5 ms·

Marin Software acquires Perfect Audience (YC S11) for $25.5M

97 points by dangrossman 12y ago

aresant 12y ago
Congrats to Brad and the team - well deserved for bringing a beautiful UX and simplified system to retargeting on social (first anyways)
- brandnewlow 12y ago
  Thank you, kindly.
jasonwilk 12y ago
Nice work!
laughing_stock 12y ago
It'd be really interesting to learn about founders' calculus in this sort of situation. What makes $25MM enough? What is it about existing growth that does or doesn't suggest selling in this fashion? (I mean this in an entirely un-cynical way. Genuinely curious, and not trying to imply anything negative, $25MM ov value in less than two years is pretty amazing.)
- immad 12y ago
  Ben Horowitz has a good blog post about this subject: http://www.bhorowitz.com/should_you_sell_your_company http://www.bhorowitz.com/should_you_sell_your_company. > So, the judgment that you have to make is a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? b) Are we going to be number 1? If the answer to either a) or b) is no, then you should consider selling. If the answers to both are yes, then selling would literally mean selling yourself and your employees short.
  - callmeed 12y ago
    BTW, this is actually laid out in more detail in his book (this chapter is near the end). I just read it and it's quite good. http://www.amazon.com/Hard-Thing-About-Things-Building-ebook/dp/B00DQ845EA/ http://www.amazon.com/Hard-Thing-About-Things-Building-ebook...
- smoyer 12y ago
  The article says the picture was taken minutes after telling the team they'd been acquired. I don't think I'm seeing fake smiles, so I'd assume that the investors and the employees are happy with the deal. They're only 20 months old so I'll make a couple of guesses before someone answers with fact: a) For a year and a half, most employees would be perfectly happy with a cash-out worth (at the instant) tens of thousands of dollars. b) Those same employees would be happier if they view the deal as potentially expanding the value of their previous work. c) Those same employees would be even happier if they were running out of cash and facing a shutdown versus a buyout. d) Sometimes a marriage creates something stronger than either of the partners ... without the back-story this one is a stretch.
  - sbisker 12y ago
    From the techcrunch article: 'the company has set aside $2.7 million of equity retention grants to Perfect Audience employees who stay on.' Given how few people are in the photo, there's probably reason for that to make them smile as well.
    - smoyer 12y ago
      Yeah ... after I posted I did a bit of mental math and decided those "tens of thousands" could push "hundreds of thousands". Not a bad outcome!
- callmeed 12y ago
  (disclaimer: I don't know what I'm talking about) Well, they only raised a $1.1M seed round [1]. I will guess they gave up 25% in that round [2]. YC got about 7%. At this point, I think AdRoll has become the market leader in the retargeting space. Without raising a huge VC round, there's no way PA could catch them. Marin is a public company, so the cash + stock offer is probably higher than an all-cash offer would be elsewhere. Plus, since they're public the PA people can sell the stock sooner rather than later if they want. So, investors get $5.75M on a 1.1M investment. Not a home run, but definitely a double in the gap with 2 RBI. YC gets $1.6M on a $17K investment (old deal). Founders + employees have 68% remaining, or about $15.6M. Not selling means raising another round, giving up more equity, and still not having a guaranteed exit. [1] http://www.crunchbase.com/organization/perfect-audience http://www.crunchbase.com/organization/perfect-audience [2] http://www.quora.com/What-is-the-average-amount-of-equity-to-give-first-round-seed-investors http://www.quora.com/What-is-the-average-amount-of-equity-to... EDIT: Changed numbers to reflect YC's ownership. Still don't know what I'm talking about.
  - nolite 12y ago
    that math actually sounds quite nice..
  - balls187 12y ago
    Several unknowns here. Typically seed rounds are for convertible notes, to which no equity is assigned. Standard note terms have conversion during an actual price round, or during transfer of control of the company, or during expiration of the note. Since they're a YC company, they opted to give 7% for $120k. That leaves 93% for the founders/employees. Minus that, they raised ~ $980k, on seed terms, which have a valuation cap at between 3.5-6 million. The valuation cap basically says that the price per share is at most calculated by the capped valuation, not the actual valuation. So investors may have actually bought $980k of stock, at a valuation of ~3.5-6million, instead of the full $25.5 that was purchased. Add to that that convertible notes typically have a discount ~20%, they bought even more shares, leaving them with considerably more ownership, than if they were straight $980k of post-money $25.5m I don't know the details, and it sounds like the employee's, founders, & investors are all happy, but this does underscore that Convertible Notes can be very costly to founders. Had their seed round been priced, the founders & employees would have made a lot more money.
brandnewlow 12y ago
Hi, folks, I'm swamped with emails and press inquiries and stuff but wanted to take a minute to say a quick thank you to the Hacker News community. I am not exaggerating when I say that most of what I've learned about building a startup came from things I read here. Thank you. If you're a Perfect Audience customer, everything's going to get better. We're hiring hiring hiring and it's all going to be engineers aimed at making the product better.
- jordo37 12y ago
  Just to echo Brad from the tech side specifically - HN has been a tremendous source of help, advice, network and everything. It really has made much of what we built possible in that I cannot imagine doing this without HN and the people we have met here. From having Jedburg reach out when I had some foolish question about high-concurrency applications, to the number of folks who helped us trouble shoot a burgeoning Mongoid/Ruby memory problem at the very beginning - Thanks a million!
  - drudru11 12y ago
    Huge congrats to you two and your amazing team! This is a well deserved milestone!
robryan 12y ago
Good for them to get some reward for providing a solid product and great service. I do worry though if we will be seeing the product rolled up into some kind of expensive enterprise offering from Marin, which would likely price out a lot of the current customers of it.
- brandnewlow 12y ago
  That's not the plan!
shostack 12y ago
Firstly, congrats! Big accomplishment in a short timeframe and Marin is definitely a leader in the space doing good things. That said, I have a concern. PA was on my list of retargeting networks to check out along with AdRoll, Simpli.fi and maybe a couple others (mostly on the SRT side of things). However I'm also going to be in the market for a bid management platform in the near future, and while Marin is on my short list, so are DS3 and Kenshoo. Will PA services and inventory remain available to customers who are NOT Marin customers in the future? Curious what sort of meaningful guarantees you can provide when I imagine the reality is that you could say one thing today, and if Marin changed their mind tomorrow, I'd be SOL. Not saying you'd lie or anything, but I know that in the real world a statement alone doesn't hold much weight when dollars start speaking, so I'm more interested in any tangibles with regards to company structure, product functionality, etc. that you can share that would be easier to put faith in. Also, what can you tell us about customers' data being accessible to Marin if your customer is not a Marin customer? Is there any chance that audience data could be fed into an anonymized audience segment or something equivalent and leveraged by Marin customers (who might potentially be competitors)?
- brandnewlow 12y ago
  Howdy! These are great questions. There's nothing I can write in a comment on Hacker News that will assuage any of your worries besides saying that you should try all these platforms and pick the one you like the most. Perfect Audience is free and easy to try and isn't going anywhere. If you like it, awesome. If you find another platform you like better, that's great too. Just let us know what we could have done better.
  - shostack 12y ago
    Thanks for the response and acknowledging the nature and realities of the situation. I like that you have a free trial to see the platform without requiring a contract. Other providers let you see a demo account, but actually getting to test a live campaign is always better because you can see the speed and integration with your analytics. Are you guys still in Mountain View by any chance?
tptacek 12y ago
Brad's one of the hardest-working people in show business. When he worked in Chicago, he was my reference example for friends of "hustle". I'm grinning ear-to-ear that this team had a good outcome. Congratulations! Richly deserved.
- EC1 12y ago
  What are some identifiable qualities you've recognized in a 'hustler'?
  - tptacek 12y ago
    Sales ability. Getting shit done. Being a rainmaker.
- AndrewBissell 12y ago
  I was meaning to use that exact phrase, but I'm not surprised to have been preempted. It's been great working with the whole PA team, and I'm looking forward to doing more great things at Marin.
UnethicalHacks 12y ago
that's awesome. I met Brad in mountain view when they were just getting off the ground. really nice to see this happen.
jacquesm 12y ago
That's a super nice exit for a company this young and quite nicely priced too (about what you'd expect in this space). Congratulations to all involved, it's nice to see such hard work pay off.
- jordo37 12y ago
  Thanks Jacques! Your writing, especially about the business of startups was one of the things I read when just starting out and when the times got tough.
  - jacquesm 12y ago
    This is one of the under-appreciated things about start-ups. It doesn't matter one bit how good you are when the sun is shining. It matters so much what you do when the going gets tough, how you deal with crisis (and they will happen, just when you can't use them) and what your attitude is when it seems the whole world is conspiring against you. Best of luck to you and your team, so curious what you'll do next! But given how this one worked out for you I'm not at all worried :)
foton1981 12y ago
Can someone tell me what's special about retargeting these days? Its commodity. Implementable in several month as PA showed. Marin must be desperate.

97 points by dangrossman 12y ago

Congrats to Brad and the team - well deserved for bringing a beautiful UX and simplified system to retargeting on social (first anyways)

brandnewlow 12y ago
Thank you, kindly.

jasonwilk 12y ago

Nice work!

laughing_stock 12y ago

It'd be really interesting to learn about founders' calculus in this sort of situation. What makes $25MM enough? What is it about existing growth that does or doesn't suggest selling in this fashion? (I mean this in an entirely un-cynical way. Genuinely curious, and not trying to imply anything negative, $25MM ov value in less than two years is pretty amazing.)

immad 12y ago
Ben Horowitz has a good blog post about this subject: http://www.bhorowitz.com/should_you_sell_your_company http://www.bhorowitz.com/should_you_sell_your_company. > So, the judgment that you have to make is a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? b) Are we going to be number 1? If the answer to either a) or b) is no, then you should consider selling. If the answers to both are yes, then selling would literally mean selling yourself and your employees short.
- callmeed 12y ago
  BTW, this is actually laid out in more detail in his book (this chapter is near the end). I just read it and it's quite good. http://www.amazon.com/Hard-Thing-About-Things-Building-ebook/dp/B00DQ845EA/ http://www.amazon.com/Hard-Thing-About-Things-Building-ebook...
smoyer 12y ago
The article says the picture was taken minutes after telling the team they'd been acquired. I don't think I'm seeing fake smiles, so I'd assume that the investors and the employees are happy with the deal. They're only 20 months old so I'll make a couple of guesses before someone answers with fact: a) For a year and a half, most employees would be perfectly happy with a cash-out worth (at the instant) tens of thousands of dollars. b) Those same employees would be happier if they view the deal as potentially expanding the value of their previous work. c) Those same employees would be even happier if they were running out of cash and facing a shutdown versus a buyout. d) Sometimes a marriage creates something stronger than either of the partners ... without the back-story this one is a stretch.
- sbisker 12y ago
  From the techcrunch article: 'the company has set aside $2.7 million of equity retention grants to Perfect Audience employees who stay on.' Given how few people are in the photo, there's probably reason for that to make them smile as well.
  - smoyer 12y ago
    Yeah ... after I posted I did a bit of mental math and decided those "tens of thousands" could push "hundreds of thousands". Not a bad outcome!
callmeed 12y ago
(disclaimer: I don't know what I'm talking about) Well, they only raised a $1.1M seed round [1]. I will guess they gave up 25% in that round [2]. YC got about 7%. At this point, I think AdRoll has become the market leader in the retargeting space. Without raising a huge VC round, there's no way PA could catch them. Marin is a public company, so the cash + stock offer is probably higher than an all-cash offer would be elsewhere. Plus, since they're public the PA people can sell the stock sooner rather than later if they want. So, investors get $5.75M on a 1.1M investment. Not a home run, but definitely a double in the gap with 2 RBI. YC gets $1.6M on a $17K investment (old deal). Founders + employees have 68% remaining, or about $15.6M. Not selling means raising another round, giving up more equity, and still not having a guaranteed exit. [1] http://www.crunchbase.com/organization/perfect-audience http://www.crunchbase.com/organization/perfect-audience [2] http://www.quora.com/What-is-the-average-amount-of-equity-to-give-first-round-seed-investors http://www.quora.com/What-is-the-average-amount-of-equity-to... EDIT: Changed numbers to reflect YC's ownership. Still don't know what I'm talking about.
- nolite 12y ago
  that math actually sounds quite nice..
- balls187 12y ago
  Several unknowns here. Typically seed rounds are for convertible notes, to which no equity is assigned. Standard note terms have conversion during an actual price round, or during transfer of control of the company, or during expiration of the note. Since they're a YC company, they opted to give 7% for $120k. That leaves 93% for the founders/employees. Minus that, they raised ~ $980k, on seed terms, which have a valuation cap at between 3.5-6 million. The valuation cap basically says that the price per share is at most calculated by the capped valuation, not the actual valuation. So investors may have actually bought $980k of stock, at a valuation of ~3.5-6million, instead of the full $25.5 that was purchased. Add to that that convertible notes typically have a discount ~20%, they bought even more shares, leaving them with considerably more ownership, than if they were straight $980k of post-money $25.5m I don't know the details, and it sounds like the employee's, founders, & investors are all happy, but this does underscore that Convertible Notes can be very costly to founders. Had their seed round been priced, the founders & employees would have made a lot more money.

brandnewlow 12y ago

Hi, folks, I'm swamped with emails and press inquiries and stuff but wanted to take a minute to say a quick thank you to the Hacker News community. I am not exaggerating when I say that most of what I've learned about building a startup came from things I read here. Thank you. If you're a Perfect Audience customer, everything's going to get better. We're hiring hiring hiring and it's all going to be engineers aimed at making the product better.

jordo37 12y ago
Just to echo Brad from the tech side specifically - HN has been a tremendous source of help, advice, network and everything. It really has made much of what we built possible in that I cannot imagine doing this without HN and the people we have met here. From having Jedburg reach out when I had some foolish question about high-concurrency applications, to the number of folks who helped us trouble shoot a burgeoning Mongoid/Ruby memory problem at the very beginning - Thanks a million!
- drudru11 12y ago
  Huge congrats to you two and your amazing team! This is a well deserved milestone!

robryan 12y ago

Good for them to get some reward for providing a solid product and great service. I do worry though if we will be seeing the product rolled up into some kind of expensive enterprise offering from Marin, which would likely price out a lot of the current customers of it.

brandnewlow 12y ago
That's not the plan!

shostack 12y ago

Firstly, congrats! Big accomplishment in a short timeframe and Marin is definitely a leader in the space doing good things. That said, I have a concern. PA was on my list of retargeting networks to check out along with AdRoll, Simpli.fi and maybe a couple others (mostly on the SRT side of things). However I'm also going to be in the market for a bid management platform in the near future, and while Marin is on my short list, so are DS3 and Kenshoo. Will PA services and inventory remain available to customers who are NOT Marin customers in the future? Curious what sort of meaningful guarantees you can provide when I imagine the reality is that you could say one thing today, and if Marin changed their mind tomorrow, I'd be SOL. Not saying you'd lie or anything, but I know that in the real world a statement alone doesn't hold much weight when dollars start speaking, so I'm more interested in any tangibles with regards to company structure, product functionality, etc. that you can share that would be easier to put faith in. Also, what can you tell us about customers' data being accessible to Marin if your customer is not a Marin customer? Is there any chance that audience data could be fed into an anonymized audience segment or something equivalent and leveraged by Marin customers (who might potentially be competitors)?

brandnewlow 12y ago
Howdy! These are great questions. There's nothing I can write in a comment on Hacker News that will assuage any of your worries besides saying that you should try all these platforms and pick the one you like the most. Perfect Audience is free and easy to try and isn't going anywhere. If you like it, awesome. If you find another platform you like better, that's great too. Just let us know what we could have done better.
- shostack 12y ago
  Thanks for the response and acknowledging the nature and realities of the situation. I like that you have a free trial to see the platform without requiring a contract. Other providers let you see a demo account, but actually getting to test a live campaign is always better because you can see the speed and integration with your analytics. Are you guys still in Mountain View by any chance?

tptacek 12y ago

Brad's one of the hardest-working people in show business. When he worked in Chicago, he was my reference example for friends of "hustle". I'm grinning ear-to-ear that this team had a good outcome. Congratulations! Richly deserved.

EC1 12y ago
What are some identifiable qualities you've recognized in a 'hustler'?
- tptacek 12y ago
  Sales ability. Getting shit done. Being a rainmaker.
AndrewBissell 12y ago
I was meaning to use that exact phrase, but I'm not surprised to have been preempted. It's been great working with the whole PA team, and I'm looking forward to doing more great things at Marin.

UnethicalHacks 12y ago

that's awesome. I met Brad in mountain view when they were just getting off the ground. really nice to see this happen.

jacquesm 12y ago

That's a super nice exit for a company this young and quite nicely priced too (about what you'd expect in this space). Congratulations to all involved, it's nice to see such hard work pay off.

jordo37 12y ago
Thanks Jacques! Your writing, especially about the business of startups was one of the things I read when just starting out and when the times got tough.
- jacquesm 12y ago
  This is one of the under-appreciated things about start-ups. It doesn't matter one bit how good you are when the sun is shining. It matters so much what you do when the going gets tough, how you deal with crisis (and they will happen, just when you can't use them) and what your attitude is when it seems the whole world is conspiring against you. Best of luck to you and your team, so curious what you'll do next! But given how this one worked out for you I'm not at all worried :)

foton1981 12y ago

Can someone tell me what's special about retargeting these days? Its commodity. Implementable in several month as PA showed. Marin must be desperate.