Bootstrapping with Services from London: Gurman Hundal, CEO of Media IQ (Part 3)

Sramana Mitra: Who was your first client and how did you get that client?

Gurman Hundal: We went down the route of working with media agencies who represented the clients. Our first clients came from big agency groups like Publicist Media. Our first big advertisers were the likes of the Weight Watchers, Honda, British Airways, and O2. It started with some of the big UK brands but it was coming through their agencies.

Sramana Mitra: You were subcontracting with them? What were the terms of how you worked with these big agencies?

Gurman Hundal: We were just their media supplier. They would say, “We’ve got  a million dollars of budget from a client. We’re going to give you $100,000.” This is campaign by campaign.

Sramana Mitra: How did you charge? Were you using the advertising agency business model of taking a percentage of the inventory under management?

Gurman Hundal: The normal pricing mechanism is the CPM model. We charge a dynamic CPM where someone pays us £10,000. We would say, “We’re going to charge you a dynamic CPM for the impressions that you’ll get. It will be variable. We’ll adjust the price according to get the result you want.” How we would make money is, if a company expects a thousand-ticket sales off the back of the advertising, our job would be almost to get them a thousand or more ticket sales by spending just £8,000.

Part of our business model is to prove ourselves. We would sometimes make a loss on some clients whereby we might spend £12,000 to get that thousand sales, but only charge £10,000 to earn their trust. It was always about hitting their target and whatever margins they could make.

Sramana Mitra: How did the business ramp? In 2010, you started working with advertising agencies. You’re basically supplying inventory to them for managing campaigns. How many clients came on board in 2011? How did the business pick up?

Gurman Hundal: 2011 was our first full year. We ended that year just with offices in the UK. We had about 25 agencies working with us. From that, we had about 70 advertisers. We did about $5 million in revenue. One of the things about our company is the way we scaled. We never took funding. There was actually no capital injected. It was scaled only on the profits that it made. In 2011, we made about $5 million. We made good profits on that to the level that we can invest even further in 2012.

Sramana Mitra: One question before you go to 2012. To service the clients that added up to the $5 million in revenue, were you only doing service or was there any kind of product that you had to develop to deliver on that?

Gurman Hundal: All service the first year. We were delivering good performance and delivering decent insights to clients. Those insights were good just because the market expectations were so low. Our vision was always to try insights. We recognize that if we really wanted to be a technology and analytics company, which has its value on unlocking insights, we did need to start building technology and start productizing that better. In 2012, we had a big decision to make as a company.

We needed to build capabilities for data engineering and Big Data practices. Then we needed to have the data science expertise to model Big Data and unlock the insights from it. Then we needed real-time capabilities to make sure those insights are actionable. We invested and launched a company in India. We threw out research in understanding that. The Big Data world is moving towards a more open source model and a cloud-based infrastructure versus this old school model of working with the big IBMs, Hewlett-Packards, which have big upfront infrastructure investment to handle Big Data. We made a big investment in India in April 2012 where we built a product called AIQ, which is our analytics platform.

We also invested in a lot of data science resources to build out algorithms that can pull amazing insights from that data. We built a front-end application to enable clients to have access to their insights in real-time. When we were running their campaign, we had a tool that was processing all the data for the end user.

This segment is part 3 in the series : Bootstrapping with Services from London: Gurman Hundal, CEO of Media IQ
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