BRIAN O’KELLEY: I met David in 2007, when we were out raising our seed round. Over the past 18 months especially I’ve built a relationship with him. So much of having a board is about trust. It was clear that he was a smart thoughtful analytical guy who was curious and really believed in what we were doing.
He’s been systematically investing in digital marketing companies. He did Merkle, he did ExactTarget, and he recently did Facebook. It’s his specialty area. He understands not just the digital/display/RTB world, but a performance agency like Merkle. It’s multiple perspectives, which is valuable in a board member.
He’s also really connected. He’s got great friendships at the biggest publishers, the biggest marketers. He’s really influential in the Valley. Some of our biggest partners are companies like Facebook, Yahoo, and Google. We do a lot of business with the Valley. As a New York company, we can’t be at every meeting. We can’t go to every cocktail party. We need people who can help us stay hooked in there.
He’s an active Facebook investor. Can your Facebook business grow faster with David’s involvement?
Obviously he’s got great connections there that may catalyze a better partnership, but there’s no inside deal. There’s nothing magical about that. It’s just like any other relationship between two companies. Facebook realizes they have a really interesting opportunity on the ad tech side. Whether that takes the form of an ad network or [attribution opportunities].
Facebook is going to be a major player here. Our goal is to partner with them and find ways we can do more together. We have a lot of assets. We’re a big company for the space now. We have over 400 really smart people who understand how to build enterprise technology for the biggest companies in the ad world. They’ve got incredible data, incredible amount of inventory, tons of advertisers. There’s definitely a lot we can do together over time, but for now we’re really pleased to be part of FBX?
Can you update us on your work on guaranteed programmatic? Should we look for something there at the AppNexus summit in April?
There’s no magic reveal on this one. We’re definitely investing in it. Andy [Atherton] building an entire team in San Francisco on programmatic reserve? Our belief is it’s a multi-year project. We’ll experiment. We’ve got some really good relationships on the majors that will help us test at scale. We think we have some advantages working with really complex portals like Microsoft that have really complicated business rules and channel conflict issues that will help us understand what the future looks like.
But it really is the future. It’s not a 2013 thing. When I hear people say 2013 is the year of programmatic reserve, I say 2013 is the year we start talking about it but it’s definitely not the year we see it come to fruition at any scale.
This is a good point around raising a round. Most companies in our space can’t afford to have a big team with a senior founder quality person leading it focusing on something that’s a multi-year project. Andy is a big founder at Brand.net. He could absolutely go out and raise money for himself anytime he wants to. He’s convinced AppNexus is the right platform to go build this. His vision is amazing. I want to help him build it.
Do you plan to ramp up in marketing and sales with the new money?
Yeah, pretty proportionally. I think we’re already the best in the industry at marketing, maybe outside Google. We’ll be doing proportionally more than we have in the past as the company grows. We’re already so global. We’re going to do events in more places than we have in the past.
On the sales side, we’re never been a very sales-like company. We’ve always had a small sales team relative to the total number of employees. It’s mainly because we sign customers and build with them over a long period of time. Many of our customers have been with us for years. We certainly have a lot of interest. Our sales people are selling enterprise technology. We’re selling a platform. It’s not like you have to get a renewal every month or quarter, as you would have to do if you were selling media. It’s a different sales process. Our sales process with some big players can be 12 or 18 months.
The deals announced last Fall, Deutsche Telekom and Orange. Those are really big telcos. You don’t just walk in and say, “Can I have all your business?” You work and work. Then you deal with tax laws. Then you deal with privacy laws. You negotiate. And then finally they say yes, and you do a test. Then you negotiate some more.
If you’re a sales person, you’re negotiating massive multi-million dollar deals that will change the face of advertising. If you’re looking for one-call close, we’re not the place for you. We’re hiring more seasoned, strategic sales people than I think most people in the industry.
Certainly we’ll look at more at them with more money than we did before. At the same time, there’s a lot of really talented people in the market. And there are some really interesting businesses. Whether we want to acquire them or not is really a function of the ROI. It takes a lot of management time and bandwidth on our side.
Geographic integration is hard. Technology integration is hard. Cultural is hard, because even though companies have a great culture it can be very different from ours. When you add it all up, the bar has to be pretty high in terms of the value for us to go through all that effort. We won’t take it lightly. We’ll do it in high ROI places where it makes total sense, but it won’t be a leading strategy. We don’t need it for growth purposes. We’ve got plenty of growth in the business without acquisitions.
What about mobile and video?
We support both mobile and video today. Neither is a huge focus. That may change. For us today, display is just massive. We serve 13 billion ads a day. That’s not “see.” That’s not “bid on.” That’s actually physically serve. It’s a huge business and it’s growing really fast.
Part of this is a resourcing challenge. We have 400 people in the business. The number of meetings I go to, I’m like I need like 5 more people to go after this.
We’re turning down business. We’re at the point where there are folks who have called us and said, we want to do something today. We say, can you wait a week or two? That’s why we’re hiring so fast. It makes it harder to invest in anything that’s not right in the fairway. We just want to swing and hit the ball as hard as we can.
By Q2 we’ll hire another 50 or 60 people and we’ll have more headroom to work on the next steps.