Innovative Ad Platform – an Ad Agency as a Service
SAN DIEGO, February 6th, 2020 – Promises, promises. One of the great frustrations of early stage tech investors is the speed at which startup leadership will promise the world, and the snail’s pace that they generally adopt to deliver on them.
Making good on promises is a priority for Targetable CEO Vladimir Edelman. Now ramping up for a Q1 2020 hard launch, Edelman has led a team that developed and delivered a game changing digital advertising platform in less than 20 months. Building on lessons learned from his last successful startup, HEROFi, Edelman & Co. has the Targetable tool up and running and is onboarding beta clients at a tremendous rate. More importantly, the company is retaining them, a fact that has his two dozen or so core investors very pleased.
The Targetable model creates an affordable way to produce effective localized marketing for restaurants and other small businesses. The Targetable CEO was interviewed by journalist and tech investor Michael Moran.
Listen to the full podcast above or read the transcript below:
Michael Moran: Welcome to the Targetable podcast, and I'm here with Targetable CEO Vladimir Edelman. Welcome.
Vlad Edelman: Thank you, Mike. Great to be here.
MM: So, Vlad, take me through what is different about targetable and how it makes marketing easier for small businesses.
VE: The idea of Targetable really came about in the process of starting this company called HEROFi. And the idea of HEROFi was to really focus on retail and the problems that retailers were having marketing effectively to their local customers. Local marketing really works the best in terms of engaging customers of an individual local store. But when you have the size of these big retailers, whether it's a target with tens of thousands of locations or if some of our restaurant clients like Subway with 42,000 outlets worldwide or Buffalo Wild Wings with over a thousand. The ability to really market in a way that engages the local population and is relevant to local customers is really tough. Because you have to really think about what's different between the folks that you're marketing to in a Minneapolis suburb versus one in Denver or in Chicago or even in Saudi Arabia. And so we started looking and turning this problem around. We started working with a couple of customers early on who really helped us get smart about the industry and really understand some of the challenges of retail in general. But what we realized is the way to engage with those customers is really to engage their customers on the ground with relevant data and things that really matter to a local population. So that's sports, that's the weather, that's traffic patterns, local demographics, making sure that you're offering the right thing to the right person in the right place and at the right time. And as we were doing these campaigns and building these cool products and all these other things that we were working on, we started to stumble onto some real truths about how local marketing on the digital side really worked and what didn't work. We had executed thousands and thousands of these campaigns by the end of 2013 and we realized, hey, you know, this work that we're doing for these multi-billion dollar brands and this success that we're seeing and driving revenue for them and driving dwell and check sizes and all sorts of other cool metrics. What if we really tried to do this for anybody? What if we tried to do this for Joe Retail and somebody who owns one pizza shop on the corner, of a Chicago street as opposed to a multibillion dollar agency that frankly can afford a specialist agency. And so part of the thing that Targetable does really well and part of the reason it does it really well is because it has the benefit of all of those hundreds of campaigns and all of that data that we generated effectively engaging local consumers for big retail. And we put that and took the cream of that and put that into Targetable. So we built essentially a platform that does everything that Eurofighter did. And more importantly, does everything an ad agency does. Right. And so what you have is a simple single comprehensive product that an individual retailer can plug into and which will then deliver all of the functionality, all of the capabilities of a media agency, of a digital creative agency, of a data analytics company. And it does all of that soup to nuts for any individual retailer. And as you look around the market and I welcome you to look as we look all the time, which is there's nobody else who does that. And coupled with the fact that this is a serious problem and a lot of retailers and frankly, a lot of people in general struggled with effective digital marketing, understanding how to do it, how to do it well, how to continue to improve it as you're doing it. That's what Targetable was really bringing to the to the table, which is this capability that never existed before and doing it in a way that nobody has been doing it today.
MM: So Vlad, you're in a kind of a pre launch mode right now, and I know you've been onboarding people and you've got some beta clients. Take me through that experience. How's it going?
VE: Crazy. You know, I think the process of launching a software product of the size the Targetable is and we've been working on this now for the better part of 20 months. And so this has been months and months of hard for software development, listening to customers, listening to investors. Clients really understanding what's working, what's not working. It actually brings me back to a really interesting point that I just want to tell you about, which is when we started this company five years ago. We started as a bootstrap and we've done startups before. Anyone who's an entrepreneur is going to cringe because bootstrap means fancy way of saying no money. And the problem with starting a company with no money is that you live and die by cash flow. That's the reason we decided to do that, which is to force ourselves not just to run the company well fiscally, but really the key was force ourselves to build something that customers actually want to buy. Right? And so instead of going out and raising tens of millions of dollars, which we've done in the past and I've done personally.
VE: The idea was, hey, let's actually force ourselves not to do it hypothetically, but to really put ourselves in a situation where we live and die by building products that customers want to buy. And so that was many moons ago. And I think we've benefited tremendously from that. But that gave us the stamina and discipline to spend the last 19 months now building a software platform that would take Microsoft two and a half years to build and bring it to market. And so there's been a lot of listening, there's been a lot of development. And now that we've started on-boarding clients early on, the results are pretty, pretty staggering. Right. And so we've got one pretty big beta customer who owns 10 restaurants here in the local San Diego area, a well known entrepreneur and well-known restauranteur. We started working with him about 90 days ago, really as a very early customer. And he's a pretty tough, you know, restaurant tourist might. But, you know, they're pretty surly lot. The whole industry is pretty surly and pretty blunt. And so he's been very direct with us on what works and what doesn't. And we set him up with Targetable. We trained him and some of his staff how to use it, how to push out local digital ads, how to program them, how to make sure that old system was working. And then we didn't hear from him for the last 30, 45 days. And he came into our office last week. And amazingly, he said, look, I was a doubter. But in the last 90 days, I checked the numbers and you guys delivered a twelve percent increase in revenue. Now, that might sound impressive to digital businesses and fast growing businesses in general, but to the restaurant industry, a 12 percent increase in revenue is staggering. It's a staggering ability to change a statistic that, on a broader level, if you deliver that to a McDonald's or a Burger King or anybody else, you are feted, as you know, the CEO of the decade. The ability to deliver those kinds of changes, those radical kinds of changes are really what we're focused on, because I think like a lot of startups in my experience, like to obfuscate a lot of their success or failure in a lot of very opaque terminology and a lot of definitions and read definitions and code definitions of what success really means. Like, you know, we increase your friend cohort crafting simplistic meanings by 24 percent and it really doesn't mean anything. And so what we like to do is focus on the bread and butter data points in very old school way, like revenue, like traffic, like check size, which is how much people spend when they go to restaurants. And we really focus on that. This guy came in last week and said, hey, we delivered we delivered a lot of value for how much we cost and probably better than anything right now in the market. So we're really psyched to see that. We're really psyched to see some of the new engagement with customers. What's incredible when you launch a new product, Mike, is you can anticipate a lot of ways that people will use it, but you can't anticipate all of them ever. And so what's been fascinating is learning from our customer in a kind of a case of physician, heal thyself. We're looking to learn from our customer first and foremost. We're looking to make sure we do what we preach really well and market our product well and target our customer well. And so when we find them and they talk to us, we tend to listen. And so now we're listening. We're integrating back a lot of feedback they're giving us and how they want to use the product, what matters, what doesn't. And so as we're prepping to really take this to a wide launch early in 2020, it's really about listening and modifying and getting this as right as it can be until we start modifying it all over again after the big commercial launch.
MM: So your investors are rumored to be quite happy with the progress you've made. And I wonder if you could take me through some of the targets, no pun intended, that Targetable has had to hit and what you're seeing in the next six to 12 months.
VE: First of all, we're extraordinarily happy with our investors. I'm amazed sometimes when I look at the folks who have invested in our company and having done this a number of times in the past, I can tell you unequivocally that, you know, it's not just the money that gets invested in your company who invests. It is almost as important, if not more so, because they bring with them their own networks, their own expertise. I'm somebody who loves to reach out to our investors, to answer questions, bounce ideas off others, and get the right investors involved. Your goal is not to get them as far away from your company and as silent as possible. It's really to engage them in areas where you might be seeing or weak and they're really strong. And that's how a good investor group really gets recruited. So today we have 25 investors, some of the best in the country, in my opinion. We've got the NEC who ran the most successful hedge fund of all time, Make Asset Management, ran Magellan after Peter Lynch. And probably more famously, after delivering all that financial value, he owns a piece of the Red Sox and Liverpool and all sorts of other fun stuff. He invested in us after a one hour pitch, saw the future and took most of our early convertible note off the table. Seeing the value early, he picked up almost 90 percent of it. We've got Christopher Chappie, who's the founder of Lightspeed Capital with Jim O'Neill, who was one of the founders of HubSpot, a company that we would be delighted to emulate in any way, as it's one of the most successful SaaS software companies on the planet today.
There's really a lot of validation not just from folks who are great with numbers and who have invested a lot and who saw some good fundamentals of how we are running the company. But more importantly, in the last six to nine months, we've attracted investors who are from our own industry. Right. And there's a special sort of nervousness that comes with starting to pitch investors who own restaurant networks or own s companies and start of things in your area of expertise. And there's a very good chance that you can sell a lot of good financial investors and they believe in me or the idea itself. But you can't. So industry investors and that gets real challenging. And so I was very happy when we started to close some of those. Brett Mars, for example, was one of the first industry investors we closed and he started and still runs Banco, which is one of the largest merchandising companies in the restaurant space. He's been in and out of the offices of Dunkin' Donuts and Yum! Brands and McDonald's and Burger King everyday for the last 30 years. And when he saw what we were doing, he invested after 45 minutes of speaking with us. One of the reasons I think we've been successful investing, not just attracting investors, but then attracting their colleagues and further investors. And most of our investors have invested all three times. We've raised money so far, which is another really good validation point on our ability to deliver value to those investors is if you think about kind of the company that they invested in on September, let's say 30 first. They invested in a company, I think with a lot of potential. And I think, you know, between a very experienced management team, like I said before, this is my fourth startup. Besides that, I got a fairly good track record of running businesses, my partners second startup.
VE: There's a lot of good experience at the table with this company that they're investing in. So they are investing in the team. But they also really like the idea. And I think we showed them the opportunity that this idea can have the potential. This idea can have. But most of these folks are very experienced early stage investors. If you're talking about no matter how great the idea and the team is, it's still tremendously risky to invest in companies in its early stages, as we were just a couple of months ago. And so on September 30, first messaging from the market, it was telling us that we potentially had quite a hit on our hands. We were hearing from business partners who wanted to distribute our products like cable companies and satellite companies, who talked to small businesses all day long and kind of know what their problems are. We were hearing from customers, we were hearing early interest from channel partners to resell us. And so we were hearing all of this stuff. And it was adding up to an interesting enough story to attract the attention of our investors before September 30 first. But then on October 1st, we really woke up as a company that had at least realized some of our potential. And in fact, we opened up enormous new potential because we launched this enormously complex software platform. We soft launched it on October 1st, which is literally the day we promised. And you can ask our investors it's the day that we promise to hard launch this product in February (2020). And I don't know how familiar you are, how many software development shops or companies like us you've talked to, but it's almost an old joke of the launch date slipping further and further away into the future until you have a product that's a shadow of what you wanted to launch, launched half a year after you intended to, but not us. And I have a very strong policy of keeping the promises that we make to our investors because they're the ones who are investing purely on potential and taking enormous risks to put money into an idea and a team really at the early stage.
VE: And the more you deliver on the promises you make, the more likely you are to continue to get them to invest and continue to show interest, continue to market your company to potential other investors and business partners and customers. And so we make a very big deal about keeping those promises. And then October 1st, we kept one of the biggest promises, which is to beta launch a software product that does what we said it was going to do. That does it well. We started signing customers in soft launch on October 1st. Essentially, we started signing beta customers right out of the gate. We started testing our marketing acquisition funnel and started seeing numbers that are very, very heartening and potentially almost as we like to call it, an unicorn land in terms of how much it will cost us to acquire each customer for our platform, which is another promise that we made to our investors. And that's that the economics of this company would emulate and in fact, outperform a typical SaaS company, because we're marketing to more of a a consumer mindset, as most of the business people acquiring our product are not business people. They're small restauranteurs with a really serious problem that we're fixing. And so from the launch of the software product and the quality of the software builds, we're building it in a way that very few startups build software at our stage as well, which is what we call enterprise grade. And it truly is Amazon whose infrastructure we've built around for a lot of the services inside the platform has told us very directly that, you know, we're using their services in a way that very few companies are in at a quality grade that they've seen very rarely at startups outside.
VE: And so having published that product and the way that we built it and at the quality level, attracting the right customers at seeing some of those right marketing acquisition funnel numbers and just seeing the interest and attraction of early partners interested in inking deals before we really take this to market. That's what's really interesting to our investors. That's what's really making our investors more and more optimistic about this company's future and more and more willing to not only invest more, but really to talk about the company, to spread the gospel of targetable to whoever they feel should hear it and really delivering the value that they can. Beyond just the money that they invest.
MM: So you're focusing on the restaurant industry right now, but Targetable appears to have used cases that spread across any industry that has a smart, targeted need for automated ads. So where do you build from here?
VE: I think we're really relevant to anybody who wants to get local marketing right. We focused on restaurant industry out of the fact that we know it really well. We've spent almost a decade in it and we've had success in it. Before we build Targetable and use that success to help guide Targetable development. Now that we've built a platform and we're really looking at what it's delivering, there are very few sectors and very few areas of retail in general that don't need what we provide because the ability to market in real time to really use data in a way that makes it actionable instantly. So when a football team scores to have beer go to for one instantaneously inside of a restaurant is a very powerful ability, right? An ability to engage with your customers. Well, who else is that relevant to? That's relevant to the real estate industry and the tens of thousands of agents who try to sell houses every single day and a franchise model, whether it's Keller Williams or Century 21, that we see potentially using our products to make single agent marketing much more effective and give them a tool that for the cost that we're looking at, charging is negligible to upgrade the quality and the efficiency and the targeting of their marketing on a monthly level. Was it relevant to malls? Is it relevant to specialty retail? Is it relevant if you're selling shoes or candy or sweatshirts or T-shirts or anything else? You know, I think we're relevant to anybody who wants to sell something to an individual person in the physical world. And so I think the future for us is really wide open.
MM: Give me a quick thumbnail of your career.
VE: Well, you see, I started my life as a journalist and I decided that was way too well-paid (laughs). So I decided to do something else. But now I started writing about the Internet and the Internet, started back in the 90s and wrote for some great magazines and newspapers. And the more I wrote about it, the more I wanted to participate in it. And so I wound up moving into the business of media as opposed to just writing. I started helping run and develop businesses for large media companies and some highlights. Ultimately, I wound up running CBS dot com for a bit. It worked for Fox. Most interestingly, out of that arc of my career, I started ESPN mobile business and grew that from zero to a quarter billion in revenue, which was an amazing experience and an amazing company to work for. And I included helping launch the ESPN phone, if you remember that most don't because the iPhone launched six months after we launched the ESPN iPhone and that was that. And so after that, I actually moved into the advertising business, tired of hearing from everybody in the media business that we just could do something cool, but let's get an advertiser to pay for it. And so I decided to go to the source and see if we could execute some really cool digital stuff, working directly with brands and wound up taking over a company called Soapbox Mobile. Early on in the text messaging revolution, which was one of the first startups that I really worked on and was recruited as the CEO of that company, turned that around pretty much in about 18 months. Mike And so that's [00:20:25]Interpublic Group to Start Antisocial, [1.3s] which was a joint venture that I helmed for over two years, launching essentially one of the first and to this day one of the biggest mobile marketing agencies in the world and really pioneering a lot of the early mobile marketing use cases from text messaging to geo tagging to all sorts of fantastic ways to engage with individual consumers. To this day that a lot of other media struggle to do. I did something similar for WPP after that, but really realized that it wasn't really the industry, but it was really getting much further into startups that I really wanted to focus on and the ability that gave to be creative, to really invent something new. And if there's a theme to my career leading up to my transition into doing more startups, it's that I was really fascinated by how do we get consumers to drag technology forward, because ultimately what I learned is that nobody's excited about broadband for the sake of broadband. It doesn't really mean anything to anybody unless they can get Netflix, unless they can get Spotify. Nobody's interested in text messaging unless you have somebody to text messaging you. There's a methodology to finding your friends and messaging with your friends. And so what I've always focused on is that nexus of new technology, a product that makes that new technology viable and makes customers passionate about that new technology and then engaging that customer in an effective way to get the whole technology moved forward and evolved and standardized. And so after I spent most of my career in the media marketing business, I transitioned into startups and into a startup like In Vivo Networks, which [00:22:04]was a Matrix Northbridge [0.9s] funded startup that I helped turn around that was focused on behavioral analytics, eventually moving out to California to be the chief product officer for bus time, where my focus on retail really started and where I actually built the first table side ordering tablet for the restaurant industry and where I really started to hear from restaurant tourism really started to hear from the restaurant industry about what its problems were and where the first ideas for unified really started. So that is what I've done in my life and I hope to do a lot more of that customer technology product focus that I've loved in the past.
MM: That's fascinating. Look forward to a early 2020 launch and thanks very much for your time today.
VE: Thanks a lot, Mike. Really appreciate it.
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