I look really weird. Do I really look like this?
This article originally ran on Digiday on December 12, 2013.
About a year ago, I wrote a blog post pontificating about the likely 2013 ad tech IPOs, and Digiday turned it into a fun poll. Pretty much for the first time in my 10 years of blogging, this post proved both prescient and accurate!
Out of nine companies listed, four IPOed (Rocketfuel, Marin, Tremor, Criteo), one was sold (Adapt.tv) and one is filing soon (Rubicon). I missed YuMe; so depending on how you score, I went something like 6-3-1. Not bad.
Here’s my take on the 2014 line-up. I think there are far more companies contemplating going out, but most of them are on the smaller side and may have a harder time making a successful offering. As a result, I’m a lot less confident in my predictive power since a marginal candidate like LiveRail might surprise us, while a “lock” like AppNexus may choose not to file. By my count there are at least 10 private ad tech companies with gross revenue in the $75-$125 million range, which is on the light side for an IPO, but close enough to be hard to predict.
In descending order of likelihood here are the ad tech companies to look at for 2014 IPOs:
Rubicon: I’m cheating by predicting them as a “yes” in both 2013 and ’14. Bloomberg reported it is already in the process of picking bankers and filing, so Rubicon is probably a lock for early 2014.
Turn: Turn is the largest of the independent DSPs and reportedly raised a recent round at a $700 million valuation. Questions have been raised about its gross margins given its mix of SaaS and media revenue, so it might take some time for it to clean up its story.
AppNexus: Last year’s list excluded AppNexus because I had just left my job there and wasn’t comfortable talking about its business prospects. But without any confidential information or insight, I think I can take a pretty good guess that it will file this year, probably toward the second half. Quote of the year from Brian O’Kelley discussing IPO prospects: “It’s just another financing round. Why would I want my investors to be irrational hedge funds?”
BrightRoll: BrightRoll is as big or bigger by revenue than the current crop of public video companies. It certainly could file if it wanted to but might be avoiding the markets because of the poor performance of Tremor and YuMe.
Collective: Among the biggest of the independent ad networks, Collective has been a rumored IPO candidate for years. Its investments in second-screen TV targeting and strategic relationships with Cox and other media giants makes it much more attractive as a differentiated play. It is also running TV commercials (!) on CNN in the New York area, so that’s got to mean something.
Kenshoo: With Marin out this year, Kenshoo will likely be looking to raise capital to continue differentiating beyond search into social and marketing tech.
MediaMath: I’m personally bullish on MediaMath since its acquisition of Akamai’s ad business in early 2013. Its financials may not justify a filing this year, but I’ll give it the benefit of the doubt given the overall heat in the market.
Who isn’t on the list:
There are a lot of companies that won’t make it out this year, either because they’re too small, need more time to get traction, or are seeing headwinds in the market.
Here’s the “out” list — let the hate mail begin!
TubeMogul/LiveRail: Both floated IPO news recently, which is generally a sign they won’t be filing any time soon. In both cases, they talked about a $100 revenue run-rate which would make them smaller than Tremor and YuMe, neither of which has set the markets on fire. Look at M&A exits for both these companies.
OpenX/Pubmatic: They both need another year before their revenue and growth numbers look attractive to public markets.
Flurry: Huge volume and scale in mobile, but revenue isn’t nearly large enough.
Quantcast, DStillery, 33Across, AddThis: All these companies compete directly with Rocketfuel and probably saw the IPO as a wake-up call. Unfortunately, they are all probably still sub-$100 million in revenue. Stock investors are also extremely skeptical about Rocketfuel’s ability to maintain its growth and margins, and any missteps will have a spill-over effect on the prospects for the others.
BlueKai/Lotame/Exelate: Enterprises are adopting DMPs and creating attractive recurring SaaS revenue. But there isn’t a break-out leader in the space ready to capture the hearts and minds of Wall Street. Another area to look for M&A exits since these businesses can easily be recast from the moribund “ad tech” to the new hotness, “marketing tech”.
What’s your take?
Scratch is an awesome tool for teaching young kids to program. It requires minimal typing, which is great for my 7 year-old.
He and I just spend a snowy morning building Pong! (Admittedly I did a lot of the work, and also admittedly there are some obvious bugs).
Click to play the game or go to the project’s scratch page to check out the code.
3D printing is really pretty cool and I think it’s going to change the world. But as enthusiasm grows and we await the “trough of disillusionment” I was wondering what the general opinion was of the applications of the technology.
So I did a quick unscientific study. I searched Google for the phrase “3D printed [Blank]” for every phrase I could think of that made sense and recorded the number of results, below.
Cars and Food are the clear winners. Cars because…I have no idea why someone would want to print a car. Food sounds kind of awesome but maybe impossible in reality given the complexity of aroma and flavor. Shoes, because the ladies. A little surprised how far down the list Sex Toy came out, but they beat the Meat (heh).
My son and I were playing the Dreidel game last night and we noticed a disproportionate number of “Hey”s coming up and very few Gimels. We were suspicious there was something going on so we turned this into a quick little science project.
In my opinion, the most important lesson about science for a young kid is the importance of empirical observation and measurement. This project was pretty simple: We would each spin a dreidel 40 times and record the results to see how close we came to an even distribution.
My results were pretty astounding:
Out of 40 spins, 31 were Gimels! According to my (pretty bad) statistical skills and this page on Stack Exchange, the odds of this are roughly one in 400 billion (give or take).
My son’s observations showed a bias towards Heys (16) and Nuns (17) which I put at one in one-hundred thousand.
Our theory is therefore that the dreidel manufacturer is sloppy, not they are trying to intentionally bias the game. But I’m ready to be disproved!
Also see: A One in a Trillion Dreidel Game.
Last year I posted a fun review of how I tried to explain internet advertising to my son’s kindergarden class. I got a ton of great feedback from other parents about using the techniques, and some folks in the ad industry even used it to explain what we do to other adults!
So when my buddy Max (11) asked me to be the guest speaker in his class I jumped at the chance to continue my experiment in teaching. Max had different motives — he knew that I used to work at Google and wanted me to tell cool stories about self-driving cars, Google Glass, and GoogleX (Sergei’s secret lab where he’s turning himself into Bat Man).
I decided to split the time between the Google stuff and a lesson about how computers really work at the lowest level. Keep in mind that these kids know basic math pretty well at this point, so I was trying to keep it within their abilities for addition, multiplication, etc. Here’s how the lesson went, I hope you find this interesting and helpful and leave comments with your thoughts.
Starting with the Concepts
To get the kids talking and motivated I started with some simple questions:
- "How many of you like computers?" — All hands raised
- "How many of you like math?" — A couple of hands dropped
- "Did you know that math and computers are basically the same thing?"
This got a couple of the kids intrigued and got some puzzled looks from others. I explained that when they’re playing a game or a movie on an iPad, it’s basically just an enormous number of math equations taking place that make that game run, and I was going to explain to them how it worked.
- "What’s the one thing that makes every computer run?"
Some kids said “chips”, but pretty quickly they volunteered “electricity”. With that I explained that a computer is just a machine that runs on electricity like a blender or anything else in your house. But how do we translate electricity to math and then to games, words, videos, etc.?
That’s when I broke out the cheap, RadioShack flashlight ($3.99, in-store only).
I turned on the flashlight and asked:
- "Imagine if we wanted to count using electricity. If this flashlight was like an on/off switch that was used for counting, how would we count to 5?"
One boy volunteered and came up to the front to turn on and off the flashlight five times.
- "Great, now what if wanted to count to a million or a billion?"
The kids were flummoxed. Until I broke our my four-bit array of flashlights:
- How high do you think I can count using just four flashlights?
I started counting from zero to 15 using the flashlights, stopping every once in a while to ask the kids how to get to the next number. For example, when I was up to 9, the 8 and the 1 were both on, and I asked “how would I get to ten?” and the kids were able to get it pretty easily.
Once I got to 15 I made the point that with one flashlight I could only count to one, but with four I could count to 15.
Introducing Binary Math
Going to the whiteboard (all kids classes seem to have them now) I wrote down “1 2 4 8” and noted that each new flashlight was double the value of the previous one.
- "Help me continue the sequence. Who wants to tell me what’s after 8?"
With some help from me, we pretty quickly expanded two to the 15th power:
- With a fairly small number of flashlights we could reach very large numbers.
- We could get to the millions with only a couple more doublings.
- Each flashlight is a “bit” or “binary digit”
- Each group of 8 bits is a “byte”.
To make this resonate I asked if anyone has heard the term “megabyte” (which everyone had, thanks to marketing of electronics) and explained that this was equal to “a million bits, or a million flashlights!” They were impressed.
Next I wanted to transition from flashlights to the ones and zeros used in binary notation. I had prepared slides/print-outs to use, starting with the familiar decimal notation:
Then showing the binary notation:
I was pressed for time, and the kids seemed a little freaked out, so instead, I used the whiteboard and wrote out much simpler decimal examples with only three digits like 156 = 1x100 + 5x10 + 6x1 vs simply binary numbers like 111 = 4x1 + 2x1 + 1x1 = 7.
At this point, I’d say there were one or two kids who’s entire minds were blown wide open. The remaining kids were about 50-50 between those that were still with me and those that were a little confused.
But How Do We Get from Flashlights to Games?
Counting in binary is a building block, but I wanted to reinforce the lesson that binary math is the essence of all the higher level programs kids enjoy. I wanted them to use the binary math to create something visual, and an exercise was the best teaching technique.
I printed out strips of paper that represented a 5-bit array and included greyed-out “cheats” to let them know the decimal value of the places withiin the binary number:
In advance, I had hand-written a set of specific numbers on each slip. I asked the kids to put a big “X” within the cells of the paper slip that added up to the written number. For example, if I wrote “17” on the slip, the kid should have put the X in the 16 and the 1 boxes. (These instructions ended up being confusing, I’m sure there’s a better way to explain this and switching from ones and zeros to X’s was probably a mistake).
Most of the kids were able to complete the task pretty easily and I walked around the room to help those who were having difficulty.
I then called out the following numbers in order and asked that if a kid had a slip with that number to bring it up to me:
As I got the slips I taped them to the wall. When they were assembled, the “X” marks in the boxes created a bitmapped image of the letter “A”. This photo shows it, though its a little hard to make out since some kids put 0’s in the empty spaces:
Using just numbers, which were the equivalent of flashlight on/off switches, we had created the letter “A”, and the same techniques could be used to create an image, a video, a game, or anything else you might see on a computer screen. I think they got it, and if not it gave them a little inkling of what lies ahead as they learn some of these concepts in a more formal setting.
I’ve put together my examples and exercise materials in a Powerpoint, let me know if you would like a copy.
If you live in New York you’re no doubt talking about Citibike. I haven’t tried it yet, and in fact, my family has the dubious distinction of driving in Manhattan to work and school each day (we’re very far from the train, no realistic bus service to get there, etc).
So, while in the car with the kids we’ve invented the Citibike Game. It’s pretty simple: you get points for each Citibike spotting and we try to beat our high score. Meanwhile, the kids are doing math and don’t realize it.
The point system:
- Citibike rack: 5 points
- Citibike biker: 1 point
- Citibike biker with helmet: 2 points (yet to be seen)
- Citibiker talking on cell phone: 3 points
- Citibiker carrying baby, child, or pet: 4 points
- Someone actively taking bike out of rack at the time of sighting: 10 points
So far our top score is an 11, which we know we can beat. Let me know your top score if you choose to play.
I was on the job market for the past couple of months and I took a very expansive approach to the search, taking an average of 5 networking meetings per day, every day, with essentially anyone who would meet with me. And in every meeting I would ask the same question: “What’s going on in New York that’s really cool and exciting?” And you know what, there’s lots of amazing stuff going on in New York!
Now that I have a job, I thought I’d give a shout out to all the companies I’ve chatted with, met, heard about, etc along with my own plain-English description of what they do (along with a little snark). This isn’t a comprehensive guide to NY start-ups, but rather a window into some “movers and shakers,” many of which may not be on your radar.
Adaptly: Platform for buying and analyzing social advertising. A leader in a hot market. Winner: Coolest website navigation.
Art.sy: Pandora for fine art. The only start-up with art historians on staff, they classify works along a comprehensive taxonomy to allow discovery of art within galleries. Winner: Best office view.
Fancy Hands: Outsourced personal assistant chores like “order me a car service to get to JFK”. Winner: Best company name.
Innovid: Online video advertising is exploding, but advertisers and agencies lack tools for measuring and controlling their spend. Innovid gives a single view for all video advertising across the web and mobile. Disclosure: I am an advisor. Winner: Right idea at right time.
Intent Media: Imagine showing ads for your competitors on your own website, and making a coherent business case on why this is a good idea. Sounds crazy, but this is exactly what Intent Media has done in the travel vertical — showing ads for Expedia on Travelocity and vice-versa. Winner: Most dogs in office.
Jirafe: Jirafe offers eCommerce merchants an advanced dashboard for gaining insights into their sales, marketing, and operations. Winner: Worst office (aka, most frugal. Seriously, when they’re not coding the Jirafe team must torture POWs or butcher livestock in their office.)
LiveIntent: Advertising within email newsletters has been a notoriously difficult market and most of that inventory goes under-monetized. LiveIntent has solved this problem and is creating a marketplace for display-style advertising within emails. Winner: Best jerky.
LongTail Video: Which video player is the most common across the web? YouTube? How about the JW Player, an open-sourced video player owned by LongTail Video. LongTail gives away the player for free, then upsells small and medium-sized publishers on video hosting, advertising services, etc. Winner: Best no-brainer exit.
Lua: Collaboration software specifically designed for multiple-location projects like concerts or movie productions. Very slick, very usable application across devices. Winner: Best t-shirt.
Magnetic: Harvests intent and search data from many, many websites and uses it to better target ads across the web. Winner: Best company name.
Percolate: Percolate makes sure that social media messaging is on-brand by analyzing and calibrating the social influences of a brand then recommending items for the social media manager to post. This sounds simple, but is actually quite important to the CMO and the rest of the marketing organization. Winner: Best idea you’re likely to ridicule before you understand why it’s important.
PlaceIQ: Short description: PRIZM for mobile. Longer description: They’ve divided the US into 100 yard squares and can identify consumer characteristics within each square such as income, gender, at-home vs at-work audience, etc. Very useful for mobile advertising. Winner: Most likely to remember the difference between latitude and longitude.
Pricing Engine: Lots of companies help small businesses spend money online, but Pricing Engine tells them how much and where they should be spending money by benchmarking their AdWords and Bing accounts against similarly-situated small businesses. Disclosure: I am an advisor. Winner: Best logo/mascot (mad advertising professor).
Rewind.me: Mobile App that lets you collect all your social data in one place to make it more useful. What restaurants have you or your friends ever checked into in this neighborhood? Winner: Most likely to be a service I personally use.
SailThru: Customized email and onsite offers for media companies and eCommerce. Unlike traditional email providers (e.g. ExactTarget, Responsys), they don’t segment your audience then send different offers to each segments. Instead they personalize the emails in real-time and match the messaging to your latest on-site activity. Winner: Best office hammock.
TayKey: Figure out what topics are trending on the Internet, figure out which type of people are interested in those topics, then very quickly target ads to those topics. Winner: CEO most likely to make you feel old.
TapAd: Target and measure advertising across mobile and desktop screens based on proprietary algorithms. Disclosure: I am an advisor. Winner: Company name most likely to be used in a hip-hop lyric.
Yext: Keeping business listings up to date across Yelp, FourSquare, and everywhere else is a significant problem for retail businesses. Yext does it for you, and is making bank doing so. Winner: Most upbeat boiler room.
YieldBot: Publishers don’t use the majority of their on-site data to target ads. YieldBot finds the relevant data on the site and targets it like search, instead of display. Winner: Best cute little robot give-aways.
Everyone loves a public offering! It’s a coming out party for your favorite company, a liquidity event for your shareholders, and a fun opportunity to dress up and ring a bell. Within the ad tech sector there are a surprisingly large number of companies talking about going public in 2013, so here’s a handy preview of the year to come based solely on my unbiased opinions*. Let me know what I got wrong in the comments.
Ad tech IPO candidates in reverse-order of likelihood to go public in 2013:
Update: Totally spaced on Marin, so added them in with Kenshoo.
Criteo: Rumored gross revenue of $500 million and very strong global growth put Criteo in the pole-position for most likely to exit. I had heard the S1 was coming in late-Q1, but, as with everything in this market, that’s probably smoke.
Rubicon: CEO Frank Addante recently declared the company profitable and with Pubmatic in decline and AdMeld in rewrite mode Rubicon has the SSP field largely to itself. Rampant rumors have Rubicon being courted by Yahoo!, but in the absence of a deal a public offering could be in the works. Alternatively, they may want to bulk up their offerings with some M&A of their own to make a more attractive candidate for the markets.
Kenshoo/Marin: I’m not an expert in search advertising, but both Kenshoo and Marin appear to be clear leaders in the space and they’re making noise about a filing in 2013. I’ll give them both the benefit of the doubt. UPDATE: Marin has filed (2/14).
Adap.tv: Video is incredibly hot right now and Adapt.tv has one of the strongest stories in the market. They’ve been able to position themselves as a tech company in the emerging video advertising space, as opposed to Tremor and BrightRoll (below), both of whom are more pigeon-holed as ad networks. (Whether this is a fair characterization is totally irrelevant). Hiring Tim Morse as CFO from Yahoo! is clearly a signal of intent to offer. And, as a side note, all the video companies listed here have much more solid fundamentals than Millennial Media, which the public markets, for some unknown reason, continues to value at $1 billion in market cap.
Tremor/BrightRoll: Going to put both video leaders in the same bucket. Fast-growing video ad networks with healthy margins in a hot space. Not clear if either is big enough to get the attention of Wall Street, so may need to wait for 2014 and/or some M&A to shake up winners from the second-tier.
Turn: 2012 was a break-out year for Turn in the DSP space, and I’ve heard they are transacting something like $400 million in media on behalf of their clients, which would compare very favorably with some of the others on this list. My guess is they need another year of growth and internal maturity before filing.
RocketFuel: By all accounts RocketFuel is growing rapidly as a buy-side ad network/DSP, representing, in my guess, among the top 5 sources of programatic demand. I don’t have a lot of visibility on their numbers, but have heard they’re looking at filing in 2013. Take with a grain of salt.
* - I have excluded my former employer, AppNexus, from this blog post since I can’t comment freely about their business without overstepping confidentiality obligations.