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Building a Fast-Growth Local Advertising Business: Yodle Co-founders Ben Rubenstein and John Berkowitz (Part 2)

Posted on Friday, Oct 26th 2012

Sramana: When you were selling local advertising, where was it placed online?

Ben Rubenstein: The first thing we did was create a website for our clients because most of them did not have one. We then took that website and distributed it to the major search engines as well as 75 other online search directories. Their websites would then appear in the paid search areas. Today that has evolved to include local maps and organic search.

Sramana: It sounds like you were essentially managing their Google PPC campaigns on their behalf.

Ben Rubenstein: That is correct. We also managed them on Overture as well, which pushed to MSN and Yahoo.

John Berkowitz: We also had their sites included on various directories. A big part of our value proposition is that we were not just a Google AdWords reseller. We had a full dashboard that our clients could log into which showed how many phone calls we generated for them as well as traffic to their websites. We also built algorithms to be used for keyword bidding, which would ensure that bids turned into actual calls. Our technology would take our phone data and feed it back into the bidding algorithm, so over time our clients results would improve.

Sramana: What year was this?

Ben Rubenstein: This was 2005 and 2006. By the summer of 2006, we had achieved a million-dollar run rate. We were still as bootstrapped as we could possibly be. We would fight over a $1.30 subway token. Money was very tight. We were putting things on credit cards trying to grow as fast as we could.

There are 22 million small businesses in the United States. We realized that if we were going to scale this business, we were going to need some money. We knew the product would scale, so we felt venture capital was the way to go. We went after VC money because of their connections and their experience. We really wanted to build out our development team.

In the summer of 2006, we started the process of raising capital. We went up to Boston and we thought we had found a firm we liked. In the end we ended up raising $3.5 million with Bessemer Venture Partners, who are based out of New York. At that point we brought in both a CEO and a chief technology officer.

John Berkowitz: Prior to that we had funded the company, in its entirety, with our own money. We were three college kids, so we obviously did not have a lot of money. We were very much bootstrapped.

This segment is part 2 in the series : Building a Fast-Growth Local Advertising Business: Yodle Co-founders Ben Rubenstein and John Berkowitz
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