This is the story of how an idea emerges, pivots, evolves and matures into a profitable company whose shares trade on the NASDAQ exchange.
Gal Trifon and his MediaMind co-founders had an idea for simplifying the creation of rich media content online. They knew they had a good idea, but what they didn’t know who would pay to use it? Unlike tech companies that launched before them, Gal and his team didn’t have the luxury of focusing on their product and hoping that customers and profits would come “someday.” They launched in 1999, a tough financial environment, so profits were critical.
How did they pull the pull it off? Listen to the interview to hear the full story.
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Here’s your program.
Andrew: Hi, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Want to learn how a company pivots and evolves over the course of years? Joining me is Gal Trifon, founder of MediaMind, which provides advertising campaign management solutions to agencies and advertisers.
But, as I was telling him before the interview started, I remember the company when it was called Eyeblaster and it did something different. They had these cool little ads. I remember even calling my brother over to look at my computer screen the first time I saw an Eyeblaster spot. The ad floated up from the page and moved across the screen in a way that I’d never seen before.
Gal, do you remember what I’m talking about?
Gal: I do.
Andrew: How do you describe those ads?
Gal: Those were early stage floating ads. And they were real first rich media opportunities that got a lot of advertisers excited, and got a lot of consumers excited. Others intruded, and they showed the way to a great deal of demand for online advertising by advertisers that never really did anything online because they felt they’re very limited. So, it actually was part of a revolution that helped a lot of publishers and content providers monetize their content more successfully.
Andrew: Yep. So, what was the original . . . and as I said in the intro, this business has evolved so much since then. But, what was that original idea that you guys had?
Gal: We started just being a group of engineers. We realized an opportunity to make the Web richer. And our initial focus was just creating technology that would help site designers, publishers build rich media content into their content more easily, manage it, track it. It just happened that advertising became the obvious application for it. We didn’t know it would turn to be an advertising tool. We didn’t know that we’d even be focused on marketing. We initially, when showing people how our technology works, we showed them how they can tell jokes in audio and put them online. People would just hear them as is. It ended up being a great lead for our advertising, but that’s not what we [inaudible 03:46] will do.
Andrew: What do you mean? What did that prototype look like that you were taking out to people?
Gal: If you remember, it was like in ’99, there was just a huge audience of people that turned to become Web developers. It was an industry that emerged overnight to help companies build sites for themselves and services for online. And I think the common ground there was that it wasn’t really a technical industry. Building sites was all about the user experience. And the people behind it were also very creative and user-oriented, but the technology that they used to build a site was very, very simple, and it didn’t really allow for delivery of rich media formats for video, for animations. The Web was images and text, and very, very basic in style. Some of it was bandwidth. But everybody could tell already that bandwidth is not going to be a problem.
So we thought ahead and really built a set of tools to help people design rich media messages and put them easily into their sites, and then dynamically change them. That was a very, very generic platform. And from it we created . . . after going through quite a bit of experimentation in different verticals, like e-commerce, we used a similar technology to help retailers build these messages into their sites. So if you go to an e-commerce store, it will help you find products more easily. It will help you realize other opportunities to buy products. And then advertising just became a natural extension from that.
Andrew: But that original prototype that you were showing people, was there any video? Was it a person standing up on a screen, but kind of away from the rest of the text telling you about the page that they’re on? Was it someone just . . . what was it? What did it look like?
Gal: So we had the whole bunch of website examples that were built over these rich media components. One was really a site where you can record yourself telling jokes. You can upload the jokes, and people can log in to a destination site and see just like in a joke’s forum in audio. And there was another one where you could upload video and images of your products and sell and show really rich media in eBay. There was one where in an online shoe store, you could see kind of floating ads. Shoes falling on the margins and promoting discounted products or new products. So there were a whole bunch of things that you could do with rich media that were not done before.
Andrew: I see. So you had this technology, you had this vision of what could be done on the Web, but you weren’t sure how to apply it. So you said, “We’ll build it. We’ll show it around. We’ll get feedback, and other people will know what to do with this.” Is that right?
Gal: Almost. We thought one is just how innovative it needs to be, in terms of the user experience. But the other important decision that we made is that it needs to be very simple to create and manage. And for all these scenarios that I presented, there was kind of a back office side to it where people could very easily be convinced that managing this type of messaging would be very simple to them.
And, yes, from then on we just reached out initially to Web developers and told them put it on your site. And you know what, if it’s an e-commerce site that you’re building, let the marketing manager manage his messages, and he’ll just be happy about the product. If it’s anyone that created the content application, just embed these content tools, and you’ll be able to manage them very easily.
It ended up being, initially, the e-commerce application was the one that excited the most, because e-commerce was in trouble and people were looking to convert consumer site visitors more. That’s where we got first traction. There was a lot of excitement around that and e-commerce. Through the e-commerce experience, we ended up realizing the advertising opportunity.
Andrew: Okay. Actually, let’s go back again. Well, I’m hesitating here because I realize I didn’t even tell people how big you are now and give them enough of an incentive to keep listening to the evolution of this story. So why don’t we talk a little bit about where you are now. And then I’ll go back to what my fascination is in life, which is how you got here; how did you build this business.
But you guys went public recently? How was that IPO? How did that go for you?
Gal: Yeah, we did in August, and it was quite a journey. We were already running for a while. The company was 11 years sold when we ended up going public. It’s something that we really looked forward to. We’d been trying to. The market was very tough and our own process was not very easy to complete. But we’re excited about it. It creates a much bigger foundation for us to continue and grow the company. It really creates a new state, a new era for everyone involved.
Andrew: And because you’re public, your numbers are public, too. Revenue last year, $65.1 million, true?
Andrew: And how many customers do you have?
Gal: So we report the count of advertisers on an annual basis. Last year, we delivered campaigns for north of 7,000 different advertisers globally. We’re unique in that we’re very global. The company realized the international markets. We started selling our solutions in North America and very quickly realized that we can expand to other markets. So rushed to operate in Europe and in APAC and in Latin America. Last year, we delivered campaigns in 55 different countries on over 5,000 different living sites. Worked with thousands of advertising agencies. It’s pretty big.
Andrew: It’s very big. And as you said, when people see it, they don’t realize it. There was an evolution here. There was a lot of work here. There were setbacks, and there was learning. And it just, it grew over . . . it’s a ten-year work in the making. Ten-year success in the making.
Andrew: So let’s go back to my fascination, my audience’s fascination is. How do you do it? How does some guy just go out there and build something that becomes this big, this successful with as many customers as you’re working with now? So, what were you guys doing just before the business started?
Gal: All of us were in technology. There were four of us that started the company. Two of us are still on board and very involved. Our other partners left at different points of time and certainly have done a lot to help us get here, too. But I feel we did have a common vision that the user experience online is pretty limited, and we wanted to change that. And we’re very quick, I feel, one thing that we did very well, given our background, was to build prototypes and show people how this will work.
And then the other thing was just to open up to feedback very quickly. It was difficult to raise money back at the time, so we needed to really get some guidance from people for what would work best. And then to just work economically was a priority because there was only that much that we could raise. So we wanted to drive for profitability. All that really helped guide us to a great degree.
Andrew: 1999 was a tough market to raise money in for an Internet-based startup?
Gal: To be honest, ’99 was when we still worked in an intro, more on just building something that we can show. When we were ready for it, so there was a little money that we raised from family and friends, and it took us pretty far, as far as our ability to build the prototype. And when we were ready to go out and raise, times had changed drastically. So, it was more in early 2000, and back at that time, that was, for many, too late of a point. And at that point of time, there was just a lot more that we needed to prove. We did end up successfully raising a certain amount that was all we could afford to raise, and it took us all the way to profitability, a little more than a year later.
Andrew: Okay. And can you say how much you raised?
Gal: So we raised about, to get to profit, we raised just over a million dollars, including that friends and family round, including a little bit of money that followed, and then a bigger round from, again, private investors in Israel that really helped us get to the point where we became independent.
Andrew: Okay. And I know that one of your first investors, Guy Gamzu, you guys are such good friends, to this day, he’s the one who introduced me to you.
Gal: Yeah. Guy’s a dear friend. He’s a board member. He’s a fan of the company. Yeah, still excited about it.
Andrew: How did you convince him and the other investors, back when people were afraid to touch anything technology and definitely anything related to the Internet?
Gal: I think people did see something different. In fact, it actually was easier then because of how limited the medium was visually. So, they saw the richer nature of things, and they could tell that given better bandwidth this is where things are headed. And then it was easy to visualize what we’re trying to accomplish, and they liked it. People-wise, it was a time when there were people certainly more confident, their business skills, and just in the process of raising funds. We were very modest throughout that entire stage and just really be questioning more than dealing. And that’s something that Guy probably liked and others too. It helped us really get to a point where clients were happy to tell us what they need, and employees were happy to tell us what it would take for them to join us.
Andrew: Was there one demo that when people saw it they said, “Ah, I can’t believe this is possible. I’ve got to invest in, or somehow be a part of whatever company builds this”? What was that demo?
Gal: I think what we had from the e-commerce examples that we created, there was one that one of my co-founders created that showed a flying shoe where you would be on an e-commerce site, and as you were browsing, they will promote a product to you by showing a shoe flying on the sideline. It was very visually interactive and it was very effective. It was engaging, and you could click on it to learn more. It got you to where they wanted you very, very quickly, and that was given the plain vanilla e-commerce experience. Back at that time, you would basically have a very hard time finding what you were looking for, and certainly for them to promote anything to you was not easy. Now we make things completely straight forward, but back then it seemed like a real revolution!
Andrew: Okay. I could see how they would be excited by that. Frankly, I would probably be excited by that today if you showed me a way of getting a customer’s attention that way and make it in a gee-whiz format. My eye always would go to it and I’d get excited about it. What about the path to profitability? You said because of the economic environment at the time, you had to show that you were going to get profit, and you needed the profit in order to continue your business. What was your plan? Not how did you end up doing it, but what was your plan for finding a profit?
Gal: We realized where the market is very soon. It was convenient for us to operate and build the technology from Israel, but we made a quick move, faster I think than many others and really, completely transferred most of our focus to the U.S. I feel that at that point of time I started feeling the commercial potential, because there were a lot of customers really, in terms of web development, e-commerce, and later advertising that were suffering. The industry had turned the wrong way. There was a lot of pressure for revenue by others, and we offered to potentially improve their performance. They liked it. By that point of time, we really learned quickly what it would take to build the sales process, initially to e-commerce through web developers. But soon afterwards, we realized that the bigger opportunity and the bigger business model . . .
Andrew: So, you were going to go after e-commerce sites, charge them a per impression fee so every time one of those shoes dropped, they’d have to pay a fraction of a penny?
Gal: So, to be honest, we actually were very focused on understanding from them how they can pay us for it. We didn’t know what the business model would be. We would love for it to be impression based, but what we learned very quickly with working with e-commerce sites is that there really wasn’t a budget for them for in-store marketing. There was a budget to build the site, and then there was a budget for them to drive traffic to it, and that really was it, especially in 2000. We really had to learn to show that we could consistently improve results for them to share this incremental success with us. Now, keep in mind, we are very small, very focused on the technology with a little bit of market coverage. But we really didn’t have any control over what they were selling, how much they were selling it for. So this brand share model for us seemed very limited and risky.
The main upside of working with all these e-commerce sites and the marketing departments was that they told us that they had very similar issues in just marketing themselves outside of the store, and if we could find a way for the same messages to really influence consumers when they are considering where they want to shop, that would be a great outcome. What we learned quickly afterwards was that there was an existing business model for advertising. There was money to go around. People were paying, sites were paid to sell advertising, and they would love to be paid more if the advertising product works better. There’s an entire ecosystem of agencies that build the great ads that really look for a better creative product. The last thing a new creative genius would want to be focused on is creating a text banner, and really we’re seeing a much greater opportunity for them to express themselves. Media agencies too, that are really in charge of paying sites and allocating budgets, were excited about potentially showing more data. So it was really a win/win situation for everyone, and that’s what we started focusing on is really bringing this product to market as a multi-user product. There is a tool for the creative shop to build the ads. There is a tool for the media agency to see where they can run it, and then there is a tool for the publishers to place these ads in their pages very, very simply. And all of them can work together to really deliver these campaigns more successfully. So that was really the evolution there.
Andrew: I’m fascinated by that. It seems like a natural. Of course, the customers don’t have a budget for on-site advertising for their own products, but they do have a budget for buying ads somewhere else, and they do want more of those ads. And publishers want more of those ad dollars, and so on. It seems like a natural when you step back. But that kind of pivot, when you’re in the moment, I could see some people resisting it, saying, “No, no, we’re not in the ad business. There are enough advertising businesses out there. That’s not our passion, that’s not our focus. We can’t take that business. We need to focus on this. Why don’t we just find a new way to convince our customers that this make sense? Maybe get them to try it. Maybe get them to do another try.” Why didn’t you take that stubborn approach and pivot and take the easier path?
Gal: I think that I don’t know if we could afford to, to be honest. At that point in time we really were on a path to really generate revenues. It was very important. There was limited cash to go around. We were traveling, staying three in a room in a hotel, and there was a lot of pressure and a lot of motivation to change that. Advertising offered, clearly, a path of less resistance. We could tell that people mean business and that our technology could be applied much more broadly, and that excited us. We didn’t really see this . . . it’s not like the e-commerce passion that we had was to the degree that we would tolerate just changing anything that wouldn’t make sense from a business model standpoint. That really changed through the advertising discussion. Our customers were encouraging us to move our focus in that direction, so that was very satisfactory, actually!
Andrew: Okay. So, you start doing that, you start getting a lot of attention. Do you remember the first ad that got you heavy attention, that put you on the map? Which one was it?
Gal: So the first one we ran that really created a lot of buzz, there were a few. There are two that I will note. One is the movie “Moulin Rouge.” That was the first big studio movie ad campaign, and what is exciting about it is that we actually researched different variables. And we found that within the limitations of banner advertising, the movie studios were the most innovative and creative advertisers. We felt they would be the most excited about removing creative constraints, and then we learned about what agencies they work with, an agency, then called Tribal DVD, that ended up becoming Advertising.com and is part of Omnicom today, was handling the accounts for Fox Studios, and they were happy to really explore ideas, to use the technology. They were very excited about introducing us to sites that would potentially take this type of advertising. They were relatively creative, and they created an ad that had a person walking to the screen and stick posters on it for the movie. It was very entertaining, and that campaign went live on sites like WWF, WWE, MTV, iVillage, and people really got excited about it. And then, a week later, every agency dealing with the movie studio wanted to do something similar.
We loved this vertical approach. We quickly expanded into other agencies, to other studios. So, we did “Jurassic Park” for Universal Studios, and their agency developed an ad where one of the dinosaurs flew over the screen. It was kind of scary. Then through it, we were introducing to other movie opportunities. Then we moved into the automotive vertical that we also felt was extremely creative and emotional in the type of advertisement they were running on TV and online to some degree and same thing. We worked through Toyota through their agency, and worked then with other brands. And then vertical by vertical we managed to expand.
The other ad story that I wanted to tell is that one of the smartest things that we did was to actually run our own technology on trade sites. So, it was actually sites that were dealing with advertising professionals that wanted to be part of it. So we were given some inventory, and we were running an ad with a bouncing ball where you could see a ball bouncing at your face from the screen and then it splashed and it said “Eyeblaster” and it was orange. People could click and find a way to contact us, and that was just amazing, the amount of pull. Then we knew it really works because the amount of pull that we got out of it was amazing. People really looked at it as an amazing case study. Lead back to them, they thought it would work for their brands, and it worked.
So these are two great examples. There was another one that was a real revolution for Zippo that is an example of something we would never even think of something like this. They are a small agency, a Midwest agency, that thought it would be great to turn the lights off on the site and then put a hand in with a Zippo lighter and then it turned the light on the Zippo, and the light is back on. That was also, if it’s done with great quality and it’s entertaining, people loved it. Consumers loved it. People really tried to find a way to contact us about it, and it was all positive. Later on, I think with the masses, when it scaled up to be used by many more, then keeping quality became more difficult. Then we were very focused on scaling down, honestly, the creative impact to make sure that it’s tasteful, and it’s not intrusive, and educated people about adding close buttons to their ads, and really integrating their ads well with the content. That really became a priority as soon as it was scaling up in use.
Andrew: You’re watching me beam as you’re talking about this, because I loved those ads. Those ads, I don’t even know that you and I, you’re the creator of the ads, I’m a big fan of the ads. I don’t even know that we’re doing justice to how impactful they were. When you go to a web page and the whole thing goes dark, and suddenly a Zippo comes on — I didn’t see that one — when you experience it, it’s so much more powerful than when you just hear someone talk about it. I remember a gondola for some Disney movie just go across my screen on Yahoo.com. I remember refreshing the page on, I forget if it was Jeep, I didn’t even care what ad it was, but I just remember refreshing the page and trying to get that ad to come back through because it was so exciting.
Now, as exciting as it was for us, you’re saying that it became too much, that advertisers needed to learn to add close buttons because not every one is as excited as Andrew was. I see that there are some hate sites about it online. Why did you guys decide to shift away from that instead of saying we’re going to educate the public? There was a time when people hated banner ads and they were up in arms when Zima had a banner ad on the Internet, and the public learned to accept it. Today that’s the gold standard of advertising, that’s proper. Why didn’t you go in that direction? How did things change after that?
Gal: It hasn’t to a great degree. We still do a lot of rich media advertising. The formats, I think, became better integrated with content. The medium is very, very user driven, being interactive and collaborative to a great degree. It became a priority to become an authority and respecting the user experience. We felt that’s the important part of our future. We could tell that consumers could be very sensitive. We’re looking long term. So, I do feel we still do a great deal of rich media and it could be very impactful in a tasteful way. The ads that are still floating or taking over the page will always be extremely creative. You’ll see them in a lower frequency. We’ll make sure that frequency controls are in place and then there’s a lot more happening.
There’s user driven, so you’ll see ads that you can expand, that you can click to learn more from, and that will actually create the experience that’s completely not intrusive if it’s a choice of the user to do.
Andrew: But there’s less of it today then there was back then when it first came out. I mean I still see, I don’t know if you guys do this or if you’re responsible at all for it, but I know that Apple does ads like this a lot where you’ll see someone with an iPod Touch. That’s you?
Gal: That’s potentially, depending and we do run ads for Apple in certain places. Others do too. It’s a bigger industry right now. But what we’ve evolved to do is actually, through these experiences with our advertisers, we just created an amazing opportunity and it still is for the medium overall.
But there were other ways to impact campaign performance, and we just became closer and closer to the happenings, and our clients were telling us that beyond creative it’s very important for them to measure effectively and there are different things they want to measure so we focused on expanding our analytical capabilities and give them all kinds of reports and tools to use data. Then they wanted to target, and we focused on that.
Soon enough, we just realized that the best outcome would be to become the digital campaign management platform of the future and to help anyone who is serious about delivering digital campaigns have a very broad set of tools to select from and the system to really, very simply, deliver large complicated campaigns. And that’s who we are today.
There’s just support for an enormous amount of formats and channels. You can run the same campaign on mobile and social sites and websites. You can deliver video ads across different channels. You can track how consumers react to your campaign in all these channels and optimize automatically the creative experience. I can show you a different ad every time you meet me. I can dynamically change the nature of these ads. I can make them much more relevant and engage with . . .
Andrew: Tell me the story of how you evolved from creating these ads where the ball will splatter on my computer screen and I’ll want to create a similar ad for my business, so I call you. How do you evolve from that to ad management?
Gal: Because it’s the same companies. The company that had a creative challenge where the publishers that couldn’t sell their advertising effectively and expensively enough. It was the creative shop that couldn’t really bring their talent to play to generate a business model online. When a campaign shifted from TV to online, there was really nothing to do creatively, and it was the media agency that really didn’t see a big enough budget as a result of both of these.
So everyone was motivated then to improve creative. And that’s what we helped do. It brought us really to the middle of this ecosystem. We became used by thousands of companies in all these different constituents, first in North America and then globally. Over time they just told us about more and more issues they had, and it didn’t all have to do creating.
Some of them had to do with data. Actually, data we became experts in just from the fact that they wanted to show that this actually works, that people attune to these ads and respond to them.
So we showed them reports, and the reports were better than other reports in the industry. So they said, “Well, we want these reports elsewhere too. We don’t want to just see this data on rich media. We want to actually have standard banners reports for you as well.” And then search became a big opportunity. A lot of consumers were responding to ads by searching and our clients wanted to show that if we help them show a great ad, and the user may not just click to buy a product, he may search for it a week later, we can help them connect between that and later delayed engagement and the appearance of the ad.
So all these different channels and systems and reports became just the requirements of our clients in a way. We, over time, just learned that there’s a way to connect all of them and to create a platform that would holistically help advertisers deal with digital advertising. It’s very complicated. Digital advertising seems to you, we’re looking [inaudible 31:05] behind the scenes complexity of it is enormous. It just takes so much effort to deliver a campaign on tens of sites simultaneously knowing their specifications and the contact people and having all of them approve it and tracking. It’s a very complicated process. We just felt we could make it simpler.
Andrew: You said that you started offering reports on your ads and your customers were so happy about them that they wanted those reports elsewhere too and on other kinds of ads. What was it about your reports that made them stand out? What was it about the data that you were giving that got people so excited?
Gal: So we showed, first of all, just in terms of delivering rich media ads, you could tell for how much time a consumer is engaged with an ad. We still do. You could tell people actually play with an ad without clicking on it. Until that point, it was all about clicks. You know what? Not everyone has a reason to force a user to click. Many of our advertisers didn’t have an objective of driving the user anywhere else. They just wanted to impact them. We showed that we found a way to show interest in more than just a click. So that was one thing.
Then the usability of it. The reports were very friendly. Data became accessible. They could slice and dice in whatever way they want. Until today, where they can click a button, and it will prepare a presentation for them to show every aspect of performance. So really I think a lot of it is just relative to what was available back at the time.
I think our approach was more a bit more user friendly and innovative and it really helped excite. Because it was used by so many agencies, they helped us improve it. Someone would come and say I have a great idea of how I want you to report results. As an agency, that’s what I wanted to show my advertiser. Said, huh? We went back. The cycles were very close.
I was selling in California. My partner was servicing in New York. Another partner was building the product in Israel. So we very quickly closed the cycles and put stuff together and came back, and it could be as fast as the next day, we’ll be, from that same agency, showing them something else. I think that overwhelmed them, in terms of how quickly it worked. They were happy to tell us more, and that helped build the platform better and better.
Andrew: How were you able to return results so quickly? What was it about the way you guys operated? If anything, the way you described it, it sounds like it would be harder for you to turn around new ideas. You’re not all in the same city. You don’t have experience here. You’re not all in front of the customer. How were you able to do it so quickly?
Gal: I think we work well as a team. There was technology orientation that evolved to where it’s really customer facing, advertising expertise, and we never really felt that . . . the good thing today, we really respect the capabilities of our clients as experts in advertising and what we want to do is provide tools to help solve problems for them, help create opportunities for them, and it became very easy.
If I were standing in front of you as an agency and you would tell me that that’s the report you want, I would quickly realize what it will take to build it because of background, and then I’ll have a very easy time explaining it and getting other people excited about it. We could turn it around pretty quickly.
The entire team operated. Back then, it was just really as quickly as that. It was a small group of people. By the year 2001, we probably finished the year with well over 100 different advertisers running through their agencies, and people could tell the potential and we were across more than one vertical. So everybody in the team was very excited to see the technology applied. I think it helped.
Andrew: You also mentioned user experience. That it was so comfortable to use your reports that that drew your customers in and they wanted that kind of experience with all their data. The founders of this company were technical. They weren’t into user experience and sales. How do you suddenly become so good at user experience and sales?
Gal: I think technologists can be good at user experience. A lot of the better user experiences that you see out there now in new media are created by technologists.
Andrew: How, not all, but how is it that you guys were?
Gal: I feel that we experimented with a lot of what we did, and we were very tuned to get customers involved in the process of creating it very early. So if someone was sitting with me and telling me that they’d like to see the process change, I would ask them how and they’ll help me draw it and I’ll have something to show. We would very quickly be able to test.
We worked in such short cycles, it didn’t really take you three months to come back and expect it. We really were very concerned about wasting time in the wrong directions. So we’re very careful to show something quickly back to the customer and to ask for opinion, come back and prove it, and so on. That’s really key. And then also, I feel relatively early, creative people got excited about what we do and were happy to join the company.
So in product and technology, we had people join us very early that were really designers. They helped us a great deal in shaping up the future of the product too. They were understanding the clients very well and the creative side and from the media agency side too. So it’s really a collaborative effort. We’re just very open and aware to it.
The reference point, the products that our customers were using, they constantly complained that they’re not user friendly, they’re complicated, they’re very difficult to train on. So that became a priority. We felt that’s the way to challenge it and to create something better.
Andrew: The other milestone that I wrote down when you were describing how the company evolved was search. How did you get into that, and how did it impact your business?
Gal: It impacted everyone’s business, anyone who has to do anything with online. Our clients have been . . . agencies serving advertisers became completely obsessed with the search opportunity, became really, first of all, a very large item. Advertisers appreciated the immediate satisfaction from a user searching for brand and reaching their website and transacting.
I think another thing that they learned to do is to really operate the search part of the campaign almost independently. Agencies were very passionate about finding a way to become involved in search themselves. Where a lot of them came from a more of a display background, branding background, they could see how search becomes more and more dominant. That’s where growth is. It actually pushes the display out in a way.
So we really were looking for a way to help our agency customers show value in search. Obviously still today, creative was not the application. There was only that much you could do and creating in Search is how you text more effectively. So data really became the real opportunities. Helping them show value in terms of analyzing search campaign side by side with display.
We realized that what we were doing here is two things. One is showing a way for an agency to indicate success in the display campaign through people searching for the brand. If you’re running a campaign for a movie and people end up searching for it a few days later, that’s a great success indication. So it became almost a respond mechanism to display advertising. The other thing that was a priority is just to show the display works. For a brand, it just becomes more and more comfortable that all they need to do is search. Search has real limitations. If you’re only depending on search marketing, then you’re expecting your customers to know about your product and to almost be decisive about it and then just basically in the very last stage, search for it and buy it. But what about all these customers that don’t still know about it and will never search for it and they may search for a category but have a lot of competition for their attention.
So what we help build for our clients is a way to show that search and display work very well together. That’s something that the agencies took to their clients to show that they should continue and spend on creating, because if they limit themselves to search only, they’ll lose a great audience who could potentially buy the product. These were the two first things that we’ve done. We’ve seen, also, just immediately traction to it. We ended up improving the type of analysis, the synergy reports that we had and ended up being successful there too.
Andrew: In the beginning of the program, we talked about how, because of the economy that you launched in, you needed to be profitable quickly. How long did it take for the business to reach profitability?
Gal: So we started in early ’99, and we started selling in late 2000, and in early 2001, we had actual traction. By the first quarter of 2002, we became profitable.
Andrew: Wow. Within a year of launching you became profitable?
Gal: Yes, you can say so.
Gal: Because of how it worked. There was much technology around, so we did not need to hang our sales operations. Back at that time, you were looking at and I wasn’t really a salesperson, but I was very passionate about getting people excited about the product, but not much more than that. My partner and I traveled to the U. S., and that was only to really show people what we do. Because of the nature of the product, as soon at they became excited about it, it was all about them using it, leveraging it. We trained them and we supported them.
That was the beauty of it. We did not need to have a very significant scale to get across so many companies and get them to create ads. We could just build a installed base of people that are familiar with the tools and expect them to do great things with it and they did. The other thing is how we marketed ourselves. So one thing is this idea with using our own technology to advertise ourselves.
Other things that we did creatively, that was to have the first online creative awards. We realized that when you walk into an advertising agency, the first thing you see are trophies and prizes that they win and awards. Everybody loves celebrating great creative in the industry. So we said that’s what we are about. Let us just create this award ceremony and start a competition. We put a site on were people could submit their ads. By early 2002, we already had hundreds of ad campaign that were really the best creative on the Web. These companies not only submitted ads, but they immediately sent everyone in the shop and their friends and family to check it out and vote for it. That created the quickly significant interest and demand as well.
With this type of activity, I think we could afford to operate to profitability with just a very small scale. Two people in the U.S., ten people building and supporting us in Israel. From then on, it changed a lot. We were invested very significantly every year and just scaling up with our service and the sales and marking, certainty the product. So that’s how we got started.
Andrew: As part of my research for my interviews, I often go to Archive.org to see how a company’s site evolved. Then when I see all those different years that you changed your website, what I do is I just started clicking around and have them open in new tabs. Most of those tabs, I could not see anything. The problem with Archive.org, the thing that I wish they could do better is deal with Flash and deal with more creative websites.
There is no way that ball that you talked about, I don’t think we will ever see that again, I wonder if anyone took a screen shot of it. But it definitely won’t be on Archive.org. The one thing that did survive was the Eyeblaster Awards, that you guys launched early on, that you just mentioned. All that is to just say that I do still see that.
In 2004, you guys raised money and you took some cash off the table. Why? Why did you decide to cash out a little bit?
Gal: Well, we had a few things. First of all we saw that this is going to work long term. We really could tell that we were onto something and we could make it much bigger and we wanted to be able to. Both in terms of employees as well as in terms of first generation investors, it was time to help relieve some pressure and buy ourselves just more time to execute, including management members, including certainly all time investors. Most people participated in that. It was not a lot of money that we took out. It really bought us a lot of peace and quiet and support for a long time.
We did that again in 2007. I think it was very important. Everyone in the company, that was with the company for over two years, had an opportunity to participate. A private company offering liquidity to employees is not something very common. I think, we got people to sense the value that we’re creating and the passion to continue to do it long term.
Now, it obviously much more transparent than simple. We just knew that it’s going to take time, and operating a business in this industry, having people work for you for, it was then five years, now ten years is not easy. There is so much opportunity and competition for talent. You can get people excited with the mission and expansion. I do feel there is a lot of passion. There are people that really love doing what we do. It became important to just really have them realize the value that is created. So that was part of the motivation back then.
Andrew: How did your life change after you took a little money off the table? Were you able to sleep at night better? Were you able to take more risks? What happens after that?
Gal: First of all, to put things in perspective, the kind of money that we took out, back in 2004, was not anything that would help anyone sleep at that point. It’s not at that level. Later on, when we did it at the beginning of 2007, it was certainly at a different level and that did help. You do want to also personally feel that you have accomplished something, to feel that you have managed to diversify a little bit. I do feel like actually for me, in looking at future opportunities, it really built a lot of confidence.
There were many opportunities to sell the business prematurely. We felt always that none of them competed with the long-term prospects. The kind of transactions that we did helped us gain the confidence, and I think it did. There were many junctions where without it we would have probably been pressured to sell. So that was part of the psychology around it on a personal level.
Andrew: Today it’s more understandable. I think venture capitalist, Mark Suster, talks about this a lot. He says you want to let the entrepreneur take some money off the table. You want him to be able to sleep well at night. You want him to be able to make decisions based on longer-term view, not because he needs to pay the mortgage and his wife is looking for some cash to pay for the kid’s school and all that.
But 2004 wasn’t common at all. I don’t know of many companies did it back then. What about this? I’m going to be interviewing Scott McNealy soon of Sun. I believe his position is he will never take a company public again. It’s just a lot of headache to take a company public. Why did you guys go public? Why did you even continue to try after so many different times when you were not able to? Why was it so important to go IPO?
Gal: To put things in order, we tried once in the worst of times. In 2008, we decided to put it on hold and simply resume the process when the market was back up. We felt that our industry is just rapidly consolidating. There was every competitor of our scale or below reached a point where they felt that can’t build themselves up anymore, and they rush to become part of something bigger. We felt we could. We felt, and we still do, there is just a much, much bigger opportunity ahead of us.
The advertisers knew more. Consumers spend more time online. Advertisers allocate budgets against it more broadly. It’s now becoming more simpler, the fact that you are using an iPad now and you are going to watch TV digitally. The fact that you are walking around with your mobile phone. The fact that social media is another, just like search, is just another way to engage with you and to measure your reaction. All this just makes it more complicated for us. Just a bigger opportunity.
We wanted to, because the industry had consolidated, the default for a company in our industry was to just disappear one day. We felt that we should show confidence in our long-term strategy by establishing ourselves independently, more robustly. Going public was something that was not done in our industry for a long time. We felt there was a strong statement that we were making and to ourselves, to our customers, and to our employees. That is why we were so focused on it, and certainly not an easy process to go through. It has clearly changed our lives to a great degree. Still that is what it supposed to do, in terms of giving us the energy and power to continue and develop the business.
Andrew: A few rapid-fire questions before we finish. First of all, best decision you ever made over the last ten years since you launched the business?
Gal: Probably moving to New York in 2000.
Gal: From a business standpoint, that was the best decision.
Andrew: Right. Why?
Gal: Because it something the company really needed to have to just a much closer to market resource that could drive its product, and its relationship building and everything should come from there. I think we were operating blindly in the dark and that changed it completely. Really opened our eyes to opportunity in e-commerce, in advertising, and that’s what allowed it.
Andrew: Do you have an example of one opportunity that you got that you wouldn’t have, I guess you were in Israel before New York, right?
Andrew: What’s one opportunity that you got and you said, “Ah, aha, of course this makes sense. Such a good decision to come here”?
Gal: I feel that the first time for me was to really go straight into it was an Internet World in 2000. I walked with a laptop with my partner, and we showed the Web companies the rich capabilities that we have, and just their response was all I needed to know that that’s where we should spend our time. We just were guessing what everybody was looking for, and within that week of meetings and that conference and just walking through booths, I learned a thousand times more than I did in building the product in Israel for over a year before.
Andrew: How about the worst decision over the last ten plus years?
Gal: Worst decision. Most best and worst decisions are actually people decisions. It’s really the type of people that you bring in and what you allow them to do. I’ve certainly had my share of decisions, and the worst side, in terms of bringing people and trying to change the company too fast, that will probably encapsulate the bad decisions that the company had made. I don’t think we made terrible decisions. I think we criticize ourselves very regularly and harshly, but nothing is overly traumatic. I don’t think so.
Andrew: All right. We’ve got now an audience of people who listen to us, mostly on their iPods, for about an hour, got excited about your story. They want to go do something with their lives. What’s one piece of action advice that you can give somebody who’s listening to this who is building a business? What is the most important piece of action they can take?
Gal: Create something that you can show and go show it. Just be with customers, show it, and they will tell you all you need to know. It is as important to know that something would not work for them, but don’t just take no for an answer. There is a lot of answers that you can get just from being in front of clients, very early with something that proves the concept, just even visually. That’s the way to go.
Andrew: Take it and show it to customers and hear their feedback, hear what they think of it, just keep showing it to them.
Gal: Show it to them with the intention of hearing what they have to say. Don’t show it to them with the intention of selling too early. Just show it, ask them what they think they can do with it. That’s the best way to go.
Andrew: All right. Company is MediaMind, and it’s at MediaMind.com. True? Got the right domain?
Andrew: Thank you for doing the interview. It’s great to meet you.
Gal: My pleasure. Thank you very much.
Andrew: Thank you all for watching, I’m Andrew. Come back to Mixergy, give me your feedback. And Guy, thanks for setting up this interview. Bye everyone.
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