Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi (Part 3)

Sramana Mitra: What did you start next?

Steve Yi: I next started a travel advertising company. After I left, it took about a year to iterate. I knew I wanted to have my own company again. I iterated on different ideas and different consulting projects. I, finally, got connected with a couple of people who I used to work with. These are people who I loved working with who had skills that were completely complementary to mine.

The three of us had no overlapping skill set. We started the travel advertising business. We did that for about a year and a half. Then we ultimately sold that company for a relatively modest amount. What it did do is, it gave us seed capital to enable us to really focus for a good six to nine months without having to worry about salaries to start MediaAlpha.

Sramana Mitra: When did you start MediaAlpha?

Steve Yi: We started MediaAlpha in 2011.

Sramana Mitra: Tell me the initial premise of MediaAlpha. What were you going to do?

Steve Yi: It was remarkably simple. We essentially wanted to do what we did in the travel space but do it in the insurance space. That was, essentially, to operate a publisher or an affiliate of insurance carriers. You put up a website that collects information about the type of auto insurance quotes that a given user is looking for. You drive traffic to the site by buying traffic from Google. That’s what we did.

You can use multiple traffic acquisition methods or customer acquisition methods. You convert that user and get users to fill out the form and submit a quote request. You connect that user either using a cost-per-click advertising model like Google does for insurance carriers, or you can get that user to agree to send that information to insurance agents or insurance carriers who will then market their insurance to them. We started very simply by having one website that we sent traffic to by buying from Google. We had a very good conversion funnel so the user can convert into a lead or a click that we then sold to insurance carriers and ad networks.

That was just the business model that we knew well. We knew how to do search engine marketing very well. We knew how to do the publisher side optimization very well in terms of being able to have a conversion funnel that was exceedingly well designed and efficient. We also knew how to do optimization very well in terms of matching those consumers to the right set of advertisers. Through those competencies, we were able to have a business without any outside capital. We were able to get that business to do $17 million in revenue in its first full year in 2011.

Sramana Mitra: Let’s step this through. When you were getting started with this business, what’s the first thing that you did?

Steve Yi: We didn’t even have an idea after we sold our travel business. The first thing that I did was I went to conferences and had every meeting that I could have with my contacts within the marketing space, and even outside the marketing space. I met with venture capitalists in Los Angeles and essentially anyone who would meet with me to run different ideas. It was a bit of boiling the ocean type of exercise to figure out what I and my two co-founders wanted to do next. We knew we were going to work together. We knew what our competencies were. We were in one of those rare situations where we had enough money to work on a startup.

This segment is part 3 in the series : Bootstrapping, Pivoting, Gaining Liquidity, Scaling to Over $100 Million: MediaAlpha CEO Steve Yi
1 2 3 4 5 6 7