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- [00:00]
Ari Paparo
Foreign podcast. This is Ari Paparo. We're joined today by Dr. Mark Grether, who is the GM of PayPal Ads. Mark was on the podcast about a year ago when he was the head of Uber ads. So we're going to ask him about that change and what's going on at PayPal and a lot of other really interesting stuff. And then this week, there's also a lot of news. There's AI news, Facebook buying scale, AI and I ask Eric to explain what the heck they do and why you really should care, and a lot of other kind of interesting stuff that's been going on in the advertising world. Next week, we're going to have a special publication schedule. So next week, for many of you, it will be your time in the Riviera of southern France in Cannes. I will be there. Eric will not manning the fort at Marquitecture Podcast headquarters in Olawa parking lot maybe. But in any case, our Cannes schedule is that we are going to not have a regular show, but instead Monday through Thursday, we're dropping short episodes with interesting people we know who will be at Cannes, and we'll have these brief conversations about the latest and what's going on and what the vibes are and what people are talking about. So I hope you enjoy that next week.
- [01:20]
Eric
And.
- [01:20]
Ari Paparo
And then Eric and I will be back with the full episodes the following week. So with that, let's get into it with Dr. Mark Grether and welcome Dr. Mark Grether, the GM of PayPal ads. Mark, thank you so much for being here.
- [01:35]
Dr. Mark Grether
Thank you so much for having me.
- [01:37]
Ari Paparo
You were on one of our most popular episodes ever in your previous job. We were featuring the conversation about Uber ads for quite some time, and I think it was really insightful. So I'm hoping to learn as much about PayPal ads as I did about Uber in that last time.
- [01:51]
Dr. Mark Grether
I will try my best. Yeah. To give a peek Preview into what PayPal advertising is all about. Yeah.
- [01:57]
Ari Paparo
How long have you been doing this job?
- [01:59]
Dr. Mark Grether
I joined a year ago.
- [02:00]
Ari Paparo
Time's flying, right? So I think PayPal is probably one of the most misunderstood companies in tech. People probably have feelings about it from back in the day where they're just emailing their friends $5 or whatever or buying some weird product online. But it's like, it's a pretty complicated business as multiple instances. Why don't you take us through, like, what is PayPal today? And also, what are you building on the ad side?
- [02:25]
Dr. Mark Grether
Yeah, sure. So what is. What is PayPal? So PayPal is PayPal itself.
- [02:28]
Eric
Right.
- [02:28]
Dr. Mark Grether
We all use PayPal to make online transactions. Vemno is also a part of the PayPal organization. So many people use Vemno as a platform, right. To transact with friends and family and, or small, small things here, there. It's also social platform, which I think is really cool. So a lot of people actually use Veno to share with their friends what they're doing. And then we also have Honey, our browser extension. Right. Which helps people to save money as they shop online. So we have again, PayPal, Venmno and Honey. Now, if you think about it more broadly, we have this business in 200 markets globally, and PayPal has access to 30 million merchants. We have 400 million consumers on the platform. And we see, believe it or not, 25% of all global commerce. Yeah. So transaction data from 25% of all global commerce, about 30 million merchants and 400 million consumers.
- [03:34]
Ari Paparo
Do more people have a PayPal account than like, I don't know, where's it rank with certain popular credit cards? It seems like every person on the planet at least has an account. I don't know how much volume goes through.
- [03:44]
Dr. Mark Grether
Everyone has a, has an account, I'm pretty sure. And many, many people, as I mentioned, using PayPal on a regular basis or they're using Vemno. Right. Many people actually even use Vemno multiple times a day. Right. So it's really a phenomenon. And in the US you say I Vemo you money. Right. In Germany, my home country, I PayPal you money. Right. It's actually there are verbs, right. In how money is flowing between people.
- [04:13]
Ari Paparo
So do you keep your Venmo history public, the way it defaults, or do you keep it private?
- [04:18]
Dr. Mark Grether
I do, yeah.
- [04:19]
Ari Paparo
Yeah, you keep it public. So we could go see what you've been Venmoing.
- [04:22]
Dr. Mark Grether
Why not?
- [04:23]
Ari Paparo
There's no difference.
- [04:24]
Dr. Mark Grether
Right.
- [04:24]
Ari Paparo
I'll leave that as a follow up for the reader. Okay, so Honey is a big business, right? You bought it for, I don't know, was it 2, $3 billion? And it's in sort of the affiliate space. So is that a core part of the ads business moving forward?
- [04:41]
Dr. Mark Grether
Yeah, it is. It is a core part of the, of the ad basis. But let me explain to you basically what, what PayPal advertising really is. As I just mentioned, right, the starting point of the PayPal advertising business is the transaction data. The transaction data from the 30 million merchants, from the 40 million consumers. And it is, on the one hand, transaction data that we get from PayPal. It's transaction data that we get from Vemno, but it's also the purchase intent data that we get from Honey, right? So we do not only have transaction data, but we also have intent data that is fed in from, from Honey. And so we're using that, the transaction data to have a really, really deep and rich understanding for consumers what they purchase online and nowadays also what they purchase offline as they're using PayPal and Vemno in stores. And so we have really wonderful kind of 360 degree perspective on what consumers are doing. And so we are basically seeing the entire wall wallet of consumers. We see not only what they purchase, we see where they purchase things, when they do it, we see what they purchase first or then they purchase second, right? So we have a really, really deep understanding from that perspective. And I do think when you think about retail media or commerce media, right, the big difference between PayPal and the retailer is a retailer who's very deep, but it's very narrow versus we are sitting horizontally across all the merchants, right? And I think that is very, very attractive for advertisers who typically sell our products not only on one single merchant website. They're selling it actually across many, many merchants. And so they would like to know how am I doing from an advertising perspective across all the merchants, right? What are our questions? What is my market share across all these merchants? Right? That's a question that typically the CFO wants to understand. I remember when I was at Uber, right? The CFO at Uber decided how much money the CMO got to spend based on market share. And then the task of the CMO was to allocate with the agency that money most appropriately across all the media outlets. And so we can help, as we have all the merchant data with the CFO to make a decision on how much money to spend to increase market share. And then at the same time, we help the agency and the CMO where to spend the money and how to basically optimize incrementality across all the individual merchants.
- [07:13]
Ari Paparo
I have a tech sort of a technical question, which is when PayPal is an option, it's installed on a checkout page. Do you get that data whether or not they use PayPal to actually transact?
- [07:23]
Dr. Mark Grether
No, we only get the data when the users actually is using PayPal or Venmo to transact.
- [07:29]
Ari Paparo
Okay, so you have all this data. It's very, it's up and down the funnel and it's very broad across geographies, et cetera. What products can an advertiser currently buy from you guys.
- [07:39]
Dr. Mark Grether
So there are basically two main products. The first one is they can run advertising campaigns on our own properties. That means, again, PayPal, Vemno as well as honey. And secondly, we launched recently what we call offsite ads, meaning they can also leverage our transaction data in the form of PMPs and PGs offline programmatically with our SSP partners.
- [08:07]
Ari Paparo
Okay, right. So you're, you're in the curation game. You've dove into curation.
- [08:11]
Dr. Mark Grether
Sorry, we are not, we are not kind of limiting ourselves to our own properties anymore. We are basically going broad. Right. And leveraging the data that we have at such a broad level of scale to really make them available in the, in the open web.
- [08:25]
Ari Paparo
How granular are these deals? Like, can I call if I'm a big client of yours, I call you up and say, I want people interested in skis or people who've bought skis in the last 60 days, that sort of thing?
- [08:35]
Dr. Mark Grether
Absolutely. Yeah, absolutely, you can do that.
- [08:37]
Ari Paparo
It's a really interesting approach because previously a lot of that data, you know, was one of the unique selling props of, let's say, the Yahoo dsp, because Yahoo has all that conversion receipt data, but not a curation. You have to use their DSP to get it. And I'm not sure of the other credit card companies, what they make available in that area.
- [08:57]
Dr. Mark Grether
Yeah. So in that sense. Right. We are not just limited to only one kind of audience segment or user segment anymore. PayPal and especially Vemno is very broad. Right. Think about who's actually using them. No, it's a very young Gen Z type of audience is an audience that's social. It's an audience that is transacting. Right. And so we tap into that kind of audience segment in itself, which, by the way, is quite attractive for many, many advertisers by just getting in front of Veno users. That alone is kind of a cool audience. And then you combine that with being able to transact using the transaction graph to then target them off site. And to your point, yes, we can do the curation. We are DSP agnostic. Right. So whatever DSP an avatar agency wants to use, feel free to do so.
- [09:49]
Ari Paparo
And yeah, do people actually shop in the PayPal and Venmo apps or are they more transactional? I keep seeing this Will Ferrell ad, and he's funny and all, and in the ad he's like, online at a real retail store, and he's like, oh, I just bought something on my PayPal apple. Does that happen? Do people do that?
- [10:09]
Dr. Mark Grether
Yeah. So they, they do a couple of things. They first use PayPal to buy on merchant websites. They secondly use PayPal to buy in stores. But what you also do, more and more, they also come to PayPal to start a shopping journey. Yeah. And what we do here is we quite often provide offers to our consumers. And so idea, the idea with offers that you get 15% off of Walmart. Right. It is on the one hand, we provide more value to the consumer so it's incentive for them to come to PayPal and to use PayPal. Secondly, it increases the conversion rate of Walmart. Right. And thirdly, it helps us to convince consumers to use the PayPal payment method more often. So it's a fantastic flywheel because it has benefits for the consumer, the merchant. And often as you can imagine, the more consumers are using PayPal, the more transaction data we collect. Right. The more relevant the ads will become. The more relevant they are, the more they drive traffic and purchases to the merchants. And so this flywheel is spinning then faster and faster.
- [11:18]
Ari Paparo
Do you, do you disclose any info about how big the ads division is?
- [11:22]
Dr. Mark Grether
No, we're not doing it. But you can imagine based on the successes I had in the past, what expectations we have internally.
- [11:29]
Ari Paparo
Well, yeah, I mean I think you made a little bit of news on this pod when you were at Uber, when you were talking about how close you were to a billion run rate and since I think since you've left they've exceeded that. So we can all make some judgment calls about that. What's the geographic scope?
- [11:49]
Dr. Mark Grether
So we have the US right now live, we have the UK and Germany and those are the three markets that we focused on first. And that's where we started. Eventually we will go above and beyond that, but for now it's the US, the UK and Germany.
- [12:03]
Ari Paparo
What's the future look like? What, what sort of new products you bring out? Or is it just expanding what you're doing?
- [12:08]
Dr. Mark Grether
Well, we have a lot to kind of in the hopper for. For can. Right. But most kind of announcements will be done when we are all together in France. Right?
- [12:18]
Ari Paparo
Oh, exciting.
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Dr. Mark Grether
We're starting, we're starting basically for series of announcement on Monday to all the way to I think Thursday. So we have I think three or four things to announce. So super, super exciting. But again let's, let's wait until we all together in Canada, then we can talk more about exciting stuff that we're doing. But there is something which I'm really, really super excited about, looking really, really forward is to give You a little bit of a preview. It's about agenda commerce and AI and bringing kind of the shopping experience to the consumers as opposed to the consumers have to go to a specific kind of destination pitch.
- [12:57]
Ari Paparo
I was expecting to have like Venmo emoji based targeting on the memo field.
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Dr. Mark Grether
Guess what? You can actually do that.
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Ari Paparo
Okay, what's the most valuable emoji in a Venmo note?
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Dr. Mark Grether
One thing that people use quite often is pizza.
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Ari Paparo
Oh yeah, that makes sense. If I was Domino's, I would hit the pizza people, hit them hard.
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Dr. Mark Grether
Yeah, that's very, very often used. Even my former employer is used very, very often. Right.
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Ari Paparo
Yeah, of course. You split, you split the tab, you send your, send your buddy a little money, right?
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Dr. Mark Grether
Yeah, exactly. And what's interesting in this audience is and I only have boys, so I learned that it's a lot about beauty. Yeah. So beauty is also a big topic in the, in the venom feed.
- [13:44]
Ari Paparo
Is that because they're, they're loaning each other money like teenagers buying each other.
- [13:49]
Dr. Mark Grether
Lipstick, stuff like that together to let's say a Sephora.
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Ari Paparo
Right, right.
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Dr. Mark Grether
And it's, it's, it's a social kind of happening. Right. You do it together and then you kind of split it.
- [13:59]
Ari Paparo
Happy. That's fascinating. It's like a whole, it's like a shadow commerce. It's like people paying their friends for stuff.
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Dr. Mark Grether
And not only do they, do they pay, but they have a check out what ours are doing. Right. It's also, again, it's also. Oh, you did that. You did that. Right? Oh, interesting. What are you doing? What are you up to? What are you interested in? Right. So it's much more than just I'm paying for something. It's really people use as a platform to communicate with each other. But it's really, really fascinating.
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Eric
Yeah. Dr. Mark, that's sort of like leading to a question I wanted to ask you. Just given dynamics like that and just the richness of understanding, you know, the consumer shopping behavior, would you consider doing like a standalone analytics product?
- [14:41]
Dr. Mark Grether
Yeah. So what, what we will do is we will do actually providing really, really deep insights to the advertisers. Right. So that they have a really, really deep understanding who are the consumers, what they're shopping for, where they're shopping, when they're shopping. So that kind of insights and leading insights. It's a big theme at PayPal ads. So basically if you think about it, in many, many advertising pitches, the structure is the ad format. Then you show me the targeting and at the end you show the reporting. We want to flip it on its head and say let's start with insights. We helped you with the transaction graph to become smarter about your audiences. Right. And then we can talk about targeting and then at the end we can talk about where do you want to reach the audiences. So we are trying flipping the script and start of insights as opposed to doing it after the fact.
- [15:36]
Ari Paparo
All right, all right, one last question. So the controversy over the naming, should we call this retail media or commerce media?
- [15:45]
Dr. Mark Grether
I mean for me it is if you want to say commerce media, I think that's a broader term. Right. If you, if you, if you like to do that. And yes, of course it is the power of the transaction data across all merchants. Where I would think commerce media is a little bit more closer to what we are doing. But don't forget again the thing that we just mentioned about them though, the social element. So you can even think about doing a share with voice campaign on Vemno. Imagine that you want to launch a new movie. Why not actually running a share of voice campaign in Vemno leading up to that movie? People go to the movie together. Right. And maybe then go and have a pizza afterwards. Right. So there's a lot we can do also from, from that angle.
- [16:28]
Ari Paparo
All right, you heard it here. The doctor has weighed in. It's commerce Media. So if you want to Hear more about PayPal, we just did a post on AdTech Explained, which is PayPal Ads Explained. The sponsored post went out this week and is very informative. So check that out on the AdTech Explained website and subscribe to that email list to get stuff like that moving forward. That's a pretty good plug. All right, Dr. Mark Grether, the new, not the new, the relatively new GMayPalads. Thank you so much for telling us all about what you're up to.
- [17:01]
Dr. Mark Grether
Thanks for joining me.
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Eric
All right, and we are back with the refresh. Awesome conversation with Dr. Mark. Okay, we have a lot of news this week. So WPP Mark Reed is out as CEO. Who will be next? Continued bunch of AI news. A little bit of a skirmish between the hold cos and more. So let's go from the top. So Mark Reed is going to be stepping down from WPP as CEO after a big rebrand. Were you surprised about this, Ari?
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Ari Paparo
You know, I'm not a seer of the hold goes. I'm not the kind of person who understands any of it really.
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Eric
You say that all the time.
- [17:44]
Ari Paparo
And yet the vibe has been bad for WPP for the last like two years and it's been. They've losing business, I think to publicist with that said, they just did this big rebrand, this big reorg. So it seems as though he wanted to get that done before handing the reins. That's about as much insight as I've got.
- [18:04]
Eric
I agree. You know, you and I spend a lot of time on a lot of things, ad tech, AI, so on and so forth. But we are not big Holdco analysts the way some of our friends are. So what did I do? I asked ChatGPT, all right, hey, Chad. And we could put this in the, in the, in the newsletter. I said, hey, Chat, who will be the next CEO of wpp? And basically it broke it down very helpfully with number one potential successor candidates internally, one emerging internal candidate, and then external candidates. And I'll name like three names because they're probably a little bit more familiar to this group here. But according to Chat, the name that came up as the widely seen front runner is. What do you think?
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Ari Paparo
Brian Lesser.
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Eric
Brian Lesser, yes. Currently CEO of WPP Media, formerly Group.
- [19:00]
Ari Paparo
M. Yeah, I say that because he's literally the only person whose name I know in the entire conglomerate. No, actually I know Stefan too, but like, I only know two people. The other, the other. Obviously he's a very well respected, accomplished person and he came back to wpp, I think, within the last year. And often when people are sort of lured back, there's some backstory about the potential moves forward that might get them excited about the job. So it sort of tracks a bit.
- [19:33]
Eric
Yeah, tea leaves make sense on that one. Two, maybe interesting ones. So this is a name that's familiar. New to WPP from McKinsey earlier this year. Emily Del Greco. Do you know Emily?
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Ari Paparo
Yeah, of course I know Emily. Yeah, she's great. I've done some work with McKinsey here and there.
- [19:50]
Eric
Exactly. So she leads Global Client Solutions and you know, potentially kind of like interesting, strong, you know, strategic person, but obviously new to the business. So that's the question. And then the outsider options, there's a couple and they named David Kenny as perhaps one of the Candidus. Right. So currently exec chair at Nielsen, but obviously longtime agency and technology leadership. But I don't know, feels like Lester's.
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Dr. Mark Grether
Got the inside scoop.
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Ari Paparo
I'm not, I'm not going to give ChatGPT a pass on this. I think probably it doesn't have access to the same types of public information that it does on other topics. And those names may have come up just because they're in there.
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Eric
Perhaps it did say that the front runner is Brian.
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Ari Paparo
So look, as long as I can say to someone I don't know very well, hey, I know the CEO of wvp, I'm fine with it being anybody. So as long as it's like the two or three people I know who work at the giant conglomerate, then I'm cool with it.
- [20:49]
Eric
That would be pretty awesome. And obviously an ad tech person as CEO of WPP would be amazing. All right, let's, let's skip to this WPP Publicis skirmish. So you did a little bit of historical run on this one in the show notes. Why don't you take this?
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Ari Paparo
Sure. So WPP issued an advisory to its clients, kind of like the when the State Department says not to go to Libya. That's that type of thing. And they called out the Conversant ssp which is owned by Publicis as a having a lot of low quality traffic, including made for advertiser mfa. And the first thing you may be asking is like, wait, they own an ssp? And that's actually what I did too. I was like, wait, Boofless owns an ssp?
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Eric
This is the kind of things that we do at Marketexter in real time. Like you know, a little bit of like who bought who trivia.
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Ari Paparo
Yeah. So you have to go back in time, do the wavy, wavy thing and say, well, there was a company called Conversant and that used to be called Value Click. And Value Click was sort of this conglomerate that owned affiliate network, an ssp, a dsp, an ad network, you know, the usual stuff. And it was public and then it got acquired and apparently they still are running the thing somewhere in the basement of the giant holding company as an ssp. And this report from WPP said that it's very high MFA rates. And also in particular they called out Citrus Ad, which was a retail media network that was acquired as having a lot of mfa.
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Eric
Yes. Value Click to Conversant, Conversant to Epsilon Epsilon to Publicis. Yes. This is the lineage here. When was the last time you saw like a direct shot like this from a Holdco about another Holdco in a client advisor? This seemed to me to be like really newsworthy.
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Ari Paparo
Yeah. Unlike the ad tech community where everyone has to buy and sell from each other, even if they're competitors. Holdcos don't talk to each other like they're, they're little islands of hostility to one another, but it's, they generally do.
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Eric
Not like deny the existence of each other. Yeah, they never Talk about each other. You should not buy from our largest competitor is wild.
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Ari Paparo
I'd love to hear. I'd love to be in the room where they were drafting that email or getting legal approval. That would be really the fun part. Who's the lawyer who vetted that little communication?
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Eric
Exactly right. It's like somewhat unprecedented and one that in companies of this size needs to go like, you know, through the, through the approvals process. So this is, this is pretty aggressive. Maybe it's a new era of combat between holocaust.
- [23:31]
Ari Paparo
I think the Citrus Ad thing was kind of interesting. So Citrus Ad is a retail ad network. If you had asked me before this week, I thought they were owned by wpp, but maybe I'm crazy. Okay, so I'm getting it all backwards.
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Eric
WPB said triad.
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Ari Paparo
Oh, triad. That's right. Okay, so WPP claimed it had just a 2% viewability rate on Citrus Ad, which is astoundingly bad. And it makes you think, you know, retail maybe these are all like really far below the fold. Product listing ads. They're the bottom of product pages before the user even scrolls. You know, it's kind of an interesting little nuance, a little piece of data that's interesting about the quality of some retail media impression.
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Eric
Yeah, yeah. And then the other I think point where you could be justifiably critical on was sounds like the sample size was 500,000 impressions. You know, that's $500, right?
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Ari Paparo
Really? The whole report was only 500,000 impressions. I didn't see that part.
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Eric
We should have someone else do the fact checking on this one. This is the thing that got floated around. X and we cann rely on X for, for the.
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Ari Paparo
Eric and I are, we're past reading. We're just, we're too. We've had too much real world experience to read anymore.
- [24:49]
Dr. Mark Grether
Post.
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Eric
We are post reading. Oh my God. All right. We had a lot of AI news, as always. We should just take through this and then, you know, talk about stuff that we, we think is interesting. So I'll take through. So number one, the Journal had a, an article about the publisher. Traffic declines due to AI. And it was a very interesting subject line or title. News sites are getting crushed by Google's new AI tools, which I thought would maybe a little bit misleading, right? Because you know, Google's not the only reason why traffic is declining due to AI. But there was a quote from the Atlantic CEO which I thought was, you know, pretty interesting, which is effectively he's telling his team to operate under the assumption that you will get zero traffic from Google and then presumably other LLMs in the future and didn't provide a timeline on that, which is wild if you think about it.
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Ari Paparo
Yeah, that is wild, but it's unfortunate future in all likelihood. And it doesn't help that the social networks are doing the same thing. So it's a double whammy where Google's replacing with AI and social networks are just removing news and that both are big sources of referral traffic which makes, you know, supporting your own traffic with email and podcasts and whatever you could do in social are important to publishers.
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Eric
Yeah, yeah, no, I know. Okay, number two, we'll go quick shot on this because there's just so much. Disney and NBCU are suing mid journey over copyright infringement. So Midjourney is a Gen AI company and this is the first legal action that a Hollywood studio has taken and obviously a TV network against the Gen AI company.
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Ari Paparo
Isn't Midjourney being sued by. By the stock photo company? Midjourneys already has some lawsuits against it because what's the name of the big stock photo company?
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Eric
Getty Shutterstock.
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Ari Paparo
Yeah, Getty. Wasn't it Midjourney that had Getty watermarks all over its content? So you're right.
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Eric
I'm not 100% sure we should check that. Yep.
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Ari Paparo
And this suit over Midjourney has some very funny language that calls. They just. The lawyers love to love to write and they called it like a serial plagiarist or something along those lines.
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Eric
It's a wild new world out there. But for sure, if you own the IP to Minions and Lion King and Aladdin and you're starting to see those being used freely, whereas before you were compensated for it, I think it's pretty difficult transition to make.
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Ari Paparo
At one point I've heard some folks in the media industry make, which I think is interesting, is the question of whether the violation is entirely on the ingestion learning or on the output. If you have a property like Minions and you train on the Minions, obviously that's a problem that you're training on the copyrighted material. But what if you didn't train on the Minions at all and some consumer said, give me an image of a minion and it popped out something somehow don't know how, but you know it did, is that a copyright infringement? And so most of the people on the media side think yes, both are copyright problems. And I think most tech people think only the first, only the ingestion is the problem. And if you license it, you should be able to do whatever you want with it. It just brings up an enormous amount of tricky issues, especially if you said something like, you know, give me a child's entertainment property with little yellow men that make funny noises. And, you know, you're really in a gray area there.
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Eric
I don't know. You would need to train on minions to be able to produce. Produce Minions.
- [28:21]
Ari Paparo
Maybe. I mean, minions have been around for a long time. That's the whole lore of them. But it's even more obvious in music where you could say, make me a song that sounds like R and b from the 70s. And it's kind of impossible to do that without having Stevie Wonder and a bunch of other properties in the training set.
- [28:39]
Eric
Yeah, no, it's a good point. All right, let's go. Two more quick hits. One that I just think is interesting because of the transaction and the know that it's a little bit closer to ad tech. You don't like this one? This Meta one.
- [28:52]
Ari Paparo
He just, you know, we all. This is an audio podcast. No one saw my face I made except for you.
- [28:59]
Eric
This needs to be a video podcast because of your faces. All right, Meta is investing 14 billion into scale AI and hiring the CEO. I as an investor have been tracking these transactions and I'm fascinated with this concept where Amazon, Microsoft, now Meta have been acquiring 49% of these AI companies, hiring the CEO as just a mega aqua hire and then keeping the companies going. And shareholders get paid. But they're able to skirt a lot of the regulations out there. So everybody's got one. Now Meta. Meta's got theirs.
- [29:35]
Ari Paparo
I have a question. I have a lot of questions. First question, we'll do rapid fire. What the hell does scale AI do?
- [29:41]
Eric
It is a data labeling company. So it's not a mobile app. IT manages over 100,000 contractors worldwide that help chatbots learn and speak like humans. So it's a very specific application where it's an AI.
- [29:55]
Ari Paparo
You were an AI sweatshop. Basically, they have a hundred thousand people in poor countries who are sitting in front of their computers labeling crap that comes in from doordash.
- [30:05]
Eric
You need to have this. You need to have this. Like, you can't just have the raw output.
- [30:12]
Ari Paparo
Yeah. You have to have the third world labeling our shit. You need to have. You never get to know. Okay.
- [30:19]
Eric
No, you should, you should, you should not. You should not have the word that you just said labor.
- [30:26]
Ari Paparo
So meta now owns 49,000 of them. How does this 49% thing work? And also what does. You said investors get paid. Do they get paid only for the 49%. Do they now have 51% of their investment in this worthless rump company that is going to. Is going to enslave third world people to label our shit is a real question.
- [30:48]
Eric
I don't know. So they assume, presumably they, through acquiring 49% of the company, they have access to all 100,000 contractors. Presumably. I would imagine with Meta wanting to have a true conversational interface for all their billions of users, something like this is super important to, you know, make sense of the foundational data from an investor perspective. I think the investors book the win based on the $30 billion ish implied valuation. And I don't know if they're thinking about what happens, if any, with the.
- [31:24]
Ari Paparo
Second by the apple, right. So you get 49% times 30 billion valuation. So it's as if you sold it for 15 billion or a little less than 15 billion. And that's great because it's such a big number. And then you still own 51% of this other company, the rump company that, who knows, it might be worth nothing or might get a second bite of the apple. And then consumers, they go into Facebook and they say, like, I'm feeling sad. What should I do today? And someone in India is typing back like, oh, you look great, ma' am. You should have a good day. That's the situation.
- [31:58]
Eric
No, someone in India is helping the chatbot speak to a human, like a human and understand the intent behind it. And I don't want to turn this into a VC podcast, but I saw across the wild world of X that the pre seed was at a $3 million valuation for scale AI. So this is a generational win for early investors.
- [32:20]
Ari Paparo
Well, also, I had read that it was a pivot, so the original business didn't work, so that 3 million was dead money. And then someone pivoted and they got lucky. They didn't get lucky. They built something big here.
- [32:33]
Eric
Yeah, we lost all of our listeners. So let's bring it back to ad tech for the few that remain.
- [32:39]
Ari Paparo
Sure. I'm going to just hire 100,000 people in foreign countries to tell my bidder what to bid. There's like a bid will come in and they'll have like 100 milliseconds to.
- [32:48]
Eric
Type in a price data labeling for ad tech. Amazon launched their own AI ad generator for all of their sellers. So I think this is interesting, basically, and this is the continuation of the trend that we've been talking about where these walled gardens are developing the tools to allow customers to build and deploy AI generated ads, basically 8 second video ads from your existing product shots. So you can just.
- [33:13]
Ari Paparo
They've got great data. They have all the text about the. About the product. They have the price of the product, they have the imagery. It makes sense.
- [33:20]
Eric
Yeah, yeah, exactly. That one does make sense. DoorDash made an ad tech acquisition. You see this one?
- [33:26]
Ari Paparo
Yeah, I remember. We didn't. I think we covered Symbiosis when it launched. That's how long this podcast has been around. We were going from launch to exit in our subjects in the news of the week.
- [33:36]
Eric
Yeah, yeah, absolutely. It is a little bit hard to figure out exactly what they do, but the broader heading of DoorDash acquiring ad tech for 175 million is super interesting.
- [33:48]
Ari Paparo
That is really interesting. Symbiosis. What they say they do is they help retail. They help retail media networks extend onto social and search. And that's very unclear what that means. I think what it means and I think we had this exact same conversation two years ago when they launched that we didn't know what they did. But I think what it means is some sort of. Some sort of audience match where you're taking the audit, the emails or whatever, protected audiences of the retailers and moving them into social and then sort of brokering it for the brands some way. That's. That's my guess. The price is really high. 175. For a company that's only been around for two, maybe three years, that's a pretty exciting price.
- [34:27]
Eric
Yeah, yeah, for sure. Love to see it. Sounds like Doordash was an early and very strategic customer of the business. So it was the classic builder or buy calculus that they made. And if you want to be a player in retail, media acquisition is a way to do it.
- [34:45]
Ari Paparo
I think also Doordash is sort of the perfect business here because their clients are restaurants and restaurants really do want to reach their customers. They don't want to just do a transaction for some mayonnaise on a shelf. They want to have connections with customers. So it's sort of a natural B2B 2B B sort of play.
- [35:03]
Eric
All right, keep going. We got interesting.
- [35:05]
Ari Paparo
Rapidly talked about Meta.
- [35:07]
Eric
Please talk about Meta.
- [35:08]
Ari Paparo
Okay, so I saw this tweet from Kint talking about how Meta had been caught doing something bad. And he linked to Ars Technica, which is a very technical blog. I read the blog post. It's really kind of shocking what they were doing. So on Android they had a workaround, effectively. That said, if you had a Meta app, they could also track Every single meta pixel in a browser that the user saw. So not in the Facebook app. In the browser you're in Chrome and you go to a website and has a metapixel, which enormous percentage of sites have a metapixel. And that pixel should be subject to the typical third party tracking restrictions. So in Safari, yes, you wouldn't be in Safari on Android, but you get the point, you should just have the cookie data. But in fact their app would be pinged and they would know exactly who the user was, their Facebook login. So it basically gave them near perfect information about Facebook pixels on Android phones, which also you have to assume that the meta install rate is probably in the 90% range on Android phones. Most popular apps out there. And this is basically a technical workaround that both Meta and Yandex of all companies had innovated. Yandex being like the meta of Russia. Right. So it's pretty bad. It's pretty bad.
- [36:34]
Eric
Was this shut down?
- [36:35]
Ari Paparo
It has not been shut down yet, but there are people at Google who are quoted as saying that it's bad and they'll probably. You could assume it'll be shut down. Now admittedly, if you're on the Chrome browser on Android, you're already able to track cross party. You just can't do it as well as this is enabling it.
- [36:51]
Eric
All right, smart people out there, let's keep going. TTD 10 days of announcements. Have you been tracking all the announcements, Ari?
- [36:57]
Ari Paparo
Yeah. I love the fact the 10 days packaging is fun. You know, often if you're in a situation where you have a lot of shit going on. I've said that word shit like four times in this program. I hope we don't get flagged on the podcast systems, but if you have a lot of stuff going on and they're not necessarily thematically related, bundle it all into like a twelve Days of Christmas type thing. I like to see that. And you know, these all seem pretty small. None of them are kind of earth shaking announcements, but they announced a deal desk, they announced some new data, some TV stuff. So it's great. I like to see the innovation.
- [37:35]
Eric
I agree, and that's a really good point actually for the marketers and founders here. When you have a bunch of small announcements, you can either try to turn them into a big announcement or just let them kind of fall by the wayside. Having a little bit of a, you know, 10 days of Christmas, 10 days of TTD is a, is an interesting way to do it. I like that idea.
- [37:58]
Ari Paparo
Or put them another Technique is if you have a annual conference for your customers, you just announce them all at the same conference. That's a very typical way of doing it. But you don't want the small announcements to just go by the wayside. You really do want to get some bang for your buck. So this is a fun way to do it.
- [38:12]
Eric
I thought the deal desk one was maybe the most interesting, but where they were shedding light on number one, how much spend obviously goes to deals, but then also how deals can be challenging from a delivery standpoint, from performance standpoint. So what they're going to do is give, I think enhanced reporting and in the case of under delivery or underperformance, provide some suggestions in alternatives rather than just kind of leaving buyers just sitting there not knowing what to do.
- [38:41]
Ari Paparo
Yeah, deals are the best and the worst thing for traders. They are sort of this magic bullet that supposed work, but they're hard to manage. It seems like they're trying to help people with that product release.
- [38:54]
Eric
Exactly. Address the worst one. Maybe one more before we go. We have time. Google is offering voluntary buyouts to employees in search and ads. This is interesting. So Google is looking to reduce headcount, which has been doing in waves. Doing this in waves is difficult to do for a number of perspectives. So they're basically offering buyouts to people in search and ads, which is interesting because it's in ads.
- [39:19]
Ari Paparo
Is this an AI story or is this a search has peaked story?
- [39:24]
Eric
This is. Gosh, this is an AI story. A search has peaked story. And Google as a result has too many employees in addition to just over hiring probably. Right. Like the, the, the division that encompasses search and ads is 20,000 people.
- [39:42]
Ari Paparo
That's a lot of people. Yeah, I think that this is probably more of an AI story and that they're becoming more efficient and there are more and more people who are very highly paid who are not necessarily adding enough value to be worth it.
- [39:57]
Eric
Yeah, yeah, it makes sense. And offering via buyouts is a good way to do so. Obviously if you've got the ability to do it like you have Google, about.
- [40:06]
Ari Paparo
Two years ago they did involuntary layoffs and it was not very well received because it was sort of seen as arbitrary and mostly cost cutting. Not for not cutting fat, cutting muscle. So I think this is definitely a smarter approach.
- [40:23]
Eric
Yeah, for sure. And with that, that is the refresh. You'll suffer, Ken.
- [40:28]
Ari Paparo
I will be there. I'll be walking around. I'll be the person who you say hi to, who can't remember who you are, but says Hi. Politely back, Please Tag me on LinkedIn as asshole doesn't remember me, and I'll be happy to respond.
- [40:42]
Eric
So, Ari's in London right now, and I think it's increased your profanity count astronomically.
- [40:50]
Ari Paparo
Well, I'm not going to use the C word. That would definitely get us banned.
- [40:53]
Eric
Definitely not. Okay. And with that, see you next week, everybody. Thank you for subscribing to Market.
- [41:00]
Ari Paparo
New interviews are added every week at marketure TV and your favorite podcasting app.
- [41:07]
Eric
Ra.