It follows, then, that if an advertiser knows what a person is interested in—if the advertiser can figure out the types of sites the person is drawn to—the company will be able to target the ads more effectively. By the way, there is nothing Big Brotherish about this. The advertising companies don’t know whom they are targeting, and they don’t care. All they know is that a particular stranger is responding to certain types of ads, and their goal is to put those types of ads—and only those types of ads—in front of that stranger. I don’t want to try to sell diapers to a truck driver. It’s a waste of my time, and it clutters up his computer screen. I want to put an ad in front of that truck driver that has a good chance of getting his attention.
The trick, of course, boils down to figuring out how to follow people as they make their way around the Internet, to get a sense of their likes and dislikes. And to do this, I had to find an Internet company that had the right type of ad-serving system (the technology that allows you to put ads on the Web sites).
For a time, I considered going to India, where I could hire a team to build a program from scratch, but I knew that that would take the better part of a year and I didn’t want to wait that long. Just as I was beginning to despair, however, I got lucky. I found an outfit called Ad Revolver. It was in the online advertising business and appeared to be making use of some rudimentary ad-serving software. I called the number in Louisiana, and from the way the phone rang I could tell I had been bounced overseas.
“Hello,” said a man said with a heavy accent. He sounded Russian.
“Is this Ad Revolver?” I asked
“Yes,” he said.
“I want to know about you guys.”
“Who are you, and what do you want to know?”
“My name is G,” I said. “I’m calling from San Jose, California, and I’m starting an Internet company. I think we might be a good fit.”
Ad Revolver was located in Belarus, in the city of Minsk, but it was registered in Louisiana, which is friendly to foreigners, and, as a result, was licensed to operate in the United States. After speaking to that first gentleman, I also spoke to his brother, who happened to be his partner, and the following week they sent me a prototype of their software. I was sufficiently impressed that I decided to pursue it, and not long after we met in London.
At that point, they didn’t know much about me because I hadn’t told them much—not even my full name. If I had given them my name, and they had Googled me, it would have colored the negotiations—if it ever came to that. Now, however, with things moving forward, I was going to have to take my chances.
We met at Le Méridien Hotel, in London’s Piccadilly Circus, and I told them who I was, what I’d done in the past, and what I hoped to accomplish with BlueLithium. As we talked, I did what I always do when I’m trying to assess a person’s potential: I asked myself whether these two brothers had the right DNA to join me and make things happen for my company. A lot of people look for perfection right out of the gate, and I think this is a big mistake. Nothing is perfect, so for me it’s really about the future and about whether I think the candidate and I are a good fit. In this case, the answer was a resounding yes. As for their program, it was good, but it wasn’t where it needed to be. If I had to compare it to a car, I’d say they had a standard, assembly-line Mercedes-Benz, whereas I was looking for the souped-up AMG version of that same, solid vehicle. The good news was that they understood exactly what I needed, particularly in terms of behavioral tracking, and it became immediately clear to me that these guys had the talent to make it happen.
When the meeting wrapped, I decided to fly to Belarus to take a look at their operation. They were booked on a flight that same evening, and I said I’d follow the next day.
I didn’t have a visa, however, and I made some calls and learned that it would take two weeks to get one. I was also told I could take my chances and fly to Belarus without a visa, though there was no guarantee I’d be permitted to stay in the country. Deciding to take my chances, I booked a flight on Belavia Airlines. The next morning, when I took my seat on the aircraft, the seat belt didn’t even work. Not exactly confidence inspiring.
We landed safely, but I ran into trouble at immigration. An armed soldier was summoned and led me into the bowels of the building, where I found myself being questioned by a man with a heavy accent.
“You not have visa?”
“No, I don’t have a visa.”
“Why you not have visa?”
“They said it would take two weeks to get one, and I wanted to come over right away.”
“What for you in such hurry?”
“I’m meeting with two brothers who live here in Minsk. We might go into business together.”
“What business?”
“Internet advertising,” I said.
He studied my passport and shook his head, looking grim. Then he looked dead at me and said, “You like Madonna?”
“She’s all right,” I said, wary.
“Next time you come to Belarus, you bring for me Madonna CD?”
“Sure,” I said. “I’ll bring you a couple.”
A moment later, he reached for his stamp and stamped my passport. I was in. I had my visa.
The Ad Revolver guys were waiting for me outside the terminal, along with their father, who had been enlisted to pick me up—he owned a car, they didn’t. The father didn’t speak much English, but on the way into the city he would tell the brothers to point out the sights. The old KGB building. The Minsk ballet. The Botanical Gardens. Victory Square. Lenin Square. And so on and so forth. The city was beautiful and very clean, and there were lots of people on the streets, but it seemed as if nobody lived there. I think it had something to do with the energy. When you go to Manhattan, the city is alive and wild. But in Minsk, everything seemed tamped down and sedated.
When we reached the hotel, they gave me a few minutes to check in and freshen up, and then they took me to a local Belarusian restaurant. It was pretty good. We had borscht, caviar, whitefish, some kind of potato pancakes with mushrooms, and several shots of vodka. I ate everything, because I only have one rule when it comes to food: If it’s alive, don’t eat it.
G in Belarus with the Ad Revolver team.
The next morning they came to fetch me at the hotel and drove me to their offices, which turned out to be a collection of apartments. They had several guys working with them, and part of their business was focused on video games. I was very impressed with the operation. They were high-energy, lowcost guys. I liked their style.
I asked them, “If I wanted to take the company off your hands today, what would you want?”
They said, “Half a million dollars.”
I said, “Done. But you can do better.”
“How?”
“I’ll give you a stake in my new company. In return, you can be my technology department, as well as my research and development team.”
They accepted my offer, which turned out to be a very wise choice, and I flew home to begin getting the company off the ground.
I didn’t know exactly where BlueLithium was going, or exactly how it was going to get there, but I knew instinctively that it was going to be big.
5 The Art of War
When I returned from Minsk, I got busy looking for investors. I assumed that most of them would be impressed with the success of Click Agents, but I’d assumed wrong. Most of them wanted to meet, partly because they were curious about me, but I couldn’t get any of them to commit any money, and several of them actually told me to come back when I was bigger. Bigger? Really? All I could think was When I’m bigger, I won’t need you.
Some of them were downright rude. For example, one of these meetings was with a general partner at a big firm, and I was worried that he really didn’t have the industry background to understand what BlueLithium was all about. He did have an MBA from an Ivy League university, however, and—as a high school dropout—I guess I was impressed.
When I
arrived for the meeting, I was ushered into a conference room and kept waiting for about ten minutes. I think only insecure people keep you waiting. It’s their way of telling you that they are more important than you are. When he showed up, we shook hands and made a little small talk, and then I started my PowerPoint presentation. About four minutes into it, when I was on my third slide, he asked me to stop. He was studying me with a patronizing smirk. “This isn’t working for me,” he said.
“Excuse me?”
“You have no focus.”
Focus? I was just getting started. How could he possibly know whether I had “focus”? I bit my tongue, but it wasn’t easy.
“And honestly,” he went on, “I don’t think you picked an area that has any growth potential.”
I still said nothing.
“Listen, I am trying to do you a favor here. I want to save you a lot of time and a lot of heartache. This is not a good field. Your chances of success are pretty much zero.”
For the next ten minutes, he lectured me, and I felt like I was in a classroom, listening to the basics of Business 101. Worse, the lecture was being delivered by a guy who had less experience than I did. But I still said nothing. When it was finally over, I actually thanked him for his time and for his inspiring words, and then I got the hell out of there. And, pal, if you’re reading this, what do you have to say for yourself now?
There were other meetings that weren’t quite as infuriating, but none of them got me to the next level. When you’re looking for venture capital, the next level is the term sheet. A term sheet is a nonbinding agreement that lays out the general terms and conditions of the deal, and the financing goes through as soon as both parties have agreed to all the points. At that stage, with the term sheet signed, lawyers on both sides sit down and hammer out an actual contract, which usually takes four to six weeks. Alas, I began to think there would be no term sheet in my future, let alone an actual contract, so I resigned myself to moving forward without any financial partners.
By late March, while I still trying to find the right software for my new venture, my lawyer called to tell me that I was being sued by the team at ValueClick.
“For what?” I asked.
“They’re angry because you sued them for securities fraud,” my lawyer said.
“So what? It’s payback time?”
“Pretty much,” he said.
In their suit, ValueClick suggested I had stolen “trade secrets,” but they never described the so-called secrets in any detail. And the company also accused me of trademark infringement. This latter charge stemmed from the fact that I had used the Click Agents logo on one of my Web sites, since I had founded the company, and since it made sense for me to mention it, even in passing, when I was describing my history. Still, to satisfy this claim, I immediately removed the logo, and henceforth any references to Click Agents were made in plain, unadorned type.
The most upsetting aspect of the suit, however, had nothing to do with trade secrets, with ValueClick, or with Click Agents. It didn’t even have anything to do with the Internet. It was about Planet Bollywood, in fact, and about those arson allegations. The lawsuit suggested than I had been part of a police investigation, which was a complete lie and an obvious attempt to undermine my credibility. I was very sensitive about this, as I valued my reputation—it defines me as a person and as a businessman, and one must always protect it. At the same time, the reasoning was obvious: ValueClick needed to convince the judge that I was the type of guy who might steal trade secrets.
Then it occurred to me that the lawsuit might also have been designed, at least in part, to frighten off potential investors. This only made me more determined to succeed, but I was still angry—the last thing I needed was to become embroiled in nasty, time-consuming litigation. Still, I had to defend the suit, and I began to bleed money the moment I picked up the phone to call the lawyers. It felt like déjà vu all over again: I had gone through much the same thing with that London programmer, and the idea that I was going to be subjected to more of the same really infuriated me. I was particularly upset because the experience taught me that any determined person can sue anyone over anything. In some cases, when you weigh the costs of defending your principles, you discover that it makes sense to simply settle. Business people have to accept that as a reality of doing business. Still, it’s deeply troubling. In most civilized countries—the United Kingdom, for example—it’s completely different. If someone sues and loses, they have to pay all the legal expenses—theirs and yours. This happens in America too, of course, but first you have to win your case, and then you have to go back to court and sue your adversary for legal fees that you should never have incurred in the first place.
At the end of the day, it seemed that the motivation behind this suit had one aim: to ruin my chance to get BlueLithium—a potential competitor—off the ground. But I wasn’t going to let that happen.
I learned several lessons from that harrowing experience. First, failure is not an option. Anyone who even entertains the idea of failure is already doomed. Whenever you set out to do something, large or small, you have to believe in your heart that it’s going to happen, and you have to keep moving toward that goal. It’s really all about forward movement—like riding a bicycle. If you’re standing still, it’s not easy to keep your balance, but if you’re moving forward, there’s nothing to it. That holds true for business—and for life. So keep moving forward.
The other lesson I learned was equally valuable: Don’t get emotional. I was angry, sure. I didn’t want to go through that fresh hell all over again, and I didn’t want the people close to me—my brother, my sister, all my employees—to get dragged into it with me. But I am also aware that logic and emotions don’t mix, and I was able to disengage emotionally. I would let the lawyers handle it. After all, that’s what they were getting paid for.
And finally—a lesson that bears repeating: Learn to move on when it’s time to move on. Bite the bullet. Let go. Start fresh. Don’t look back. It’s not as easy as it sounds, but make the effort—it’s worth it.
Ironically, a private equity group from Chicago had been secretly looking at BlueLithium, and not long after the suit was filed they offered to invest $20 million to help grow the company. At the time, this came as a bit of a surprise, and it also seemed like a great deal of money. With the business just getting off the ground, I was only generating about $200,000 a month in revenue, and I wondered what they might want for that $20 million. Still, their interest gave me power and cachet, so we started talking. Before we did, however, I discussed the situation with my family, telling them that I needed to be up front with the Chicago money men about the ValueClick lawsuit. They all agreed with me, but they told me to be patient. There was a chance we might reach an early settlement, and they suggested I let that possibility play out.
The lawsuit didn’t go away, however, and the Chicago investors were moving forward very quickly. I liked this—I like to make things happen, and the faster they happen the more I like it—but with no settlement in sight I decided it was time to tell them. I walked them through the whole miserable situation, and they listened politely, but it was clear that our little dalliance was over. “We don’t play that game,” they said. “It complicates everything.”
This only made me more determined to succeed. The lesson here is simple: Don’t lose your moral barometer. Lies and obfuscation might give you short-term success, but they make for very unstable relationships.
That summer I finally settled my legal problems with ValueClick and got back to the business of business. I could have stayed and fought the suit, and my lawyers felt I could have won, but they didn’t think it would have been worth it. So I withdrew my suit accusing them of securities fraud, and they withdrew their suit against me, and neither of us acknowledged any wrongdoing. It was a wash.
The guys in Belarus, meanwhile, were still working on my new program. It wasn’t there yet, but it showed promise. With Click Agents, I had
been running a basic, pay-per-click operation, but with BlueLithium I was going to take things to a whole new level. I was still dealing with the same three constituencies—advertiser, site owner, and consumer—but I was getting better acquainted with the consumer. And it wasn’t that much of a challenge. People reveal their likes and dislikes as they make their way through the Internet, moving from site to site, and it had become possible to follow them around. We didn’t know the consumer’s name, we didn’t know his age, we didn’t know where he lived—and none of that meant anything to us. What we did know, for example, is that he or she had shown interest in the Four Seasons hotel chain, and we could then “tag” that person with a “cookie” and follow him around the Web, enticing him with more ads for the Four Seasons or with ads that appealed to Four Seasons’ kind of people.
In effect, BlueLithium was poised to disrupt the Internet advertising model. We were saying “I can find you on the Internet based on your behavior.” It didn’t matter whether you were on CNN.com or MySpace or visiting The New York Times online, we were able to find you because we had behavioral data that told us where you’d been and where you might be going. And when we found you, we would entice you with all the right ads. (That was the idea, anyway.)
At this point, even before we’d launched the new technology, our revenues had exceeded our wildest expectations, and I began to think that I should give the venture capital route another try. I didn’t need the money at the time, but I knew that BlueLithium was going to be much larger than Click Agents, and I wanted to have the funds in place when it came time to make expensive decisions.
The Dream: How I Learned the Risks and Rewards of Entrepreneurship and Made Millions Page 12