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Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 7)

Sramana Mitra: People do comparison shopping all the time.

Steve Yi: Exactly. Amazon does the same thing. When you look for a product on Amazon, they will actually have listings for competitive retailers. It’s a combination of insurance revenue and understanding that there is media revenue from your property that you can extract. In turn, it makes them a much more efficient marketer. If you’re spending $100 to get someone to come to your site and fill out a quote request, you can recoup 25% to 30% of that cost by having an advertising program. That’s money that you can then pour back into marketing and getting more consumers to your site. >>>

Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 6)

Sramana Mitra: In terms of your operating expenses, how many people were involved and what kind of a P&L did you have to support within that operating margin?

Steve Yi: There was three of us. One person was working with us as a contractor who eventually became our VP of Sales.

Sramana Mitra: How many customers were you dealing with? Were these a small number of large customers?

Steve Yi: Within about three months, we were working with probably 8 to 10 auto insurance carriers and three advertising networks to monetize the traffic that we were acquiring.

Sramana Mitra: How did this work? You get a lead qualified and you would give that to all your customers? >>>

Building a Global Enterprise Software Company from Belgium: Felix Van de Maele, CEO of Collibra (Part 6)

Sramana Mitra: When you raised the seed round, you already had some revenues and customers?

Felix Van de Maele: No. We raised the round in August 2008. We just incorporated the company. We had no customers and just had a letter of intent.

Sramana Mitra: Who were the people who funded you in this round? >>>

Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 5)

Steve Yi: We were fortunate to become profitable within the second month. For that first month, we thought we could never make that math work. We were losing a lot of money in that first month. It’s specific to this business. You just have to go through that period where you’re willing to lose money.

Sramana Mitra: You also have to experiment.

Steve Yi: Yes, exactly. Is the website converting? We have to put traffic to it to see if it converts. What keywords work well? Auto insurance was a particularly hard vertical to do this in because every click that you buy from Google was $20. It was very expensive to get users to our site. We were spending $20 and making $2 or $3 for a long time. Slowly but surely, you get a 5% improvement here, a 10% increase in what the advertisers are willing to pay you, and the math starts to work out.

Then you just keep at it and start to have some breakthroughs where you have a good portfolio of advertisers who are willing to pay you the right amount. You >>>

Building a Global Enterprise Software Company from Belgium: Felix Van de Maele, CEO of Collibra (Part 5)

Sramana Mitra: Your positioning is to help with data consistency.

Felix Van de Maele: Yes, data consistency, data understanding, and data compliance.

Sramana Mitra: Who is your direct competitor?

Felix Van de Maele: The biggest competitor is really doing nothing. It’s not a replacement sale. What we replace is Excel, SharePoint, and Word. It’s a new category. It’s not really a new problem, but the problem just became too big to handle on an ad hoc basis. As to who we compete with, I’d say the incumbent data management companies like IBM and Informatica are the ones we compete with the most, because they’ve been selling data management platforms for a long time. We don’t say to our prospects that they are competition but we really believe that they are doing something else. >>>

Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 4)

Sramana Mitra: Each of you had worked on this travel startup before, and you had sold this startup. You got a little bit of money and were willing to put some of that money into starting something else as a collective group.

Steve Yi: That’s exactly right. You said it much better and succinctly than I did. One of the things that I fell into the trap of was thinking too hard about trying to find a great idea. Ultimately, we were successful when we decided to focus on the auto insurance lead generation. It was after we decided to keep it simple and focus on an industry that was generally doing well. In our case, we were in Internet advertising, so we wanted to pick an industry where there was a lot of advertising.

The advertising ecosystem in auto insurance was very similar to what we had dealt with in travel. We felt very comfortable with the technology platforms that we had built in the past and our ability to leverage our expertise there to build better advertising platforms tailored to the auto insurance market. Once we knew >>>

Building a Global Enterprise Software Company from Belgium: Felix Van de Maele, CEO of Collibra (Part 4)

Sramana Mitra: What could you do that IBM couldn’t do?

Felix Van de Maele: That goes back to the original story. The authenticity there is in focusing on business people. We always focus on business people. The product is very easy to use, collaborative, and social. We adopted some concepts from Wiki. The user interface was very friendly.

That’s very different from the incumbents who’ve always been selling IT-focused tools where the focus is not on collaboration but on a single developer doing something. That’s a fundamentally different type of product. You could say, “A business glossary is not that complex.” Actually, it’s not an easy problem. The typical software companies that are focusing on data management weren’t used to creating these types of products. >>>

Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 3)

Sramana Mitra: What did you start next?

Steve Yi: I next started a travel advertising company. After I left, it took about a year to iterate. I knew I wanted to have my own company again. I iterated on different ideas and different consulting projects. I, finally, got connected with a couple of people who I used to work with. These are people who I loved working with who had skills that were completely complementary to mine.

The three of us had no overlapping skill set. We started the travel advertising business. We did that for about a year and a half. Then we ultimately sold that company for a relatively modest amount. What it did do is, it gave us seed capital to enable us to really focus for a good six to nine months without having to worry about salaries to start MediaAlpha. >>>