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Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 7)

Sramana Mitra: The $9 million in 2015 was your revenue or was it the gross spend of how your advertisers are spending with you?

Daniel Nathan: It’s the gross spend but the average margin was pretty high.

Sramana Mitra: From an accounting point of view, how do you calculate revenue? Growth spend is not revenue in your business, right?

Daniel Nathan: It is, because we are doing an arbitrage business model.

Sramana Mitra: If you’re gross spend is revenue, what is the gross margin then?

Daniel Nathan: We cannot disclose exactly the gross margin but it’s much higher than industry standard. The industry standard is about 30%. >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 3)

Sramana Mitra: There’s a lot of room for fraud.

Karl Mehta: We solved a lot of problems in the payment and transaction space that had never been solved. We didn’t start out to solve the problem. We just wanted to provide a simple service. We built anti-fraud technologies. We built multi-account technologies. The most important things that we built was the micro-transaction capability because you could not do a transaction less than a dollar because credit card charges you at least 2.8% and 30 cents.

PayPal has the same rate. Even now, it’s difficult to do a one-dollar transaction. We figured out that by doing a prepaid aggregation we could support a transaction for as little as 10 cents. That whole technology grew and became very big. We were the underlying monetizing platform when Facebook launched Facebook Credits. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 6)

Sramana Mitra: Very interesting. When you got a bunch of companies going, how were you pricing? Was it a subscription pricing model or was it a media buying pricing model where you were taking a percentage of the budget you were managing?

Daniel Nathan: We were doing arbitrage. We go a client and say, “We want to make you profitable. The ad spend that you’re going to do with us is going to be positive. What is the current CPI that makes you sure that you’re going to make money if you’re going to buy at that CPI?” Then they tell us, “We have an average return per user of $2.3.” Then we start at $2.

Starting at $2, we’re buying again on CPM and CPC completely taking the risk on our side. We were plugging our technology on their servers. Every time we’re sending users to their app, we were able to understand the kinds of users. In real time, we are able to understand how an audience that we bought for them >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 2)

Sramana Mitra: What happened to the first company?

Karl Mehta: We built it all the way. We had a great Series A from Mayfield Fund. Palm, which at that time was a mobile device, was an investor. We built it to about 70 people. Then, 9/11 happened. We had a hard time. Nobody was funding any company. We had to shrink it down to almost 20 people. We refocused on B2B instead of B2C. We, again, rebuilt the company to about 75 to 80 people. We turned it into a $20 million run rate. In 2005, it was sold to Wireless Matrix.

Sramana Mitra: When you did the turnaround, what was the business model? >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 5)

Sramana Mitra: You’re catering to French clients?

Daniel Nathan: Actually, we don’t have any French clients.

Sramana Mitra: Where are the clients from?

Daniel Nathan: US – a lot of them from San Francisco.

Sramana Mitra: How did you find these clients? >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Serial entrepreneur Karl Mehta is applying consumer education models from MOOCs and such to the world of corporate training. Very interesting spin on online learning.

Sramana Mitra: Let’s start at the very beginning of your personal journey. Where are you from? Where were you born, raised, and in what kind of background?

Karl Mehta: My background is in engineering. I did my undergrad in Computer Science and Electrical Engineering.

Sramana Mitra: First and foremost, where were you born and raised?

Karl Mehta: I was born in Mumbai, India. After getting my undergrad degree, I came here in 1994. It’s been about 20 years in the US. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 4)

Sramana Mitra: What happens next?

Daniel Nathan: My first company was not going to copy the technology I was building. They were not going to buy on CPM. On the other side, my company was not going to go to direct advertisers. The issue was that advertisers wanted to work with us directly because they had much more control. The incubator came in and said, “It doesn’t make sense to have two companies competing with each other.”

My third company bought us and then I stayed in the company for six months. I plugged the technology and the team. The team today is still the most profitable team in there. What happened is I wanted to do something else. When we built Uplift, we were using a third-party technology to build our business. We were not using our own technology and I always thought that this technology was not efficient. It was managing all the data and it was not applying any type of optimization algorithm or machine learning techniques. >>>

Greece Has A New Atlas: Marine Traffic CEO Demitris Memos (Part 6)

Sramana Mitra: Listening to you and the story, you’ve already hit your stride. You’re growing at 60% year over year. You’ve got internally generated cash. If I were you, I would probably not take external financing. How does this company become a billion dollar company? That question is not clear.

On the other hand, you don’t need to become a billion dollar company unless you take $10 million from VCs. If you can’t convince VCs how you’re going to become a billion dollar company, they’re not going to give you $10 million. At some level, you may not want to waste your time chasing venture capital. Just focus on chasing customers and before you know it, you have a $50 million company that you and your partners will own yourselves.
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