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Hey everyone, it’s Andrew Warner founder of Mixergy dot com, home of the ambitious upstart. And you guys know what we do here. I bring internet entrepreneurs to come to talk about their experience, how they built their companies, how they created something incredible. And in many cases, how they ended up selling it. And what’s happening is, now that the audience is getting bigger and bigger and more interactive, they are starting to demand certain things and they’re starting to help with certain things. A big demand, Juan, before I introduce you I will tell you, is to bring entrepreneurs in from outside the US. They don’t want people just in Silicon Valley in the US. They don’t want people just from the US. They want them from all over the world which becomes a challenge for me because my friends are mostly on the west and east coast of the US. Thankfully though, my audience is also helpful and they’ll introduce me to entrepreneurs all over the world which is how you and I met. Juan Dominguez he is the CEO and founder of Red CPA in addition to so many other things. I don’t know how much of it we’re going to get into in this interview. But what I want to also, in addition, to the current company – Red CPA is an ad network and ad software producer – I also want to find out about Viajar, a company that he launched, took out for funding and then yah dot com said, “We like this so much forget about funding, we’re going to buy you.” And then he ended up running yah dot com and then they’re ended up being a sale here and a sale there and I’ve got a 55 million Euro number on my screen. But I also have tens of millions of dollars and we’re getting to get into all that and clear it up in this interview because I don’t have it here. Speaking of, Juan – Juan and all my audience, I’ve got to speak to all of you now at once. I don’t know enough to do this interview. Usually I can answer all the questions myself pretty much in the interviews; this time it’s more compl
icated than that. And I’m outside of Spain where Juan is and where his businesses have been built. So we’re going to learn together. So let’s go back in time, actually, and start off this way before we even get into what you’re doing today. Let’s find out where this idea for Viajar came from, that first business that we’ll be talking about. 3
Interviewee: All right. First, thank you very much for inviting me and having me here. I’m really excited and I really hope everything goes smoothly and that you understand my English which is a little bit rusty, lately. But to answer your question, I used to work in the airline industry for a few years and I ended up working at [INAUDIBLE] which is one of the largest [INAUDIBLE] which are the [INAUDIBLE] luxury distribute airline tickets to travel agents. I worked there for three years. I started working there in 1997 I think. It was just about the time when online travel agents were starting to take off in the US. And since we had the technology that they used I thought that was a pretty simple business to run. It looked much more complicated than it actually was. So I started plotting the way to create an online travel agency in Spain, even though there wasn’t a market in 1999 or 1998 which is when I started thinking about that. There wasn’t even a lot of people online in Spain but I was sure that it would take off very soon. So I…
Andrew: Why, by the way, did you know that online travel agencies would take off? Did it have anything to do with what was going on in the US internet space?
Interviewee: Yes. That was the first thing and also at that time there was a lot of media hype about internet everything. It was right before the boom. Even in Spain there had been a few very high profile allowances of some companies that have been funded by banks, paying heavily for them and valuations were going through the roof. And everybody wanted to invest in online whatever. It was that time. So I knew the technology, even though I’m not into technology, but I knew it was very simple to build. And I actually draw this business plan in which I will have 15% of the total market for airline tickets in Spain in two years and I was going to be a billionaire very easily. And I thought, “Wow. This is going to be very simple to convince someone to cough up the few millions to launch the project.“ I didn’t even start looking for funding because I made this phone call to this guy, Martin Markovski, I don’t know if you’ve heard of him. He’s been in many, many online projects. He’s one of the Tech Crunch guys that get mentioned when they talk about angel investors and people with good connections. I called him, because I knew him somehow, and he said, “Well, you don’t need to find any funding. Just come to yellow com, we’ll give you participation in the company…”
Interviewee: …participation in the company, and we found the halcyon. I gave them my idea and I built it inside [YellowProp].
Andrew: OK. Let’s stop and unpack some of what you’ve said so far because I want to know as much as possible about this. The first is, what did you envision for the business model, or for the business, when you first came up with it? Actually, what were you taking around to people like Martin in looking for funding?
Interviewee: Can you repeat the question? What was, I think…
Andrew: I’m trying to learn what the first version, what the first vision, of the business was.
Interviewee: The first vision was very simple. Online travel agency which would sell airline tickets. That was the only technology that was widely available at the time. The dire need that left off engineering to… Sorry. There’s somebody coming. To do the ticketing to have online and to have people actually being able to purchase an airline ticket. Yeah.
Andrew: And let’s talk even deeper. Where did you think that you were going to get your customers back then?
Interviewee: That was the big question then. There wasn’t any customers, to be honest. In Spain, internet penetration, at that time, was allotted. It was low band. There’s no connections. There weren’t any e-commerce activity, really. I mean there was some sales by some people who were trying to imitate Amazon. And I think people had pulled all of those customers together in a very small room, and we probably know each other [Laughs] from before. So actually, the idea of getting the customers was not a big part of it. I mean my business plan, I just put like, I don’t know, let’s spend 1 million Euros a year. In marketing, we’ll get just about every customer in the country. So I didn’t have any experience with retailing, or with customer acquisition at that time. OK?
Andrew: I see. And so you didn’t think of, you didn’t say, “We’ll buy online ads”, or “We’ll buy TV ads”, or we’ll do anything like that. It didn’t even get that specific.
Interviewee: Yes, yes we did. But…
Andrew: I see.
Interviewee: But it was all based on assumptions, and it was something that was absolutely not scientific. I was thinking, “OK, if we have one million, I will buy fresh ads. If I have two million, I will buy TV. And I will spend a hundred thousand to buy just about everything that is online.” At that time, in the Spanish market, there weren’t many people actually advertising online. So you could buy lots of advertising for very little money.
Andrew: What about convincing the airlines, or the travel agencies, to let you sell tickets? What did you envision for that?
Interviewee: Yeah, well that was the easiest part, because since I worked in Madieros, we had access to the system that was required to sell tickets, and also to the airlines. I knew that was going to be one of those things in which they laugh a little bit at you, because they think that it’s going to be something in the very far future. And they are not going to be passionate at the time. But still, I mean, they also had their own intention of setting up shop online. So they weren’t going to be very much against us. I tell you, if you knew the airlines that operate in Spain that I had the relationships with, and they say, “OK, we will give it a try, and we’ll help you out with this.”
Andrew: OK. All right. So then, you were taking it around, or you were asking an old friend for advice. And he said, “Why don’t you just sell to Ya.com or come join us?”
Interviewee: Yeah.
Andrew: What was the deal that he offered you for joining?
Interviewee: Yeah, he gave me a percentage of the company.
Andrew: Of the overall company, of overall Ya.com?
Interviewee: Yeah, yeah. At the time, there were only 80 people working in the company, and we were all founders of the company. I joined Ya.com three months later, after it were founded. So I was one of the founding partners in the company. And between all of us, we split 10% of the company, which we sold later. You have the number wrong. We sold it for 550 million Euros.
Andrew: OK. So the overall number, you sold 550, and you and the other employees, or the other co-founders, split just 10% of the ownership of the business.
Interviewee: Well, at that point, yeah. We had that in equity, but afterwards we got, some of us, got to dealing, which we had a lot of stock option, on top of that. So in the end, the employees ended up having 20% of the company, smallest.
Andrew: I see. Wow. OK. Did you personally end up with more than one percent of the business?
Interviewee: No, I didn’t. I finally ended up with a lot less than that. But it was not bad for an out.
Andrew: You say an out. What percent of the business was left at the end of that?
Interviewee: For me, I think it was like 0.4, 0.5, something like that.
Andrew: I see, 0.4, 0.5, which is not bad. It’s still in the multiple millions of Euros.
Interviewee: And a couple. The only problem that we sold it to the company, and we had three. The part that we collected was in stock. And it was the year 2001.
Interviewee : We actually deposited, we collected the U.S. stock and that was the year 2001, so that stock went down very fast. And we had some arresting, so the money that we actually got was not much, as much as we were supposed to get but that is life sometimes.
Andrew: I see. Can you say by how much it went down before you bought yourselves?
Interviewee: It went down like 60% from the price we were supposed to get.
Andrew: Can I assume that it was still over a million Euros at least? I got to say, I remember we got an offer at the height of the market for about 100 million dollars for our company. And my kid brother and I said no way our number is 450 million, it was some number over 400 and we are not going to sell, and then when the bubble burst and we were walking around having to rebuild our business essentially, we kept saying things like wow if we only would sold think about that. And the only thing that made us feel better about that, if only we would have sold attitude was if we would have sold we would have been forced to hold on to shares for a long time and by then the market would have gone down and it wouldn’t have been worth so much so we might as well get to work, we’d say to ourselves.
Interviewee: Yes. We actually saw, those times especially in the European parts of the market everything was very, I don’t know how to say, _ _. There were a lot of people, not people lot of companies with lots of money because they had _ in Spain it was terror, _ in the U.S. and in India and we also had visited in South Carolina that was the company that _ and they had may be _ _ drugs by States you know. _ was from _ now I can _ be upset _.
Andrew: I think our connection is having a little bit of trouble. Do you happen to have any programs running in the background like Outlook or items that might be taking up some of your bandwidth?
Interviewee: Not sure.
Andrew: By the way, people in the audience are asking how do you spell the website that we have been talking about _, it is V, I, A, J, A, R dotcom. J is the letter that I learnt today in Spanish class. I have got a Libya’s class instructor to come here to my office to be my personal tutor. So that I can learn a little bit of Spanish and _ that is how you guys pronounce J right?
Interviewee: Yeah.
Andrew: _ that _ is just a challenge for me to pronounce. But I learned how to say _ at a bar here when I asked for J and B and I assumed it was going to be called J and B. And the woman said I don’t know what you are talking about. And pointed she goes Oh _ _, _ _ right? _ _ I can see that our connection is still a little bit fuzzy let’s see how well we can continue though, we will do what we can with it. Okay, so we got a sense of where you were going with it. What I am wondering is why did you sell? Why didn’t you say no I see that there is a lot of investment in this market, I will like to see if I can get any some of that?
Interviewee: For the 1st time, we _.
( At this point in the interview, we lost the video feed, so I called him up on his phone and recorded the rest of the interview. Here is the continuation with audio only)
Andrew: And the question that I was asking before we got disconnected, one was why did you decide to sell in order to partner up with the guys from _ instead of going out there and getting the piece of the funding pie that was out there?
Interviewee: Yeah well, 1st because I am very lazy, I didn’t want to go around checking people from. And 2nd I cared more about getting things done than about making money. I think money by the process of getting things done right. And I thought that I had the biggest chance if I went with the people at the other _. That they had the experience, in extension put our network and they will provide me _ that I needed to get my business up and running with the 1st.
Andrew: I see.
Interviewee: Plus I was supposed to be making some money. Wasn’t that? Even though if I wasn’t part of my own company for my _ , I was party to the same. I thought it was a good deal at that time.
Andrew: So then were you just trying to see what could happen in this market or did you get into this business because you saw that there was a lot of money to be made and you want to jump in on it or were it both?
Interviewee: I thought there was a lot of money to be made and I wanted to jump in but I wasn’t really thinking about making money for myself. I was not really. I wanted to make some money for myself but it was more the challenge of getting the thing done. I know that sounds, I think that sounds too true because most people in this type of business are more about making money for themselves. They are abusing but my obvious attempt is to see things as challenges that just have to be done instead of ways to making money.
Andrew: I see. Okay. So what was _ at the time?
Interviewee: U.S. and network called _.
Interviewee: It was a network portal, actually. It belonged to this telco company called Jazztel, and it was a bunch of portals. Actually, when I joined it, it was just nothing. I mean, there were a few portals, and everything was in beta world, being worked at on. We had big plans for us launching at the portals, but there wasn’t much to be shown at the time really.
Andrew: What do you mean? Was the vision to create lots of different portals? Or, was it to become more of a Yahoo.com back then?
Interviewee: No. It was not the Yahoo.com. It wasn’t us changing the have anything to do, it was a collection of vertical portals. There was a general portal which was Ya.com, and that means something Lycos at the time. Then, there were a lot of vertical portals. There was a finance portal that would be something like Yahoo Finance. There was something like, I would say, a TechCrunch or a CNET at the time in which we talked about the gadgets and everything. There was a sports channel. There was a car channel or a car portal. They all have their own different domains, and they were supposed to have their own life. They were supposed to be getting their own advertising revenue, and whichever e-commerce could be added to it.
Andrew: Your job was to just work on Viajar?
Interviewee: At first, yes. I did that, but since the project that I had in mind was very, very much into paper, and the technical part just took us seven months from scratch to lunch Viajar.com. Then, after only 12 months, I was put in charge of all e-commerce activities, which were plenty. I mean, Ya.com had a very ambitious e-commerce plan. We also launched a few shops and we bought a few companies in the way. We had that and I was in charge of everything related to that.
Andrew: To launch that kind of a business within seven months sounds quick. How were you able to do it so fast?
Interviewee: I had the people who had actually programmed the Web interface for [xx]. They joined me in the company. So, they have first-hand knowledge of how to actually handle a reservation system. We didn’t put too much of an effort at first in the [xx] that surround it, the publication and content part was quite poor at the time website. It was a purely transactional website, and the systems would take care of customers. We built them as we went, because we knew that we will have a lot of customers, so we have time to do that. So, we launched something that in which you could actually buy an airline ticket but you didn’t know that the process behind it was mostly manual. We will receive the airline tickets on a normal way, travel agent to agent screen, and then process it manually and input it into our CRM system manually, and everything was not very well integrated. So, we went [xx].
Andrew: This was like Mechanical Turk before Mechanical Turk where people found that the whole system was automated, but behind the scenes, there were real people who were taking the orders and manually handling them.
Interviewee: Yes, something like that. But, we launched like that but we very, very fast began to integrate things. The first year, you have an idea of what we’re talking about. In the first year, we just sold €100,000 worth of airline tickets, that’s nothing. I mean, that’s maybe, I don’t know, 4,000 tickets.
Andrew: Actually, that’s pretty progressive. Back then, a lot of people imagined that you have to build everything in and you have to have it perfect before you launch. It has to work and scale really well. If somebody would have suggested that kind of technique in the US at a company that raised funds that had these big visions, they would have been laughed out of the business. Why did you, guys, see that as an acceptable way of doing business?
Interviewee: Because of the market. I mean, if you have a market with 200 million people in which all of them have high speed connections and money to spend, and they’re used to catalog shopping and that kind of stuff, then you probably have to provide for that kind of thing. But, in our market, where nobody actually buys catalog and where there’s no one with an Internet connection and everything, we knew that it would be very slow. So, you see a need to provide for that.
Andrew: So then, you build this out, within seven months, you have the first part of the business up and running. Then, they decide that they’re going to bring you in and have you handle all the e-commerce. What happens next to the business?
Interviewee: Viajar explodes. In year 2000, we sold €400,000; in the year 2001, I think we made something like €8 million, which is a huge increase considering that we have nothing, actually. So, it exploded. I kept on juggling my work, my jobs in the company, dedicating as much time as I could to Viajar.com. In 2001, Deutsche Telekom, it was the dot-com crash in the stock market, but in that year, we managed to sell Ya.com to Deutsche Telekom.
Andrew: After the market crashed.
Interviewee: Actually, we had agreed on [xx] before the market crashed, but it was just about that. We sold in April, I think, or in March, and the market crash was in April, something like that. We sold like 20 days before the market crashed. Yes, good timing.
Andrew: Wow! What an exit. Let’s talk about how you even got, though, to €400,00 in business. You had a business that was doing €100,000…
Interviewee: 400,000 Euros. In the year 2001, I think we made something like 8 million, which is a huge increase, considering that we had nothing, actually. So, it exploded, I kept juggling my work, my jobs in the company, dedicating as much time as I could to the [harlecom]. And in 2001, [??] Telecom, it was there, the dot com crash, the stock market falling. That year, we managed to sell [yellitcom] to [thetelecom].
Andrew: After the market crashed.
Interviewee: Well, actually, we had it the year before the market crashed. But it was just about that. We sold in April, I think, or in March, and the market crash was in April, or something like that. I mean, we sold like 20 days before the market crashed.
Andrew: Wow, what an exit. Let’s talk about how you even got, though, to 400,000 Euros in business. You had a business that was doing 100,000 in Euros, and I could understand at that point, it could be manual, and you could hire people to process it all by hand and move the data into the CRM and so on. When you get into 400,000, and definitely when you get to 8 million Euros, that’s a lot of processing. How did you go from manual to automated?
Interviewee: No, we started manual but we, in our plans, there was the automation already in the plan. I mean, so, it was, what we did was to face what we wanted to have. And the first thing we wanted to do is to have sales. So, the first thing we produce was a web site, and the transaction part of it. And that second thing was integration with accounting, processing, delivery, with all those kind of things. So, it was a gradual thing. I mean, first thing we integrated was [dashing] of the tickets. Second thing was understanding there was nine tickets, so we two or three, send them through UPS, so we had to integrate with UPS and so on, so forth. We just worked on that until we had everything more or less automated. Which took us very little, I mean, it was, again, from, I think, we started in July 2000. We started selling, July 2000, by July 2001 everything was more or less automated, more or less, not perfectly, but, yeah.
Andrew: OK. How did the sale come about?
Interviewee: How did the sale of [Yardcom]?
Andrew: Uh-hmm.
Interviewee: Um, well it was, [Yardcom] was an absolutely speculative proposition that was put in play by the people in [Yestel]. We knew there was a market for that. There were huge IPOs and all the [talkers] that had that name had had their total listing in Europe. So, the yell was to announce it and do an IPO. We had these people from all the investment banks in the world coming after us and saying we were worth 2 million Euros, something like that. And we actually believed them. So, we had the totals and some people hate to wait on the IPOs, like all the big [talkers] in Europe, the telecom, the telecom, Telefonica, telecon, tele, they had their own orders, they had their own money to spend. So, I mean, they had to justify those IPOs, and so everybody started looking around for a way to expand to other countries. And we were just there for the lapse. I mean, we were about three, four sales from the unit that we were created. So, we were just waiting for the offer to come. And since many people had the money and the obligation to sell, to spend the money, they had to spend the money in big projects or at least projects that could be justifiable, that could justify the amount they were going to pay. And, we had very good marketing, the outcome was a very well known brand from the start. We had a very good advertising agency. We were very cool and very hip and everybody liked us. So we were probably the main grab for anyone coming into the Spanish market. It went down just like that.
Andrew: I see. OK, so you sold, what was next for you after this? Actually, how did you personally feel after the sale? You had a big stake in the business, you saw it through from the beginning, what was it like?
Interviewee: [coughs] Well, it was all right, but we had this vesting, so I had to be there for at least two more years. So, for me, it was OK, we sold it, we made some, at least some paper money, a little bit of the time, and what we have to do is to work with these people for the next two years at least. In my case, …
Interviewee: …for the next two years, at least. In my case, I started getting more responsibility within the company because after being the, I mean I was in charge of e-commerce. And I had five companies reporting to me that were five spinoffs that we had. But then I started talking care of the portal side the company. The portal side was the largest part of the company, in terms of people. And those saw, we put together the [harbor] commerce sites. And the advertising part of the products was actually the biggest money-making activity of the company. So to me, it was a very nice challenge to have. I mean I was, at that time, very happy to hop online. And I had the people, a team of almost 300. And you know, it felt like it was a very nice experience to have. I have never had such a big team. And I just hang on for the thrill of it, you know. And I was having lots of fun.
Andrew: Did you start to imagine, at that point, all the riches that were going to come down? Did you start to imagine how you were going to be able to spend all of this money?
Interviewee: Well actually, I wasn’t spending the money at the time already. [Laughs] You see, I’ve never had a lot of fun making money, but I have never thought too much about it. So whenever I have money, I start a new business, or invest in something, or whatever. So I wasn’t really thinking a lot about the money as an important thing in itself.
Andrew: I see. So you’re saying whenever you have money, you invest it. Did you invest this money before you were even able to cash it?
Interviewee: No, I never do that.
Andrew: Yeah.
Interviewee: But I also have, I have other investments from before joining the company. So I had some money. I try to diverse in the housing boom in Spain, in some house promotions. So I was making other money on the side. So I didn’t really have to worry about the money.
Andrew: I see. OK, so what was next for you?
Interviewee: Next for me was, in theory, to leave the company for something else, but I ended up staying there for the next five years. And the way I was staying there for five years, I had a big plan. It was to buy back the [other com]. Because the [hub] was not. The [hub] was a big business. And this big business for, I mean, if you take into account the size of the market. We were selling interest at five. We sold almost a hundred million Euros, which is not bad for an online travel agency. We were number two in the market. But the owners of the company, the Telecom, were not into selling travel. I mean they were appear, take off, and they were interested in maybe a sale, and maybe putting wires on the floor. So, I thought there was a very good chance of them selling it to me. And then I started talking with MBO Operation, in which I would buy it with money from this venture capital.
Andrew: Uh-hmm.
Interviewee: And that’s what I did. I started looking for VCs that would back this operation. I found one that was interested, and I presented an offer. [Ventracom] said “yes”, and the day after I had done this, the VC backed off from the deal, and they said they weren’t going to help me buy it.
Andrew: OK. So wait, let’s see if I understand this. You finally, you said earlier that you were too lazy to go around and get investors. Here you are, you finally get up and you go out there and you find investors who are willing to put up money to let you buy back your creation, your baby, and then Deutschtelecom comes around and says, “no way”?
Interviewee: No, no, Deutschtelecom comes around, says, “yes, we will sell it to you”, OK?
Andrew: OK.
Interviewee: And I have done that with not a contract from a VC. But I have an agreement with a VC that they were going to back this operation. What I didn’t know at the moment, or I didn’t know it was going to be like this, is that for them to actually buy this other company, depending on them getting another bigger buy, in which they could integrate the other company. [??] said “yes”. But if they didn’t get to buy the other bigger company, they were not going to go through with the operation. And that’s what happened.
Andrew: I see.
Interviewee: So, I was there left in the cold, because I had already introduced, given an offer to my bosses. They had said “yes”, and then I didn’t have the money to buy the [xx].
Andrew: Oh, wow. I see. OK. All right, so then, how do you pick up the pieces after that?
Interviewee: Well, actually, they were in a complicated position. They couldn’t actually fire me because I was the one who knew something about how it was a big business, it was running OK. And we had some value for them. Even though it wasn’t so technical, or it wasn’t the biggest part of the business, it was going to have some value. And no one was going to fire me. But they commited, they made this horrible mistake, which was, they had to sell it…
Interviewee:…they decided to sell it, and, decided to stop investing anything in the Hullacom. So, we came into a crash mode or catastrophe mode, I don’t know how to call it, and we had to stop doing things in the hull, reduce expenses, reduce marketing, reduce everything and sell the company, which I did. I just had to swallow my pride and since I had made a mistake I helped it out.
Andrew: Wow, and that was a sale to France Telecom, right?
Interviewee: No no no, then I sold the hub to this big conglomerate in California, and at the same time, Ya.com was sold to France Telecom.
Andrew: I see, okay. All right, this is a lot to keep track of!
Interviewee: Yeah [laughs]
Andrew: This isn’t an easy “I got funding from this guy and that guy over, we built up a business and we sold it to that guy over there.” It’s just a lot. But was it as hard to live through as it is for me to keep up with?
Interviewee: Yeah, I tell you the sale of the Hull was an absolute nightmare, it took us one year, I don’t know how many people I saw, I don’t know how many time we had to go through the business plan once and again, and actually for nothing because I wasn’t making anything out of that, you know? I wasn’t an employee, I wasn’t getting any reward out of selling it, except the fact that if I made a good sale, I might be able to stay with the certain company, that wasn’t any, to me, it was nothing. I didn’t have interest to work for anyone else. I had thought for a couple of years that it was time to run my own company, that’s why I tried to buy the Hull. So yes, it was a hard time, it was very hard to keep up with, and also it was a huge amount of work. With all the paperwork, [unintelligible], you know, that kind of stuff.
Andrew: Why not just…I’m not understanding why you wouldn’t leave at that point. Why not say “Forget it, let’s go launch another business, instead of looking for somebody to fund my buyout of this business, I’ll go look for somebody to fund my next idea.”
Interviewee: I felt very much in debt with it. The Hull was my baby, there were a hundred fifty people working there, and some of them were my friends. I didn’t think it was time to leave, I had a mission to accomplish and it was to finish up the whole thing. So I finished it up.
Andrew: Okay, all right. So between that and where you are right now, Red CPA, I think I see 17, 19 months? What did you do over those 19 months?
Interviewee: How can you see 19 months? There weren’t 19 months.
Andrew: Oh no? Maybe I’m doing the math wrong…I see here that it seems…
Interviewee: You’re looking at LinkedIn, yes?
Andrew: I’m looking at LinkedIn, it says you left 4/07, April 07 and that Red CPA, I think was 11/08.
Interviewee: Well, if you take that into account, you are right. In those months I had some investments already done, I had these [macadin] agencies called Search Media and I kind of worked a little bit at that. I also had my first daughter, so I didn’t want to work for a while, that helped as well in making me lose some time. I also started some virtual world project called TrapKey which I’m still a partner, and I worked on that for several months, but I didn’t work a lot in that time. But CPA was in the works the day after I left the Hull. It was something that was planned, and we had to find the right way to do it. We just didn’t want to rush into it.
Andrew: What was the vision for RedCPA?
Interviewee: The idea at first was to create an online ad network that would create, provide particularly for the finance industry. We had very..my partner and I used to work with, we had a very good relationship with the biggest banks in Spain and at the time, there were a lot of demands from these people to have somebody who will actually take care of their needs, their campaigns and their CPA acquisition campaigns. So the first thing was to see which was the way they were doing that and how it could be improved and we were working on that. We were actually, in the middle when we started a company, that doesn’t appear here, which is called Full Solutions, that only works for banks in this area. It was pretty successful for a while, but the idea was to learn about the industry, and then that started not buying anything, not selling anything , because of the financial crisis, so we called that off and we started CPA. CPA the idea is we do [unintelligible] network, we send publicity from publishers that don’t have a commissions department,
[end of excerpt]
Interviewee: …from publishers that don’t have a commercial department but we give it a twist of technology. What we have done is to take the normal [INAUDBILE] use and put a layer of data on top of that hoping to be able to provide with [INAUDIBLE] system.
Andrew: I see. I’m looking too, by the way, at the live feed and it looks like the live feed is completely down. But people are still in the chat room. They’re having conversations about other things. So I don’t think the problem before, the reason that we lost our video was us. I think it had to do with the people that I’m using for the live feed today. We’ll just have to figure something out for in the future. What about the creation of Adtelligence?
Interviewee: Well, Adtelligence was a by product of this development that we were doing for Red CPA. Since we had started…at first the technology was doing something that we were going to use for ourselves and our customers. But then we thought that if it was successful we wouldn’t have the clout to actually market it anywhere but in Spain and that didn’t make much sense. So the idea was to create a second brand to commercialize the technology. The first thing that we came up with was this reporting tool that we have given for free to any open [INAUDIBLE] users which is actually a productivity tool. I don’t know if you have ever used an ad server but normally it is a nightmare to report with it. You need to have lots of actual spreadsheets and to create graphs and everything it takes forever. So normally the ad networks and the publishers don’t make a big fuss about reporting to the customers. And I was a customer of these people and I was very unsatisfied with what they were giving me. So I decided to do something different that would actually help them get started and that’s Adtelligence. I don’t know if you have seen it…there’s a video in our website that explain it pretty well I think and maybe you can take a look at it.
Andrew: Actually I saw it on Crunch Base. I go to Crunch Base a lot to do research before these interviews. And they had one of your videos up and it was really [INAUDIBLE]. Why are you doing this? What’s the entrepreneurial goal for you?
Interviewee: In this case, it is money.
Andrew: I see.
Interviewee: For the first time in my life. Well, I think at least in the Spanish market, I think this is the place for this kind of thing. The big media in Spain they have bought the ad servers because everybody else was buying them. So everybody has double click and they are not providing customers with anything that really works. So they tend to sell their inventory as a commodity. And I think inventory in the advertising world shouldn’t be treated as a commodity but it should be cut in pieces and given the correct pricing. And I think if we are able to provide with a great system that is good enough and simple enough for a lot of people to be able to get value out of their inventory that will be worth something. And that’s the general idea behind it. What we are doing is we are developing this algorithm that we copied actually from the airline industry which is yield management algorithm. I don’t know if you know what it is. Yield management is the systems that are used to sell seats on an airplane. If you take a plane, maybe there are 250 passengers and maybe there are, I don’t know, 50 different rates that those people have been paying. It is not because of chance it’s because there is an algorithm that actually lets you optimize the price that everyone is paying for his seat. It depends on a lot of things; on the history, on the amount of people you have on the plane, on how many people are buying at this given moment, how many people are buying seats on the next plane coming, a few things. Even though there are some yield management algorithms for online advertising they are not public and they are not very good. Some of them are and there’s [INAUDIBLE] Media which belongs to Yahoo. They have a pretty good one. But the rest of them, they don’t work. Nobody tries to do that. And I think that’s something that could be patented. I think if that works it could bring up a lot of value in normal advertising inventory.
Andrew: I see. All right. Well, I feel bad that we only have audio and it’s not a full video interview. But I’m glad that we at least got to find out about you and find out about your experience.
Andrew: Let me actually, before we go, I got to ask you about what it’s like to be an entrepreneur in Europe. I know in the U.S. if you’re an entrepreneur, people there support you, there’s an environment that is almost a hero worship environment for entrepreneurs. What’s it like in Europe?
Interviewee: In the rest of Europe, I don’t know. In Spain, it is the backwater for entrepreneurship. First, because there is no VCs. The few there are, they call themselves VCs, but they don’t take any ventures. There’s no risk. And it’s very hard, because the markets have refragmented. If you live in the UK, then I think it’s a little bit better. In France, where they have the largest markets and people have more money. If you are in Spain, you have to actually be very much, you have to have some money that you own already and you invested. Or you have to be very lucky. It’s kind of hard to work as an entrepreneur in Spain. That said, there are many people who actually have companies and who live off of that, but it’s absolutely different story from what you can expect if you are an entrepreneur in the U.S.
Andrew: I see. And when you say that venture capitalists aren’t really looking to take risks, what are they like?
Interviewee: Horrible. They are like, what they want is, I mean, not many venture companies here looking for capital for company development. They want products that are already profitable, and then they will invest in order to grow the business. There isn’t much going on the tech world, either. And in Spain, there’s been a huge boom in housing, and there’s been huge amounts of money poured into housing companies. And that has left the market with a lot of money that is absolutely conservative, because some people have made big fortunes, but technology is not something very, very well understood. And the big player in Spain, which is Telefonica, which is now, I think it’s the third largest telecom in the world, they are not into the culture of nurturing entrepreneurship or helping out with that. They just copy. And what they do is, they sell. They have been selling forever, for the last hundred years. So that’s just how it is.
Andrew: So how did you raise money for Red CPA?
Interviewee: I raised it. I put it in myself. We started with only 500,000 Euros. Well, only. With 500,000 Euros, with which we put 150,000 up front. And then we got this sort of government loan, that we have guaranteed with our money, of around 250,000. And the rest, we usually, when we need more money in the company, we just, my partner and I, we loan it to the company.
Andrew: I see. Wow. So even though you’re a proven entrepreneur, with the track record, with contacts, with experience, you still can’t raise money in Spain.
Interviewee: Well, yes we can. I mean for this company, we would. But the thing is, well first, I think that if you have the chance of not raising money, you better not. I think, I mean, if you are, if you can spend your money, then you will get all the rewards afterwards. And you will not be a slave to other people, which I…
Andrew: I see.
Interviewee: I value a lot.
Andrew: Right.
Interviewee: Then, on the other hand, I’m starting to start a new travel, another travel-related project. And for that, I am looking for money. And I have access to that. And I think I will raise it without too much problem. So I mean, there is money, but it’s very hard to come by. And the people who actually have the money reside unfortunately in the U.S. No one in there in their right mind would ever accept. But that’s the market.
Andrew: Like what?
Interviewee: Like, I don’t know. In Europe, for example, when I hear or I read in TechCrunch about how a first round of VC works in the U.S. in which you can get whichever amount, and only give away 25% of the company. Here in Spain, that’s unthinkable. Oh, yeah. I mean they would ask you for… I mean the other day, I was with somebody who said, “OK, you know a lot about travel. You have a proven record. We are going to put some money. But if you want me to give you two million dollars set, it’s going to be five million, you have to give me 70% of the company. I said, “Well, that’s totally crazy, and I’m not.” But that’s the way they try to work here.
Andrew: I’ve got to say, I’ve been seeing that around the world. Even people who love starting a company where they are, and have no interest in going anywhere else, will always say that, maybe not always, but more often than not, will say that if you can, start your business in the U.S. The environment is much more friendly.
Interviewee: Yeah, yeah. So I have no experience in the U.S., but I read a lot about that.
