Monday, March 29, 2010
Interview with Jeff Green, The Trade Desk
Story by Benjamin F. Kuo
Last week, Ventura-based The Trade Desk (www.thetradedesk.com) announced a $2.5M funding round. The firm's CEO and founder, Jeff Green, was a co-founder of AdECN, the Internet advertising exchange acquired in 2007 by Microsoft. We talked with Jeff about his new startup, and where it fits into the Internet ad market.
Jeff, thanks for the interview. What's the story behind the funding?
Jeff Green: We put together a seed round, worth approximately $2.5 million. It's divided into two tranches, we've closed the first tranche, and have almost completely closed on the second tranche, which is about a week away. The two funds that led the round were Founder Collective, out of Boston, and a group called IA Venture Partners, which is led by Roger Ehrenberg, who used to run the Deutsche Bank hedge fund. He left to start his own firm, which only invests in data-based companies, who are all focused on accumulation and use of data. We've also got a huge list of strategic investors also participating. The two we're disclosing right now are Jerry Neumann, who ran mergers and acquisition for Omnicom, and Josh Styleman, CEO of Reprise Media, which was sold to IPG and became their search product.
Can you describe what are you doing, at a high level?
Jeff Green: To fully understand what we're up to, you need to understand the evolution of online advertising. The last time I started a company, was AdECN. AdECN was a system that basically was trying to be the New York Stock Exchange of advertising. We built a hub, where we could conduct auctions, in real time, and allowed people to participate in real time. What we're building now, is a system much more like the Goldman Sachs of online advertising. While we participate in a NYSE-like platforms, we utilize those real time auctions to better buy media, and buy media in a better way than what we've done in the past. That might be a bit of a verbose answer to the question, but to say it more simply--we are answering one of the most difficult questions in online advertising, which is what is this particular impression, from this particular user, on this particular site, worth in this particular instance? Answering that question is among the most difficult questions in the industry, and the one we're undertaking to answer. In order to answer that, we must have systems that basically make decisions in real time, and utilize all types of data.
Where is all this data coming from?
Jeff Green: The simplest answer, is anywhere it is legal and ethical and within the bounds of consumer privacy and use agreements. Basically, we're willing to use marketer data. There are lots of marketers who have accumulated data, and don't do a good job of using it to improve their spend. What we do, is integrate that and also buy data from other people, who have accumulated that in an appropriate way. We help people to monetize that data, and help marketers spend more efficiently. Incidentally, it's important to note for consumers--consumers tend to get freaked out when they hear that their data is being used to market to them--that while we are accumulating more data to make the market more efficiently--that we and our partners do so in an appropriate way, and it makes it a better experience for the average user looking at ads. We want to help them look at ads that are relevant to them, as long as we do that without crossing any lines, and so everyone is better off for it.
Can you give us some examples of the kinds of data you're using?
Jeff Green: The type of data we're using include any payment, which can inform a marketer of your buying decisions. That data can be from outside the user--meaning that it's easier to sell umbrellas on rainy days than sunny days, that some products do better in certain geographies--or from the user, such as that a user has abandoned a shopping cart, that they have a disposable income of X. Marketers use that data, for example, to only sell BMWs to those who can afford it and are their target customer.
We assume this is well beyond the standard demographic data provided right now, i.e. male/female, age group, etc.?
Jeff Green: It's very fair to say that age, gender, and income are highly commoditized. Every marketer has access to those. It's the things outside that group that start to get interesting.
Let's talk about your background. For those who aren't familiar with your background and AdECN, can you talk about that a bit?
Jeff Green: I started my career in online advertising, as a media buyer. I came to learn how many ways a person can be ripped off by online media. I bought both search and display, email, and frankly every other kind of online media--and I felt that there must be a better way to make that work, more along the model of a financial market. I left that environment with that mindset, to create first AdExchange, and then AdECN around 2004-2005. We spent a few years creating that, figuring out that because there were 350 ad networks, we'd either need to compete with all of them with cutting edge technology, or we could create an online advertising exchange, because no one else had. Wed decided to put on our fair and neutral hat, protect the market, and change the landscape. I think it's fair to say we did that--Rightmedia sold to Yahoo, we sold to Microsoft, and Doubleclick sold to Google. It's now clearly also become a top priority at Google. The ecosystem has changed, and real time bidding and transparency has swept the industry. As far as the team goes, we have several engineers who have come from AdECN and Microsoft, including Dave Pickles who wrote the ad server at Microsoft which allowed AdECN to scale to hundreds of billions of monthly impressions.
How did you decide you wanted to start a new company?
Jeff Green: We basically said we wanted to create the company when we left Microsoft. Both of us are serial entrepreneurs, and as fun as it was to be at Microsoft to see something you created beginning to grow up and become adopted, as a central part of a humongous company--and as much as we loved building the product and had a great experience there--it's not as much fun maintaining it. We felt we wanted to be more cutting edge, and given that the industry is so ripe with opportunity, now was the time.
There's lots of companies in the online advertising space, how about in this area?
Jeff Green: There really aren't other companies competing in this space. The way we think online advertising will be bought, we think real-time mechanisms will be used to clear a transaction. However, there are only a handful of companies able to do real-time impression buying with any kind of sophistication. I believe the majority of impressions in the next couple of years, and particularly display impressions, will be bought that way, and there's only a couple of companies that can do that. It's a wide open space. Even though we think our technology and approach is better than those couple of companies, even if we divide up the opportunity evenly among the companies, they will still be billion dollar companies, assuming we mature and no other competition enters the marketplace.
Finally, how far along until you have product?
Jeff Green: We believe very strongly in iteration of our product. The market is so nascent, that it's really important that you are agile and able to adapt. The best way to do that, it to get product as fast as you can, make sure it works, and assuming it works, get it out there so you can begin to iterate. With that approach, we're hoping to have product in market by the middle of the year to begin iterating on it. However, real dollars and volume won't take place until Q4 or maybe Q1 next year.