PubMatic, founded in 2006 by brothers Amar and Rajeev Goel, exists to support the many great online content and service creators that we, as consumers, largely take for granted. Online service industries, from journalism to entertainment, communications services and others, use a business model that is predominantly based on advertising. Advertising is what funds a lot of what we consume online every day. PubMatic helps these publishers get greater value from their advertising so that they, in turn, have more money to invest in content and service creation.
RG: This was the original view when we started. We discovered that this segment was hugely underserved from a technology and services perspective, and that there was nobody building solutions at scale that automated digital monetization for publishers. That’s why our mission is to fuel the endless potential of internet content creators.
How PubMatic found a niche
RG: We started experimenting with content monetization by plugging into the ad-networks that existed at the time, and we discovered how incredibly cumbersome it was to rotate the ads and optimize ad spending. At that time, there was a lot of talk about how the internet was changing advertising. This was around 2005; advertisers had just started to test online targeting and mobile had not really taken off yet. Also, between 2002 and 2005, many interesting new businesses had been started out of the ashes of the dot-com bubble. These new businesses were among the first to do online customer acquisition and to really use online as an intelligent marketing channel. That shift was not driven by the incumbents of the world, but was really started by these newcomers.
RG: As digital advertising started to evolve, and a number of tools were developed to help advertisers, we could see that the tools to take advantage of digital advertising were missing on the publisher side. That’s when we saw a really big opportunity. We discovered that there was no easy way for publishers to deliver more relevant ads to their consumers or to leverage advertising to deliver more revenue. We then started talking to other publishers, who told us that there really were no good solutions out there for them.
Four key lessons learned from growing a niche business into a global leader
Since Rajeev and Amar started PubMatic, the company has been affected by the hype cycles of AdTech, going through a number of ups and downs over the years. Today, they run a software business of over $100 million in annual net revenue. But the road to this point has not been a straight line, and they have learned many things along the way. Rajeev generously shares four key learnings from this journey.
1. An engaging company culture can make the difference between success and failure
Goel is convinced that culture is what will make or break any company. This is something he spends a lot of time thinking about and executing on, and lately he has earned a company-wide reputation for reading and responding to every e-mail in his inbox.
RG: I learned pretty quickly that one of the single most critical things a company needs to become successful is a culture that fosters employee engagement. After a certain stage – and that stage comes quite early on – motivating employees to give 110 percent can mean the difference between success or failure.
2. Fast execution always wins over having the right strategy
RG: In our industry, being really good at execution is far more valuable than having the right strategy. Being able to move quickly, understanding what is working and what is not working, abandoning failed strategies quickly, and shifting the focus to execution and operating the business – these always win over taking a lot of time to figure out the right strategy. This is likely unique to our industry, but the reward of being right first is small compared to the value you can create by moving quickly. You can spend a lot of time thinking about the options and the routes ahead but, ultimately, information is imperfect, so I think it’s better to make decisions based on the information available and measure performance using milestones. If something is not performing as expected in a couple of months, we will be honest about it and change course. In a lot of companies, it is extremely difficult to admit that you’ve made the wrong choice; the longer you spend working on and thinking about the strategy piece, the harder it becomes to admit that it was wrong.
RG: Switching gears quickly is a science we have tried to perfect at PubMatic. The way to do that, aside from having a culture of employee engagement, is to be data oriented. We make sure we know what metrics will tell us that we are on the right path, and then we analyze them consistently.
RG: The key is - you cannot get frustrated with failure. We don’t believe in penalizing failure at PubMatic because it makes people fearful of making any decisions.
RG: Fear of failure does not lead to people making more of the right decisions, rather it leads to people making no decisions at all. People start deferring up; instead of making a decision, they prepare data analysis and give it to their boss to make the decision. The boss does not want to make the decision either, so he or she passes it to their boss, and it just keeps moving up the chain. Anyone who has been in a slow organization, where making any decision seems to take forever, is familiar with this routine.
3. Stay grounded and focus on the product – no matter how fast you are growing
RG: Making sure you stay focused on the feedback around the product is also key. When you go through high growth, it’s easy to focus on the sales numbers instead of focusing on how the customer is experiencing your product. Often, a non-founder seller will have 10 percent of the success of a founder seller because of the many things a founder knows about the product; a sales rep may never get to that level of depth. So, you need to think carefully about how you scale up the sales organization to sell in a productive way beyond “because I can sell as a founder, I should just bring in more sales reps” techniques. It just does not work that way.
4. Think twice before you open your second office
RG: Another thing to consider is how you expand geographically. There is an enormous “tax” – in terms of both employee engagement and the speed and quality of execution – to having employees spread out over different geographies. You really want to delay doing this for as long as you possibly can. It’s easy to think that because every big company around the world has many offices, the sooner you move to that model, the more successful you will be. But the minute you open a second office, especially if you are in startup survival mode, you incur a tax that can be really painful.
Learning the hard way and embracing rapid change has paid off significantly for both Rajeev and PubMatic. But Rajeev thinks the most rewarding thing about running PubMatic is seeing the results for publishers, who are able to generate significantly more revenue from advertising to fuel their own creativity. Enabling that success and fostering the success of their employees are the things that drive this ambitious team forward.