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. >>>

Building a Global Enterprise Software Company from Belgium: Felix Van de Maele, CEO of Collibra (Part 3)

Sramana Mitra: Why did your current VP of Sales join your company? What was it in your company or in what you told him that convinced him to join your company?

Felix Van de Maele: I think that’s a really good question. We were very early. We had no revenues. We had no customers. He thought strategically about the problem and the  shift. Ultimately, we ended doing something slightly different. He was adventurous enough to take a big risk. We consider him a co-founder today.

Sramana Mitra: When he came on board, was that still in the first year?

Felix Van de Maele: It was in December of 2009. >>>

Building a Global Enterprise Software Company from Belgium: Felix Van de Maele, CEO of Collibra (Part 2)

,Sramana Mitra: How did you go about starting it?

Felix Van de Maele: I did my Master’s thesis in data integration, which is a well-known problem. I wrote a one-pager saying what I wanted to do. We wanted to raise a seed round and build the product. We were going to do $50 million in five years because that’s what you’re supposed to say. I gave that one-pager to my professor at the university. He said, “Fine. Go ahead.”

We started talking to the technology transfer office at the university which specializes in taking intellectual property and commercializing that. They have investment friends. We started talking to different people, worked the first version of the business plan, and wrote seven more versions. That whole trajectory took about a year. Ultimately, we incorporated in June 2008 and raised our seed round in August 2008. >>>

Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 2)

Sramana Mitra: Do you want to quickly summarize what you attempted in the last two startups?

Steve Yi: My first startup, which was in 2004, was a customizable search toolbar platform that any publisher or website can customize and distribute to their users. The second company was a travel advertising site. It was essentially just an affiliate marketing website focused on the travel space.

Sramana Mitra: The first one didn’t work because there was no monetization model?

Steve Yi: Actually, there was a monetization model. You can monetize it through a deal with Yahoo! or with Google. It didn’t work because we were squarely within the crosshairs of Google who wanted the toolbar market. It was a very important market for them. In terms of getting distribution of their toolbars, >>>