tech economy. If you want architecture done right and well documented code, or if you need to build something that is high capacity and highly scalable, India is an excellent place to go. However, this discipline and process comes at the cost of efficiency and speed.
Efficiency / Speed (Today = 3; 5 Years Ago = 2):
When I first started outsourcing, it was pretty inefficient. There were challenges with time zone differences, communication, language/translation, working styles, etc. This resulted in more hours being spent (overall) to get a job done. I’m not sure that there were any real cost savings given these inefficiencies. Today, things have improved considerably. We still have a time zone issue, but as quality increases this becomes less of a speed bump. Also, communication is much better (including the quality of telephone connections between the U.S. and India) and the working styles and language/translation gap has become much smaller. It seems that Indians know just as much about American culture now and news as we do (I’m embarrassed to say that sometimes they know more about what’s happening in the U.S. than I do!) All of this has made communication much more seamless; resulting in greater efficiencies. One resource sitting next to you in your office is still more efficient than one resource in India (communication being the primary factor); however, comparing that at a group level, you can gain greater efficiencies in India by having a 24 hour development cycle and greater flexibility for expansion.
Flexibility (Today = 4; 5 Years Ago = 2):
Another major advantage for outsourcing is the ability to grow your team quickly. Engineers overseas are easier to find than engineers in the U.S. In India, these days, they have training down to a science and they are producing engineers faster and more efficiently than we are here in the U.S. It’s almost like an assembly line for engineers. I’ve been able to quickly expand teams (permanently or temporarily) as needed and that can be a real advantage to a fast growing company. However, this “assembly line” can definitely have its disadvantages when it comes to quality.
Quality (Today = 4; 5 Years Ago = 2):
One of the most important things to pay attention to is the quality and experience of the engineers when outsourcing. It is important to consider their education and training and whether or not they’ve had real world work experience. A lot of outsourced firms are pulling people fresh out of training and putting them on new projects. The larger outsourced firms have a management and mentoring structure in place to make this more efficient and control quality; but that definitely comes at the cost of efficiency. Don’t let your project (and money) be the training ground for new engineers.
Security (Today = 5; 5 Years Ago = 2):
Security (of your ideas/code) used to be a big concern when outsourcing. In India, if you go with some of the more established firms, this threat is no worse than it is here in the U.S. As technology continues to fuel the growth of India’s economy, everyone has become very sensitive to this issue. They realize that stealing code and ideas could severely hurt their growth. When I first started outsourcing, there was an instance where we found that our ideas and code were being reused and promoted outside of our project (as a separate product at the outsourcing firm). It was alarming and made us really think about security as an important issue. Fortunately, that was the first and only instance I have ever encountered related to security threats. Having said that, this is definitely something to be cautious about when outsourcing to other countries whose economies are not so dependent on outsourcing as a source of income.
Creativity (Today = 3; 5 Years Ago = 1):
As I mentioned before, India provides an enormous amount of intellectual capital, however, where they excel in expertise, often times they may lack in creativity. Engineers in the U.S. seem to have an easier time expressing “vision”, whereas engineers overseas have an easier time expressing “architecture”. I believe in setting the vision, product definition and the architecture of the “user experience” with resources here in the U.S. and leaving the architecture of the code and platform to India. I have seen the creativity level increase quite a bit over the years in India, as they are exposed to more projects and as entrepreneurship grows. However, as a whole, the creativity level in India still has a way to go.
Loyalty (Today = 2; 5 Years Ago = 4):
Loyalty used to be a strength for outsourcing. It used to be pretty easy to keep engineers involved and engaged on a project long-term. Now, there is so much competition that it is very, very difficult to keep people. Engineers want to advance their careers by moving up within an organization (so they want to move from coding to architecture to management, etc. quickly) and they want to increase their earning potential. As a result, there is often a lot of churn and sometimes even a lot of “bait and switch”. When considering outsourcing, find out how long they typically keep an engineer working on one project. Churn will cost you time and money in training and ramp of new project team members.
Management Tip:
This tip is mainly for startup companies. Startup companies have less discipline, consistency, process and need to move much faster than larger companies. Outsourcing is optimized for larger companies, due to the management styles/processes of many outsourcing firms. Having said that, there are ways to optimize it for startup companies. The best way, in my opinion, is to manage your engineers directly. Outsourcing companies will try to put in project managers to “make things more efficient”, “maintain quality” and “manage goals”. They are valuable to the team, but I find it best to have a direct relationship with each and every engineer on your project. Manage them directly, communicate with them directly and make it as much of a fluid process as possible (this will also help with loyalty, too). Use the project manager to enforce the goals, but don’t let them be the only point of contact between you and your engineering team.
I still remain a very big fan of outsourcing, if done right…
By Frank Addante
Since Google's announcement of their decision to acquire DoubleClick for $3.1 billion on Friday, I have received a flood of emails asking for my thoughts on the topic. So, I am going to interrupt my previous series/postings on product development to share my thoughts.
Back in 1998, DoubleClick was my #1 competitor at L90. Our product, adMonitor, was a direct competitor to DoubleClick's ad serving technology. When we started, we were the 7th horse in a 7 horse race. DoubleClick, like other competitors, had already underwent a successful IPO and their market cap was in the billions and their resources were virtually unlimited. Against the odds, within a few years, adMonitor had become one of the most dominant advertising networks on the Internet, serving billions of ads each month for over 3,000 companies such as Microsoft, AT&T and Visa. Ultimately, we gave DoubleClick a run for their money and shortly after we took L90 public, DoubleClick acquired adMonitor to take us out of the market. A move very similar to what Google is doing with DoubleClick today.
Recently, I have been looking very closely at the online advertising market. I was shocked to see how little has changed in the past 7 years. The online advertising market was hot 7 years ago, it tanked during the dot-com fall out and recently (a few years ago, along with Google's IPO) has become hot again. Google is clearly the driving force behind its success. And, it has become clear to me why. Google was the only real technology innovation in the online advertising market. Google made it simple. (see my posting on "Keep it Simple")
Google has cornered the online advertising market. Prior to Google, the online advertising market ran like the stock market without a NASDAQ computer. Everything was manual (shifting around excel spreadsheets) and there was little visibility available to advertisers and little exposure available for publishers. Google simply came in and automated it.
Most of the online advertising space today is made up of broker-dealers. I believe this to be the case because there is still a lack of technology in the space. There is some new technology, but mostly very specific, niche technology solutions such as video ad-servers, behavioral targeting, etc. Aside from these micro-innovations, the only other real innovation in the space are the advertising marketplaces where advertisers can purchase advertising from mid-tier publishers through an automated system.
Google is the dominant player because they have technology. Drawing an analogy from the online advertising business to the coffee business... It's like Coffee Bean, Peet's Coffee and other competitors leasing their cash registers and coffee machines from Starbucks. Many of Google's closest competitors are using Google's adserving technology to drive advertising revenue. Great for Google, bad for everyone else.
I am not the least bit surprised that DoubleClick sold for $3.1 billion. Personally, I think it was the smartest decision Google could have made. What's the cost of not having it? What if there was another competitive cash register on the market? DoubleClick's technology, while old and antiquated, was the only other decent "cash register" with any traction. Sure, there's a wave of new technology solutions that have come into the market that are competitive with DoubleClick, but, they are unproven. Most of these new companies have been started by "newbies" to the advertising space and it's going to take them a while to learn the advertising business. Most of the veterans from the first online advertising revolution 7-10 years ago are likely sitting on yachts counting their payouts.
So, now the large networks are revolting against the GoogleClick deal. They are challenging the deal with the government on anti-trust claims, saying that it gives Google too much power and they will have an unfair advantage. I think this is a bunch of nonsense. Sure, Google has a significant advantage, but I don't believe they have an unfair one. They just happen to be the main supplier of cash registers and coffee machines. Anyway, come on, Google's mantra is "don't be evil", right? How could they abuse their power? Besides, with Google trying to launch satellites, building mobile phones, trying to replace Microsoft Office, scanning libraries of books, who has time for advertising technology anyway?
However, make no mistake about it, Google is very much a competitor to any publisher. They have one of the largest websites on the Internet and that is their main business. They keep 100% of the revenue from their own website and only a fraction when selling advertising on other sites. There needs to be another supplier of cash registers and coffee machines and there is nothing preventing another supplier from entering the market. However, the problem with it is that it is damn hard to build advertising technology. It took us years at L90/adMonitor, hundreds of billions of ad impressions worth of learning, millions of dollars and hundreds of people to get it right... It's not impossible, it's just hard, time consuming and expensive. The GoogleClick deal doesn't prevent anyone from competing, it just sets everyone else back another 12-18 months further than they were before.
Smart move on Google's part and congratulations to the geniuses at the private equity firms (Hellman & Friedman and JMI Equity) that identified this hole in the market and bought DoubleClick for a fraction of what they sold it for. But, if I were a publisher or a major network using anything from GoogleClick, I'd want to find another supplier of cash registers and coffee machines before someone drives up my rental fee or takes my cash register away (with my customer list and cash still in the drawer). Ahh, maybe I'm just being paranoid... If I'm a publisher using Google, they already have my customer list, advertising data and revenue information anyway...
After writing this, I think I smell something... I can't tell if it's a fresh pot of coffee or Startup 6.0 brewing...
(For the record, I don't drink coffee.)
By Frank Addante
In today's high-tech, highly competitive world, more and more companies are describing their products or services using too many fancy, jargon words. This is particularly a problem in crowded markets where they are trying hard to differentiate themselves from their competition. Particularly with startup companies, they think that they have to use fancy words or names to make their products sound more sophisticated. Unfortunately, they wordsmith themselves so far away from describing what it actually is that they sell, that their customers or users need a jargon-decoder ring to understand what they do.
I'll take a simple example and "jargon it up" to illustrate my point. Let's take a bicycle. What if I were to describe a bicycle as:
"A multi-wheel personal transportation device"
If I were a motorcycle manufacturer trying to differentiate myself from a bike, I would say something like:
"A multi-wheel next-generation, high performance engine-driven transportation device"
Oh wait, that could also be a car, so if I wanted to differentiate the car, I would say:
"A quad-wheel, next-generation, high performance engine-driven quad-seat transportation vehicle"
Oh no, that could be an SUV, too... Well, you get the point. Describing something using a) jargon and b) competitive comparison could spiral out of control, quickly.
I was fortunate enough to learn this lesson years ago. My third startup, L90 (Startup 3.0), was in a very crowded, highly competitive online advertising market. We tried many different jargon-driven ways of describing ourselves. The more jargon our competitors used, the more we used, the more we used, then the more they used... What worked best was when we very simply described ourselves "The Premium Advertising Network". It was simple, to the point and it worked. Customers immediately knew what we did and we established a supreme perspective by adding one descriptive word, "Premium".
Ever since then, I've constantly used what I call the bicycle test: "We build bicycles". Anytime I think of ways to describe a new business, product or service I use this statement as a foundation/test to ground my thinking. The closer I can get to this statement, the better...
Because, if you can't simply say what it is, than what it is won't matter.
Throw away the thesaurus!
By Frank Addante
I realize that I have not made a new posting in a few weeks. My apologies for the sporadic activity… I am in the process of relocating back from the Bay Area to Los Angeles, so things are a bit hectic at the moment. I hope to resume my weekly posting schedule as soon as possible.
I had some time to put together this post over the weekend… This is probably one of the biggest lessons I have learned throughout my past 5 companies.
Move Fast. Be Agile. Stay Focused.
I believe that a startup's biggest assets are speed and agility. The ability to execute at faster speeds and to rapidly adapt their course is what enables them to compete and to protect themselves from the big companies.
This can be both a strength and a weakness. Moving fast without focus can be dangerous. It can quickly move you off course.
"Getting Big"
Some of my companies have moved faster as they grow, some have moved slower. The tendancy is for companies to move slower as they get bigger; they add more processes, they have to keep more people "on the same page," there is less tolerance for "scrapiness" and real-time, active communication is a great challenge.
It all comes down to company culture and the team that you build. Moving fast definitely requires a team that has the "entrepreneurial spirit." The team must be empowered, must have flexibility to experiment and it should be "OK" to make mistakes. A culture where it is not "OK" to make mistakes puts everyone in CYA (cover your a**) mode, limiting their potential and speed of execution. I've found that people will allocate bigger buffers for setting expectations, they over-hire to make sure they have more then enough resources, they over-perfect things, they have more frequent and longer time-wasting meetings, they concentrate too much on the methods instead of the results and they over-process things. I always say if you aren't making mistakes, you aren't moving fast enough.
"If you want to double your rate of success, quadruple your rate of failure" (-- Thomas Watson, IBM Founder )
As a leader, encouraging this kind of behavior requires a lot of discipline and extreme trust in your team.
At L90 (Startup 3.0), an online advertising technology company, we moved faster and became more agile as we grew in size. The team was like lightning. Our meetings were quick and infrequent (if we were in meetings, we weren't producing). I would describe them better as "touchpoints" and "rallies" as opposed to "meetings." The focus was so clear that there was never a question as to what it was. It didn't require a detailed definition or a plan. In fact, I don't even think anyone ever had to ask what it was, it was just ingrained in our culture. There wasn't a new-hire orientation or weekly staff meetings that said L90's focus was X. Everyone was just running so fast towards it that it was hard to avoid the focus or the momentum heading towards it. It was an amazing thing to be caught in the middle of.
On the flip-side, at Zondigo (Startup 4.0), a wireless and voice applications company, we had a team of people that were running fast, however, we had a severe lack of focus. This was the first (and only) company that I had started with outside capital from day one. I believe this factor caused us to behave differently than my previous startups. It's like the clock started ticking from day one and we had to rush to find the "right" answer. Zondigo was an idea, a team and capital in search of a business plan. We were afraid to make mistakes. Meetings, meetings, more meetings... longer meetings... more debates... "what if..." "that won't work because..." We spent more time "talking" than "doing"... If something didn't work immediately the first time, we would try something new and switch our focus rather than staying the course and finding an alternative solution. It seemed as though we decided to change our focus every other week. Part of this was due to rapidly changing market dynamics (2001, dot-com crash), however, most of it was due to lack of confidence in our own plan. Interestingly enough, if we had stuck with our original plan, I believe we would have been much more successful. This lack of focus was my fault, I was not an effective leader for my team and we did not start the business on a solid foundation (vision, mission, goal, focus). Unfortunately, I didn't learn this lesson until years after Zondigo's exit.
There was a brief period of time at my current company, StrongMail Systems (Startup 5.0), that we went through a similar phase; lack of confidence in our plan, vision, focus. We had tried to change it multiple times and every time that we did, it would take us further and further away from our goals. Fortunately, this time I recognized the pattern and we were quick to correct it. We reverted back to our original business plan and it turns out that it has been, by far, the most successful for us.
So, what I have learned: Believe in your plan, let loose, stay confident and go go go!
By Frank Addante
[Startup 3.0] L90, Inc. – Premium Online Advertising Company
Age: 21 - 25
Time Period: 1997 - 2001
My Role: Chief Technology Officer, Technology Founder and Chairman, Advisory Board
High Point: $500 million market cap; 3,000+ customers; 8 billion transactions per month; 65% Internet reach
Warning, this will be a long posting. I am extremely passionate about what we accomplished at L90 in a short period of time with very little resources.
I can sum up three of the most action packed, exciting years of my life in 14 phrases:
1. Bootstrap
2. 7th Horse in a 7 Horse Race
3. All-Star Team
4. Rapid Growth and Dominance
5. Patent Lawsuit
6. IPO
7. Global Expansion
8. Acquirer
9. Leaving
10. Personal Lawsuit and Litigation
11. Acquired
12. SEC Investigation and Securities Fraud
13. Jail
14. Liquidation
After developing one of the most popular sites on the Internet and inventing a technology platform that enabled companies to grow their user base and generate revenue through online advertising, I felt it was time to take these experiences to market on a much larger scale. The next company was an Internet advertising and technology company called L90, Inc. L90 was the premier advertising network on the Internet. We had over 3,000 customers, delivered over 8 billion e-mails and online advertisements per month and reached over 65% of the Internet population through our technology (adMonitor). We focused on Global 2000, blue-chip customers such as Microsoft, Visa, Disney and Proctor and Gamble. At its peak, the company had hundreds of employees, offices around the world, and produced over $100M in total revenue. All of this was supported by the technology platform (adMonitor) that I invented at ReaXions, Inc. (Startup 2.0). We eventually took the company public, raising $112M in an IPO led by SG Cowen.
1: “Bootstrap”
A handful of desks, a handful of passionate people and the “money machine” (a.k.a. the fax machine); that’s how it all started. Our top priority was always clear: get the next order. The very first version of our ad-server software (adMonitor) was being run on my personal desktop computer and plugged into my ISDN line at home. One of the very first ads that our software delivered was promoting the launch of a brand new product from Microsoft called “Outlook” and it was placed on a very small website called eBay. A few months later, eBay called us to say that they were pulling all of the advertisements from their site because they were distracting and they didn’t want people to leave their site. I said “I don’t understand… that doesn’t make any sense… how will you make money?” I guess they found another way… Starting with companies like eBay and Microsoft, we built our business one customer at a time.
2: “7th Horse in a 7 Horse Race”
We were not the first to build an ad-serving technology platform. In fact, we probably had hundreds of competitors including seven that were either very well funded with significant venture capital or publicly held (e.g. DoubleClick, 24/7 Media, AdForce, Engage, Flycast). They had products that were already in the market, piles of cash, tons of customers and revenue, seemingly endless resources and lots of employees. We had customers and revenue. I remember meeting one of our larger competitors. They were interested in acquiring us, so I flew up to Silicon Valley with our CEO. I was 21 years old at the time. I walked into a big, flashy, modern office with tons of people running around (it seemed like they had a “money machine” on every desk). I walked past a large glass window that housed hundreds of computer servers with glowing, flashing lights; which ran their ad-serving technology software. Their server room was larger than our entire office and our entire ad network was being run on the exact same type of computer that their receptionist used as her desktop computer.
I sat in a meeting with the two guys that ran their technology teams (they were old enough to be my dad). One guy was the creator of Microsoft Excel and the other created the first network for IBM. (No, that’s not intimidating for a 21-year old on their first trip to Silicon Valley) They proceeded to tell me how they had an engineering staff of over 50 people (and rapidly growing) and millions of dollars invested into infrastructure. I had zero engineers, zero infrastructure, zero venture capital and a desktop computer running our ad-serving software on an ISDN line.
On the flight back, our CEO asked me what I thought. I said “we’ll beat them.” To be honest, I don’t know where my response came from because the truth was that I was very intimidated and had no idea how we would beat them. Either the pressurization in the plane was off or my gut was trumping logic.
Two years later, we were unstoppable, taking their customers and everyone else’s. They ended up going out of business shortly after our IPO. DoubleClick was the only one in front of us and we were stopping at nothing to beat them. And, we were very quickly chipping away at their customer base, too.
3: “All-Star Team”
We won because we had the best team. Period. Every person on my team was A-class. We didn’t hire resumes and experience, we hired smart, good people who wanted to be entrepreneurs. Everyone was a “friend of a friend of an L90 employee” and it made all the difference in the world. In fact, many people had no prior experience at all in the jobs that they were hired to do. But, every one of them rose to the challenge and ended up mastering their jobs. No one wanted to be the first person to leave the office, everyone took an enormous amount of pride in their work and no one wanted to let their “friends” (co-workers) down so they always jumped in to lend a hand.
Sometimes people tell me that this was the “dot-com days” and everyone was just trying to get rich. I refuse to believe that. I think our team was second to none and it showed in everything that we did. I think it is evidenced by the fact that many people from our team went on to be very successful; some are successful entrepreneurs, some are holding very high level executive positions at successful companies and some started non-profit/charity organizations.
A team like that is addictive, I have been in rehab, dealing with withdrawal ever since.
I’m proud of all of them. We had fun; worked hard and played hard.
4: “Rapid Growth and Dominance”
We refused to lose. We took it personally. We grew from a handful of employees to hundreds of employees worldwide in just a few years and the winning attitude was never diluted. There were a lot of growing pains, but there was no obstacle too big for us to conquer. In fact, the bigger the obstacle, the more pumped up everyone got. The interesting thing is that we never looked at our competition, we never did any kind of competitive analysis on the products --- we wanted to be leaders, so we acted like leaders – we focused on our customers, not our competition.
5. “Patent Lawsuit”
We were on the IPO track and our #1 competitor (DoubleClick) filed a bogus patent-infringement lawsuit right before our IPO. They were trying to block the success of our IPO. It was ugly. We had lawyers everywhere; digging through files, reviewing all of our emails and mounds of paperwork. This was a multi-million dollar lawsuit and it could have crushed our business. But, we never let it phase us. We did what we needed to do, adjusted and moved on. In fact, we were so agile that we were able to readjust major plans, literally overnight. We thought that DoubleClick was going to file the lawsuit in Virginia because we were planning to open a new data center there. One night, we hopped on a red-eye flight to Virginia and moved millions of dollars of heavy, high-end computing equipment out of Virginia in less than 24 hours and redeployed it to Austin, Texas. In the end, we settled the bogus lawsuit in our favor.
6: “IPO”
Business as usual... While the prospect of an IPO was exciting, we never let it consume our minds or let it affect our behavior. It was just another step towards conquering our market. There were a lot challenges leading up to it (e.g. raising capital, underwriters backing out, extreme criticism, patent lawsuit from our competitor, etc.) In fact, we even had to change our name (original name was Latitude90) because Latitude Communications was going to sue us because our names were too similar. So, almost overnight, we became “L90.” To top it all off, on the day of the IPO, the market took a big dip (January 21, 2000). Even through all that, we had a very successful IPO - the offering share price went from $8 per share to $15 per share and we raised $112 million. The market capitalization eventually peaked at almost $500 million (half a billion dollars!)
The IPO came and went, we had parties, we celebrated and took a deep breath. Then, we went back to work – harder and faster than ever. I believe our entire team bought their friends and family stock. I have yet to talk to anyone who did not hang on to it well-after the IPO. That either shows extreme passion for the potential of the company or poor investment advice – I like to believe it is the former.
7: “Global Expansion”
We had offices everywhere in every major city in U.S. (Chicago, New York, Miami, Detroit, San Francisco, Los Angeles, etc.) I spent a lot of my time traveling amongst all of the offices. We were also expanding overseas which were exciting times. The most important thing that I learned as we were expanding was that it is extremely important to learn the nuances of the different cultures in different cities in order to hire the right people. New Yorkers (i.e. aggressive) are very different than people from Los Angeles (i.e. laid back) – if you hire a laid back person in New York, they’ll get run over…
8: “Acquirer”
There was a period of time where I had a stack of business plans on my desk of companies we were considering acquiring. I was 23 years old, I barely knew what a business plan was… yet, I found myself evaluating business plans put together by experts, investment bankers and lawyers. What the hell did I know? To me, it was simple, does this move our business forward? If so, buy them (at a reasonable price, of course). Funny thing, we were moving so fast that there were few companies that fit this very simple criterion.
9: “Leaving”
During our IPO process, one of the common questions was “What if Frank gets hit by a bus?” While many told me that I should have been flattered, I took this as an extreme insult. How could we be a real company if it is perceived that one individual is so critical and such a risk to its ongoing operations? I viewed that perception as personal failure. From that point forward, my #1 goal was to eliminate that perception and make it so that the company did not need me. I succeeded. I was satisfied that I achieved my goal, then, there was a period of extreme sadness. At that point, I knew that I needed to move on. My job was done.
I wanted to stay very close to the company, so L90 invested in my next venture (Startup 4.0: Zondigo) and I became Chairman of the Advisory Board, found my replacement and moved on. This was one of the most difficult things that I’ve ever had to do. My team felt like I was letting them down, they were nervous, scared and confused. During that time, some of them had very sour feelings over my leaving – I think they felt that I abandoned them. I believed that I was doing what was best for them and what was best for the company – they needed to grow and they all stepped up to the challenge. It turns out that they saw something that I didn’t. As you’ll come to learn in the next few paragraphs, everything changed after my departure. I doubt it had anything to do with my leaving, I certainly wasn’t anything special. I think it was just bad timing, but I still often wonder what would have happened if I stuck around. It is, perhaps, the only decision I’ve ever gone back and questioned.
10: “Personal Lawsuit / Litigation”
One day, everything got weird. I was planning to sell my stock in the company and I came to learn that there was a problem with my stock. After getting the run around from the CEO, I was advised to take action to remedy the situation. I ended up having to file a lawsuit against the CEO and the company. This was the first and only personal lawsuit that I had been involved in. How could I sue the company that I was so passionate about building? It didn’t make any sense to me – I was very confused, the Board was very confused… I was planning my wedding at the same time that we were in litigation. It got to the point that I was worried that a process-server would show up on my wedding day with a counter-lawsuit. It turned out that the CEO wasn’t honest with anyone, including myself and the Board. He was trying to hide something. He is now in jail (details to come in the next few paragraphs). After he was fired, I ended up settling the lawsuit with the company and now have great relationships with the people who were once “sitting on the other side of the table”. Funny how things can change so quickly...
11: “Acquired”
After my departure, L90 sold the technology platform (adMonitor) to DoubleClick. It was a dumb move and it did not make any sense. How can you run an ad-network without an ad-serving technology? Turned out that the CEO had his own agenda and he was able to convince the Board that this was the right thing to do. There were later suspicions that he pushed to sell the technology so that he could cover-up some of his wrong-doings. I brought my concerns to the Board; however, we were in litigation over my personal lawsuit, so I did not have much influence with them. The acquisition went through and that was the start of a terrible chain of events.
12: “SEC Investigation and Securities Fraud”
I met the CEO for lunch at Jerry’s Deli in Marina Del Rey, CA, across the street from L90’s headquarters. My purpose for the lunch was to confront him on the things that “didn’t seem right.” Halfway into lunch, he said “Are you wearing a wire?” I said “No, what are you talking about?” he said “lift up your shirt, I want to see that you aren’t wearing a wire.” I was so confused... The guy that I used to go surfing with on weekends, considered a friend for years and someone that I had an enormous of respect for, had turned into a completely different person right in front of my eyes. Huh?
One week later the SEC announced that they were investigating him for securities fraud. What the hell happened? Who was this guy? It all started making sense. To this day, I am not angry with him (even though everything that we had all worked hard for was being destroyed) and I don’t think he was a bad person, I think he simply made some very poor decisions. He was fired and a few others resigned from the company. I think there were some very good people that were caught in the cross-fire and now the CEO and a few others are in jail.
I helped the company’s Board to clear the company from the mess and cooperated with the SEC. Testifying at the SEC, even when you are one of the “good guys”, is not a good feeling and I hope it is something that I never have to experience again. All I can say is that walking into a dark room with gray walls and sitting in front of a bunch of government officials and a team of lawyers firing questions at you for hours is not a comforting experience.
13: “Jail”
It is sad to see good people go to jail, even though some of them made some very bad decisions. Maybe they truly are bad people and I am just the ultimate optimist, but I have trouble accepting that. I understand why it needs to happen. Many people lost a lot of money, including myself and many of the hard-working, passionate people on my team. I just simply wouldn’t wish that on anyone, and I feel especially bad for their families. I’ll probably never know the whole story on who did what, why and to whom --- but I still have a lot of respect for some of the people that had to go to jail over the whole fiasco. I hope, for them, that they are able to bounce back and when they get out that they do something good for the world.
14: “Liquidation”
The SEC investigation and the acquisition of L90’s technology by DoubleClick destroyed the future growth potential of a very good company. This was the opposite of your typical “dot-com bubble bursting” story. L90 was a great company with a good business model (profitable before any venture-capital funding and the IPO), it had a lot of money in the bank and it ended up being shut down (by choice). The advertising services group was sold to AskJeeves and then the company began a liquidation process to give tens of millions of dollars in capital back to its shareholders. The story is still not over yet. The company is still technically in business, awaiting the final stage of the liquidation.
Wow. I don’t know what to say… I am not happy with the way things ended, as I don’t think it reflects what a great company we had created, but I wouldn’t trade anything for all of the positive experiences that came from it.
Today, at my current company, StrongMail Systems (Startup 5.0), I am still working with some of the superstars from L90. In fact, my co-founder (one of my greatest friends), Tim McQuillen, and I met at L90 (more on this later...).
I will never forget my experiences at L90 – I was inspired every day by the team that we had created. It was unfortunate that, for many of them, their hard work was tarnished and their dream was destroyed. Sometimes I still feel that I let them down by leaving when I did – had I not left, I could have potentially prevented the mess that was created after my departure.
Today, a company like L90 would be thriving with the success of online advertising.
To the team at L90, you were all superstars and I hope that you all go on to achieve your dreams in the future!
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SNAPSHOT:
Venture Capital Funding: $2M angel (Initial), $12M (total)
Exit: $112M IPO, led by SG Cowen; technology acquired by DoubleClick; advertising services group acquired by AskJeeves
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LESSON(S) LEARNED:
Think big. Be scrappy: The bigger we got, the scrappier we became. Just because a company gets big, ideas get bigger and the employee and customer count grows – it doesn’t mean that things need to become more complex. We were developing a new feature or product a week with an engineering team of less than 20.
No shortcuts!: What goes around comes around. Shortcuts always come back to bite you. In the case of L90, a select few took some short cuts and they are now paying for it with some of the best years of their lives.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BIGGEST…
…reason for success: The Team
…mistake: Leaving
…challenge: We were the 7th horse in a 7 horse race when we started. There were a number of companies (DoubleClick, AdForce, LinkExchange, 24/7 Media) that were either public or well-funded before we even got started. We were late to the game and had a fraction of the resources that they did – beating them was one hell of a challenge.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IF I WERE…
…smarter: I would have better protected my financial interest in the company.
…dumber: I would not have hired a good lawyer to “right the wrong.”
…to do it all over again: I would not have left when I did and could have potentially protected the company from the mess that a few people caused after my departure.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Next on deck: Startup 4.0… “Wireless is the next big thing – hurry!”
By Frank Addante
[Startup 2.0] ReaXions, Inc. – Web Design, Development and Advertising Technology Company
Age: 21-22
Time Period: 1997-1998
My Role: President and Founder
High Point: Developing one of the first online video streaming websites for the 1998 Winter Olympics with Visa
At Starting Point (Startup 1.0), we made graphs, lots of graphs… We would impress ourselves with graphs and charts showing hockey stick growth in users and website traffic. We loved our graphs… we were very excited about how our user base and traffic were growing very quickly. One day, someone created another graph called “Expenses” – it looked a lot like our “Web Traffic Growth” graph… Then we got really carried away and created a graph called “Profit” – this one looked A LOT different… after that one, the graph making party was over.
It suddenly hit us that it actually costs more money to support more traffic! So then the question was posed: “How will we make money?” Advertising was the answer! (though, at the time, companies that we would sell to did not have an “online advertising” budget… creating budget = not good)
Starting Point was one of the first sites on the Internet to offer targeted, track-able advertising. The revenue-engine behind the site was driven by technology that I created to display banner ads, text links and to deliver targeted emails for the site. It was a simple concept; if someone searched for the word “long distance” we displayed an advertisement for AT&T long distance. I developed this ad-serving technology for Starting Point at ReaXions. I was running two companies at the same time – one which was a “dot-com” (Starting Point) and the other which developed technologies for “dot-coms” (ReaXions).
After seeing the online advertising model work for Starting Point, I decided to build upon this concept and enable other websites to do the same. So, I started a new company, ReaXions, Inc. During this period of time (1997-ish), websites were basically static, online advertising brochures. Marketers, and their respective companies, were looking to “go online.” At ReaXions, we created one of the first online video streaming enabled sites for the 1998 Winter Olympics. ReaXions helped companies create websites and then provided them with the tools to promote their sites and monetize the traffic (marketing software). They paid us -a little- money to develop their website and then they paid us -a lot- of money for the marketing tools to drive revenue from it. The more money they made, the more they were happy to spend with us. A lot of other companies started realizing the same thing - Internet advertising was heating up…
At ReaXions, we invented the technology (adMonitor) that would later serve as the foundation for my next startup (L90: Startup 3.0)…
Click here to see a semi-working version of the ReaXions website from 1998.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
SNAPSHOT:
Venture Capital Funding: $0 (profitable)
Exit: Evolved into my next company: L90, Inc. (Startup 3.0)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
LESSON(S) LEARNED:
What you don’t know can’t stop you: Our team was very inexperienced and we had no idea what our limits were. So, we simply kept reaching further and making mistakes until we got to the right answer.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
BIGGEST…
…reason for success: As the market changed, we recognized it and evolved into a much bigger business plan.
…mistake: Being young and naïve, I understood very little about business. I got involved with people who understood it much better than I did. As I created a lot of value for others, I failed to surround myself with smart people who could protect my interests.
…challenge: Figuring out how to scale.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
IF I WERE…
…smarter: We would not have allowed ourselves to discover the “wrong” way to do things. In doing so, we were able to formulate the right plan. Otherwise, we would likely have failed like most other website development companies did at the time.
…dumber: I would have raised venture capital for a company/business plan that would not have scaled.
…to do it all over again: I would have skipped this company altogether and went straight to the next one (L90, Inc.: Startup 3.0 – which leveraged the technology we developed at ReaXions)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
People often talk about the dot-com “bubble” bursting… did it really burst? Or did a bunch of investors simply lose money? The number of people online continued to grow… the number of websites continued to grow… the money spent online continued (e-commerce and advertising) to grow… It is too easy to start an online business – anyone can do it, anywhere in the world and reach anyone in the world -- with little “obstacle to entry” (by the way – I do not believe in “barrier to entry”). The question is no longer “how do will we make money?” it is now... “how will we continually evolve to protect the way we make money?”
Next on deck: Startup 3.0… “Internet advertising is good. No, it’s bad. Oh wait… it IS good!”
