Rael wanted to combine his years of knowledge in the finance world with advertising. He quit his job soon afterwards and after contacting Dr. Jun Wang who had papers on the very same subject, they both decided to co-found MediaGamma.
Rael Cline shares with me how MediaGamma is helping companies harness the power of their customer data to drive better customer-centric products.
Hi Rael, thanks for agreeing to share your story on YHP. Can you give us some background information about yourself?
Sure: I was born in Johannesburg, South Africa and pretty much grew up there. I studied finance and economics for undergrad, took a job in finance and then came to the UK in 2010 to study a Masters in Finance at the Cambridge Judge Business School. I then decided to quit finance altogether (as you do) as I realised that it’s really a golden age to start a company here in the UK.
How did the idea for MediaGamma come about?
Actually I did end up using some of my finance knowledge after all! Basically I came across the world of “programmatic advertising” where computer algorithms buy and sell ads online in real time. This happens tens of billions of times every day worldwide and the industry is worth tens of billions. In many ways, it mirrored what had being going on in the high frequency trading world in finance for a long time. So the initial idea was to use some of the ideas and techniques from the finance world in the online advertising world. I came across Dr. Jun Wang’s papers from the Computer Science department at University College London (UCL) who was writing about the very same thing. I contacted Jun and we decide to co-found MediaGamma as a spin out of UCL’s Computer Science department.
Tell me about the early days, the type of challenges you initially encountered?
There are the usual challenges that most startups face such as validating your idea, recruiting people to work with you, etc. However one quite unique challenge was that these two worlds of finance and advertising had never historically overlapped. I had to spend a lot of time trying to lose the jargon of both worlds and really distil and articulate the value proposition.
What is MediaGamma? And what are you trying to solve with it?
Fundamentally we are a machine learning company that uses data to show the right ad to the right person at the right time, lowering customer acquisition costs for our clients.
How have you been able to fund it so far?
As a spinout of UCL’s Computer Science department, initially we received some money from the University, along with some angel investment. Along the way we managed to receive multiple Innovate UK government grants (free money!). We have now closed a £2mn round with the UCL Tech Fund and Parkwalk Advisors as our investors.
What advices would you give to entrepreneurs looking to raise funds for their start-ups?
One needs to understand what the expectations are of the people/funds you are approaching and how the economics work from their end. For instance, large funds would need very large exit values to justify their returns to their investors when compared to smaller funds so really one of the first questions they are asking themselves is whether you’re going to be that £1bn (or even £10bn) company, for instance. If you’re not, that’s certainly not a bad thing but it means that you’re probably wasting each other’s time. It’s also important to know the time horizon of their investment and whether they’re able to participate in future funding rounds instead of having to find new investors all the time. If they don’t follow on, it can send a bad signal to new investors.
About the first few months, how excited were you, tell us about how those months felt, what happened?
The first few months were really about speaking to as many people as possible and trying to refine the value proposition. I spoke with people involved in both finance and adverting technology, engineers, investors, potential customers, etc. It’s both nerve-wracking and exciting. People like to see progress so there’s definitely pressure to show that over time. However what people say they will do versus what they actually do can be two very different things so it’s important to not weight the verbal commitments too high.
How did you initially get traction?
Understanding the sales process at your potential customers is key. Who makes the decisions and how long does it take? One can also develop a sense of early adopters in these conversations and you need to do everything possible to ensure you can deliver. Having a good customer reference works wonders.
What are the most crucial things that you have done to grow your business?
I feel B2B startups generally under-charge (or don’t charge at all) and this is a huge error. Convincing a company to pay you for an outcome that’s very uncertain is a good validation that you’re doing something very useful. Having the pricing discussion early on is crucial to thinking about how your products works and grows. That’s not to say that you can’t change your pricing or (even business model) later though.
What would you say has been the highlight of your entrepreneurial journey so far?
There’s nothing quite like the feeling you get when you sign your first long term customer contract…
What should we be expecting from yourself and the MediaGamma team for 2018?
We are building out a self-serve product for our clients whilst we provide the infrastructure. We’ll also be ramping up our sales team to further scale the business.
Lastly, what three pieces of advice would you offer entrepreneurs starting out today?
1. Manage your psychology and health properly. It can be a lonely and frustrating experience in the early days. Find people who are going through something similar to you and share notes.
2. As mentioned above, it’s important for B2B companies to demonstrate value by charging right away.
3. Focus on hiring consistently well. The cost of a bad hire in the early days can be fatal.