Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Most people see the sale date as the day that you finally have reached the finish line. It’s a date that you can just take a breath and celebrate and feel like you’re set for life.
I feel like John Waterman to some degree, must’ve felt that when he sold his business, which was called at the time, but then a weird thing. He came back in and he bought it. And I wonder what it feels like to come back to me. It almost feels John, and we’re going to talk about it in this interview. It almost feels like graduating from college and then finding out that you missed a few credits and you’ve got to come back.
Jon: Uh, you know, it’s funny just when I was out, you know, uh, it, it pulled me back in. but there there’s a, there’s a story behind that. I mean, obviously, you know, every entrepreneur is going to make a decision. Is it, does it make sense financially? First, and then, you know, is there a long-term vision? And ultimately, you know, I got into the business, the internet advertising businesses.
I like to just call it in 98 and built up this business. Find ology starting around 2000, 2001, sold it to this public out of Australia in 2007. And you know what the timing of it was was obviously critical as well. I sold in December oh seven. And for everybody, for those who remember. 2008 came and the, you know, the debt crisis hit and, uh, you know, most companies or having, uh, you know, issues find all of you, fortunately had grown.
but then it’s suffered some of the, you know, complications around, uh, you know, the, the market. And, uh, I was in a great opportunity because the public company, um, as, as a whole, wasn’t doing well and they own 52 companies, um, around the world, mainly in like kind of PR and, and agency type services. So the opportunity came to, to buy it back and look for me. My employees that my team is, you know, kind of, I shared with you before we got online here, family to me is the most important thing. Right. You know, and my, my team is like the family. So, you know, the, the idea that, that the company could have went. So, um, in another person’s hands and who knows what would have happened, you know, it made it more, exciting for me to kind of keep the team together and keep building.
Andrew: All right. I want to find out about the initial launch from a person who didn’t seem like he was on the track to do this. Why you sold what happened after the sale? I love the rebrand when you repurchased it, it’s now called add.net. It allows online advertisers to reach new audiences via their private network of quality publishers and distribution channels.
And then John, I don’t feel like to understand. How the hell are you going to succeed in a world that seems increasingly dominated by a few players in the advertising space, and we could do it all. Thanks to two phenomenal sponsors. The first is HostGator. If you’re hosting a website, go with hostgator.com/mixergy.
And the second, if you’re in the content business and John, I know you and your clients are you guys should consider signing up for member full. They will allow you to sell content to your audience. And John, like everyone else, you can go sign up for free at dot com slash Mixergy. First. I’ve got. I’ve got a page here on the internet from the sale.
It says photon group limited purchased your business for an initial cash payment of 19.25 million Australian dollars. And the issue of 516,590 photon shares. Plus deferred payment tied to performance targets. Does that sound.
Jon: That that is about right. There was additional cash, uh, that we had. The account that was, you know, that was passed over to us. But yeah, it was, it was a great exit. Um, not only for me, but for, you know, all my employees, um, you know, I own a hundred percent of the stock and, but I gave away 15% of the proceeds of the sale, um, to all the people that were there with me at the time.
Andrew: But we’re going to go through some of the difficulties in the business, but let’s just take a moment to appreciate the good thing. So you sold the business. Did you get to do anything good for yourself? Anything fun. Take some time off. Buy that beautiful house.
Jon: You know, I, I wish I’d give you good stories, but you know, the truth of the matter is, is like other entrepreneurs. This is not, it’s not necessarily about the money. Um, it really, and I think, I think I would say to every entrepreneur out there, if it truly is about the money you might be in the wrong business.
Andrew: But did you get to do anything like maybe take that vacation that you couldn’t have done when you were, when you were working? I’m looking at you, dude. I know how, how successful the businesses you’re wearing a t-shirt that the same old white t-shirt that I would imagine you, you went to school in,
Jon: that’s right.
Was there any, did you get to do anything fun with all that, that that’s success.
Jon: I enjoy everything that I do. And I know you’re looking for that. I went on this crazy Vegas rep and he was, you know,
Andrew: The money shot that will roll people into listening.
Jon: Bottles and all that. And look, I’ve, I’ve always, I’ve always had fun and, and done that, but when it came down to the sale of the business, um, besides the few moments with, you know, intimate moments with family and appreciating, you know, the, the, the success, you know, as you mentioned in, in, you know, the, the beginning of us chatting, I had earn-outs that were built into the deal, right.
So I was, you know, soon as the deal closed, really. The head was back down and we had, you know, goals to reach and there was, there was, uh, other things to accomplish. So, I mean, it’s a bit of a sickness I would have met, but, but, uh, I didn’t really do anything overly extravagant now.
Andrew: All right. You mentioned you’d been in this space since 98, 98. You were a sophomore at UC Santa Barbara. You were there when the.com bubble was just getting going. Riches were minted. Companies were being disrupted and then a friend of yours, Danny, uh, yum, Toby and Toby Tobin wanted you to do something or introduced you to.
Jon: I discovered domain name, uh, domain names. And, you know, before search engines were popular, believe it or not. And, and even to this day, people still do it typing in cool cars.com, right. Or, you know, just different keywords, um, you know, with a level of intent to.
go to a particular website, but obviously 98, not a lot of those websites existed.
So. I was acquiring these domain names and redirecting that traffic to all different places, uh, you know, around the web. Um, you know, that kind of got me into, you know, traffic brokering, I guess, in a sense where I was able to, you know, redirect users to particular places that they might be interested in, you know, buying or acquiring different services or products.
Andrew: Like what, give me an example of a domain that you had an, a typical.
Jon: Oh, wow. Uh, so many
Andrew: one that you remember. Okay.
Jon: you know, w w we had a, we had a domain name. I remember it was, it was far Ari, far Ari, you know, but for some people we
Andrew: it sounds like Ferrari.
Jon: like Ferrari. you know, so, uh, you know, people, people would love to go to a car site or something along those lines. Um, You know, back in 98, I would say there wasn’t many places to send traffic, to be honest, our largest, uh, advertiser at the time were all the online casinos that existed in 98.
Right. If people go back to 98, there wasn’t a lot, there wasn’t really e-commerce going on. It wasn’t even close to what it was today. Um, you know, before, before 2000 people were very hesitant of putting their credit card, you know, on, on their computer and sending it out.
Andrew: Was this through affiliate programs or were you, you were, so this was just straight up affiliate programs. You find them on the internet, you buy domains from like internet or whatever. I forget who it was, who was selling it at the time. Right. For like $9 a month, a year. Excuse me. Right. That’s the model.
Jon: That’s exactly what the model.
was, drive that traffic, um, to, you know, to as many different affiliate programs as we could, but then, you know, fast forward to 2000 accompany, um, out of ideal lab, which was an incubator emerged called goto.com. goto.com was the original name of overture, uh, which went public and was eventually bought by Yahoo.
They were the first. True sponsor listings search company. Um, and we eventually put a deal together with them in 2000. Um, created a site called find ology.com and all over the domain name traffic now would just redirect to find ology so people could actually truly find, um, what they were looking for through all the different listings that we were able to pull in through overtime.
Andrew: And that right. So now, if somebody went to far ra.com and overture had paper, click ads for the Yahoo search, uh, I guess directory, they weren’t even a search engine for the owl search directory, just like a Google ad words. Then you could take those ads, put them on your page. Boom. The thing I see that whole thing makes a ton of sense
Andrew: all this.
Jon: this was really, this.
was pretty Google, right? I, mean, people were trying to discover the internet by typing in domains. And we were now able to send them to find ology, which was a search engine. And you would do a search for what it is you were looking for. And we would hopefully have a listing for you that would take you to where you wanted to go.
And fortunately, for us, they were sponsored listings that got us paid that allowed us to pay for the traffic. We were acquiring.
Andrew: I, uh, I see it on the internet archive here. It’s uh, it looks like the old, oh man, it looks like the old overture site. It looks a little bit like, uh, like the excite.com and Lycos of the day. Right.
Jon: Totally. I mean, there were all of those search engines that were, that were out there. The Lycos, the, you know, the excite, all those.
Andrew: And essentially you had that and before all this, though, you didn’t, from what I understand, even have a computer didn’t get on email.
Jon: Yeah. I, when I got into the business, I signed up to an AOL account. Um, my first email address and, uh, didn’t have a computer bought a computer and, uh, typed with two fingers. So.
Andrew: Why? Why not? What type of person were you in school? What was your
Jon: But, you know, I, I was always entrepreneurial growing up, so I always had something going on. When I was a kid, I did garage sales. I sold basketball, a little basketballs around the neighborhood. I did car washes. Um, so I was always very entrepreneurial. My father had this vending machine business that he had started.
I bought, you know, eight machines from him with a route in high school that I would go to and, you know, look, I was, it was like 10, it wasn’t. Sodas and food. It was like temporary tattoos and baseball cards, basketball cards, stickers, and a hat eight locations. And, you know, it’s for in high school, I was making like 2,500 a month working maybe six to 10 hours a month.
Andrew: Were you the one who opened up the locations,
Jon: No, I had purchased it for my father and I, and I actually, you know, I just was servicing them, but, uh, you know, I sold that when I went to college, um, in Santa Barbara. But again, I always had that entrepreneurial spirit.
Andrew: Uh, and the internet was kind of a geeky thing where you can go and maybe talk to scientists and professors, and maybe the kid who’s sitting right next to you in computer lab, but there wasn’t an entrepreneurial angle on it. And as soon as you found it, then it drew you in, you built up the business. When you were just in college, do you have a sense of how much revenue you were able to produce?
Jon: Wow. I mean, yeah. I mean, you know, by, by the end of my senior year, um, you know, um, I I’m, you know, fortunate and to say that I was doing over a hundred thousand dollars in profit a month, so.
Andrew: Profit just, and then doing what with it, considering that there’s tax implications and everything else where you just
Jon: I was just reinvesting into the business. Right. I mean, so I didn’t ever had a business plan. I never raised money. It was always kind of inherent and, you know, I just pay, I knew I was making money, so let’s keep spending and, and, uh, you know, I’d never did it Um, the traditional route of, you know, raising VC money or putting a business.
And I think, you know, probably to my benefit. Ignorant to the opportunities in the VC world. Um, actually probably played to my benefit because I stayed very lean very mean bootstrapped. And you know, when the.com bubble burst, I w I wasn’t affected.
Andrew: What did your, did your sales go down at all? Did anything impact your business?
Jon: No, because you know, most of the experiences that I had and the people that I’ve seen that I saw, and I think, you know, it’s interesting to me kind of maybe experiencing a little bit now display and video, um, you know, display advertising was really the big thing there and it was ridiculous CPMs, like a hundred dollars CPMs.
We weren’t selling. Display, there was, there was no everything that we did was intent based, right? So there was a user that had intention to go look for something or, you know, potentially buy something. And we would direct that user there. Um, we were, we were always in that intent driven market that search really brings the search market wasn’t affected as much as the.com boom.
Andrew: you’re, yeah, you’re saying that the web vans of the world, which were way ahead of their time, build too much infrastructure, they suffer the pets.com again, ahead of their time they suffered excite display, advertising suffered. Did your business let’s take a hit at all?
Jon: No. we, we, we didn’t, you know, we were growing slowly enough to where we didn’t get the impact. Our speed was faster than the markets to appreciate, you know, uh, uh, deflation, I
I understand that. We’re still talking about days when you can buy clicks at pennies of pop. Um, all right. So then 2002, though, you told our producer, um, that’s when your business hits some kind of turbulence, what happened 2000? Yeah. Yeah,
Jon: Um, 2002, I don’t think we hit turbulence. Maybe the producer got that wrong. In fact, I think we actually, you know, things were, were scaling relatively nicely. Um, you know, 2002, I mean, just in terms of the.com
Andrew: no. I mean, I mean, for you internally with the team, apparently there was an issue with your partner that helped you find a low point in the business. Right. So I see you’re saying to me,
Jon: know, I know,
Andrew: not take a hit then.
Jon: sales didn’t necessarily take that big of a hit, but, but I was able to buy my partner out at the time. Um, he went on to go and do different things, you know? Yes. There was a little bit of a low point. Um, but it wasn’t, it wasn’t really. Uh, it wasn’t at a point where we were like, oh my God, we’re going out of business, but it was definitely a restructuring.
I bought my partner out. I hired a couple new people to help really build something. And I guess that was around 2002, um, where everything kind of starts to take off.
Andrew: W uh, 2002 is takeoff. So you now you’re, you’re a hundred percent owner of the business. The team changes you let go. Of some people, you bring a new people at that point. I I guess, was Google now starting to become an issue was Google starting to become a presence for you at that point beyond advertising.
Jon: No, it wasn’t really becoming a presence that would get an interfere with us. In fact, more companies in 2002 started to emerge right in the pay per click search space companies like fine. What that eventually went public, changed the name to me. They were bought out by ad knowledge. Um, there were companies like connubial and aha, and all of these other, you know, smaller pay-per-click search companies that emerged.
And we eventually created some technology that allowed us to, well, we called it at the time. Meta-search all those feeds together. So we ultimately were pulling the. The sponsor, listing fees of all these other companies and then distributing right syndicating, the $5 fee made up of all those different pay-per-click search
Andrew: Oh, when people were then paying you to put your listing of search results, which were ad, uh, ad based on their site.
Jon: No, no, we were, we were paying them. So we were pulling in the advertising listings from all these other pay-per-click search company. They were paying us and the way we, and the way in which we Got traffic was now not only through find dollar g.com and the domain name traffic that was coming, but we were also now working with publishers or webmasters as we call them back then to drive traffic.
To our phonology sites. So we had the little search box that people would put on their website. Um, we had text links that people could put on their website that were relevant to their content. And every time a click occurred, we paid people 15 cents and we were ultimately one of the. Pay-per-click search arbitragers I guess we were buying traffic, sending you an, a phonology that ultimately would go to all the other pay-per-click search companies that were there.
We never had relationships with a direct advertiser. We worked with these pay-per-click search companies that were more like agencies.
Andrew: And this was part of the internet. That for a long time, nobody knew about you. Weren’t getting celebrated fast company didn’t have you on the cover or anything like that. Did you, on a personal level, I’m trying to get a sense of who you are. Did you want a personal level feel like why are they, why are they ignoring us or I’m so glad they’re ignoring.
Jon: Wow. Interesting. It’s definitely Not you know, I wasn’t glad I was being ignored, but I didn’t care. I, I really never was one to try to go out there and, you know, Popularity out of my, you know, entrepreneurial, you know, business and spirit. And it was never, it was never, it was never who I was still, not really who I am.
Andrew: All right. When you were syndicating your ads on other sites, can you give me an example of who was, or let’s talk about specifics, who was the top person?
Jon: Ooh, well, you’re making me go back. I, I can’t even recall. I think really ended up what ended up being that low. Some of the largest, um, uh, suppliers of ours were the same companies that we were sending traffic to, you know, it was, it was very insensitive. You know, and it still is in some, in some ways, right.
Where we are providing our feed to a company that was giving us their feed. They had similar distribution. Yeah.
Distribution themselves. We added to their depth of coverage. So like the ahas and the, the, the, the noodles and, uh, all the other companies that existed, we were, we were sending traffic to them and they were even sending traffic to us.
But I would say the largest supply partners then were still the domain. Portfolio owners. We had a great, you know, relationship with all the domain name, portfolio owners. So anybody typing in, you know, different domains that existed would we would get access to that traffic.
Andrew: All right. Let me take a moment. Talk about my first sponsor. Tell me what you think of this as a salesperson entrepreneur.
Andrew: Here’s here’s what member does, you know, everyone now is focused on creating content and they’re hoping that they could sell advertising. Well, memorable says, you know, what, what if you could just sell some of that content to your audience and memorable enables that.
So if you want to do email newsletters, have some of your email newsletters be paid and memorable enable that if you’re a podcast or like me, you want some of your episodes to be paid. Let your fans buy a subscription that gives you access to that. If you have a site, a community, whatever it is, memorable makes it easy for people to do.
It’s a simple plugin that allows you to take over or simple software that allows you to take that relationship directly and not farm it out to so many of these new businesses that do it. What do you think of that proposition?
Jon: Look any way in which you can create content and monetize that. Right. And you know, not necessarily, I don’t know if they take exclusivity or, or whatnot, but anyway, that you can monetize your content is, uh, is always a benefit. I mean, look, publishers, content creators, um, The, the goal is to generate revenue for that.
And if, if, uh, there’s a good way to do that, you know, I test it all. I’m a big, I’m a big believer in testing everything. So why not have it?
Andrew: If you were a content creator today, how would you test selling, um, selling some content?
Jon: Well, I mean, look there, there’s there, you know, like, uh, like your sponsor there’s companies that help you get your content out there and we’ll help you monetize it. Um, you know, you could license, you can create your own website. If you’re creating enough content, you know, you should look to have, you know, create an SEO strategy, you know, get that content out there.
Get organic. Traffic coming to your, your content. And ultimately you’ll be able to monetize it through a number of, of means whether it be,
Andrew: Here. Here’s how I would think about you telling me about this. You tell me what you think, John, with your expert opinion. If someone out there creating content, I would say the first way to sell content is to not overthink it, but to sell more of what you’re doing now to your audience. Not because that’s the end that’s because what, because what you’re trying to do is get a sense of who wants to support me and pay no matter what, and talk to them and find out why they did it and then what else they need, because now you’re starting to see some people raise their hands.
I want to pay you. Cause I like you. I don’t necessarily love this first product. Maybe you’ve been a blogger and now every fifth blog post is members only. I’m paying for that because I want to have a tighter relationship with you. Here’s what I would like from that tight relationship. What do you think it add as a start?
Jon: You. The first thing that comes to mind to me are paywalls. Right? And, and I, and again, I don’t have so much experience in this, but there’s plenty of publishers out there right now that are saying, look, we’re kind of past the we’re past the model of advertising. We want to have a hybrid.
Jon: Are users paying for the content, but then also getting some content for free. And I think, you know, that is ultimately the way things will start to go. Nobody really loves the display and the video ads. And now with Google kind of, you know, getting rid of cookies and the ability for advertisers to target is becoming a lot more difficult. Those video and display ads will become less meaningful.
Andrew: I would even say on a smaller level for, for most independent creators, they’re not going to hit that audience size that will allow them to make money from advertising. But they will have a smaller audience. That’s passionate enough that they will pay to support, pay for more, pay for feedback, pay for connection with the creator.
All right. Listen to me, people, if you’re out there and you want to start selling some of your content, you already have an audience already have content. Maybe it’s small. Maybe you don’t think it’s big enough for advertising. Maybe don’t even think it’s big enough to sell to your art. will tell you, oh, contraire Mt.
For, I don’t even know what mum fair means, but all contrary, they will make it easy for you to start selling right now. And you own your relationship with your audience. If you don’t like memorable, you can always move on. But if you do, you’ll have an amazing tool. That’s now owned by Patrion, a company that you can count on.
Go to member full.com. Flash mixer. Do you just try do a Johnson? Just try it. Alright, John, coming back to you now, you’re um, you’re building this business and then at some point you say I’m going to sell, why did you sell it?
Jon: You know, it’s interesting. I, you know, the business was growing slowly and steadily from 2002 through 2007. I actually went to go talk to some investment banks, um, in 2000 and early 2006. Um, and they actually. Got back to me and said, John, I think you’re a little too small. I think I had 12 employees at the time.
You know, I was a big part of the business and they said, John, you’re a little small right now. I think the business revolves around you too much. Um, I think you should just keep trying to build it and, uh, you know, and I think all of a better chance in the future. Um, the reason I decided to come. Go out there.
Cause I was just really trying to learn. I, all I knew was how to make money, you know, generating cashflow, bootstrap, business, um, real true entrepreneur, you know, minded and you know, it was a great lesson. Um, Hey, you know, I was making a couple million dollars a year and you know, the business was growing, but too small maybe to get anybody his attention.
I doubled down and we hired more people. We expanded, um, our distribution, our re our revenue grew, our profits grew. Um, and then I went back to some market, um, in, you know, kind of the middle of 2007 and was able to, and ended up getting a deal closed in December of 2007 with, uh, that public company out of Australia.
Andrew: Okay. There’s a lot that I admire about you. Let me ask you, so this is not coming from a negative place, but I feel like one of the things that you didn’t do in that period, having gone through the articles, haven’t gone through the site. You didn’t create a brand and the beginning you were crying, you said we could be a search engine.
You could, you could see that there’s like this directory, there’s this flair. And later on towards the year of the sale, which was what, 2007, it was more like we’re going to put this landing page on the site so that if anyone wonders what we do, they have a sense that we’re the search engine. But in reality, we want you to go to the bottom and click on advertisers partners.
Let’s get on a call and see if we’re big enough to do business together. Right.
Jon: Completely correct. We, you know, we realized by that point, Google and Yahoo are the search engines. Right.
You know, I think, you know, uh, AOL and, you know, there, it was going to be very difficult to break into that space, especially, you know, with an uncapitalized business. So. Correct. We focused in, on advertising.
We focused in, on creating profits, um, and you know, and, and driving and driving traffic to the advertisers that we were fortunate enough to work with through our partners. So a hundred percent correct. I mean, it was an attempt to kind of give people. Understanding and comfort. Um, the advertisers, the clients is an understanding and comfort where that traffic was, you know, was coming from.
Ultimately though we were driving traffic to find ology, to generate, you know, good sales for the advertisers.
Andrew: But even like the way that Taboola will advertise themselves on, on sites, it’s not, it’s not helping the ads conversion rate, it’s helping their brand name. I don’t think that you were doing that back then. Am I right?
It was through XML, right? API type technology, where our partners would query us and said, Hey, You have an advertiser for car insurance and we would be able to hit our back end and then respond to the publisher with, Okay.
Here’s an ad for car insurance and this is what we’ll pay you. If you want to display it.
Go ahead. If you don’t, that’s fine.
Andrew: I think even like search engine land was getting big. Some of the companies that you talked about, I was searching for them as we were talking, uh, like canoodle, there were articles about them search engine land. From what I could see of that period had two articles that happened to men mention, find . It was just a different mindset.
It clearly worked. You sold the business. I told you before we got started, um, That I found this random thing that I got to ask you about after the sale. I see in the Royal Gazette, which I never heard of before there was a. There was this, this notice that said that, uh, notice is here by giving pursuant to section seven of the corporation registration act that the following companies have made default and payment of the annual registration fee due March 31st, 2008, and, and find ology was one of these companies.
It’s like, it feels almost like at some point someone was neglecting the company to the point that they weren’t even paying a basic, do a basic fee.
Jon: The Gazette. I believe that’s a, a paper in Montreal, Canada. Um, I have no idea what a, what that is.
Andrew: Well, I guess what I’m trying to understand is am I reading too much into it or was the company that acquired you so focused photon group limited? Were they so focused on what was going on in the environment that they neglected little things like this, which it’s just, it’s a basic mistake. But it is it indicate indicative of bigger things or not.
Jon: No, no, I, I wouldn’t say that. I had never heard of that. That default in 2008, I have no idea what it is, but I can tell you that the company, you know, phonology, we were, you know, I was still involved. I didn’t, I, when we sold, I sold a hundred percent of the stock to the public company. But, like I said, we had these outs that were built in, so actually the public company incentivized us to grow at a rate that I would say probably wasn’t sustainable.
And, and that’s ultimately what happened is that we opened up an E you know, we opened up new, a local search division. We opened up, um, you know, different, different divisions of the company, um, to try. Create growth, which we did successfully for the first 18 months. But, you know, as every entrepreneur should know, be careful about your foundation, right?
Don’t build too much on top of a foundation that isn’t strong enough. And ultimately the public company, not only incentivize that type of growth, but insisted on it. And ultimately that’s what, you know, uh, caused the company to really, you know, be in a position where it was. Not cashflow positive for a small period of time.
Um, they were looking to sell the business. I found out about it and said to them, look, if you’re going to sell the business, you may as well sell it to me. And that’s ultimately over the course of a year, kind of what happen.
Andrew: Yeah. How, uh, how has the price compared to what they paid you?
Jon: Uh, it was a small, small fraction of, uh, what, what I got paid. Yeah.
Andrew: And it was you again, paying directly out of pocket. No
Jon: Yep. No, that’s there’s.
Andrew: you believe in this strongly, this is one of the things that you think that entrepreneurs are missing today. This thinking about we should just be bootstrapped. Am I right?
Jon: You know, there’s plenty of companies that have done it and plenty of entrepreneurs that done it the other way around done it successfully. Look, there’s plenty of VC money out there right now. Um, I was fortunate. I got into a place early, early on where I can. I think I had 10 grand. Um, and I think I went in 10 grand, uh, you know, uh, on my credit card and I was able to create profits enough to be able to grow slowly, but surely these days, things are a lot more, you know, mature where you do need a little bit more capital to just start.
Um, but, and so if you don’t have it, I understand that. The idea of raising money, but I’m a big believer in bootstrap, you know, entrepreneurialship, um, where you, you know, you focus in first on creating revenue and profits, um, before, you know, significant.
Andrew: No. One of the challenges that I have here doing these interviews and being an entrepreneur in the world today is that entrepreneurs like you, your stories aren’t out until much later, because you don’t have an incentive to say, look at how much money we’re making versus new entrepreneurs who have a big incentive to say, look at how much money we raised.
Right? Because it helps them hire. It helps them build from nothing. And it’s a real challenge. I, uh, before the pandemic, I got to meet some people over dinner at poker, et cetera, here in San Francisco, they would come into town at night. I see some of what’s there, they would not do interviews. They would talk privately.
And I feel like even when they talk privately, it was a very cagey conversation. And so we’re definitely missing this kind of energy. And I love it. I feel more invigorated hearing your story about, um, the, the vending machines that you had than I do seeing what’s going on on tech meme and tech crunch today.
Jon: Uh, man, I appreciate that. I mean, it, it, it definitely is true that there’s so much hype around. I raised this much or, you know, we got a second round and, and good for them. Right. But ultimately, as an entrepreneur, you know, You want to hold on to control as much as you can, because you’re the one with the vision.
And while you can find people to be able to back you and whatnot, it’s only, it’s, it’s only gonna be good when it’s good. If it starts to get a Rocky, you know, don’t fool yourself, you’re not in control anymore. Um, and ultimately, you know, you need that level of control if you truly believe in yourself and believe in the vision, um, and believe in the story.
Andrew: When you bought the company back, what was the vision that you had? What did you see in the world?
Jon: Full transparency and full honesty. It wasn’t about vision. At that point, it was truly about keeping my staff and team together, making sure no one lost their jobs. Um, I was, you know, I was financially independent enough to be able to do it. And, and I would say. I was kind of burnt out at the time. Um, you know, I’ve been doing this now for 12 years.
Um, and I, you know, like, like I said, just when I was out, it pulled me back in. So while I was, you know, really happy that I kept the team together and everybody was still making money, you know, it took a little while to kind of get my mind back into the game and I think wall for the next three years or so we did do the rebrand, right.
I, I recognized early on. We needed to kind of rebrand ourselves, give us a refresh and add.net emerged. In 2012, we launched a video division, a display division. We launched an email division. So we tried a lot more, more things that we were successful at those things from a revenue and profitability standpoint, but not from a scalability standpoint.
Um, you know, Gain enough market share in those areas to where it was, you know, really viable, but it was around 2015, 2015, 2016, where I really kind of, you know, got a fire up my ass again, you know, reef was able to kind of clear my hat over those few years and focus in. And I said, let’s double down on what we know and what we do best, which is search.
And really what that meant at the time was. Intent based. Traffic, right. Let’s capture users that are showing intent to go to a certain destination or buy a particular product or service. And let’s double down there. And that’s where we started to work with. The larger agencies started to kind of penetrate a little bit more with the agencies, with the big brands, starting to leverage our technology, to create.
Optimization capabilities. So we can really determine what was that bit, what was that user worth, right? Was it worth 5 cents or was it worth 30 cents? And as things kind of started to evolve and as I started to get really more focused, that’s where the business started to had. And it was at that point that we kind of, uh, you know, didn’t look back.
Andrew: Okay. I’m looking at the site from back then and the, and the sales material from back then, it seems like the shift had happened around 2015 towards emphasizing Bing and Yahoo and Google. And it was it. Wasn’t now the smaller sites. And. Uh, the smaller search engines and the, uh, domains, it was more like you’re an enterprise client.
You want to buy ads with these big search engines. We are here to make sure that you don’t waste your money and that you do it well, right.
Jon: Not completely correct because we weren’t buying traffic for, um, these clients of ours on Google or Bing or Yahoo. In fact, we still don’t. We, we, we actually work with other agencies that do that for their clients. What we said is look, there is more to search than meets the eye. There’s more opportunities to buy.
Good quality traffic then just Google and Yahoo and bang. And now really just, you know, Google and bang, you know, we market ourselves now as an extension outside the major networks. Right. And that’s resonating really, really well.
Andrew: Where else is search? I, I, I think I I’m picking up on one moment in time where the site and the literature emphasize those search engines and maybe it was, here’s a search engine you’re coming for. And we’ll also tell you, when you come in about these other opportunities you don’t know about. So maybe that’s why I’m missing a large chunk by looking
Jon: In 2016, we launched a technology called search IQ. Um, basically it started as a WordPress plugin, um, where, you know, where publishers could, you know, put in their own search technology, that was way better than what was available to, you know, to the masses and index their sites a lot better. You know, great content that they created over time and it gave us the ability to insert advertising within those publishers websites.
Andrew: Uh, and then was search IQ, giving money to the publishers too.
Jon: No search IQ actually started as a SAS product where they were paying us. There was a freemium version and then enterprise and whatnot, you know, the freemium versions allowed us to place ads. So some clients actually were happy with us, you know, placing ads. Um, you know, we, we started putting deals together with larger publisher sites.
Andrew: what’s a, what’s a big publisher that you went over early on.
Jon: I mean, you know, earlier on, um, there’s a site called dog time.com. Um, total beauty.com. It’s a one of evolve media. It’s a couple of evolved medias sites. There are a publishing house here in Los Angeles. A good friend of mine runs that, that business, uh, Aaron rotor. So, you know, that’s an area in which, you know, we started getting more visibility.
Um, you know, you could go to some, uh, you can go to more.com right now, um, and see the search IQ technology live.
Andrew: by the way we should watch when you’re tapping on the table. Um, because it comes up on the mic. I see. So you were saying, look, we’re going to expand search. Google may have internet wide search. But there are these other places where people are searching, where there’s intent and where there’s an ad opportunity based on intent.
And that’s what you were. That’s what you were going to capitalize on and expand.
Jon: Correct. And, and not only your search, right? Google has plenty of, uh, advertising. That’s not just off the search bar, right? They have Google ad sense where you, where they’re looking at the context of the page and there’s listings within the ad unit, we’re able to provide publishers with the capability where if they’re creating content to drive, um, their user to buy a particular dog color, right.
We work with chewy as an advertiser. Well, that, that. Content creator could send that user to Amazon, right? The dog call or an Amazon. It could send it to pet co, but we can give them the opportunity to send it to chewy and ultimately pay them More for that.
Andrew: More than they would get from doing an ad a Google. I don’t know what they’re calling it now, but it was called a ads ad sense more than that.
Jon: No, because that sense was more of a display ad unit, not in the content. So
Andrew: what was the end of content stuff that you do links within the,
Jon: correct link hyperlinks within the content.
Andrew: ah, so if somebody mentioned a dog collar, you would hyperlink in, I didn’t realize you were doing it.
Jon: Right. So it’s keyword based, right? What is perch? It’s, it’s all based on keyword intent and that’s what the ad.net network is all about. It’s capturing intent and, and focusing on performance. Um, those are the two big things that we kind of rest our head on.
Andrew: you get your head back in the game? You said that look, you’re burned out. I understand you’re doing this since you are a school. And even before, before you officially started, find dollar G you were an entrepreneur all the time. How’d you get your head self?
Jon: I mean while it’s, that’s definitely going into, you know, personal, deep things that I’m happy to share. I mean, to be, to be honest,
Andrew: to go personal. I,
Jon: You know, as everybody, you know, you go through ups and downs in life. And, and I, was just in a, at a kind of a low point for no real, crazy reason. I did experience, you know, some, uh, business partner, you know, uh, stealing from me, um, that was kind of, uh, an ego blow.
I did have a good friend that worked with me for a long time, kind of, you know, stab me in the back. Um, there all these like things that were happening around the same time. And it was, there was a moment where I said, you know what? Maybe I’m taking, I should take some responsibility for this. Um, and I got to refocus my energy and, you know, and, and put out better energy out there to kind of get, get it back.
And ultimately that’s really kind of the turning point I took, I took, you know, bad stuff that was going on in my life and I turned it around and, you know, just focused on the ball.
Andrew: Anything helping you get through it. Coaching books, religion.
Jon: uh, you know, What good friends, um, good, good, um, good advice. Uh, learned experiences from other people. Um, And, and I did for like five weeks take this very interesting spiritual psychology class, um, out of Sam, out of this, like, you know, private university that a couple of people had referred me to people actually are very, very successful.
So I gave it a shot and I got some great value out of that as well.
Andrew: What was it?
was literally called spiritual psychology, um, out of the university of Santa Monica.
Andrew: I see it right here. I just did a search. It’s doctors, Ron and Mary Hall. Nick of spiritual psychology. Yeah. That’s them.
Jon: That’s them,
Andrew: What was it about them? Um, I’m looking them up. I can’t get enough info. Fast enough. What was it that they helped you understand?
Jon: Well, again, I think it was just taking a look at things differently, right? When bad things happen to you. There’s a responsibility that you should have. I mean, look, I know it sounds terrible, but like, if you, you know, if you lose a big client, right. You know, you can take the woe is me attitude, or, you know, maybe I did something, you know, that, that caused that to happen.
Let’s let’s kinda, let’s, you know, look a little bit deeper, you know, they, there’s interesting, you know, concept of your, your, um, Your lifeline and your goal line, and you know, that doesn’t necessarily always intersect. Um, you know, the higher you go up on your, your, you know, your lifeline, how you feel about yourself, how you feel about others, the further you can get, uh, you know, get on your goals.
Andrew: All right. Not to go too, like heavy here, but let’s, let’s talk about one other thing that’s related. 2015, the company had a cash crunch and you were investing in real estate. So two things hit at once. What’s the cash crunch, what happened with real estate? And I promise we’ll get to happy stuff, but I
Jon: No, no, no, totally fine. Look, if anyone can, you know, the thing that I love is that people can learn off of other people’s experiences. And that really is, you know, the, the best way to learn is, is. Listening to other people, but, um, yeah, th the company was in 2015 starting to grow. Right. I made that decision.
We started to grow, um, and you know, as most people out there know, you know, you’re not getting the best terms all the time. You know, some of our advertisers pay us net 90. One 20 and we’re out there paying our supply partners, our publishers, net 30. So that, that, you know, was the cause of the cash crunch, which is a positive.
But because I was invested personally in these real estate ventures where I had experienced the partner committing fraud, um, I was, you know, I had a bit of a, a situation.
Andrew: Oh, wow. And so were you able to recover the money that they want?
Jon: Uh, so on, on the fraud part, you know, thumb, yes. Not, not quick enough to really help the cash crunch. We were literally me and my CFO. We were two days away from signing a, um, a loan agreement from a factor that we never had to use before, um, that you know, would have helped us, but would have cost us a good amount of money because these things aren’t cheap.
Um, But I was able to maneuver things in the background enough to get us through. And then we ended up landing a big advertiser that was paying us a net 30 instead of net 90. And so as, as all, everything kind of fell into place at the right time.
Andrew: Man. I would’ve thought that by this point in your career, That these problems just wouldn’t exist anymore. That it would be more like, how do we expand? How do we double not, how do we, you know, get the factor to work with us factor? Sometimes I think about as the payday loan of, of businesses, right? They charge high interest, obviously not nearly the same, the same thing, but it’s high interest rate when you need money fast and wow.
We all right. Things did clear up. Now I’m looking at, um, we started this conversation with, uh, A press release or something that I’d read that I’d seen about you let’s end it with another one. June 8th. I see a business wire, uh, post here about how AdNet ad.net partners with Clarion capital partners to scale its marketplace through strategic acquisitions and continue to kind of growth.
What’s this deal? What are you guys going to be doing?
Jon: Yeah, I’ll give you a quick backstory. Um, you know, in, you know, as the company was drawing, we were doing very, very well. We were making really good money. Again, no investors, no debt. And, um, I started to look to make acquisitions. Um, and I went out there myself, um, to go make some acquisitions. And I found myself in a situation where there was two acquisitions that I attempted to make.
Um, Found out that I was the best offer from a cash perspective upfront and then structured on the backend, but I didn’t end up getting the deal. And what I learned quickly is when you’re in that, in that world of finance and you’re dealing with VC VC backed companies or private equity type companies.
There’s a, a cronyism that exists. And I didn’t come to, I didn’t come to the table with investment bank. I, I had no debt, so I had no bank that could speak on my behalf. Right. So the credibility component wasn’t there. They didn’t know whose this guy, John Waterman, is he going to be able to close on a, on an $8 million deal or on a $12 million deal?
Even though I was able to show bank statements. I didn’t end up getting that deal closed. And while business continued to succeed and we continue to grow, I made the decision that it was time to partner with, um, you know, a major player in the financial community that could help with these types of acquisitions, um, and maybe help us scale even greater organically through their experience in, you know, scaling businesses.
Andrew: All right. So then where do you see the future of ad.net?
Jon: Oh, man. I, I, you know, for, for us, you know, sky’s the limit. I mean, I’m really excited about, you know, the next two to three years, uh, the products that we’ll be putting out the relationships that we’ll be developing.
Andrew: and more ad units that you invent or that you are now getting into that already?
Jon: No, we’re gonna, we’re going to be looking to create some new publisher facing ad units. Um, supply has been, you know, um, I would say the, the, the difficulty, these days, we have great demand partners. You know, advertisers and agencies that are working with us, they want to give us more budgets. We want to be able to go out there to the publishing community, to the content community and say, Hey, look at our, you know, technology into your stack.
And we’ll be able to pay you more for, you know, the traffic that you’re getting. Right? No.
Andrew: What, um, I’m not nearly as deep into the space as you are. What, what opportunities, what, what is out there for companies who are competing in a world that’s dominated by Google, Facebook and Amazon? What are you seeing that when I read news reports saying that they’ve captured the whole market, I’m missing.
Jon: Well, I mean, look, they’ve captured the grand majority of the market, but when I go to w when, when not necessarily me, but when my head of sales and our sales team goes to an agency or a brand and says, look, Give us a piece of this budget. We can have. Diversify your ad spend, which right now is probably one of the key components is diversification, right?
Advertisers don’t want to give all their money to one or two companies. And they liked the idea of diversifying their ad spend. As long as they’re getting similar, you know, return on ad spend, right? As long as they’re getting the similar KPIs, diversification becomes crucial.
Andrew: To what? And then where, where are the units of diversification? What’s, what’s hot, that’s available outside of those three giants. And then w by you placing ads on search results of other websites, for example, right? That’s one ad unit. What else? What other ad units are.
Jon: We’re still one of the largest acquirers of domain name traffic in the United States. Um, so, you know, uh, uh, I, uh, stuck to where I kind of came from. I mean, when you think about it, there’s still, you know, domains out there. People typing in, uh, you know, typing in domains that may not exist. Site, but we could redirect that user to a particular search result page or ad unit Google and Yahoo are probably the largest buyers of domain name traffic still.
Um, but we, you know, we compete on a number of a number of levels.
Andrew: What’s what’s one of those domains that you currently have.
Jon: Oh man.
Andrew: I know a lot of them are PRI. I imagine a lot of them are private.
Jon: You know, I I’m just, I keep on going to marijuana store.com because it’s something we do with, it’s the one that it’s one? that we just sold recently. Um, but, but, um, I honestly on a, on a granular level, I’m, I’m really not good at all the specifics.
Andrew: but this gives me a sense of it. And then what’s another one other ad unit like that that’s still hot that we may not be aware of.
Jon: Um, you know, we work with a lot of, um, funnel pages, right? So there’s a lot of, uh, companies that are, you know, you, you sign up for, um, you know, home insurance. Um, you’re looking for your home insurance and people are taking through a funnel of home insurance. Well, anyone who needs home insurance may be interested in.
Getting a new mortgage or a refi. And so we’re able to take that level of contextual intent into what would be, you know, new intent for, for a consumer.
Andrew: All right. I love hearing this type of stuff. Do you know what John? I actually forgot to even talk about my second sponsor here. So we’re obviously not going to charge them, but that’s how much I enjoyed this fricking conversation.
Jon: Oh man.
Andrew: I’m so glad that you’re finally out there talking more. I’m telling you over the years, I’ve seen very little about you.
Few quotes. I’m glad that you’re doing this interview. I hope you’re going to be out there talking.
Jon: Thanks, man. I appreciate the time and, and, and hi to all your audience.
Andrew: All right. Thanks. The website. Of course. It’s ad.net. And I want to thank the now one sponsor. I apologize. HostGator. We’ll do a make good, but I want to thank member full for making this interview happen. If you need to charge, if you want to start adding that to your business, go to dot com slash exergy.
John it’s been great.
Jon: Take care.