Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford (Part 5)

Sramana Mitra: We are huge fans of bootstrapping entrepreneurs, so congratulations on doing that. What scale did you reach before you raised the private equity round?

Jamie Tedford: We were almost a hundred people. We were very profitable and had 50% EBITDA margins. When we decided that we were going to talk to the private equity market, we got a lot of raised eyebrows for our P&L. Thankfully, a lot of the private equity firms in Silicon Valley had never seen a balance sheet that had profit. A number of them asked if there was supposed to be a parenthesis around the numbers.

Sramana Mitra: What range are we talking? Are we talking about a $5 million dollar company or a $100 million company? You can give me range, but I just need to understand how far you bootstrapped.

Jamie Tedford: We sold the minority share of the company for $68 million. We had built a really valuable company that had reasonable revenue. We also had really rich profit margins.

Sramana Mitra: What firm did you take money from for the private equity round?

Jamie Tedford: Like I said, we talked to a bunch in Silicon Valley, New York, and Boston. We, ultimately, chose a New-York based firm called AEA Investors. I think they’re one of the oldest private equity firms in New York.

Sramana Mitra: What is your business today post-private equity round? You said you made a pivot from the publishing services business to more of an ad tech business. Tell me more about the product strategy after that pivot?

Jamie Tedford: While not the primary driver, we did see acquisitions as a reason to bring in outside capital and also to get our company valued to contemplate acquisitions that are some mix of stock and capital. The first need that we had recognized was to really build out our ad stack. We had built our own organic tool. Some of our customers were using it to augment what they were doing with us on the publishing side but is nowhere near the scale of some of the point providers who were very specifically focused on building ad tech for social media.

We looked around and did a scan of the market and met with a dozen leaders in the ad tech side of our business. We were coming up in a parallel ecosystem with Facebook and, ultimately, Twitter and LinkedIn. We bought Optimal for $35 million in a stock and equity deal. They were, by orders of magnitude, the most comprehensive technology and also had shared DNA with us around how you use data to make everything you do smarter. We had just won a Facebook Innovation Award for a product called Open Signals, which is now a feature of our platform. It takes third-party data like weather forecast to digest and create programmatically content and advertising that’s obviously much more relevant because it’s using that data in a way that allows us to create more efficient messaging.

This segment is part 5 in the series : Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford
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