1Mby1M Deal Radar 2014: Clickable, San Francisco, CA

When the going gets tough, the tough get going. Some technology startup veterans will tell you that when the markets are crashing, it could be a good time to pick up great technologies at rock-bottom prices. SuccessFactors was such a company. It was born out of the dot-com crisis of 2001 when Lars Dalgaard bought some well-funded technology companies that had gone bust and resurrected them with his vision.

After the dot-com crisis, the economic crisis provided another such window of opportunity to Mike Onghai. Inspired by the success story of SuccessFactors, he bought the assets of Clickable in 2013.

Clickable was originally founded in 2006 and was known for its award-winning Pro advertising tool and expertise in dedicated search and social advertising. It had received funding of $32.5 million in five rounds from Union Square Ventures, American Express, FirstMark Capital, Founders Fund, Peter Thiel, Jonathan Miller, Manatt Venture Fund, Schoffstall Ventures, and Monster Venture Partners. In mid-2012, Syncapse acquired Clickable in a mostly stock deal reportedly worth about $33 million. However, a year later, Syncapse filed for bankruptcy.

In 2012, it became clear that all the networks—Google, Facebook, Bing, LinkedIn, Pinterest, Instagram—will have their own PPC ad units and as a result, there will be an explosion of marketing data sources, products, and services. Mike had been looking to develop or buy a platform to solve this problem by simplifying the presentation of complex data into meaningful metrics and insights. When the assets of Clickable and Syncapse became available through a bankruptcy auction, Mike and John Raven bought them for $3 million. This was quite a steal considering that at least $30 million was invested in its technology including the analytics platform.

Mike is a computer scientist with an Electrical Engineering and Computer Science degree from UCLA. He is the CEO of Clickable. He was an early employee at GeoCities, which was sold to Yahoo for $3.5 Billion in 1998. John Raven has an Electrical Engineering and Computer Science degree from CalTech. He is Chief Operations Officer of Clickable. Other partners and advisors are Dave Fall, Erik Eklund, John Evans, Sundeep Sahi, and JC Medina who collectively have decades of experience in the analytics and advertising industry at firms such as Microsoft, Google, Bankrate.com, Nanigans, Fiksu.com, AdChemy, Nextag, and Philippine Long Distance.

The new Clickable has recently launched Clickable Marketing ROI dashboard, which allows clients to combine paid marketing analytics (e.g., Facebook Ads, Google Ads, YouTube Ads, etc) with earned marketing analytics (e.g., Facebook, Twitter, Instagram, YouTube marketing KPI’s, etc) on one platform and measure their marketing ROI in a dashboard view.

Clickable’s main value proposition is its platform. It helps ad agencies save time and eliminate human errors in collecting data from all the marketing services. Agencies use their product to give their clients a login access to their dashboard. This not only increases transparency and saves lots of time spent in generating reports but it also helps increase the lifetime value of their customers, increase recurring revenue streams, and upsell other products and services. Their dashboard platform comes with publishing, moderation, and ad buying workflow management.

Initially, Mike and his partners spent a lot of time talking to digital marketers or people working in the marketing department of large brands. They would probe them for their pain points. It was clear that the publishing tools were becoming commoditized but at the same time, the explosion of APIs, products, and services was becoming overwhelming for the marketers and advertisers. Finally, a contact referred them to a Fortune 50 client who wanted to create a central repository of social and search data from which to generate business intelligence reports. Clickable was able to demonstrate expertise in data and business intelligence and that led to an expanded relationship.

Their top target segments are mid-market digital advertising agencies who service consumer goods and e-commerce sites, B2C Financial Services brands, and B2C Consumer Apparel brands.

Their pricing is based on how much ROI they are able to provide to the client. The thumb rule they follow is that the ROI should be at least three times of what they charge them. The pricing ranges from $6,000 to $240,000 per year. The average billing per customer is about $30,000 per year.

Their major clients include mid-market advertising agencies Precision Marketing and New World Agency. They have a couple of Fortune 50 clients that are under a non-disclosure agreement including one of the largest banks and one of the largest consumer apparel brands in the US.

Clickable’s revenue run rate is now approaching $2 million and they hope to break even soon. With a sales team of six people, the company expects to triple their sales and reach subscription revenues of $6 million in 2015.

According to their research, there are a total of 285,000 total mid-size and large agencies and advertisers. However, to arrive at the ideal customer profile, they eliminate customers with long sales cycles and focus on the less competitive segment of the mid-market agencies. There are 129,000 mid-market agencies and advertisers with 50 to 5000 employees, who can afford to pay on average $25,000 per year. Thus, using a bottom-up analysis of their ideal customer profile, the total addressable market is $3.3 billion.

Till now, Clickable has been entirely funded by their corporate funds from LookSmart. They have been approached by several investor groups. Mike, however, says that for Clickable, the value of an investor who can guide them in growing this company rapidly is more important than monetary investment. Their ideal investor would be somebody who is focused on Enterprise SaaS and has a great track record in building Enterprise SaaS companies successfully. As for non-equity investors, their ideal strategic partner would be enterprise software companies who can take their product to their existing customers.

Regarding exit, Mike says, “Exit strategies are best when acquirers come to you, not when you seek acquirers. Our philosophy has always been to build cash flow by solving customers’ pain points. We can grow revenues at a rapid rate and build a lot of cash flow for the next three years.”

This segment is a part in the series : 1Mby1M Deal Radar 2014