SaaS Interviews with CEOs, Startups, Founders
1082 Why Public Sizmek Went Private to Fuel Growth via M&A in Buy Side Programmatic Space
11 Jul 2018
Chapter 1: What is the significance of Sizmek's growth strategy?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Mark Grether.
He's the CEO of Seismic, and he focuses on guiding the company and accelerating the growth of the business. Before Seismic, Mark was co-founder and global COO of Zaxis. Under his leadership, the company grew into the world's largest programmatic media company with over $1 billion in revenue in five years. Mark, are you ready to take us to the top? Thank you. Good. Thanks for being here.
First off, did I get the last company, the pronunciation correct, that you were COO of? Yes. Yes, of course. I'm a CEO of Seismic. I joined the company actually a year ago on the day-to-day. And as you can imagine, it was an exciting time that we went through the last year. We acquired RocketFuel. We combined both businesses, Seismic and RocketFuel, under the Seismic brand.
And now we are the largest independent buy-side platform for advertisers and agencies. We have about 1,600 employees globally. How many? 1,600. Okay, 1,600 what? Sorry.
employees globally and we now do business in 70 countries so we are truly global business and we serve about 20,000 advertisers worldwide 20,000 worldwide and walk me through some of the revenue model here other buy side platform CEOs I've spoken with and others in the space like Bill Wise at MediaOcean are kind of exploring adding a SaaS component to their typical transaction fee model are you doing that and tell me more about your revenue model
Of course, I mean, if you think about Seismic and the legacy of Seismic, Y2 always was a SaaS model. Seismic grew as the largest independent ad server. Right. And as such, we always applied a SaaS model. And now if you look at the combined business and you may have seen our recent push into total transparency, it is really all about our platform business.
So we now operate a self-serve platform which allows advertisers to run programmatic campaigns themselves. And they have the opportunity to tap into our AI capabilities. So one of the biggest kind of differentiators for us is that we do not only have the global platform and we do not only have now a fully integrated staff. which has a DMP and a DSP and a nerd server.
But more importantly, also, we can bring everything together powered by AI. And that is really kind of unique. It's kind of one of the key differentiators. And you're absolutely right. We offer that product in a SaaS capacity to advertise our same agencies. Yeah, the Seismic acquisition was last year.
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Chapter 2: How did Sizmek's acquisition of RocketFuel impact its business model?
Did this ad was served to the right audience in the brand safe environment and all of that? So that basically, that question became a little more complex, but it was still about a question, was an ad served? And as you can imagine, you cannot actually create your own homework. So as an ad server, almost by definition... Wait, Mark, what do you mean by that? You can't create your own homework?
Meaning that if you are on the buy side, and one of the main reasons why it exists is to help your advertise and your agency to find out whether you should pay money to the publishers because you served your ads. If you are now also a publisher, if you're also running a media business, you would actually measure yourself. Right. And it's obviously a conflict of interest, which you cannot go with.
Right. And therefore, from the get go, as a natural business, we knew that we never, ever have to own media. Right. And therefore, if you look at the legacy seismic business and the history and the culture of seismic, right, we always doubled down on the buy side. And we never actually ran our own media business where we owned media or we had a principal risk in media.
And that kind of DNA now is what we are also applying to the DSP business, which we acquired Rocket Fuel. And therefore, again, it's in our DNA to run a fully transparent business. And that's, again, what we're now doing. Walk me through your brain. So there's a lot of very talented folks, CEOs I've listened to the show, and they're always considering which companies they're at today.
And are there better opportunities elsewhere? How did the company incentivize you to join? And what excited you about this opportunity versus your last one, where it sounds like you drove some incredible growth? Yeah, thanks for that. I mean, certainly Zaxos was a fantastic journey for me. You know, it was kind of my first baby. And now I do think that Seismic is my second baby.
And as much as I have two boys at home, Seismic is my second one. And the main reason why I was intrigued and why I joined Seismic was this belief that there is actually a role to play as the biggest independent buy side stack in the world because an alternative to Google, right? They need an alternative to Google and Facebook, and there won't be many alternatives.
You have to have the scale, the stamina, and the knowledge and expertise to build such a powerful alternative. And the vision of Zeiss is exactly to be that alternative to really bring together all the ingredients that you have to have as a global stack. Again, we talk about a DSP and a DMP and so AI plus services on a global scale, right?
that allows you then to serve the biggest of the big lines of the world. And that actually really excited me to be able to pull off such a unique organization. And as we have seen over the last 12 months, with the acquisition of Rocket Fuel, with our repositioning of the company, with our focus on transparency, and also with the recent wins for some big, big spenders, right?
I think we are on a good path to establish ourselves as the only one who can truly compete with the Dalbert League's back at global scale. I know that many of you have thought about launching your own online courses to help sell more of your software and other products, but a lot of you guys haven't started, myself included, to be honest. It's too much work.
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Chapter 3: What role does AI play in Sizmek's platform offerings?
The reason is that bringing companies together, right, and forming a new business model just takes time, right? So if you actually have to report and justify yourself every quarter, you're much more short-term focused. However, Seisnick and Rocketfuel together, it's not about the next quarter or next half year, right? We have a much more longer time horizon in mind.
Let's talk about five years from now, right? And we will use the time to truly build this fantastic company, which again means we have to bring together and we'll double down on technology. And again, that, for example, takes some time. And therefore, by having a much more strategic perspective respect for the business, you typically can do that much better in a non-public environment.
Now, how fast is the company growing in terms of year over year growth? Do you disclose that? And what are we guys looking at? Actually, we do not disclose that. And again, we have a much more longer time horizon. So again, I'm not here to say, hey, we have to grow month or month in the, I don't know, hundreds of percent, right?
It's much more what value can we create for advertisers and agencies in the long run, right? And how can we help them over a five-year period to truly help them to differentiate, right? And to attract more customers themselves, right? And that, again, the five-year perspective is the key factor for us and what we can do over the time, time arise.
And then also, thinking about us as an organization, we know that scale matters. We know that there are huge opportunities in new areas, such as, let's say, programmatic TV, right? And therefore, you shouldn't be surprised if we continue on our M&A course, right? And not only grow organically, but potentially also inorganically if the opportunity is there.
Generally speaking, though, you're larger than the last reported numbers, which were in December 2015, I believe.
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Chapter 4: How does Sizmek differentiate itself in the buy-side programmatic space?
It was 170, I think. Top line gross income was 75 million. You're larger than that, right? You haven't... Okay, got it. Last two questions here. One's cryptocurrency related, one's acquisition related. When you look at acquisitions, do you look at acquiring a team? Do you look at just the tech and it's going to save you two years to build your own tech?
Do you look at acquiring customers that you don't already have? How do you look at acquisitions? It's really both, right? It really is both, right? On the one hand, there are new opportunities. Again, I mentioned programmatic TV where we might be more looking into the talent and the technology, right?
And then there are other areas where we already have a good footprint and therefore maybe we look more into acquiring more relationships with advertisers. So again, both are on the table and it really is more dependent on what makes strategic sense for us and more importantly for our clients.
Blockchain is well known for its inability to process transactions at high velocity, which is exactly what programmatic has to do in the form of billions and billions of billions. Do you ever see a solution where there is a blockchain oriented solution for programmatic bidding? Let me put it this way.
I do hope in the interest of our industry, but more importantly also in the interest of consumers, that whether it's now blockchain or some more advanced version of blockchain in the future, can help to solve two fundamental challenges. The first one is from an industry perspective to truly assign value to each individual shareholder or stakeholder in our industry.
So that actually he gets renumerated accordingly. The stakeholders are who? People like ourselves, people like agencies, people like media and data providers, right? We focus as an industry too much on the input rather than on the output. And one of the reasons is that we just have a struggle to measure output.
And the better we become in measuring the output, the more we can actually attach remunerations and compensation plans on that basis. The second piece is equally important. If you think about consumers, right, they basically trade off data about themselves in return for typically free access to the Internet.
But unfortunately, we are not able as an industry to show them precisely how the trade-off actually works. How the what works? How the trade-off actually works, right? And so again, the hope is that blockchain or other cryptocurrencies can help us to really demonstrate what a consumer is getting in return for us being able to use his data in his advantage, right?
Because at the end of the day, we all want to continue to use the internet free of charge. But there is, again, there is a trade-off. Someone needs to pay the fantastic people producing content. And therefore, again, I do hope that cryptocurrencies will help us in giving more transparency in this kind of trade-off for consumers so that they're more...
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Chapter 5: What challenges do advertisers face in the current market?
And then when I have that, I have no problem selling all of it to people that get value from it. Like my financial data sells for a lot of money for obvious reasons. Um, is that what you're articulating around? That's kind of the ideas. Yeah. Yeah. Yep. All right. Very good, Mark. Let's wrap up here with the famous five. One word answers. Number one, what's the last business book you read?
The last one was Predictably Irrational by Dan O'Reilly. Number two, is there a CEO you are following or studying right now? I always started and will continue to study Steve Jobs. Number three, besides your own, what's your favorite online tool for building your business? Zoom, actually, so that you can do video conferencing across the globe. Zoom, and we had Eric on a few episodes ago.
The growth there is incredible. Be sure to go catch that episode where he shares revenue numbers. Number four, Eric, how many hours of sleep do you get every night? Mark, sorry. Mark, why did you listen to me call you Eric? Mark, how many hours of sleep? No worries. Actually, I'm not getting my eight hours, but I found that I can replace one hour of sleep with one hour of running. Okay.
Oh, Mark, we just lost your audio. I can't hear you. Mark, we just lost your audio. I can't hear you. And Mark, what's your situation? Married, single, you have kiddos? Married, two boys, three and eight years old. Wow. And how old are you? I'm 45. 45. Last question. What do you wish your 20-year-old self knew?
Advice here really is about you should really know or find out what you are passionate about, what you're really good at, and really focus on it and stick to it. Guys, there you have it from Mark. Focus and find out early on what you're really good at. Focus on it. Go all in. He had success at his previous company as COO. He's now joined, obviously, the Seismic team.
Take it at private really to accelerate potential M&A things that allow him to have a longer-term approach with things like cost overlaps and additional synergies. He's playing in a space that's very hot and being really one of the largest, if not the largest, buy-side platform out there. We'll see if blockchain stirs up the industry. I'm sure Mark will be at the forefront.
Mark, thank you for taking us to the top. Thanks so much for taking the time.
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