The following is a transcript of Targetable CEO Vladimir Edelman’s interview with Eric Wright, host of the DiscoPosse podcast, which ran as Episode 92 on Dec. 12, 2019.
Access the full podcast above or here or read the transcript below:
ERIC WRIGHT: Vlad Edelman is a dynamic and knowledgeable startup founder who is the power behind Targetable, a virtual ad agency. Join us as we walk through Vlad's experiences over the course of his career that led him to found Targetable. This is definitely another lesson for anyone keen on the startup life. Vlad is full of amazing advice and information.
All right, welcome aboard, everybody. This is great, and we are back at the podcast. Thank you for joining me, if you're a fresh listener. Welcome to the new show. Hopefully you're enjoying what's about to happen. You're going to get a great conversation. It's been a wild journey recently. We've seen a lot of really, really new voices, new faces coming up on the podcast. It's been one of the most incredible journeys for me because I've seen the launch of new folks that I can get opened up to. We're going to talk about a startup journey, a really, really cool platform. Someone who's got a great-storied industry, and a super dynamic speaker as well, so this is going to be fun across the board! I want to welcome Vlad Edelman. Vlad, you are doing something neat with Targetable.
But first of all, let's start introducing yourself. Tell us where we can find you online and then we're going to get into what Targetable is doing and the story that brought it to the market.
VLADIMIR EDELMAN: Sure thing. Thanks for having me on here, Eric. I'm really excited to talk about Targetable and kind of what we're tackling. But first, my name is Vladimir Edelman. I'm the CEO and the co-founder of Targetable. And before Targetable, I was mucking around in a lot of marketing stuff and media stuff and a lot of technology intersecting with content and media and figuring out how to get everyday people engaged with super cool technology by giving them stuff that they wanted to consume. And soTargetable is kind of the logical culmination of a lot of stuff that I've done in my background.
EW: I’d love to hear what brought you to this point in your in your career and life. And that's often the most exciting story, because what I've found is that the folks I've talked to recently don't all just become startup founders (ie “I was born an entrepreneur!”).Very few successful people I've talked to lately come from a computer-sci background; they’re not necessarily programmers that built a thing. I love the fact that it's, you know, the storytellers and the people that have lived the experience and can really understand finding the problems that need to be solved. And that's really why what we're doing is amazing. Products are only amazing if there is a really tough problem to solve.
VE: Yeah, that's a great point. You know, I've seen a lot, and I'm sure you've seen the result of startups and companies and people who build products or services or solutions to problems that they think about in the abstract and haven't actually experienced first-hand. The results of that are often comical or on the bad side; they’re often extraordinarily painful and costly mistakes. And so, I came to Targetable from a career of – well, I'm actually the black sheep in my family, which is primarily physicians and music teachers and organizers of music festivals. You know, I came to the country as a five-year-old from the Ukraine, from what is now known as Ukraine, back in 1979. My family were musicians, if you can imagine being a musician in America without speaking the language or anything else - it's a really tough journey. But my early focus was really journalism. I graduated with a degree in journalism and was writing and reporting on technology and technology transfer very early on. I went to school at Boston University, and was writing for The (Boston) Globe and Boston magazine and a lot of Psychology Today. … I realized early on that journalism was just too high paying (laughs) and that I didn't want to retire in my early 20s from all of the money that was being thrown at me for freelance writing. So I decided instead to kind of transition to the business of media. I was fascinated by how those institutions were being
run and how choices were being made. And to make a long story short, I wound up doing a number of things that helped me understand early digital technology and the Internet. As an executive producer at CBS I was responsible for most of the large digital products there, for The Late Show with David Letterman, and lots of TV shows that have now been canceled by now like Chicago Hope (which will definitely date me), Brooklyn South, and then moved down more and more to things that were more of an intersection of multiple technologies.
I helped create and launch a number of products for Fox and a number of other media companies as digital really starting growing. I was their first mobile employee dedicated to starting and growing ESPN’s mobile business, business that by the end of my tenure there was attracting more eyeballs than all of their other media combined except for their broadcast business. It was also generating almost a quarter of a billion dollars (a year) in revenue. And that was fascinating. We grew a business that was really in its early stages of consumers engaging with brands like ESPN through their telephone devices or pagers and early stage mobility technology. And then to really being able to look at that on a global level running the business globally, I was doing deals with telecom companies in Brazil and Iceland and India, China, kind of having a really fascinating perspective on how this technology was growing. And more interestingly, how the people and how the demographics were defining what was popular, and what was not.
And, you know, if you remember back then, the importance of ringtones, the importance of wallpaper - I mean hundreds of millions of dollars made, you know, from things like that. And then, of course, the iPhone changed a lot. But, you know, right around there, after ESPN, I decided to focus more on the marketing and brand side. I got tired of hearing the sentence: “Let's go get somebody to pay for this and we'll do it.” If it's cool, I decided, hey, let's just go and see if I can do something like that on the money side. And I experienced one of my first startup opportunities by taking over as CEO of Soapbox Mobile in California. It was owned by a private equity fund, it was essentially a zombie company and a portfolio that was very, very odd. And again, one of those classic examples of a private equity fund that was focused on distressed debt in the medical field. All of a sudden deciding, ‘you know what? This is really boring buying shares from, you know, hospital clinics. We're going to get into the film business and the digital agency business.’
This was a transition where, after I got there, I said, look, guys, in the film business, you're going to lose money a hundred percent of the time; people who know the industry, it's engineered to make sure people like you lose money. And the digital business - really hard as well.
And so, of course, that came true in many ways. But in the meantime, I took Soapbox Mobile, which is one of the earliest text messaging platforms, and realized early on, to my earlier point, you know, people don't really engage with technologies, they don't really get excited about technology for the sake of technology. I mean, nobody's excited about more broadband just because it's broadband. They're excited because they can get Netflix. They can pay it, play their favorite games. They don't have stuttering and they don't have delays. That's what gets them excited. You know, similarly with mobility and text messaging, et cetera. Nobody is that excited about that unless they can actually talk to friends, play games, send things back and forth.
And so quickly, realizing that, I essentially built an ad agency on top of this text messaging platform to give it context. And to really help the customers we were trying to sell it to - the Marines, the House of Blues, Ford Motor Company, Procter and Gamble - we defined for them what they could do with it and then sell them that, you know. We did that quite successfully, and I wound up selling the company to Interpublic Group. Out of the ashes of that, I started Ansible, which is today still one of the largest mobile marketing agencies. To kind of fast forward a little bit, I did something similar for WPP, but ultimately 10 years ago I moved to San Diego and took over as chief product officer for a company called Buzz Time. And Buzz Time was is a public company that has been around for decades and is responsible for those trivia and poker games, things and bars and restaurants that people can play in different locations is all network together, and it gives you a reason to go into a bar or restaurant to compete with other people across the country.
And that was super unique and really novel in the 80s and 90s. And then after the 2000s, you know, the idea of connectivity and the persistent availability of Wi-Fi really, you know, made it less novel. And so I was presented with the challenge of what do we do with these two to three thousand customers for these games that are becoming less and less need-to-haves and more of nice-to-haves. And so, you know, the reality is that they started to have very different problems and digital technology was coming like a tidal wave. And so over the course of my tenure there, I built one of the first table side ordering tablets in the restaurant industry.
Doing that required me to go in and out of thousands of different restaurants - small and large, franchised and not, large brand names and not - and really understand what consumers are doing in there, how they are run, and what challenges they have. We built and launched this product successfully at Buffalo Wild Wings, which is a 13 hundred location sports bar chain, one of the largest in the world. But after we launched the tablet in those stores, I realized that there were much, much bigger problems to be to be solved and retail problems far beyond that. The catch phrase, you know, “Amazon.” Right? So if you have somebody who's not in the industry or asking, what's the problem with retail? Amazon. What’s the problem with pure systems? Amazon. What’s the problem with sales and marketing and retail? Amazon. You know, it's the lazy man's answer to everything that's wrong. But, you know, the reality is it's actually it's actually much, much deeper than that. It's much more specific than that. And I realized that very few startups and very few companies in general were focusing on building products that were actually architected to solve problems in the retail, particularly the restaurant industry, from the ground up.
You know, a lot of companies were taking products that they had built for digital businesses or e-businesses and reconfiguring them for retail or kind of blending them together to work for retail as well. But for a lot of people, that was kind of an afterthought. This big behemoth of an industry with tons of complexity, antiquated technology, often staffed by people who didn't really understand digital, and with a lot of physicality to it. And that's one of the things that really came out the most over the decade that I spent in the industry, which is that the retail business is physical, it's wet, it's dirty, it's complicated and it's filled with people. Those people turn over at rates of like 100 percent, 170 percent. So it's easy to understand in the abstract, “boy, those businesses are hard to run." But when you see the difficulty of running businesses where there's thousands of locations, ranch sauce everywhere, bartenders stealing, guys smoking doobies behind the dumpster, people coming in and out and not giving a crap about your brand or your marketing initiative that your’e about to spend hundreds of millions of dollars on and putting in their hands to execute well. It's truly a huge problem. And so I started HEROFi with my partner, Trent, who I met at this time and we developed the tablet together and had this revelation together. The idea was to start solving the bigger problems. Let's really figure out how do we solve problems of marketing automation? How do we solve problems of engagement with local consumers?
Luckily for us, Buffalo Wild Wings had so liked the relationship that we had established in rolling out this tablet that they were our first client. What they challenged us with was as a monolithic brand and the largest sports bar chain in the country, their success was really rooted in the connectivity with the local community - being this local bar and “bar around the corner: that people could go off to and watch the game. There were tons of things coming together that made their life really difficult. They were big. A lot of staffing had to be done, a lot of training. Tons of TVs. But the problem was the industry was catching up to them. A lot of other places had 70 TVs in their locations, and a million beers. Most importantly, the individual consumer that they were targeting now had a Buffalo Wild Wings-like environment in their home. They had huge TVs. They could order wings. So they were competing with living rooms and man caves and dens. So we tackled that. Just to clarify, the company was called HEROFi at that point, which is the idea that we would make heroes out of the executives who would take the chance of hiring us. It wasn't about us. It was really about them and the companies that we were championing.
For four years, we worked as HEROFi and I successfully ran the company as a bootstrapped startup; by that point, it was my fourth startup. Early on, I said, you know what? Let's launch this company as an organically grown bootstrap startup with no financing for two things, not because we couldn't raise the money we actually could, but because it forces you to do two things:
One, it forces you to build products that customers actually want to buy because you must be especially pragmatic and not too wildly experimental. You have to know the market is along with you for the ride, for those initial tests and those initial launches of the program. Folks often forget that, and assume there’s an unlimited amount of money in the bank. No, the burn rates can catch up pretty quickly.
Until you're faced with the with the chance of missing your payroll or asking for a loan from your parents or not being able to pay the rent, those things are so visceral that you could tell yourself all you want - that look, I have 25 million dollars in the bank from, you know, venture capitalists, but I'm going to act like I have zero. Good luck, right. I mean, that's just that's something that is just not tenable and a lie that a lot of people tell themselves because it also forces you to do a lot of things. It forces you not to give away your product. Right. It forces you not to do too many free trials. It forces you to focus on the things that are actually on a business level, really healthy. It forces you to sell your product for what you think it's worth. Sell a product that customers actually want to buy and pay you for. And what that means is that you're solving a problem that actually hurts because as I'm sure you've seen in a lot of listeners have seen, you know, buyers on the SAP software side or digital or pillows - buyers on that buy side will buy a lot of things that aren't liver or dodge, right? They will buy a lot of things to test. They will buy a lot of things because you you're a great salesperson. But when you're when you're when you clear away all of this kind of fog of all the other reasons why you're likely to sell a product, the best way to sell something and to establish that relationship is by solving an actual problem that hurts. Because when the rubber meets the road and there's a recession or there's a problem at the customer, they have to cut budgets and they have to look at all the different projects and products that they've bought and the people that they've worked with. They might have a nice relationship with you, but the reality is they're going to cut you off if they don't really eat.
EW: Yeah. Discretionary. It's funny, discretionary purchases. People think of it in their home of like, oh, it's like artwork or like there's physical things. You're redecorating, like little stuff that's obvious stuff when people think of discretionary, but for a business that you're selling, just keeping the lights on is core. And like you said, staffing all of these other moving parts especially. So as the Buffalo Wild Wings, how many different things they're just juggling in order to keep the restaurant working from day to day. That that could keep anybody busy and if they have to scale back. Yeah, they're gonna go they're gonna go back to paper. They're gonna go back to simpler systems. There they have the unfortunate ability and high pain tolerance to go manual with a lot of stuff and I've seen people face that unfortunate thing in their life.
VE: Exactly. That's so funny, because you see the disbelief in the faces of people who did it , like “this is such a cool thing.” And they're like, yeah, but, you know, it's the classic kind of “but I could pay somebody to do that. But I could live through the problem.”
And by the way, to your example, it really works on a on a household level, too, right? I mean, like. Yeah, you think discretion, art and carpets are discretionary spending, but most people don't really know that until they don't have the money to afford extra bandwidth or extra computers or, you know, premium bananas versus Costco bananas. There's so many layers to the definition of what you truly need to survive. Right. In front of business level, that means the lights go off. Right. And so, you know, things that are not critical. Go off. So kind of kicking off that, we created a number of products that were absolutely phenomenal at doing a couple of very particular things, like retail, which really lives or dies by 3 KPI (key performance indicators). The biggest and most important one is revenue driven by frequency. How many people come to your place? Period. End of story. That is the overall live and die by statistic, and the ones after that that are slightly less important, but still, the absolutely top are dwell and check size. Right. And it's simply when you look at it in simple language, what does that really mean? It means how many customers, how much did they spend, and how long did they stay?
And so what we did early on is instead of focusing on things that we thought we could sell them or they thought were cool, we were absolutely draconian in focusing on things that drove those KPIs because we knew that if we could nail that, we would be important and necessary for them forever. And so we did things like, you know, create beer boards where we would integrate with their inventory management system for draft beer or beer in general, which is the largest pour of beer in the world that have 18,000 plus skews. And, you know, that was a nightmare because it was absolutely all physical and it was antiquated technology. But we rolled out these in-store screens that would update in real time what beer was available, how fresh it was. But more interestingly, we keyed the promotion of that beer to the specifics of the individual restaurants. So we would test what kind of beer sold better in the afternoons, which ones packaged up at which promotions converted better and all sorts of other things that digitizing that whole process allowed us to do. You know, we created products like Watch and Win, which we integrated with a company that provided us sports stats and real time for 38 different sports. And we would create promotions that were triggered by things that happened in sports. It's kind of the old, you know, bartender cowbell when a touchdown is scored a goal.
Because we were solving it in a technological way, we could do it with enormous scale and precision. So, for example, when Vikings scored a touchdown, all of the Buffalo Wild Wings in the Minneapolis area would trigger a buy one get one free beer promotion for 15 minutes. Right. And our system was controlling all of it. It was listening for the scores. It was triggering the promotion to hit their screens inside the store. It was it was swapping over buttons on the POS system. It was essentially making that promotion hands free, fully automated, and it wasn't touching the the in store staff or making their lives any harder. It was making their lives easier. And that was critical. And so we did a lot of things like we executed thousands and thousands of different campaigns, so to speak. And, you know, the then we got to know the individual franchisees, the stores, you know, how we focused on the Bears and the Chicago stores and or how we focused on, you know, Saudi Arabian Soccer League and the record store. So we got to know their system really well. Over the course of four years, we added customers like MGM Resorts, we added customers like Skechers, like Westfield Malls. And we really started to understand how some of these mechanics work. And so by the end of 2017, you know, I had essentially grown this company from a first year revenue of one hundred and seventy-thousand dollars. And in 2017, we were, end of the year, two million. And, you know, it doesn't sound like the billions that Facebook makes. But I have to tell you that organically growing a company like that from zero to two million is tough. And it was we were inordinately proud of that progress. But the one challenge was that we realized that we were building a different business than the one we wanted.
Every new client was complex. It required a ton of custom work. And it was really about solving huge problems for enterprise clients and really going deep in terms of understanding and integrating with their teams. That is a technology agency business or a consultancy business. And so we did something, you know, that was really difficult. And the hardest thing I've ever done in my career, which is we stopped, we stopped and we said, look, we can keep going this way and we can build a great lifestyle business that throws off a great salary, really nice bonus checks, and and that's it. Or we can stop and we can build a real company and we can use these three years of experience to do it. So what we did is we looked at, OK, out of everything that we've executed, what have we done that has really worked? Then we can abstract into something that can be templatetized into a platform. And long story short, Eric, Targetable is a really unique startup, so to speak, because it's a startup that benefits from the experience of a predecessor - still, its parent company - but a predecessor in business that generated three years of scaled and actually executed in-market business to create its product. So we had data going back three years of what works, what doesn't work, and how. What are the operational challenges? How do we get around the complexity? How do we get around the staffing issues? And so we took all that and we said, OK, here's what we're going to do. What's obvious that what's obvious is, you know, the best type of marketing for a retail physical business is local marketing. It's the kind of marketing that engages with the local consumer, that understands where it is contextually and what environment it's operating. But at the same time, that's also the most expensive marketing to execute.
EW: And if anybody has tried to do advertising or sense, what is it tuning to? Personalization is one thing, but personalization and localization. It's an exponential change in complexity and cost of doing it, and doing it at scale is its own challenge. People may not realize that sometimes and think like, oh, yeah, I'm I'm walking around. That's why a website asks about your location, you know, it's because that thing that you're looking at, they’ve got something else just like it on sale. And it's it's only half a mile away from you. But there's a disturbing amount of complexity in creating that combination of personalization with localization for anything, any variety of platforms, too. Because you're selling into companies that they are selling into.You have to enable people to use their thing and use their network effects. It's a profound level of difficulty that people face, and it's a tough challenge.
VE: Absolutely. So what we realized is first to your point, there's so much data that can instruct you to find kind of what I'll connect with. There's so much data that's irrelevant, that’s interesting or curious or hey, “people in green jackets who go out to opera on Sundays also like to buy hamburgers on Tuesdays in the afternoon.” Who gives a shit? My God. How am I going to operationalize that? I didn't make campaigns just for people in green jackets? It's not like it doesn't help me or you or your business at all. And so that was one challenge. And the other challenge was, you know, how do you do this at cost? Right. I mean, in many ways, Targetable is a push against CRM. It's against the idea that the best way to market is by figuring out the three people, you know, in these five zip codes that want to buy a hamburger right now and then finding a way to target them and get them into a burger selling restaurant. It doesn't pencil out. It's not possible, frankly. And I spent half my career, you know, in the business that that gave me the data to know that that's not possible. So what Targetable really is, is it's a completely virtualize advertising agency, soup to nuts. Customers of Targetable get the advantages and the benefits of an agency that costs five, seven, ten thousand dollars a month for an individual customer or for an individual store. In the case of large chains for what we charge per month, which ranges from ninety-nine bucks to 300 bucks a month, depending on what you're doing. And that is the true magic of Targetable, which is it's first of all, it's comprehensive. And second of all, it delivers everything you need.
And so here's what happens: So you log into targetable. First thing we do is we ask you to log in using Facebook. And, you know, that's the one requirement. That's the one thing we ask customers to do. That's it. If you log in with Facebook, we have the data that we need to start generating ads for you that are better than anything else you're going to generate on your own. And when you do that, we start to build you another other cool things that customers now have that, you know, in many cases we've helped in and out of customer offices where they're like you, we just buy that. And it's called the rich data profile. It's a combination of data about an individual location that is relevant to that location. And that comes from three different places. It comes from the location itself. Who are you? What's your address? It’s Joe Smiths Pizza Restaurant on the corner of X and Y Street. It's also all the data that has to do with that matters in terms of selling your product. What's the weather? What's the traffic? What are the sports being played around it? What are the demographics of the people around you? And finally, it's also all of the data from the Internet about you. It's all of your Yelp reviews. It's all of your Facebook, it's all of your Google text. It's all of your everything. Right. Open table, you know, Snapchat, everything. And so within minutes, you know, we have synthesized a data profile for an individual business that is absolutely exhaustive. And more importantly, the system now updates that in real time in an ongoing manner.
And so it doesn't matter if you're running an individual burger restaurant and this is your first restaurant and it makes it some hundred thousand dollars a year, which is which is fairly small. Or if you're a McDonald's, you know, on Broadway and forty-seventh in New York and you're making, you know, three or four million dollars a year. That is more data than those businesses and those stores will probably see about themselves in one place at one time, ever. And so we construct that on the fly. We optimize and update that forever after that. But more importantly, we then use that data to generate advertising that's already been formatted perfectly for multiple ad platforms out of the gate. It's formatted for Facebook, Instagram. By the end of the year, it'll be formatted for Google. And it's really about the platforms that really drive local conversion. Right. So we may add things like Yelp and Open Table or we may go to the retargeting business or we may listen to our customers and at other platforms. But the reality is it'll keep adding platforms, you know, that that makes sense and that are easy to publish on. So we create ads that are formatted with creative messaging that the customer can now edit and change whichever way they want. But more importantly, we create automatically the strategy that goes with that ad. And that's the magic, because when we realize the real center core of the problem is the problem that customers are having is not ads. It's nice that we create ads for them. It makes their life easier, etc.. It’s that they don't know what to do with that ad afterwards. They don't know how much money to spend on it. They don't know which networks to put it on. They don't know how long to run it. They don't know which demographics to target. And so within seconds and minutes of engaging with Targetable, we're pushing out ads to you that are more optimized and better targeted than what Procter and Gamble is doing with multiple billions of dollars.
EW: Like I said, first is picking a platform, then understanding, sizing, scaling, targeting all of this stuff. It very quickly breaks down. And kudos to you on the fact that you go to the website and you click pricing and it's there. It's one of my favorite things. There was a tweet that said, look, I can go to the Space X Website and I can tell you how much it costs to send a football to the moon. There's no way that your goofy SAS product has a dollar sign call beside the pricing.
VE: It's such bullshit. Either you don't know how to price your product, by the way, or you don't know what it's worth. And there's no reason, by the way, like if you look at our product in general, it's super simple. In the track off of things like Shopify and things like Uber, you don't have to have a lot of complexity on the front end to impress a customer that you're doing a lot for them. When you look at Uber, it's a tiny dot that shows you a car that's coming closer and closer to you to pick you up. That doesn't mean that in the back they're not moving heaven and earth. You know, in terms of complexity, it is a little enticing dispatching system. No kidding, right? I mean, it's a complex thing they're doing. It's a very complex thing that we're doing. Right. We're digitizing and we're automating advertising, where we're taking in data. We're figuring out what the ad should look like or figuring out the strategy, blah, blah, blah. But on the front end, it kind of looks like Instagram. It's really simple. There's a feed, there's campaigns being generated. There's insights being generated about your business that you can tell us if we're right or wrong and build the intelligence of the system. There's suggestions, there’s all this data that's telling you, hey, it's Memorial Day, Did you get your memorial campaign's done? Why not? Let's get them done. Let's put it in the bank and let's schedule them for deployment. By the end of the day, the product does things that are actually very simple, but that people just don't do very well. They're not very consistent. The frequency is really off usually on advertising, meaning, you know, most small business people without a lot of digital knowledge waste days constructing a perfect ad. They ask Bob in I.T., like I have a buddy I know really well, my cousin - those people don't know digital advertising. By the way, there's a general feeling I've noticed, I don't know if you agree, which is like this weird assumption in the industry in general with the public, that just because you use Facebook and you run a Chinese takeout restaurant, you should know the advertising industry really well. You should know how to get on the Facebook platform, buy advertising, schedule it, target it, create it. Like there's an assumption that everything should not be self service. Well, advertising is hard.
EW: Yeah. And it's think it's actually so counter. And the worst thing that I find people do and this is common, is that technology founders bump into this problem all the time - they get frustrated. Like, I just know how to do this thing. I'm smarter than this machine. You're building a piece of software you’re going to sell somebody to convince them to do something because they're not smarter than the machine. You should humble yourself. You're not smarter than the machine. And there are certain things that put their focus on the business value they can add instead of them figuring out how does advertising work because how does advertising work today? Even if you nail it, even if you figure it out, you do all the reading, you go back and read every single book about how it came together, you study all the guides, you do all the analytics, you pull it all together and you put up the first perfect Facebook ad today in three months that will be it will fall on deaf ears or deaf eyes.
VE: Yeah. Not to mention that. By the way, congratulations. You did that. OK. Now do it again, because you're putting out five to 10 of these a day. And then you should be doing that every single day, every single week, keeping an eye on it, making sure they're working, making sure they're not outdated, tracking the budgeting, tracking the effectiveness of your spending and on and on and on. Right. And so your cousin, who knows I.T. or like Billy Sutton, who built his own Web site, they're not going to know how to do that. And they're not going to do that. And so for people who are busy running restaurants, Targetable is an absolute godsend. Right. It's literally like they can set it and forget it. That's one way that it works. And if they do the work of onboarding, which is very simple, it'll suddenly start producing advertising that is shockingly good. It's shockingly effective. We started with a local San Diego businessman who owns eight restaurants here in San Diego. And he was a real surly dude, like these guys are no bullshit people. If you're not doing it for them, they are not interested and they are not going to shellac their feedback in nice words. And so, you know, we talk them into being kind of early partner, kind of testing it, and we set them up. We had an account person to help them set up two of his restaurants. And then we didn't hear for months, like two months. We're like, oh, man.
EW: Oh, no.
VE: And then he walked in and he said, well, tell me what you need me to do and tell me who I should talk to make sure you guys survive. Because I just looked at the numbers and we delivered in 90 days a 10 percent lift to his overall revenue. Let's pick a round number of million bucks. That is a lot a lot of money that we just delivered to his bottom line. For restaurants, that is unthinkable. Well, not to mention that, in the long run, he’s spending less than three grand on the solution that's going to reap a hundred grand for the year.
EW: Right. And that's the interesting thing of the numbers, again, for people that don't get it, aren’t used to working in the percentages of percentages that are that make successful conversions. And it's why the idea of the using the sales funnel, the whole idea is that you put in if you put in one hundred things at the top and you nurture them all the way through this whole process, you get about three at the bottom. And if you've got to touch them and do stuff through, you know, some personal interaction, you'll probably get one at the bottom. So a 100 to 1. So if you're doing four percent conversion to actually selling something to your hundred inbounds, you're doing well. So if you can take that and you can get an uplift of 10 percent. Oh, wow. Anything you can do to move that that number up. Especially as it begins to scale.
And actually, I want to tap into this neat thing: I love the approach that you took and the way you were able to do it is kind of the way that "How did Amazon make AWS dominant?” Well, what they did was they solved a problem that they had, and then they started to sell that as a service to people because they like, hey, other people need infrastructure that can do incredible amounts of scale and growth and logistics. So we solved that problem for ourselves, let’s start sharing it and selling it. And effectively, you did that same thing as you built something at scale for a massive organization, more than one organization. And then you took that model and said, what if I delivered it for somebody who is not at scale, but then they want to get to scale or whatever their scale. It's a rare opportunity to create something that is proven at scale and then can easily scale down. It's just like a human thing of like, hey, if I can do something and I can do 10 times a day, I can do a thing. I got to work really hard before I can get a job doing it 100 times a day versus I can do it a thousand times a week and now I have to do it 40 times a week. You're going to get hired.
EW: It's a neat thing of the approach it's in. And the fact that you bootstrapped it is really cool because again, being able to be aggressive, like we’re going to bootstrap, we're going to build and we're gonna take this thing that works in scale. So, again, kudos to you and the team on really, really nailing down tough things in a unique way. I'm excited. Plus, also, anybody listening: they’ve just received literally like an MBA lesson, in the course of this.
VE: And, you know, if you want to use more MBA terms, Eric, I feel like you said that way too simply. I think that the reality is what we did is we strategically de-risked our investment in time by optimizing the operational data. Sorry, go on!
EW: And so the other thing to tap into as well is, look, advertising is a really tough thing. Why would you want as a business owner, want to be really good at it, and even if you're really good at it, be really good at it forever? If they are so good at advertising, then they should shed their business and get into advertising.
VE: Well, by the way, they could be really good at advertising. We've noticed we're very we're very attractive to small business people. We're also very attractive to large businesses. We've got a lot of demand from franchisees of large systems. The Subways, the Buffalo Wild Wings, the Arby's, the Firehouse Subs, the folks who understand that at the end of the day, what we do just provides an enormously cost-efficient way of doing something that needs to be done, and the system does it better than humans. Right? Because media buying and planning, it’s a question of data. You were just saying that. It's looking at the data. It's analyzing if it's working, it's does this image work or does this image work? Does this wording work or this wording? This spending or that spending? This zip code or this one? Well, that's a job for a robot like it.
Our system never shows up drunk, never shows up hung over, isn't sad isn't in a middle of a breakup. Think about what you're really buying with an agency for five thousand bucks a month, which has serious cash for a restaurant. Because five thousand bucks buys a lot of hotdogs. It buys a lot of, you know, value pack advertising, which they can look at and feel and show people. But the reality is, what it really buys you is, is less than 100 percent of a media plan. Right. Because that's less than 60 grand a year. It doesn't pencil out because reality is a chain like Buffalo Wild Wings has to do this for every one of their thirteen hundred restaurants. And that's where this whole thing breaks down, because the reason Targetable exists is because economically, even if the agency was killing it, a brand like Buffalo Wild Wings or a Subway or anybody with more than, let's say 10 locations, no matter how good the job is, you can't spend five thousand dollars times every single location, spending millions and millions and millions. When you can spend a lot less. That’s why we could do what we do and why what we do is relevant not just for people who are good at advertising, but to people who are spectacular at advertising because we take it all off. We let them focus on stuff that matters a lot more. We make them right. We let them focus on the creators and say going out, how to engage with the restaurant and figuring out how to train their people instead of sitting there for hours and doing this kind of routine work that just needs to be done to be good.
EW: And the thing that is maybe frightening for people when they get into this and they look like, OK, here you're like, I read Chaos Monkeys. I know how Facebook gets. People get really weirded out around the idea of like the machine making decisions for you and like, oh, yeah, I watched The Great Big Hack and oh, you know, all this all the sort of like fear and concern over the A.I. driving behavioral patterns and whatnot. Really, what is it is a merger of two incredibly powerful things. Number one, personalization. So being able to have you as a local restaurant, your franchisee, owner of whatever to influence your local community, but then through the network effect of your organization, through the ability to tap into data that's in other places like franchisees, doing these things across different geos, across different states, different cities, different towns, different halves of the mall. There's a reason there's the joke about a Starbucks on every other corner of the same intersection. Well, because they know people walk both ways and they have to get them all in. So they're willing to put the data at work to put the expense in, and it proves itself out. So what you're doing is the idea that that owner, that business entrepreneur, can then take their personalization, feed it into a successful local system, and then you optimize that system along with every other system that aligns with that. And then you can have it become self managing.
EW: It's not like you're saying, hey, get out of the business or anything. You just turn us on and we work. Like, no, feed the animals.
VE: No, it's more than that, Eric. That's a great point. I mean, I can't tell you how many times we've heard like, oh, I don't want this thing to just run wild and do blah, blah, blah. And you're right. I mean, in many ways, the fear is very irrational. But at the same time, it doesn't matter. You have to deal with that fear. You can't just be like, “well, that's stupid. You're stupid, that’s stupid way to think. And I'm out of here.” You know what the reality is? You know, we built the system in a very particular way to address that, which is the system never does anything you don't want it to do. Right. And so you can oversee and manage and do by hand as much or as little of this as you want. You can set the system as set it and forget it or you can have it ask you every single turn and every single thing. It'll ask you what you want to do. It will suggest things. You know, there's a reason that the system doesn't just generate campaigns. It has one of the simplest and most elegant build your own campaign tools that I've ever seen. If you really want to do this yourself, have at it! Read and you can build a campaign step by step within our system. And that that build a campaign tool is engineered to work really, really well for you, the customer. Because if you've ever used Facebook’s tool or Google's tool, which they've been working on for decades, it's a nightmare.
EW: Right? Everything with Google's UI reminds me if you took a robot and hired it to build an A.I. on how it thinks that the robot would interact with a system that a human would use. It is like they're so disconnected from actual human experience. It's disturbing.
VE: Yeah. It looks like an EKG that meets a, you know, Excel spreadsheet from 1988.
EW: And sadly, the thing that they do really well is obviously an incredibly scalable business. I always joke, the reason why Google's API is for their stuff is so good is because the UI so horrifying that they have exactly the drag as an API.
VE: Exactly. Well, ultimately, at the end of the day, there's two things: Why, when investors or other people talk to us and they're like, well, aren't you afraid of Facebook doing this themselves? Or like the venture capitalists favorite question, which is, well, what if Google does this? Well, I don't know. What if Google decides that you're irrelevant? What if they decide to be in the venture business? What does that mean to you? But the reality is two things: One, is Facebook is never going to help you buy ads on Google. One thing we're looking at long term for our system is really being able to figure out like what is actually the best place to spend your next dollar. Is it on Google or on Facebook or on Yelp or on YouTube? And so no individual platform is actually going to do that. The second thing is no individual customer level be that important to Facebook.There's a reason that, you know, after a decade of still building their platform, you can still make a mistake, like spend less than a dollar a day in a campaign, that’s what Facebook has. But they'll let you put that campaign in. And then they'll rejected like three days later, which has been like, hey, thank you. But it's such an amazing signal of how little they really care about your time, the missed sales and the event that might have happened. They just don't care like it.
And it's not it's not the evil thing. It's the fact that their focus is on the maps. It and their focus is on them. And so our focus is on the individual business. So the things that we do, for example, in our campaign manager to the same example, you won't be able to move on from that step unless you fix that problem. We're gonna tell you, “Oh, hey, you. The way you structured this, it's 90 cents a day. Facebook won't approve this. Fix this now.” And it's a small, subtle thing. But it's very emblematic of why tools build for a purpose like this are often really better than bolt-on tools that are built as an afterthought to the bigger business. It's interesting. And you have that in many, many places in our system, which, by the way, launched October 1st. We’re at 10 percent of where we're really going to be. If you think about today, we're a virtualized ad agency for the restaurant business, but that is a self-imposed focus. Because when I started this company, I decided for myself I had two rules, which is, one, don't work with assholes. And I broke that rule on day two because there's too many assholes in the world. But the second thing was make new mistakes. Because when I started my first company in New York, I rented space in Gramercy Park as the first stop because, you had to have a beautiful office for customer sort of thing. And I had piled on like fifty-thousand dollars of burn a month before I even signed a single customer. That's one of other places and other mistakes. But I really wanted to make new mistakes. I want to make sure I wasn't repeating mistakes that I had already made and to really have had the benefit of that. The development of this was focused because we can fix a lot of problems for a lot of people, just because you can doesn't mean you should. And so we force ourselves to it to really fix a problem of effective local marketing that is pre formatted, pre optimized, fully, fully solved, fully solved, not just quasi solved for the restaurant business. Well, then what we do is relevant. So, you know, we have a lot of choices ahead of us if we're successful, and the early stats are truly amazing. You know, I think we’re solving a real need.
EW: I always talk about every startup that I watch, typically that you get to know them, hopefully touch them in stealth. I'm excited when I can talk through and I've got friends and in venture capital, so I get exposed to kind of those early stories and you watch. My favorite thing is kind of like working backwards because they tell me, like, here's the thing, that this is our first product where the launch is going to come at US Stealth on next March or whatever. And it's like, OK, that's interesting. That's your first product, the go-to market. Like, that's not the product, though. There's something bigger. There's always the system you're building has an initial go to market. There's always a bigger story. We know it's a workable, provable, scalable, scalable market. But - guess what? You know, you add you take restaurants and you then add, like you said, those secondary, you know, targeted businesses are or whatever it's going to be. The machine already works.
Quite often, it’s the first thing worked, and now what do we do beyond that? And there's really probably a lot of stories of companies. We don't even realize because it's under the covers, it's hidden behind things, because people who go to Buffalo Wild Wings or go to Subway or go to these companies, they don't know how they do the things they do. They just know like, hey, I've got a tasty 6 inch sub right now. They don't think about that thing. But then they go to the doctor or they go to a bookstore and the very same thing could be driving their ability to be aware of where to go and when, where, how to find things and how to get better at buying decisions. It's so funny that you're sort of hidden in a way, but you're so much a part of this consumer and an enjoyable buyer experience, because that's what it's for. Like you said, what's the problem you're solving? The problem you're solving is keeping people in those seats or bringing them to the seat in the first place and keeping them there a little longer and really making that sort of like lifetime value in that that current stay value of the customer a little longer; make it a reason for them to hang out. And it's not through, nefarious methods. It's just like, hey, what do we do to make it so that they like what they're doing? So they want to do it rather longer or spend a little more money?
VE: And it's funny you said that, nefarious methods. I always have this debate with my mother, who's busy adjusting her privacy settings on Facebook. And it's like, look. That ship has sailed. Like, we work with a lot of different data. And I'm like, ah boy. The only solution you really had is not to be famous or somebody anybody cares about, because otherwise, there’s ways to get your data that you're never going to protect yourself against. And so a lot of this fear - I always wonder why people are like, “Man, I hate that these companies are getting data about me and sending me better advertising that I care about.” Do you want to get shittier advertising that sells you things you don't want to do, because, by the way, advertising is part of the world? It's just never going to go away. And the only reason it's here is because it works, because if it didn't work, nobody would do it. But the reality is we don't touch customer data. We don't care who you are. We don't care about your name and your email and your in your mobile phone number. I mean, we care a little bit. But it's certainly not like the thing that really drives us. And we still generate advertising, that is classes and classes of effectiveness ahead of almost everything else, because if you do the work, you don't need to know who somebody is. You just need to know their context. And if you know their context, you can send them better ads.
EW: Yeah, and we could spend another hour just talking straight about the pure challenge of ethics in advertising in general. I am going to tap you to have a long-form conversation on that one because you obviously have a deep experience in the market. I'd love to kind of get to your brain on some of those things.
VE: I have pretty violent thoughts on that having run through ad agencies, but I did get out of the business for a very particular reason. But we can pick that one up at another time.
EW: That is for sure. Well, let me tell you, a lot of this has been incredible and especially thank you for sharing the story. I'm excited in watching the growth of the company, your journey. We will definitely set up something. We're going to get back together and talk a couple more times, because you're such a dynamic person to talk with and I hope folks have enjoyed this. We’ll dig in a little more. Keep me in tune as well, obviously, as you get through the next sort of phases with Targetable itself. We'll get you back on soon and we're going to make sure that we get people to take a look at it. And really think about the story we just told and as you’re looking at your startup, as your founding story. Anybody that wants to build a simple product or project inside their organization - these lessons play out in different ways. You take the word advertising out, you take the word restaurant out and you what are you doing? Creating a system of optimization that creates localization and personalization. Mac makes it up to whatever the industry is. And these are really profound lessons, and I actually appreciate that.
VE: And to expand on what you were saying - And first of all, thank you so much for having me. Just an absolute pleasure talking to you, and will absolutely look forward to and enjoy talking to you again - I’ll take your abstraction one step further up the chain, which is to say that at the end of the day, what we do is take data; figure out what of it matters and then facilitate a response to it in real time. And when you think about what that means to anybody listening who is looking at businesses, that is what today's world is about. It's about reacting in real time and not waiting minutes, weeks, months, because today's consumer doesn't have the patience. That is not going to come back no matter how much you would like it to come back for the benefit of your product. So keep that in mind.
EW: Life comes at you fast, as they say. And it's no joke. It is it is truly there. And like you said, if I'm going to go and I'm going to get in the business of expanding my business, I very certainly don't want to figure out the machine, because even like you said, if you do figure it out, all great, you know, but life will change. The system will change. Even looking at stuff recently, like the way that the algorithm works inside Google and all of a sudden you find the rankings completely shift because Google themselves will shift the way they're doing business. So do you as a business owner want to get into the game of figuring that out? No. So I tap the tools that do it in the best possible way and look at platform opportunities. So with that, how do folks get a hold of you if they wanted to, to chat further with you? (I recommend go to Targetable. Check it out, targetable.com).
VE: Yeah, go to targetable.com. I'm actually very responsive on LinkedIn, which has become kind of the world's Rolodex and way to kind of pre-filter business connections. And I'll risk giving my e-mail on this podcast as it's mostly professionalized: vlad @ targetable.com. Questions about entrepreneurship or about your business, I love talking to other entrepreneurs, people who are in the trenches and trying to solve problems! I’m super busy, but always find time to connect. So reach out and you'll probably get a response.
EW: Well, thank you for that, Vlad. I tell you, that's the power of people to do great things with machines. That’s what I love about the story you told. Well, I definitely look forward to talking again with you about that. Of course, folks who do want to want to keep listening and hearing other great stories like this, jump on iTunes, hit subscribe if you haven't already. If you just caught this one as an individual episode, rate it if you can. It's always appreciated if you go and rate because I myself am in the advertising business of making sure we get to the top of the lists. And the more folks we bring, the more opportunities we can have great conversations with great folks.
So, Vlad, thank you for taking the time with us today.
VE: Thank you. I just subscribed to your podcast!
EW: Ah, there we go! One more one more tick up. It's been an absolute pleasure and I look forward to talking again soon.
VE: Likewise. Take care, Eric. Thanks so much.
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