35. Michael Katz – double-clicking on InterCLICK and Yahoo

Michael Katz is the co-founder and CEO of mParticle, a pioneering customer data platform (CDP) that launched in 2013. Before that he was founder and president of InterCLICK (hereafter due to caps-aversion: Interclick), a data-informed ad network which started business in the Boston metro region in 2005 and was sold to Yahoo in 2011 for a reported $270 million.

Mike spent an eventful (almost) year at Yahoo as VP of Optimization and Analytics in 2012 before founding mParticle with his brother Andrew, Jason Lynn and Dave Myers. He’s based in NYC.

As Mike tells Jill and Marty in this reflective recap, he had no real career vision when he launched out of college near the peak of the dot-com boom, joining an absurdly high-flying consulting firm called ZEFER (trend watch: all-caps) … which grew from nothing in 1996 to $100 million billings three years later … back to nothing by 2001. He then joined Accenture, which failed to excite his loyalty when a friend asked him to join an ad startup with a $25,000 check from his dad (who told him: “You’d better make this work, because I’m not writing you another one”).

The startup’s clever innovation was to sell anti-popup ad software downloads via popup ads, which were then ubiquitous and often alarming, like this one on the Fastclick ad network that looked like a legitimate warning message but wasn’t:

Pop-up ad on Dribbleglass.com via Fastclick ad network (circa 2002)

The team moved from pop-up blockers to arbitraging ads for their own account using ad networks and affiliate networks that were available at the time. They managed to net about $1 million in a year and began to think of themselves as a legitimate venture.

To accommodate a team of refugee Microsoft engineers, Mike and the team moved to Florida for a year and returned home with their own ad serving technology, allowing them to segue off Santa Barbara-based Fastclick’s ad serving tool, called AdServer, which competed with DoubleClick and Atlas.

Too small to interest PE and “laughed off of Sand Hill Road” by the VC’s, as Mike tells it, Interclick engaged in alternate financing of a later-trendy type, pulling off a proto-SPAC. At the time, the company was “about ten guys in an office in Chinatown where we were lucky to have toilet paper and paper towels.” Margins were tight, which served them well during the recession of 2008-09 and set up an uplisting to Nasdaq in 2009.

Interclick goes public in 2009
(Mike Katz is second from left)

At the time of the IPO, it was taken as a sign of life in the supposedly moribund ad network narrative, which was supposed to be sequeled by RTB and exchanges (“… still way too early,” Mike said at the time). The company issued a widely-circulated white paper on its “POV on Demand Side Platforms,” defending the ad networks’ relevance.

Growth was solid in the years 2009-2010. At the end of 2009, Comscore ranked Interclick as the #10 ad network by size, with a monthly audience of about 150 million uniques and a YoY growth rate of 9%. It was just behind 24/7 Real Media and Collective Network, and just ahead of Tribal Fusion and Audience Science (formerly Revenue Science).

If you’re curious – and I know you are – the Top 5 ad networks at the start of 2010 were AOL Advertising (187M), Yahoo! Network (181M), Google Ad Network (178M), ValueClick (171M) and Microsoft Media (165M).

Mike talks to Nicholas Carlson of Business Insider
(Carlson later forgot to mention Interclick
in his spicy book about Yahoo CEO Marissa Mayer)

By this point, Interclick’s differentiation from the pack was its focus on infusing data into audience definitions. Through its proprietary Open Segment Manager and Genome, it could overlay data-exchange info from partners such as BlueKai and eXelate to improve its own targeting. So for example, Interclick could synch its own 3P cookie IDs with BlueKai’s pool and add insights (e.g., “this high-value luxury shopper [Interclick] happens to be in the market for a Range Rover right now [BlueKai]”). The challenge was building a taxonomy to reconcile data sets from disparate providers – something Mike says they accomplished.

And then in 2011 after years when “nobody cared,” at least three suitors approached, including Epsilon and Yahoo. At the time, Yahoo’s ad tech was reportedly aging and it was using blunt persona-based targeting techniques. It had its Ad Network and was the target of takeover rumors itself: an era of turmoil.

Yahoo’s acquisition of Interclick wasn’t universally admired, but it made sense as an upgrade. But then commenced a comically-rotated cast of CEOs as Carol Bartz was replaced by Ross Levinsohn and a few others and finally — in 2012 — the ex-Googler Marissa Mayer.

Mike has frankly mixed feelings about his almost-year at Yahoo, and Mayer apparently did not support Levinsohn’s vision for Interclick/Genome as a consolidating principle for Yahoo’s network intelligence … and so it became another of the troubled Yahoo’s incomplete passes.

mParticle launched as an early CDP before the category really existed and has been true to its mission for almost a decade. As Mike concludes: “We felt like we never really got the full opportunity that we felt like we deserved [at Yahoo]. And so we were all motivated to build again. And the things that we’re doing at mParticle to this day are exactly what we set out to do back in 2013.”

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