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Marketecture: Get Smart. Fast.
Episode 152: Jim Payne is back! His new SDK lets you control monetization with AI
00:55:27
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- [00:01]
A
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- [00:34]
B
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- [01:14]
A
Welcome to the Market podcast. This is Ari Paparo. I'm here with Eric Franchi and our guest today. We're very excited about Jim Payne, a person who've been trying to get on the show, who've mentioned on the show probably 10 times and he's got a new startup called CloudX that is in the mobile space but has a privacy angle and also has a big AI angle. Is a lot of interesting stuff to talk about. Eric, have you worked with Jim in the past?
- [01:42]
C
I have not, no. But I've met him, I've hung out with him. He is extremely smart. He has as many stories as anybody in terms of just legends of. So hopefully we'll have some time to get into it. But for those who are not familiar, Jim is the founder of Mopub, which was acquired by Twitter. Jim's a founder of Max, which was acquired by Applovin. So one of the best founders in ad tech and one that I don't think gets enough credit or conversation. So I'm excited about having him on today.
- [02:12]
A
Yeah, me too. And then the breaking news as we're recording. This is about Pinterest acquiring TV Scientific. So we'll have a full breakdown of that and our hot takes and Eric's, you know, gloating as investor in that. It'll all be good.
- [02:29]
C
Shout out to Jason Fairchild.
- [02:31]
A
Yeah, Jason Fairchild, former guest on the show. So this week we announced the market live speaker list, or at least the first tranche of it, that we are having a big event, if you haven't heard, on March 10th and 11th. It's two days 1,000 people. You should really buy tickets now if you haven't already. Early Bird is ending in January. Partial list of speakers, including Eric and I, of course. But obviously you hear from us enough. We have Sophia Colucci, who's the CMO of Molson Coors. Neil Vogel, who's the CEO at People. Joanna o', Connell, who's always an amazing speaker from Omnicom Media Group. Jeremiah Oweng, who's a visionary, expert in AI and throwing you a little curveball here. Lance Armstrong, who I think goes without introduction. And Eric, you had an opportunity to bicycle with recently, but it didn't work out. Is that the story?
- [03:24]
C
As I remember it, no comment on the bicycling, but I had a chance to meet Lance. He is obviously a legend, but he's an awesome investor as well. He's an investor in Branch Lab, one of our portfolio companies, an ad tech company. And he's extremely thoughtful around data and the use cases. So I think it's going to be an awesome conversation with him. I can't wait to see him on stage.
- [03:47]
A
Yeah, me neither. So that's just the first tranche. We're going to be announcing a lot more speakers over the next month or so. As a reminder, you should really buy a year Early Bird tickets. If you don't have them, it's, I think, until early january@marketecturelive.com with that, let's jump into the conversation with Jim. Jim Payne. Thanks for joining us. We're really excited to talk.
- [04:10]
D
Ari, it's great to be here. Thanks for having me on.
- [04:12]
A
So you're one of my white whale guests. I've been trying to get on for, like, over a year. I mean, I don't put a lot of effort into this podcast. So when I actually try to get somebody on the pod, it means I really want you to.
- [04:23]
D
Well, it means a lot. I know I've been evasive for that period.
- [04:27]
A
A little evasive, yeah.
- [04:29]
D
Well, I mean, I told you. No, it's not evasive. It's just we wanted to have the, you know, ability to talk about what we've been working on. So, you know, I didn't want to be mysterious on a podcast. I want people to tell you guys exactly what we're up to.
- [04:44]
A
Yeah. So Jim has been mysterious in person. Like, I would see him at Cannes, I'd be like, we gotta have you on the podcast. And then he'd say. He'd say something like, yeah, we got some really cool stuff coming up. I'll be on as soon as the stuff is announced. And that's been going on for like a year.
- [04:58]
D
Well, it's, it's. You know how it is, Ari. I mean, you've done a number of companies. Like, you don't really know which direction it's going to take. Yeah. So I didn't want anything to be on the record that would be like, hey, we didn't do that at all, or that was a bad idea, and, you know, we went down a different path. Sure.
- [05:13]
A
So. So your, your background is, like, kind of amazing, especially in regards to the mobile app space. Founder of mopub, Founder of Max, or co founder of Max, I'm not sure how. Or investor. Max. Buyer. Seller. Buyer. Seller of MetaMarket, which we covered in depth on a previous podcast.
- [05:36]
D
Yeah, that's right. Although I wasn't on that one. That was just Mike.
- [05:40]
A
You weren't? Yeah, yeah. So that's one for the archives when Mike Driscoll came in and told us all about that. Do you still own a piece of. Are you an investor in Rhyl, which is now the owner of metamarkets?
- [05:52]
D
Yes, I'm an investor in Real. Probably smaller than I would like to be, but yeah, we. We basically, you know, bifurcated the company and one half went to Snap. Back to Snap, actually. And then the other half became what Mike's doing with Rhel. And obviously Mike and I go way back. Mopo was the. The biggest customer of. Of MetaMarkets, as you know, and we kind of put it into every single aspect of the product. So I'm an investor in Real, but we're also a customer of real too, with CloudX.
- [06:26]
A
Oh, great. So the reason we actually were able to get you on the show is because you finally announced something. So the mysterious mystery is over. The clouds have lifted. CloudX.
- [06:38]
D
Correct. And I'm sure that you could have.
- [06:42]
A
Guessed what we were going to do really surprised me. It's an SDK for app monetization. How could that have ever come to your. Come to you as an idea?
- [06:51]
D
Exactly. I don't know, but it actually was started by a tweet where you said, let's. Let's Vibe code.
- [06:58]
A
You know, that tweet seemed to have started a lot of businesses.
- [07:01]
D
That's right. That's right. You know, I said I probably could Vibe code an ssp. In fact, let's go try and do that. And turns out you can get a lot done with. With Vibe coding and a great team.
- [07:13]
A
So how much did you vive code? Like, did you really?
- [07:17]
D
No, no, that's a joke? No, the, we were, we were well underway but we were, you know, the, the, the one of the things we wanted to announce last month and the formal announcement was not just the financing and not just the early team and what the product is going to be, but we obviously have an important partnership with Meta and that, that took some time to do. So we, we had been, when I ran into you at Possible and we, you know, we had that tweet exchange, we were in the early design phase of is there something that could be done to help Meta be successful or more successful in their third party business? So that's kind of why it was relevant on top of mind for me.
- [08:03]
A
So Meta obviously buys third party inventory in app through their fan. They don't buy any web or desktop anymore. So what are their concerns? Why can't they be more successful? I thought we had a real time open auction because of all of the work you did at Max and Google of work, et cetera.
- [08:23]
D
That's true. And so yeah, that, that's why, you know, there's plenty of third party activity in Max and other SSPs in Mobile. But what Meta really wanted to be able to do is work more directly with publishers that make sense for their demand expression and make sense for their creatives. And so how do you actually arrange those kind of, you know, bilateral agreements? It's actually hard to do that today in mobile. So one of the things that we wanted to do with CloudX was facilitate that kind of transaction to happen, have it be informed by data and priced properly. And then importantly we created this notion of a secure auction so that there's no data leakage that could, you know, potentially be misused. Not to say that that's something that actually happens, but it's something that certainly that it needs to be comfortable about.
- [09:19]
A
Yeah, sure. So, so we didn't let you kind of give your elevator pitch to start, but I'm going to start by reading, I think that the like two sentence announcement is pretty interesting. So I'm going to read it then I'll let you comment on it. Which is Cloud X's monetization as code approach offers rich options for advanced publishers, line items to create multiple auction scenarios and per request price floors, real time analytics, log level access, blah blah blah blah blah. So that's pretty interesting. I've never heard monetization as code. So what does that all mean?
- [09:54]
D
Well, we came up with it, the idea was basically earlier in the spring, you know, vibe coding, SSP sounds cute, but ultimately like what we wanted to provide was the ability for people to vibe code their monetization stack actually. So that's where monetization as code comes from. It's this notion that let's make software tools and you know, a market of a marketplace with liquidity in it that can be operated by a tool like Claude. So how do we make it such that a admin person who's sitting at a mobile publisher who wants to do all these different deals and figure out, you know, how to actually optimally allocate their inventory. And there's a number of challenges that we can talk about, you know, more specifics like why you'd want to do that, but how do you actually make that work in practice? The first thing we kind of came up with was this notion of let's have everything in the admin stack be a file that Claude could go into and create line items, create targeting, create bundles of geographies and then you can refer to those things and then you get basically all of the infrastructure of Source code control, GitHub, version history, diffs, branching, merging, you know, automatic deployments onto your actual production stack. You kind of get all that infrastructure for free. And if people are technical, then they understand how to actually navigate all that too. So monetization is code is kind of the core first class design decision that we made at the beginning of the product that unlocks a lot of the workflow optimization and the AI enablement that we're doing.
- [11:33]
A
That's fascinating. So let's do a real business example. You said that we're talking about a publisher's perspective, an app publisher, in this case the app publisher, what's business problem might they solve? Like meta comes knocking and says give us more inventory for a higher price. Is that kind of a scenario you're talking about?
- [11:51]
D
Yeah, that's a scenario for sure. But why would somebody want to do that? Right? Because you're kind of getting an optimal, at least spot price in an auction scenario. So you might want to do that because, well, you know, my, my user base is not heterogeneous user base or sorry, it is a heterogeneous user base in the sense that you've got long term users who stick around and then you've got people who churn out rapidly. So the people who are long term users who stick around, well, I probably want to monetize them with ads differently if I can tell that they're going to be or turn into a long term user. The LTV calculation is different. And right now you don't As a mobile publisher you don't really have the ability to say I only want to run meta creative, that is, you know, six seconds like a real style creative for those very, very high value users and then let's let the rest of it be monetized more aggressively in a kind of its typical way that a mobile advertising stack operates. So how but so a publisher might want to do that. They don't really have the platform or tool to do that even for that one case. But if you actually imagine the complexity of a multi studio publisher with dozens of variations of sudoku that they've acquired through the years, completely different tech stack. One's an iOS native app, one's Unity, one's going to be like flutter the implementation of it. You got iOS and Android, you've got all these different versions out in the wild to make all the line items to do that simple thing that I was just talking about and actually monitor what's working and making sure that Those line item IDs match with the right thing and that they're getting picked up by meta and we're actually bidding on them properly and the creators are rendering it's actually a Herculean task and that's what Claude code and that are, you know, Chat LLM implementation can actually do for you almost automatically.
- [13:48]
A
So most of the ad tech world, broadly speaking, is implementing AI and MCP as a way to automate legacy workflow. Like, you know, you have a workflow where I create a line item, I update, I do, blah blah, blah, blah blah. And now we have a little chatbot that says, you know, update all my line items at once. It seems like you've skipped that first step and you're just straight on the command line.
- [14:11]
D
Well, yeah, I mean that's. People, people in our world are more comfortable with native integrations because that's kind of how you have to do it. So, and that's another big piece of work that desktop folks don't think about or care how hard it is. But one of the reasons why the mobile advertising business is completely different in its, in its implementation ultimately then desktop is because the SDKs are so hard to actually work with and install and do. So you know, we've got the Kman line that can do your line item and workflow optimization and adopts and that's all well and good, you know, server side stuff, everybody's happy with that. But we also have the same thing for the client side SDK implementation. So we've got an agent that can put the SDK into the app, create the line items and IDs in the right place in the SDK, whether it's a native iOS or Android or Unity, like I was saying, and then make sure those are created in the server and everything actually maps to each other. And you've got all these other networks that also have placement IDs and there's just a tremendous amount of work that you've got to make sure is exactly right. And any little problem is a lost revenue opportunity.
- [15:23]
A
And I mean the way this, the way this is done traditionally is with a spreadsheet. It's like I have a sheet that says here's all my line items and here's my like segments from the cdp. Like you mentioned, like long term value. Those will be expressed as like a low value segment probably. And so in your world, as I'm imagining it, I haven't seen the actual product here you're telling Claude, like, you know, for the low value segments from our CDP and the corresponding line items, change the floor price or whatever has to be done.
- [15:51]
D
Yeah, have it be a more aggressive set of auctioner participants and we're going to basically ring fence some inventory that we're going to charge a premium for that Meta and other bidders can take away from the open auction. And there's a commercial arrangement that'll facilitates that. But one of the things that I think is you're probably going to ask me about this, but the thing about mobile is like a lot of this stuff has just not happened. Right. A lot of the things that you guys typically do in desktop that you're accustomed to doing, that everyone does.
- [16:22]
A
All right, so you seem to be disparaging me and Eric as desktop guys. I'm a broad advertising guy and Eric hasn't seen a desktop in years.
- [16:33]
D
I think it's a compliment because basically Mopub and Max were both inspired by what was happening on desktop and I just basically brought those things to mobile. So I don't know what I would be doing without you guys, frankly. Just keep coming up with great ideas and I'll bring them over.
- [16:50]
A
Tell us about the Trusted Execution environment, the TEE idea. This has been floating around a lot as related to the sandbox and the cookie environments. But now you're bringing it to the SDK. What does that mean?
- [17:02]
D
Sure, yeah. So it's the, the importance of that idea is basically how does a bidder like Meta who's expressing some economic value to an impression ensure that they're not leaking some signal inadvertently to either other participants in the auction or to publishers who can then, you know, use that information to make a bidding model and then it disintermediate them. So what we want to, what we're doing with that trust execution environment is basically making a set of guarantees about how the data is used coming into the auction, how the auction actually runs and then what comes out, what can emerge. And that makes it easier for us to share more granular data with our publishers, which is part of the value proposition positioning of the, of the overall CloudX tool is that a publisher is going to be able to get all this information and then make their own models and LTV optimization calculations and do all that kind of stuff. How do you do that if there's extreme signal leakage, like you'd have nobody basically bidding in the marketplace. So that was an important guarantee that we can make as a platform to allow and facilitate a lot of that stuff to happen.
- [18:11]
A
Yeah, so I haven't looked into this issue technically, but the Unified auction from let's say Max, which is owned by Applovin, the signals are all secure within that environment. Right. The bid is encrypted and the creatives are encrypted. You probably know who wins, but you don't know the bids. So why is that not sufficient?
- [18:33]
D
Well, it's perfectly sufficient. It's a huge business and it powers most of the mobile advertising today. So I think there is certainly sufficient for many purposes. But if, if Meadow wants to have more of comfort level with more granular information being shared to publishers and you know, we're not as large and we're not as established and you know, they may say what happens to our bid? Are you really actually cleansing this stuff? Can you demonstrate that to me as a new player and as a, as a player who's trying to enable publishers to do more, we have to make some, I think, additional guarantees. And so that's where the secure auction environment came from. We developed in close partnership with them actually. And, you know, essentially it is a GitHub repository with our auction code in it. And if you run an auction on our platform, you get some verification tickets that you can provably, we can provably demonstrate to you that it used that code to run that auction.
- [19:37]
A
Right. And the value is that, you know, that the auction is fair, you know.
- [19:43]
D
The auction's fair, you know exactly what's happening in the auction. And then there's also, I think an important piece is that what comes out of the auction, if you bid and you lose, that bid's not sitting around on some server that we can go use in a model. So that's, that's an important guarantee that we make in that auction as well.
- [20:02]
A
Do publishers do app. Maybe this is a dumb question, but do publishers prefer to only have one auction in their apps? Like, because with the idea of universal auction and the remove away from mediation, it makes sense you would only have a single SDK doing all the auctioning.
- [20:19]
D
Yeah, it's certainly, you know, it's, I think it's a nice idea, but it's just not really practical. Yeah, sure, I think what do they do practical?
- [20:30]
A
What do they do?
- [20:30]
D
Well, so most people have a pretty diverse stack and you might actually even recall that it's typically not like one website or one big app that these guys may have. So they, they're operating, they're operating multiple studios in like a decentralized model. And those studios run their own gaming, you know, cadence, and they ship their own stuff and they ship on all these different versions of mobile operating systems and they have, you know, various properties acquired and amassed over the years. So even if you wanted to have a single unified platform that does all that for every single property you have, it's actually quite hard to make one platform work for all those different cases. So in reality, and then I would also add too, without being too disparaging, not everybody's figured out how to succeed in the auction, but those folks represent tremendous demand. And so if you want to express that demand into your mobile application for some segment of your user population, you're probably going to have to use a different tool. And so up until, you know, honestly the, this past year, a lot of that stuff was just too complicated to make the juice worse. The squeeze. And so what we saw in the spring was these AI tools are going to come along and make it 10x easier to do all that stuff. And then so actually making a more complicated setup, if the workflow is lower and the friction is lower actually unlocks a lot of business opportunity. And, you know, we've been extremely, you know, we've been inundated with publishers who have told us like, this is exactly what we want to do, or we're building something like this internally and would rather use you guys, actually.
- [22:14]
A
That's super interesting. So, you know, for, for decades, you know, web and desktop was the kind of the big brother and app was kind of this new thing that was really kind of weird and did not follow a lot of examples from web and desktop and create new things and often bad things. But it feels as Though standing here today, the app business is more attractive than the web and desktop business, primarily based on the success of Applovin in creating a performance model that scales. Do you think you probably don't want to talk about Applovin because you had a long involvement with them, but do you think there are lessons that can translate back to web and desktop in terms of creating performance, closed loop systems, using better technology, et cetera?
- [23:05]
D
That's a great question. I mean, I don't profess to be an expert at desktop at all, so I have no idea what desktop should do, quite frankly. But I will say in regards to Applov and I haven't been involved over there in quite a long time, but obviously we sold Max to them for a reason. Huge fans of the Applovin business and they have done an incredible job of building just a juggernaut in the space and it's something to behold. And Adam's amazing at this stuff. So we're huge fans, obviously. And the thing I would point out about mobile is that it's always been had the capability, I think, to be a more expressive platform, to have more capabilities because you're running on the device. It's obviously where users spend the substantial majority of their time. It didn't have the intent always. And so the unlock, I think that, you know, I would give Adam and his team credit for doing is basically unlocking this notion of discovery and applying that not just in like a Facebook Instagram context where you have tremendous amount of data, but in a, in a relatively, a less, less data rich environment to make that discovery actually work. So, you know, narrative certainly follows price and like now the mobile folks are ascendant because I think, you know, obviously you see the hundreds of billions of dollars of market cap and enterprise value that just that one singular company has created. And so now, you know, obviously I think we are, we are getting a lot of calls from people who aren't in mobile, who are maybe in more traditional ad tech, desktop situations where they're like, hey, can you help us figure this out?
- [24:52]
A
I love the idea of throwing out my ad server and using Claude to traffic my ads. That sounds kind of awesome.
- [24:59]
D
And that's, I mean our, we're, we, we kind of, we kind of got a little bit lucky because cloud code and these tools came out in the summer, you know, just as we were making what we were making, we had already made that bet. So it was a nice. Oops, paid off nicely in that case. But you're not alone. Like all the publishers who are adopting our platform, are extremely excited with what they can do with the extremely limited resources that they currently have.
- [25:25]
A
Yeah, that's kind of awesome. Adam is also on our white whale list. So if Adam's listening, we want you on the pod.
- [25:33]
C
Can you text him for us, Joe?
- [25:36]
D
I can't make any promises.
- [25:39]
A
So. So Jim, you're one of the. You're a person who has a lot of legends about him. You're not always at all the industry events. You just kind of quietly do your stuff, make gazillions of dollars, success after success. So we're gonna do a little lightning round where I'm gonna go through some of the legends of Jim Pain, and you're just gonna, like, yes, no, prefer not to answer. Or you could also give some color if you'd like. So, you know, let's just ask some Jim Payne legend questions.
- [26:11]
D
Happy to. I mean, I'm honored that there's even a list of legends, because you're right, I do kind of do my thing, but I do pop up in south of France. I'm not gonna lie about that.
- [26:20]
A
Yes. Yeah, sure. I mean, there's been a lot of successful people in ad tech, but you gotta be pretty high on the list. So. So the one that came from this podcast, I think it was Kevin Weatherman we had on maybe six months ago. Or was it Kevin? It might have been the Mike Driscoll episode. I can't remember. Why would we have Kevin Weatherman on the pod? I can't remember.
- [26:38]
D
Yeah, I don't.
- [26:39]
A
Yeah. Love Kevin. He listens.
- [26:41]
D
I don't want to say anything negative about Kevin.
- [26:43]
A
I love Kevin.
- [26:43]
D
He's the one loyal listener.
- [26:46]
C
We love you, Kevin.
- [26:47]
A
So there was. There was an incident where, just to put it into context, you were talking about how your horse was going to be running the Preakness, and that we were in New York at the time. Preakness is in Baltimore. And you casually talked about how you were going to fly a helicopter to go see your horse. True or false?
- [27:07]
D
Yeah, that is. That is true. We were going to do that. So it's. That's. That's a great story that I'm happy to tell. So one of the. We didn't actually end up doing the. The helicopter because of the weather.
- [27:19]
A
Oh, yes. The horse had to run despite the weather, but the helicopter couldn't fly.
- [27:24]
D
Yeah, right. The horses run in a lot of weather. You wouldn't want to be flying helicopters.
- [27:29]
A
Sure.
- [27:29]
D
But. So I. I got involved in an awesome company called Commonwealth as an investor. They're basically a horse racing syndicate platform. And I got to know the founders really well and this guy Chase runs it now. He called me and he's like, you've got to go big on this horse called Mage that we just bought along with some other people and you know, you can syndicate it through the platform and you know, we want you to be one of the bigger investors here. And I looked at it and I was like, well, you know, Chase telling me that get involved in a horse, like I probably should listen to him, did that. And so ended up as, as part of the syndicate that was part owner of Mage. And Mage was just kind of a star horse and won the Kentucky Derby. A friend of mine and I went to the Kentucky Derby along with the rest of the Commonwealth teams who were in the winner circle at the end. And you know, as when you, when your horse wins the Kentucky Derby as a somewhat long show is a 17 to 1 shot, you know, it's kind of a mind blowing experience that security comes in, escorts you to the grounds, you get a mint julep in a silver cup custom made from. Yeah, it's amazing. It's an amazing experience. And then, you know, you're sitting there and you're like, I'm on NBC. And so I'm getting all these texts like, why are you in the winter circle of the Kentucky Derby? Like, you know, this sort of stuff. And so we just got, you know, absolutely, you know, thrilled with the sport. And then obviously Mage, we felt like he could probably win the Triple Crown. And so Prenis is the next step of that. And I think we were at Luma, we were at dms, I think.
- [29:12]
A
Yeah, man.
- [29:13]
D
And you know, I was talking casually to Mike and I said, you know, basically in order for me to do all the things I need to do in New York and then get to the Preakness in time to see Mage, I gotta probably take a chopper.
- [29:25]
A
Yeah, Amtrak won't do. No Amtrak.
- [29:27]
D
We ended up doing Amtrak in his. It was tough, but yeah, because it was raining.
- [29:32]
A
This is what happens when you exit as a founder. So those listening, we have goals. Put it on your mood. Board the horse Chopper. All right, next on the list. Is it true that you turned down a Google PM job to start Mopub?
- [29:46]
D
Well, I had worked at Google PM before.
- [29:48]
A
Okay, so you. So you left Google to start mobile?
- [29:53]
D
No, I actually left Google and then joined AdMob. And I was at AdMob for maybe two months and my partially. I thought that AdMob was going to be well So I was working on inside of Google. I was working on a thing called Hosted Mobile Search which is like a text based WAP search product. Yeah.
- [30:16]
A
And for the younger kids, it's not the WAP you're thinking, it's the old phone protocol.
- [30:23]
D
See, I don't even know what that is, man. I don't even know what that means.
- [30:25]
A
I'm in touch with the youth.
- [30:26]
D
Yeah, I know. Well, you're a media figure, you Google it later. But I don't know if I should. I know enough to not do that. Anyway, what was I going to say, right? I was working to host the mobile search and you know, we like BlackBerry was the strategy at Google at the time. And I absolutely love Google, loved it. It was like such a good experience for me. Taught me everything I know about how to be a CEO and show product and all that kind of stuff. It was just absolutely amazing. But I, you know, we were sitting there in the iPhone moment and I'm like, and I partially wanted to get out of my Google experience the readiness and the network and the skill set to start a company. And I actually had intended to stay at Google a lot longer but I was like, this is kind of the moment. So I ended up going to AdMob and I was like, I'm going to learn as much as I can about mobile advertising and you know, it's a Sequoia back company and you know, it'll be a good network building thing and then I'll eventually go make the next company and that'll be my plan. So that's basically what it was. And it just ended up being like SpeedRun because within two months AdMob was bought by Google. And in fact one of the guys who started Mopub with me, Nafees Jamal, I met him at AdMob and he joined on the day that the acquisition was announced.
- [31:49]
A
Not a lot of time to invest.
- [31:50]
D
That was his first day. And so, you know, we, we hung around to see kind of how things would play out with the FTC and stuff like that. But we got gained enough conviction during that time that programmatic advertising was exactly what mobile advertising needed. That that was basically the core idea for mopa.
- [32:09]
A
Okay, more on mopub. I know the answer to this question. Is it true you gave me equity as an advisor to do absolutely nothing for MoPub?
- [32:16]
D
Yeah, that's, that's a softball because you know that's true. But you actually.
- [32:20]
A
That is true.
- [32:22]
D
We had some advisors who did a lot, some advisors. We just wanted to Be involved. And I did feel like that was good karma. And hopefully you use that money productively because it actually was probably a lot.
- [32:35]
A
It was a shit ton. I've advised and invested in a lot of companies.
- [32:47]
C
I have a mopob legend. I heard that you loaned employees money to exercise their options early to benefit from the favorable tax treatment which upon exit, created, I think, dozens of millionaires.
- [33:03]
D
Is this true? Yeah, that's right.
- [33:05]
C
They.
- [33:05]
D
There was a business inside. That's an article that Alison Chantel did on that. And that got me in a bit of a hot water at Twitter. They didn't love that. Oh, really? Yeah. We could edit it out if you want. No, no, you can keep it. Twitter doesn't care anymore. Elon runs it. Yeah, sure. I'm sure Elon would be like, I'm glad you did that. If he's listening.
- [33:26]
A
All right, next. So I really don't know the answer to this one, but someone told me this. So there's a book, a very famous book called BR Bringing down the House about MIT students who beat the casino. Are you in that book?
- [33:39]
D
No, that was before my time. That was before my time. Yeah. That is a false, false one. But we drew some inspiration from that. When I was an intern at Microsoft. We did a lot of card counting, actually, because there's nothing else to do in Redmond, Washington. Sure.
- [33:56]
C
Great.
- [33:56]
D
Legends.
- [33:57]
A
It's a legend. Okay, we debunked it. Okay, the last question. If I was an angel investor in Mopub versus an angel investor in Max, which would have given me a greater return given that Max was bought for by Applovin for stock?
- [34:14]
D
Well, it depends on if you held the app stock. Some people did and they're doing extremely well, but it was extremely high volume ride. And so not everybody stuck with it. But basically angel investor Max, you would have gotten your money back in the cash portion of the deal and then had the same size position ultimately. And Applovin at. At a $2 billion valuation is what it was at the time. Whoa.
- [34:47]
A
And Max is a pretty small company.
- [34:49]
D
When you exited, Max was a. You know, we could do a whole podcast on sort of how that all came together because it was pretty much. I personally self funded it. It was at a time where I don't know if a period existed, but no one wanted to do ad tech investing at that time. I mean, I pitched to everybody and as my view was actually, it's interesting because this, this view worked at the time and then ended up not really being able to work. It was A very much ID based approach to programmatic. And also interestingly enough, like it was Facebook and others who were trying to bid directly on IDFAs and spearfish. And so our platform is designed to enable that in a way that Mopub didn't do. And so I self financed it and was the executive chairman eventually and Dan ran it as the CEO. And you know, ultimately we saw that what Adam was doing without Blevin and what we were trying to do were actually very complimentary and the industrial logic made so much sense. And so, and I also was like, I don't know how we're going to raise the money to have this going to take to actually do this in this particular environment. So it made sense to team up with them. And that worked out really well.
- [36:09]
C
Yeah, it was 2 billion when you, when you sold it.
- [36:12]
D
Yeah, we did that deal at the same time that KKR got involved. And so that's a public number, right?
- [36:21]
C
It's 240 billion today.
- [36:23]
D
That is correct.
- [36:24]
A
So 120 x on your, on your.
- [36:26]
D
Investment, on your, on your angel investment, which you don't get those too often. The best one I heard is a buddy of mine, Brian Norgaard. You know a thousand x on Polymarket, I was like, that's pretty good. He got in at 9 million and they just traded 9 billion. And I was like, I that's, that's legendary stuff.
- [36:43]
A
It's quite a good bet, literally. All right, Jim, this was, this was awesome. If, if listeners have additional Jim pay legends, put them in the comments or hit them on Twitter. We're going to take a break. We have a lot of news. We have this exciting acquisition, Pinterest TV Scientific to talk about.
- [37:00]
D
I just want to say thank you guys for having me on. If you want to do volume two, I feel like there's, we're just scratching the surface. I'd love to do it.
- [37:06]
A
Well, we'll Definitely do volume two when CloudX has its multi billion dollar exit, right?
- [37:12]
D
Exactly. The way AI works. It'll be like three months or now.
- [37:15]
A
Yeah, it'll be three months for now. You should change it. Is it CloudX AI or is it just CloudX? Is there a.
- [37:20]
D
We have the, we have the AI.
- [37:22]
A
You got to have the AI that increase your valuation already.
- [37:25]
D
That's, that's right, that's right. When we, when we go. We're going to do GA in January and that'll be part of that. So that's my commitment to you.
- [37:33]
A
All right, we'll, we'll follow up when it happens. All right, let's take the break. Hey, everyone, it's Ari here. I want to let you know about our upcoming Market Live conference in New York on March 10th and 11th. Our live events last year were smashing successes with sold out standing room only crowds, amazing speakers, and the best content you'll get in any setting in the advertising business. This year we've expanded to two days and over a thousand attendees. So it's the must attend event for the doers and thinkers in our business. You're going to learn something at this event. The speaker lineup has just been announced and it's really strong and we're just getting started. So we announced Sophia Kalushi, the CMO of Molson Corporation. Neil Vogel, the CEO of People. Joanna o', Connell, the chief intelligence officer at Omnicom. Jeremiah Oweng, the general partner at Blitzscaling Ventures, he's an expert in AI. And Lance Armstrong, the general partner at Next Ventures. Get your tickets now. Early bird end soon. So your tickets are available@marketecturelive.com that's marketecturelive.com and we have special deals for brands, agencies and publishers while tickets last. So we're going to sell out. So you want to get your tickets. It's a two day event, so plan ahead. But it's in New York, nice and easy to get to and we're looking forward to seeing you there.
- [38:50]
C
All right, we're back with the refresh. We have a lot of news to get into this week.
- [38:56]
D
Wait a minute. You guys feel it?
- [38:59]
C
It's like raining. Is it raining by you, Jim? Wait, that's not rain.
- [39:04]
D
That's not. Not Santa Monica.
- [39:06]
C
That's tears. The tears of the ad tech haters. The people who say you cannot build awesome businesses and drive great strategic outcomes in ad tech. They're having a bad day.
- [39:20]
A
Why are they having a bad day, Eric?
- [39:23]
C
So Pinterest, publicly traded company, well known for their social network social footprint, acquired the CTV performance startup that my fund was an investor in, is an investor in called TV Scientific. Pinterest is a $16 billion company, 600 MAUs. It's a good business, it's a big business and it is largely, I think, a mobile product. So interestingly, they are now a CTV company. And on the surface, some people were thinking this was a head scratcher, but if you actually understand where CTV is going, where this whole performance CTV market is going, and it makes a bunch of sense for performance ctv, you need signals, you need data, and ideally you need search data or intent data. Pinterest has that in spades. And Pinterest needing to unlock another area of growth. Getting into CTV makes, makes a ton of sense. So I got a lot to say about this, but I, you know, I'll, I'll stop there. Obviously we've been an investor since day.
- [40:18]
D
One and we're thrilled with the outcome.
- [40:20]
C
And thrill for Jason. What do you think about this whole thing?
- [40:22]
D
Ark?
- [40:23]
A
Yeah, congrats on the investment. It's a space we've talked about on this show many times. I'm involved with Vibe where I was on the board for a while and I'm very excited about performance TV in general. I think though, and I wrote this in my little Twitter thread, like, the biggest challenge to performance TV is customer acquisition. And these many millions of small advertisers is really the sweet spot here. Or Maybe it's the 10,000 medium sized advertisers. And you see that in the way Mountain talks about its business, about the many, many accounts. And so the big tech platforms have those. Facebook, Google, they have millions and millions of customers. And it is inevitable that it's a race that the startups try to grow as fast as possible. The big companies either build or buy. And this is, I think, the first shoe to drop.
- [41:18]
C
Shoe to drop. In a good way.
- [41:19]
A
In a good way. In a good way.
- [41:21]
D
Yeah, for sure.
- [41:22]
C
For sure. Pinterest has their version of Advantage plus and pmax. So I think what's interesting here is all of a sudden you start adding CTV to the mix. Irrespective of how many clients, customers they have. I don't think they break that out. I don't think they have the millions of SMBs that the others do. Like this unlocks just additional ad spend.
- [41:40]
D
If they play it right.
- [41:41]
C
So it makes a bunch of sense.
- [41:43]
A
Jim, I have a question for you. Do you know, is Pinterest do a lot of audience extension or is it all.
- [41:47]
D
Oh, no, none as far as I know. But I think that's an interesting rich vein for them to potentially pursue.
- [41:55]
A
Yeah. Because their audience is pretty flat, I think. I don't think they're growing audience that fast.
- [42:01]
D
Back in the max days we talked to them to do something like this, but it just, that never really got to be a priority.
- [42:07]
C
Yeah, it's a $4 billion business, so it's, you know, it's a substantial business and if they're not growing, they need to just like unlock more places for them to put more ads.
- [42:16]
A
Yeah, and we've said this before, but it's really kind of Remarkable how absent the big tech companies are in CTV and streaming, I mean Meta just isn't there. They're just not a participant. Google is so focused on YouTube they've let the rest kind of slide. X isn't there. TikTok's not there. I mean obviously people watch TikTok on their big screen TV sometimes, but that's different from being part of the rest of the world. So I think there's a lot of blank space here.
- [42:46]
C
Yeah, this is not the predictions episode but I'd love to get both of your guys take do we see Meta, Google, TikTok, snap start to move into CTV or do you think they just kind of keep playing it as they have and ignore what is a massive market?
- [43:01]
A
I think Meta is in TV in the next six months.
- [43:03]
D
Yeah, I think it makes obvious sense for them to do it and so I would expect them to. I mean if you look at what they're doing with us and third party, I think it's a good signal that they're trying to go outside and make the investments that they're making in ad recommendation engines and AI overall just drive that roi.
- [43:24]
A
Do you think Jim, that's because they feel like they've moved beyond IDs and to their AI based system. Like if it was all IDFAs and IDFAs get wiped out, then off site isn't as attractive. But now they have this magical AI engine.
- [43:38]
D
I do think that that's driving it. Yeah. And so obviously we're going to work really hard to make them successful in mobile advertising next year too.
- [43:47]
C
Awesome. Let's stay on the TV front, on the CTV front. So I don't know how much we want to talk about who's going to ultimately end up owning Warner Brothers. Since we last recorded last week Netflix announced the acquisition or attempt to acquire Warner Brothers, the Elsons via Paramount, they put in a hostile bid. I don't even know where things are today and ultimately where it goes, but the question is what does this mean under maybe those two scenarios for the advertising market? So first, any updates on this back and forth that you've tracked?
- [44:22]
A
Only what everybody else is tracking that Paramount is trying to be hostile and Paramount's also valuing the cable spinouts, whereas Netflix is not. I think the big story here is consolidation. Either party buys them is one less channel, one less ways consumer interact. And I don't think it'll be the end. I think there's going to be increasing consolidation in traditional media. Obviously it's been in decline for a long time. But the regulatory view of being more permissive and just the declining values of some of these assets will force consolidation.
- [44:59]
C
Yeah, that makes sense. What does this mean for ad tech? What does this mean for advertising? What does this mean for ad tech?
- [45:05]
A
Well, you know, I wrote this in my Twitter thread that you can kind of draw a line between the TV Scientific deal and this deal in that the independent ad tech, being like TV Scientific, are dependent to some extent on inventory they don't own. And if the inventory gets consolidated, it becomes harder to access that inventory the same way you can't access the walled garden in Amazon. What happens if Netflix now owns Warner Brothers and they make that a walled garden and so on and so forth? They haven't to date, but they might in the future. So consolidation is bad for independent ad tech is kind of the short answer. It may be good for advertising, though.
- [45:43]
D
Got it.
- [45:43]
C
Jim, you tracking this one?
- [45:45]
D
Well, you know, I do spend a lot of time in la, but I don't have any alpha for you that I can share, unfortunately.
- [45:52]
A
You're preparing your own bid.
- [45:55]
D
That's right. That's right. I got my consortium working on it right now.
- [45:58]
C
From what I've heard, LA is up in arms over this with the potential effects this might have on the. On the movie industry.
- [46:05]
D
Huh? Yeah, I think, you know, it's interesting because I do spend a little bit of time in that world and, you know, there's still something in the air here about the creative spark that no matter how much, you know, Netflix distribution they get, it still comes from, you know, some really special product that gets conceived of in some, you know, somewhere here in LA and goes into that machine. So I do think it's going to be while. Yes, the. I think the economics obviously go elsewhere. Like the. Ultimately, you know, you can't really replace that.
- [46:41]
C
Yep, makes sense. All right, let's move off of ctv. We'll get into dsp.
- [46:47]
D
Bunch of acronyms.
- [46:49]
C
So there was a report in Digiday and picked up by others that the trade desk, seemingly for the first time, is getting pretty aggressive on signing deals for Q4. I'll pull a quote out that you put in the DACA here, Ari. One indie buyer said TTD offered 1 to 2% discounts on ad tech fees for individual clients if the agency committed to spending 500k or more in 2, 4 than originally budgeted. Another buyer said they were offered post auction discounts if they spent at least 750k in Q4. So is this more evidence of pressure in the DSP market? Via Amazon, which has been one of the stories of the year or something else?
- [47:31]
A
No, I think it's definitely that story. Amazon competing on price. There was a story that Yahoo DSP is competing on price. Google has always been DV360 has been the low priced competitor in the DSP market and trade Desk's message to the street has been just not to pay attention to that. It's not happening and it's obviously happening. So this is a little gossipy and sort of like it's hot tea. But it'll be very interesting to see the earnings report in Q when the quarter's over to see if maybe there's a shortfall or maybe they're seeing some movement in their model.
- [48:10]
D
Yeah.
- [48:10]
C
Is it hot tea though? Because what, what would you want, like let's say you're a TTD shareholder. What would you want TTD to do if indeed there was evidence of pressure in the market? Would you want them to just like, you know, put their heads in the sand? No, get out there and compete, get aggressive and start to like drive activity. Like I like the settings is good.
- [48:32]
A
You know, I'm gonna offer you a three word rebuttal. Post auction discounts was in that quote that you gave. That's. Yeah. So they're Post auction discounts means like, you know, keep you. We're not going to change your rate card. You're going to stay with what we, you pay us, which might be off, might be off market might be a little too high, but we're going to sweeten it. So on the first week of January we're going to, you know, wire your agency, you know, 10,000, $20,000 to keep you happy. And it'll be up to you, Mr. Agency, if you want to share that with your end client or, or put it, put it towards the Christmas party.
- [49:09]
C
Again, you know, just seems like they're in the market competing. I, I'm not mad at it, but we'll see. Again, to your point, we'll see what Q4 looks like. One other thing on the, on the, I guess like CTV DSP front, once you guys caught this pmg, the, the indie agency owned by Momentum, they've got this marketplace called Ali, which is pretty cool and they apparently have rolled out like a meta CTV DSP functionality in it so their clients can access basically all the inventory that is now disparately available in individual DSPs, namely like YouTube via DV360, Amazon via Amazon in a single buying interface. So I think this is pretty good.
- [49:57]
A
Yeah, I Interviewed an executive from, from PMG at Can about this. They had just released Ally. It's like a dash. It's sort of a dashboarding integration tool. Makes it easy for their. Yeah, it's really nice looking and stuff and it's, you know, the devil's in the details here, which I don't think we have all the details as to how much they're going really direct versus just you know, automating the use of the APIs from the DSPs. I think it general the trend here is agencies actually building parts of the stack to make their operations more smooth. Customers stickier, generally reduce costs and that seems like a really positive thing for any agency to do.
- [50:38]
C
Yeah, agreed. And coming from an indie, not a, not an old co, probably something there as well.
- [50:42]
A
Yeah.
- [50:44]
C
Let's talk about commerce media, retail media, launch of new things. So two things this week. The first was so there's some news that Shopify rolled out a new ad network which it is and it isn't. It's a cross merchant product network. So basically it will insert an item from another merchant into a storefront, kind.
- [51:10]
D
Of like how you get with the.
- [51:11]
C
Third party sellers on Walmart and makes them for sale. So effectively it's kind of like a RMN disguised as merchandising, not necessarily ads. But I think this is interesting because it keeps shoppers in a store, right. They don't navigate elsewhere.
- [51:26]
D
If it's a product that fulfills it.
- [51:28]
C
And it creates a little bit of a performance loop, right. Like you know, you will earn ad credits according to, according to the program that you can then push into further promotion by you as a, as a seller on Shopify. So not mad at it. I think it's a pretty cool idea.
- [51:43]
A
Not mad at it. There have been a bunch of independent apps in, in the Shopify ecosystem that did this already. Like product recommendation apps. Effectively cross retailer makes total sense, no brainer. I think. You know my take here is that Shopify is under investing in this opportunity. They had some announcement I think a year or more ago that they're building an ad division and then nothing really came of that. And to my knowledge they're not very active in advertising right now and they have so much data. They don't just have data and intent and technology and all that stuff. They also have merchants who are too small to do it themselves who are reliant on them for new customer acquisition and that's just such a sweet spot. They should be much more active building the app lovin of web based commerce or whatever. Not even web based commerce. It seems like a huge opportunity for them.
- [52:39]
C
Yeah, Yeah. I mean, you know, again, it's not the prediction episode, but I would imagine in 2026 they have to get aggressive. Is there a head of advertising at Shopify? Maybe they start there. I don't know if there is one.
- [52:51]
A
I don't know. Ari@aripaparo.com.
- [52:56]
D
What I'd say these things take a long time. They should have been doing this many years ago. So I don't know if it's 26 prediction, but it seems like to me a massive opportunity. And. But you know, again, like narrative price drives narrative. Right. So I think you investors or anybody on a board, a company like that has to look at what Adam's been able to do and say, we need to go after this because it can really be supportive of creating a tremendous amount of market cap for us. Absolutely.
- [53:27]
C
One other Uber. So Uber continues to do well. I think they're at, you know, 1.5 billion in terms of their advertising business. They launched this thing called Uber Insight. So it's working with Liveramp. Basically, you can, as an advertiser, securely connect your data with Uber's data and then find out interesting things about your audiences based on where they eat via Uber Eats, where they travel via the Uber app. I don't know if this is a paid product or a way for them to drive more spend, but this is a pretty cool use case.
- [54:00]
A
Yeah, it reminds me of a little bit. This is totally off color, but the. The Michigan coach, how he just got fired for having an extramarital affair.
- [54:08]
C
How does this remind you of the Michigan coach?
- [54:10]
A
Well, how do you know how he got caught?
- [54:12]
C
No, I haven't been tracking this one.
- [54:14]
A
He doordashed plan B to his office because for. Well, you know what plan B is, or you could Google it. And the doordash guy ratted him out. Really? Yeah.
- [54:29]
D
Yeah.
- [54:29]
A
So. So not that you got to put him in a clean room. You got to put the delivery guy in a clean room. That's the lesson.
- [54:40]
D
Execution environment.
- [54:42]
A
Trusted execution environment.
- [54:43]
D
Exactly.
- [54:45]
C
We just brought it home. You need Trusted execution environment.
- [54:49]
A
I didn't know where that story was going. I walked myself into a corner and you guys saved me. Thank you.
- [54:55]
D
Amazing.
- [54:56]
C
And I think that's a great place to end it. We got a bunch of other news. We'll put it in the newsletter. This has been an awesome week and an awesome episode. Thank you, Jim.
- [55:04]
D
Amazing. Oh, thank you guys so much for the opportunity to be here.
- [55:07]
A
Really appreciate it. Thanks Jim. And thanks everyone for listening.
- [55:10]
D
Yep, see you guys soon. Thank you for subscribing to marketecture.
- [55:14]
A
New interviews are added every week at marketecture TV and your favorite podcasting app.
- [55:23]
D
Foreign.
- [55:28]
A
Thank you for listening to the marketecture podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Marketing. And if you're feeling social, we operate a vibrant Slack community that you can apply to join@adtechgod.com.