Sramana Mitra: Is this the company that you’re running now?
Fred Hsu: No, that company was actually called Oversee. It had started around 2000. It was completely bootstrapped. Our first investor was my mom. She helped us buy our first server. That company grew from zero to eventually $230 million in annual revenues from 2000 to 2008. It was wildly profitable. It had a lot of EBITDA than a lot of public companies that I see today. That company was eventually sold to a private equity firm in 2009.
Sramana Mitra: How far did it go? What kind of revenue levels did it reach?
Fred Hsu: It reached $230 million in annual revenue.
Sramana Mitra: You started this company while you were in college. What was the premise?
Fred Hsu: The premise of what we’re doing was matching advertisers with end users.
Sramana Mitra: You were acting as an agency?
Fred Hsu: We were acting as a marketing firm with a charter to go out there and find more customers for advertisers.
Sramana Mitra: You were working directly with brands who were looking to advertise online? Is that an accurate description?
Fred Hsu: We’re more of a distributor of eyeballs and a wholesaler of traffic.
Sramana Mitra: Which publisher’s traffic were you representing?
Fred Hsu: Primarily, Google and medium-to-large domain name holders, for example, someone who may own a generic domain name like pencils.com. Back in 2000 to 2001, this was around the dot-com bust. After the bust, a lot of people held Internet domain names as virtual real estate. Back at that time, the technology was such that there was not much targeted content. Certainly, there were not targeted advertising on these pages.
Just around 2002, Google was in pre-IPO mode along with a company called Goto.com which was ultimately acquired by Yahoo!. They had proven this pay-per-click model in their search engine. They wanted to go out and pair with companies like us who could package up a large volume and a very broad base of organic end users searching for very specific content. Back then, 15% of all searches on the Internet actually happened on the URL bar. Oversee stood in the position to capture a lot of that traffic and create software to actually place relevant content.
Sramana Mitra: You were creating that content as well?
Fred Hsu: Correct. Creating content and ordering advertising. We developed some patents around ranking ads in content in such a way that it drove much more relevance to the end user and ultimately, commercial clicks to the advertiser. Both Google and Yahoo! provided an aggregation of advertisers.
Sramana Mitra: You finished college in 2004 and went full-time with this project?
Fred Hsu: I finished college in 2000 and went full-time with Oversee. We grew about 50% every year.