We Sold Optimal! What We Did Right and Wrong Along the Way… Part 1
It was the first half of 2008 when we started – our three cofounders were me, David Li and Atul Patel. Atul was down in Southern California, and we traded ideas and he helped us get some of our early customers, and while never an operating member of the team, was on our board after we took our first investment in late 2008. I’d worked with David at Root Markets where he was one of the first engineers hired by Viva Chu, and later I’d recruited him to work with me at Consorte Media where I was briefly the COO. Before I joined I was thinking of starting something, but Chamath Palihapitiya (who was on the Consorte board when he was at Mayfield) and Alicia Morga had convinced me to join the company after I’d initially done some consulting for them, and we’d built some cool adtech in a short period of time (in good part thanks to David’s amazing skills) including an awesome Salesforce-to-Right-Media connection/integration. But Chamath was leaving Mayfield to go to Facebook and I realized I really had to scratch the startup itch, and so I had left Consorte late in 2007. After toying briefly with an idea around adblocking (I only ever discussed the idea with one potential investor, more on that some other time), David and I had our first discussion about partnering up, and talked what we wanted to build, at the Starbucks on 425 Battery Street, in San Francisco in early 2008.
We were focusing on the problem that buying non-search online advertising, what most people refer to as “display ads” today – was really difficult and time consuming. I’d essentially product managed the buildout of this kind of technology in-house at NexTag where we quickly became one of the top 5-10 US display advertising buyers in 2004-2005, and thought such a system could work well if released as a SaaS platform. We also felt that there would be more APIs and programmatic ways to buy coming, and if we started out by building a completely self-service buying interface aimed at midsize companies that plugged into Yahoo’s Right Media platform and Google Adwords (display, not search ads) we’d have something interesting that could grow significantly and there would continue to be other ad platforms over time we could plug into.
I was trying to figure out a name for the company and looking through a list of 20 or 30 URLs I owned I thought might be interesting. I’d tried to get “cpmadvisor.com” but that was taken, so I settled on “cpmadvisors.com” and we called the company CPM Advisors, Inc. (once we’d incorporated it)! Our first office space was a share with BrightRoll at 450 Sansome Street – across the street from Yahoo’s San Francisco office – we were all pretty happy when Peets Coffee set up shop downstairs in the building around that time, by the way. After we raised some money, we moved to 100 Bush Street (the art-deco Shell Building), where we were subleasing space from a group of architects who had done an amazing job building out the space – it looked very different from the rest of the building.
In Summer 2008, we’d started talking to some potential angel investors. You probably know what happened next with the public markets tanking – and previous commitments disappeared overnight. One angel investor told me that “my portfolio dropped 40% this week” and apologized for not being able to invest! Luckily via an introduction from Tom Cole who was at Trinity Ventures at the time, we met Jonah Goodhart from WGI Group. WGI comprised Jonah, his brother Noah Goodhart and Mike Walrath. They had been early investors and the founder of Right Media (by then sold to Yahoo) respectively, and really liked our vision, and enough people I’d worked with previously said nice things about me that they agreed to lead our first investment round of $600k (we did a priced round, deciding not to go the convertible note route) at a $2.7 million pre-money valuation. We had a few other angels participate as well including Jerry Neumann. I still remember how excited we were when we saw that first wire show up in our bank account!! We were off to the races!
When we moved into 100 Bush, there were 4 of us, David and I, and our first engineer and our first non-engineer employees! We had a bunch of extra space so we rented out a few desks to a couple of startups while we started hiring up – one of them was Transpond, which was later acquired by WebTrends. We were building software now, making technology decisions (some great, some not great that were entirely my fault!) and working towards our first public release! [Next installment: The Tech and the Release! to be continued…]