It has been 31 months since I last sat down with Eli Portnoy, co-founder of Thinknear, and to say things have changed would be an understatement. This episode highlights the epitome of being a startup in the ever-changing mobile ecosystem. The story of Thinknear really does mimic the flight paths of many of the most successful startups that are emerging from round one of mobile but the road was not always straight and the path not always clear.
Part startup story and all survivor story, Eli shows what it REALLY takes to make your way through the rough entrepreneurial waters – mud and all.
Key takeaways from this episode. Click on the link and the video will take you to that clip
Rob: Hello everybody. Welcome to untether.tv, your single source for deciphering the mobile experience. I’m your host and founder, Rob Woodbridge. I’m today with Eli Portnoy, sunny Los Angeles, California. He’s the founder of Thinknear, and he’ll be on in one second. Before I bring him in, I would like to thank those of you who have had the opportunity to come on and actually sponsor us or go to become a patron of untether.tv; you can go to patreon.com/untether. All I’m asking for is a dollar. If you find value in the content that I provide each and every day, a dollar a month is what I’m asking for.
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This guest; Eli was on in October of 2011. That was about right, wasn’t it Eli?
Rob: My goodness.
Eli: That’s years ago.
Rob: How things have changed. Back then, his company, Thinknear, was focusing on bringing customers into stores during downtimes or slow times during the day. He called it Yield Management for Retail. So much has happened since then, as we could expect in those 2 years, including a few direction changes and one little thing, a $22.5 million transaction that made him part of Telenav.
Welcome, Eli. What’s changed? I should say, what stayed the same?
Eli: Thanks very much for having me. It’s been an amazing couple of years and it’s amazing how much has changed. Pretty much everything has changed. We’ve changed the model, we’ve changed the business. We’re obviously now part of Telenav, which has been fantastic. Also the market has changed. While what we were trying to do back then was at the very, very cutting edge of what was possible, now it’s not only possible, but pushing the envelope again and doing all sorts of new things that we couldn’t have even dreamed about doing back then.
Rob: Back then, you were talking about this: You were talking about yield management. I made a quip, I think, saying, “You don’t want to call it yield management to retailers because they’re not going to understand that.” It’s customers; I want customers in my door. How long … the sequence went like this: We talked in October of 2011 and by October of 2012, you were acquired by Telenav, and in that year you’d done a couple of changes of business model. What happened to the whole idea of yield management?
Eli: The basic idea we had when we spoke was we were going to find out when small businesses, mom-and-pop retailers, had busy and slow times. Whenever we figured out that they had slow times, we’d go and buy mobile ads from all of the existing mobile ad networks and we’d show ads to people nearby with discounts and try to drive them in. Basic idea is if I’m Joe’s Pizza and I know that there’s certain times when I don’t have customers, let me use mobile ads to bring them in. That whole concept was too complicated and took too much time for the retailers, so we wanted to automate the entire thing.
We went out and we built exactly that. We spoke in October, and we were really excited because this was going to change the way small businesses did business. Except one thing happened which we didn’t anticipate; we went out and we started buying these mobile impressions on behalf of our merchants and working with all of the existing mobile ad networks. We found out two things: One is that we’re not equipped to do location-based targeting. They were really, really having a hard time targeting people nearby, and that was the premise of our entire model. The second thing is when they could target people nearby, they just didn’t have enough scale to do it in any meaningful way. We looked at ourselves and we said, “How is this possible? We built this entire business under the assumption that this could be done because everyone told us it could be done because it was so obvious,” meaning mobile is portable. The whole point of mobile is that people take it with them everywhere they go and it’s got location capabilities; it’s got GPS built in. How could advertisers not take advantage of this?
All of these ad networks emerged and not done locations well. We said, “We’re going to forget everything we thought about for the SMBs and small businesses, and all of that piece, and we’re just going to focus on solving that issue. We’re going to allow advertisers to target mobile ads by location in a very precise way and we’re going to allow them to do it at scale.”
We dropped everything and we started building it. It took us about 6 or 7 months to build a very early v1 version of our product, and within months, we were already doing business with some of the biggest brands in the world. A few months after that, Telenav came knocking, and the rest, as they say, is history. It was an amazing couple of years because of how much has changed.
Rob: You don’t have to be so humble to say the $22.5 million is still, I think, stands out as the single largest exit from a Techstars company, not just a, ‘You were the first exit from a New York-based Techstars company,’ but it’s also the largest acquisition that’s ever been made by one of those companies, isn’t it?
Eli: That’s what I understand. It’s definitely very humbling to …
Rob: Obviously, that changed from what you were doing around yield management into creating this highly-targeted location-based ad network was a good one. Is that an understatement?
Eli: I think it worked out.
Rob: It’s a smart guy over here. That’s a good move. Was it really … was it easy to make the decision? When you went out and you said, “These ad networks aren’t delivering what you anticipated they were going to be delivering and there’s a demand in the marketplace,” was it … did you have to hum and hah about this? Did you go away? Did you talk to your investors? What was that process of just dropping the whole yield management and moving into this space?
Eli: It was incredibly painful and difficult decision. It was not easy at all, because I had gotten up in front of 500 investors and told them, “I am going to change the world with yield management,” and I got in front of all of your viewers and I said the same thing. I passionately believed I could. Saying that it wasn’t going to work was in large part an admission of defeat that it wasn’t. That was really hard to get over. Then on top of that, we had investors give us money under this one concept. We thought there was a bigger opportunity, but it wasn’t as simple as just changing fast and doing what we wanted to do.
There was a few months there where we were having [inaudible: 06:53]. We were really trying to understand, ‘Is this really an opportunity or is this just a way out for us to try something new when what we were doing wasn’t working?’ Ultimately, we decided, ‘No, this is really an opportunity. There’s something there.’ Fortunately, our investors were incredibly supportive. Fortunately, we have very small egos so we were able to take the defeat and keep going.
Rob: I don’t know if it’s a defeat. I think that if there’s anything that this entire mobile landscape, or this mobile revolution, has taught us is that those who are not nimble, those who do not move with fleet of foot, those who do not move quickly often perish at their own peril because the ideas … they get stubborn around their ideas. When we talked, back a couple years ago, I used to use this term. You’re building infrastructure. You’re building a foundation on basically molten lava. The world was shifting so quickly back then, it still is. As you said at the beginning, you’re doing things that today you find innovative, but the things that you wanted to do 2 years ago seem commonplace now. That’s how quickly things move.
That whole period when you were in the there, in that … in limbo between the old Thinknear and what became the new Thinknear; were you … did you just ball up in a cocoon with your team, or were you still building out that … the yield management piece?
Eli: No. When we made the decision to move into this next evolution of our company, we completely stopped working on it.
Rob: Just dropped it.
Eli: We dropped it. That was a really important decision for us because we just had … we were a team of 4 people so we really couldn’t afford to have distractions. We completely stopped everything we were working on just focused exclusively on this new product. It was more than that, though. You mentioned the cocoon, but we were building this product on a leap of faith that others would want what we wanted. We were essentially building a product that we needed for our initial vision and we were just assuming that others would have the same desire. I had a lot of sleepless nights where I … it was ‘Build it and they will come,’ and I wasn’t sure that they would come.
I remember very vividly about a month after the product was ready, I was going out and I was trying my hardest to sell it to agencies and brands. We had a board meeting. The board meeting starts, and I basically opened up by saying, “We’ve got this product. I know it’s awesome, but I haven’t sold a dollar worth of revenue. I may just not be the guy to go and sell this.” Fortunately, my board was really patient. They said, “No. It takes a little bit longer. Sales cycles takes a little bit longer.” The next day, literally the next day, we got $150,000 IO, the day after a $50,000, and it just started snowballing. It was a leap of faith. We were in our little cocoon, we prayed, we had faith, and it happened.
Rob: Why not … would you … did you go out and talk to these guys beforehand as you were building the product, or did you literally build the product on a whim?
Eli: I spoke to a lot of customers before doing it. The problem is there is and there was so much confusion about hyper-local ads. We would talk to some guys and they’d say, “Everyone is doing it.” That wasn’t true because we were trying to get it done with all of the players they were mentioning, and then we’d go to others and they’d say, “That can’t be done. No one could do that.” We felt like there was an opportunity but no one was actually out there buying it and no one was saying, “Yes, we would buy from you. It was definitely a big leap of faith.
Rob: That’s really interesting because the perception was that it was being done or the perception was that it couldn’t be done. Was anybody at any point in time during that period doing it?
Eli: There were a lot of people who were claiming to do it, but as we found out in the end, no one was doing it well. When I was internalizing and trying to understand, ‘Why is something so obvious not being done?’ I realized that there were a couple of points: One is a lot of people were coming at this from the perspective of online advertising. They basically cut their teeth in the online advertising world, and all of a sudden, mobile emerged. The way they saw it was, ‘We have big PC and we have little PC. [inaudible: 10:57] on a little PC.’ We were approaching it totally differently. We were saying this is a mobile portable device; this is nothing like the PC. What worked online shouldn’t necessarily be brought to the mobile device. That’s one thing.
The second thing was the location happens to be one of the hardest problems to solve. It’s inherently problem for a whole bunch of reasons. Just from the data side, it’s a very, very nuance and difficult problem that very few people can do right. If you think of it as an add-on, you can’t do it right; you can’t think of it as an add-on. All these mobile ad networks that emerged, and then they started adding things like location, and that just doesn’t work. We came at it from, ‘We’re going to solve for location first and then everything will emerge around that.’
Rob: I see. I want to talk about that, the state of location accuracy, because you did a great presentation down in Florida recently about that, that caught Chuck Martin’s eye, and we talked about it on the Mobile Minute. That’s where all of it stems from. I do want to know; describe … we’re at that point now. You have pivoted, you’ve changed your business model, you’ve gone out, you’ve closed some deals. What does your company do at that moment? Walk us through what you guys do, what Thinknear does.
Eli: Absolutely. What we do is we allow advertisers to target consumers with ads on their mobile devices based on location. We like to say that we use location intelligently to deliver incredible campaigns for consumers and advertisers. What that really means is that we’re using location, understanding where you are when we show you an ad so that we can do one of three things: We can show you an ad because you’re close to something else, so we call it a proximity-based marketing. You’re near a McDonalds, here is a McDonald’s ad. We can do it to target you because you are part of an audience that’s interesting to an advertiser. You’re at a sports stadium watching a Yankee game, so we want to target you because that tells us something about who you are and it relates to what we are trying to sell. Then the third is what we call geo-retargeting; that is I am showing you an ad because I know you’ve been to several locations of interest to me. You’ve left a trail of intent through the locations you’ve visited. You’ve been to a car dealership 3 times in the last month; therefore, I think you are an auto-intender; therefore, I want to show you an ad.
We’re building these products on top of really, really precise location targeting capabilities and we’re building these products on top of this idea that if I know where you are, I can derive all this information that’s useful and showing you ads that are relevant.
Rob: These ads just appear. Basically, somebody would take your network, plop it into their apps; your ads would take over when they’re in that proximity.
Eli: It’s [inaudible: 13:35] you already use, and we’re basically working through either directly with the publisher, the app, or with third- party inventory sources like exchanges or ad networks, and we’re taking over [inaudible: 13:47]. From the consumer standpoint, nothing changes. You’re using the same apps you were always using; you’re just seeing more relevant ads that are actionable because they’re related to what you’re doing right then and there.
Rob: Is there a specific market of applications that work best with you, guys? I would think like newspaper apps, those things that are opened often and highly local.
Eli: Those are [inaudible: 14:09] because they get really good location and they know how to get a good location. It’s surprising that we find there are a whole bunch of other apps that you wouldn’t expect that pull location for a variety of reasons. As long as the location is really, really good, it actually works. The way I think about that, the way I finally understood it, is I thought of the example me on my computer. When I see an ad, what I’m actually doing is I’m on my computer and I’m looking at a website. What’s most relevant to me at that moment in time is the website I am looking at. If the ad is relevant to the website, that’s good.
In mobile, it’s actually different. The screen is smaller and my attention is a little bit different. I’m not sitting down for a session on my phone. What I’m actually doing is I’m at the bus stop and I’m playing a game for a few minutes while the bus comes. What’s actually more relevant to me is the fact that I’m in a bus stop rather than I’m playing Angry Birds on my phone. Tying that ad to my location context is way more powerful, and that’s why I think having that good location actually matters more than the specific app that you’re on.
Rob What about … how can … how do companies, local companies, use this to their benefit? I talked to a lot of them; the majority of them aren’t doing it, as you pointed out. They’re not doing it for a variety of different reasons: 1, they think it’s too expensive. 2, they think it doesn’t’ work. 3, they think it’s too complicated. What are some things that these companies can do? How do you sell it to them, to get over this little … these hurdles?
Eli: We sell it to more than just local companies. To us, location really matters to any company doing business, because location is more than just proximity [inaudible: 15:49]. Location is just a part of what we do every day. I talk to advertisers and I tell them, “What you care about is attention and you want it to reach people, and you can do that in a bunch of different mechanisms. More, and more, and more people’s attention are focused on the device on a mobile screen. You need to find a really good and compelling way to reach them at the right time with the right message, and location enables that in a way that no other medium does.” It’s less about location. Location enables what we’re trying to do, but it’s not as much as it used to be about location. When we first started thinking about location, it was all proximity. You’re close to this; therefore, I’m going to show you an ad, but we found that it can be so much more than that.
Rob: What’s the impact of some of a company that does … that works with you guys?
Eli: We’ve done campaigns with dozen of the Fortune 500, Fortune 1000, biggest brands out there. What we’re finding is that they’re seeing amazing results. When they’re engaging with folks on mobile, they’re engaging with them in a way that’s relevant to them in a way that they can’t on any other medium. We’re seeing great click-through rates, conversions. Basically any metric we look at, we end up seeing great results for them, and they keep coming back.
Rob: Let me … I want to compare these two different models that you were using. With Thinknear Version 1, which was Yield Management, you were selling to the local businesses, right?
Rob: Think … and it was literally, ‘I got to go to that business, I got to go to that business, I got to go to that business,’ or there’s a chain that you might go to in the city, but it’s literally business; you’re selling to a business. Thinknear Version 2, you’re selling to large corporations that want to reach into … in a contextual way, to their customer base.
Eli: That’s exactly right. Our business not only shifted in terms of the product, but also who our core market was. We now have a team that’s selling directly to the biggest brands and agencies out there. We do also have a team that’s selling to small business, but not directly, only through channel partners.
Rob: That’s a strong lesson right there, isn’t it?
Eli: It’s a lesson, definitely.
Rob: How do you scale? That’s the key. It might work, and I see a lot of guys do this. It might work in your neighborhood, it might work with a lot of work in your city, but will it work in the city next to you, then in the country below you or above you? I think that that’s really the biggest challenge. If you need to … we talked about these guys 2 years ago; all the coupon guys. You were saying, “If that ever … if they can ever just subside, if they could just disappear for a little while and let guys like us poke our heads up …” Those guys, we saw this over the last 2 years; scale for them meant 1000 bodies in a city. That’s just not manageable. It’s not good business.
Eli: No, it’s tough. Local SNB-type businesses are really challenging because it’s just so difficult, so nuanced; every city is different. Then on top of that, it’s so expensive to sign up a new customer and it’s so hard to make that work on an offering that they can pay for, which tends to be very cheap. You’ve got high customer acquisition costs, low price point for the product, and it’s just tough.
Rob: High turnover. The small and medium-sized business are the guys on the phone with you all the time; high customer support costs, all those 0things. Do you have any advice for those little guys that are trying to figure out how to play in this game?
Eli: Are you … advice for the small businesses, for those [inaudible: 19:24]? There are some really good products that have basically created mini agencies for small businesses. Basically, they take all of the different products; the online display, the search engine marketing, the mobile, and they basically create an offering that’s really compelling, really works. I think that’s probably the way to go. I think that’s where the entire industry is moving, because you can’t have 10 different products calling into one small business. It’s got to consolidate and have one little mini agency do it.
Rob: That’s … we’re seeing that everywhere. The confusion in this market is so great because there’s so many offerings, not only in the advertising market, but in the payments space. It’s just overwhelming for everybody. Everybody takes a step back and thinks, ‘We’ll just let the big boys duke it out then we’re going to jump on when all the dust settles, and we’ll try to figure it out. You became part of a big boy. Tell me about this process. You go through this gut-wrenching, painful change of business. You’re in your cocoon; the 4 of you guys are duking it out timidly in front of the investors. You say, “We got a great product but no customers, and then all of a sudden the next day, a customer lands.” It’s like ‘bang’, things start to accelerate. You said that from the time that you pivoted, it was 6 months into it. Then what, Telenav just knocks on your door one day?
Eli: Telenav basically calls us, tells us that they have this incredible opportunity to work with us, that there’s a business development opportunity. We start talking to them and we start thinking about what that looks like, and very quickly, it turns into an acquisition discussion. I need to … I start thinking, ‘We’ve got a massive opportunity to go and build something. We’ve got this once in a lifetime opportunity to have a product, the right product in the right market, and build something huge. At the same time, we’ve got this opportunity to be a part of a bigger company that’s incredibly relevant, that’s got a ton of data that would be helpful to us, a ton of experience, and to accelerate what we want to do, and really win this market.’ It was a very difficult decision, but I couldn’t be happier with the way it worked out.
Rob: What’s going through your head? You described it well; you’ve got this great opportunity. You’ve got a little bit of investment from your investors. Did you go to those guys and say, “Here’s Telenav over here. I believe that we can drive this. We’re at the right place at the right time, with the right product, selling to the right people.” Was there tension around this, or was it … did they say, “Take the deal?” I don’t know if you can answer these questions. I’m always interested in this, because I talk to a lot of guys, and they say, “I took the money because this company, all of a sudden, I can now … I have resources. I’m not scrambling. I’m not the CEO that has to go fundraising and deal with investors. I’m the CEO of a small group that I can now go and accelerate the product and get product into market.” Was that your thinking?
Eli: It was part of it. Resources, fortunately, we were about to close on a pretty big round of funding. I thought we would be okay, but it just wasn’t going to be to the same extent. Telenav has been doing location- based services for 14 years on mobile.
Rob: They’re big guys.
Eli: The data they have, the resources, the deep understanding of how location actually is pulled from a device was just stuff that would accelerate our knowledge learning in a pretty significant way. Ultimately, I don’t think VCs really care about what [inaudible: 22:55] business once it’s sold. I think what the decision really came down to, ‘Is this the right move for the business today?’ There were some tense moments, but fortunately, we had very supportive VCs who really ultimately wanted the entrepreneurs to do what the entrepreneurs wanted to do. This was what I thought was the right move for the business, so they were very supportive.
Rob: How do you feel, Eli, about closing, doing all of this? It’s not easy to be reflective of this and you’re a humble guy. Over a 2-year period … I’m just going to say this; you’ve got this … it takes a very unique individual. We see this in the mobile space quite a bit around the great entrepreneurs that are able to pivot. You’re going down a path, you’re not feeling it, you have your little spidey senses that are popping up saying, ‘No, no, no. We got to look at different opportunities.’ You have the wherewithal to be able to see a different opportunity, and then bring everybody in line. Oftentimes, you’ll lose partners as a result because it’s a different business. You manage to hold everything together and you go straight in a line. You align all your investors. You build a product in 6 months. You bring in … it’s vindicated. You’re validated by bringing on customer base. Then almost days later, a big guy like Telenav says, “We want you and we’re going to pay to have you; $22.5 million.” When you reflect on these 2 years, how do you feel about all this?
Eli: I’m really grateful. It’s one of those things where if you were to ask me 3 years ago if I ever thought that this would happen, there was no way. It’s just incredible. The thing is that it was a very, very, very quick amount of time, but there was an immense amount of work that the team put in. One of the cliches that I hear a lot about startups is ‘It’s all about the team,’ bit I lived it firsthand. What the team was able to do and the way the engineer is building this entire product on 2 people in 6 months, it was an amazing effort. Then having … I was the only one going out and selling. It was me and our [inaudible: 25:06]. It’s very, very tough to reflect and not be awed, humbled, and just incredibly grateful to [inaudible: 25:14] opportunity.
Rob: I would be. I would be sitting back and thinking … there’s no ego, but I’m just sitting back and thinking in marvel over the last 2 years. Congratulations on doing that. I don’t want it to be uncomfortable between us. If I could give you a hug, I would. I would say, “It’s great.” One of the things that I often lament around the mobile industries are those idiots that don’t take the money when it’s good. Do you know what I mean? We talked about Groupon not taking $6 billion. I think that when you have an opportunity to do a couple of things; take some money off the table for yourself, for your investors, create a great relationship with your investors because you know that in a number of years you’re going to step back out. They’ll embrace you and be willing to put more money into an idea that you have because you had success. To be able to take the money off the table and do the things that you did, and then also see what’s great for the product in a larger company like Telenav. I think it’s great.
Eli: Thank you, Rob.
Rob: I’m also so interested in this because I do this podcast with [inaudible: 26:22], as you know, This Week in Location-Based Marketing, and we talk a lot about location accuracy, contextual relevance, location-based marketing, which is all that we talk about pretty much. We talk about these new technologies that are emerging. You did this unbelievable job. Chuck Martin told me of this presentation down at Florida, at a media post event, and I have to ask you; I’m going to bring this up. It might open up a wound. Tell me about the state of location accuracy, because I think it’s the giant elephant in the room that nobody’s talking about that maybe it isn’t as accurate or we’re not collecting the right data. Tell me about this.
Eli: I mentioned earlier that location is incredibly [inaudible: 27:03]. It’s nuanced and it’s hard to know how difficult it is until you’re actually in the weeds trying to make it work. I was once at an agency where we were talking about what we were doing and he said, “Location is so hard. I know because one of our big clients is a QSR, [inaudible: 27:18]. When they send out a mailing to their restaurant, 1/3 of that is returned because they have the wrong address.” The franchise itself has the wrong addresses. I believe it because [inaudible: 27:30] how bad some of the data that’s out there is. There’s just so many examples.
An example of it is if you assume that Google has perfect data in Google Maps and you start using that to figure out [inaudible: 27:42] interest are, you’d actually be wrong on mobile advertising because what they’re doing is they’re finding the inference or the drive; that’s the point that they’re giving you, but that’s not actually helpful because what you want is the rooftop point. You want the center point of it if you’re going to make decisions. That’s just one tiny, little example.
When it comes to location [inaudible: 28:01], what we found was when we first started Thinknear, there was very little location information coming with the ad requests. There was probably maybe 5% to 15% that was coming through, and a good chunk of it was [inaudible: 28:14]. As more and more folks started buying location-based inventory and more players emerged, there became this massive incentive for publishers to start [inaudible: 28:23]. They were getting paid more if they [inaudible: 28:24] wanted to and they started passing it. The problem is it’s [inaudible: 28:29] to get location data because you need to have permission from the user; the user has to have their GPS on, the phone has to have a clear line of sight to the GPS satellite. What was happening is they weren’t getting great location all the time and they were basically derive location in other ways that were much less accurate and passing it [inaudible: 28:49]. What ended up happening is the market, the number of location-enabled impressions grew, but the quality of those impressions didn’t grow as quickly. We started seeing a lot of really bad location information.
We did this study. We did this experiment where we basically ran tens of millions of ads and asked users who clicked on our banner if we could we pull their location on the website they went to, and we pulled locations straight from the finest source we could from GPS. We compared the location we got [inaudible: 29:17] to the location that was coming in the ad request. What we found was only 32% of those impressions had location accuracy within 100 meters, which is interesting because what we also found was that 42% of the impressions were off by over 6000 meters, which is crazy. Then we looked again and we saw that 26% of the impressions were off by 10,000 meters. It’s just … what we realized [inaudible: 29:45] as location becomes a bigger and bigger piece of this ecosystem, the opportunity’s growing but also the junk is growing. It’s really important to be very thoughtful about really understanding location and the nuances, and getting it right. Otherwise, it can be bad. If you do it right, it can be incredible. It can be an amazing.
Rob: Who else is talking like this?
Eli: There’s a lot of folks talking about location. Clearly, the market’s grown and there’s a lot of competitors, and there’s some really great competitors, too. We believe that we are the guys who care the most about location accuracy, about making sure that the fundamentals are right, because we’ve been at it for so long. When you combine what Telenav’s done and the access to the hardware-level GPS; we think we are the location experts. We don’t even think it’s close. We are the location experts. There are others that are really good at the data overlays, and there are others who are really good at building partnerships with publishers. When it comes to location expertise, we think we are the best.
Rob: Let me run this by you: I would say it was so shocking, that first of all, that these numbers were like that; 26% were 10,000 meters away.
Eli: That’s 6.1 or 6.2 miles.
Rob: That is crazy. That’s 10 kilometers in Canada; that’s not location. I overlay this with a study that they said how far people would go for discounts. People would travel 60 miles for a 25% or 30% discount. It’s 10 … it’s just, you’re way off. What about these things, these archaic systems, or organizations called the Post Office, US Post Office and Canada Post up here? These guys are pivoting at a great rate. Canada Post is your package delivering system for your e- commerce purchases now. They’re even in parts of my city; they stop door-to-door delivery which is their bread and butter. They own what I think … and the US Post Service; they own what I would think is the single greatest database of locations ever. No other business or no other company can own that kind of data. Is that accurate?
Eli: Yeah. I think they’re sitting on a treasure trove over there.
Rob: Who buys them? Better yet, how do they play into this with what you guys are doing, what Telenav is doing, what location-based ads are doing, and why aren’t they doing these things?
Eli: It’s interesting, because location’s been so important for so long. It’s not the first time that location’s mattered. If you think about direct mailing, all of the different data companies that have emerged to basically help direct marketers and how effective that is. You go back to Sears, that’s how Sears started. I don’t know exactly how they can transition into this new world, but they clearly have incredible assets.
Rob: I think they should be licensing that. If you want data accuracy for location, there is not another one. There’s not another organization in Canada or the United States that has that activity or that accuracy. It’s fascinating. How do you solve these things? A few things around that: What can advertisers, what can companies do to ensure that they’re not getting rooked? Ultimately, you’re saying that 70% are not within what they’ve been promised, if it’s location, or contextual or location accuracy. What can organizations do in order to be able to not be in that 70%?
Eli: I think first, I think it comes down to picking the right partner and really understanding the intricacies of the technologies, how they’re doing things, and really what they’re about. I think business is so hard, it’s truly difficult to [inaudible: 33:46] anything. Finding folks who are really good at the things that are important and the things that you care about I think is really important. Ultimately if I was a brand, what I would ultimately look for is the results. What do conversions look like? What are the actual results of my campaigns, because ultimately, you can fudge the numbers 100 different ways? You can do all sorts of things. If ultimately it’s driving sales, it meets all of the pieces that need to be going [inaudible: 34:13]. That’s what I always focus on; this whole concept of attribution and conversion. It’s been very, very difficult, but it’s actually getting solved now, and I think that will give brands much deeper insight into who’s doing well and who’s not.
Rob: That’s it. You guys ran this partnership with [inaudible: 34:32] to close that loop, to bring attribution to the ads.
Eli: Absolutely. If we are trying to help automakers or car companies drive more people into the lots, then we$ should be able to show them how much lift we’re actually generating, and [inaudible: 34:51] helps us do that. If we’re working with a quick-serve restaurant and they’re trying to drive foot traffic, we need to help them understand.
We really like [inaudible: 34:59] for a bunch of reasons. One is we like the methodology they’re using. We think that they’re a really smart team and they’re doing great things. Even more importantly, they’re an independent third party. That matters so much because we see a lot of our competitors building this in-house and we had the conversation. I just shot it down the day the conversation started because we can’t be providing attribution for our own … that’s just a huge conflict of interest. We love what [inaudible: 35:26] is doing, we love being partners with them, we love using a third party to do it, and we love the results we’re seeing. We feel really proud to talk to them with clients about it because it’s just our results but we had nothing … they’re just arms-length, so it’s great.
Rob: That’s very important. I love that. You have to have your principles as a business, and there it is. You’ve found your line where you aren’t going to cross. This whole concept of attribution is very unique. Does it affect the way that you guys price? Is there a point where you are … it’s not about display, it’s about contributing to the sale and attribution that you guys will price against, or are we too early for that?
Eli: It’s still a little bit early, unfortunately, but we’re definitely getting there. We’ve been experimenting within. We have run a bunch of campaigns where, especially in our search product, because we power a whole bunch of GPS solutions for AT&T navigators, Sprint, Ford, where we will charge on a drive-to basis. If people see the search for something, they see one of the ads and they actually click to start driving there through our own GPS, we control that entire experience.
Rob: That’s cool.
Eli: It’s awesome. On the [inaudible: 36:48] side, [inaudible: 36:49] is really, really strong, but it’s still directed; still not 100% accurate because it’s still panel-based. I think to get a little bit closer to fully closing the loop before we can do that.
Rob: Do you see a day when that happens, where you’re not a … there’s no more advertising, it’s more like there’s a commission on every sale and that’s how you get paid?
Eli: I’d love for that to happen, and if I didn’t draw on the experience of online, I’d say we’re really close. In online, that hasn’t really happened and it’s even easier to close that loop. I think there’s some incentive on behalf of the ad technology companies not to do that because …
Rob: You think?
Eli: We’ll definitely push stuff to get there as soon as we can.
Rob: They’ll drive CPM down to zero before … into the negatives, before they decide to get rid of the ads, because it’s lazy, it’s lazy, lazy, lazy. The stuff that you’re doing, ads and just shines a huge light on how lazy people are around ads. Even large companies that have their marketer or their advertiser running their location-based ads, that just shouldn’t happen. You graduate from college in marketing, that doesn’t make you a location-based marketing expert. I see that all the time, and they wonder why it doesn’t work. I say, “You don’t have the expertise.” It works, but that person can’t do the job. It’s not a fault of that person, it’s the fact that it’s a different specialty.
Eli: It’s incredibly, incredibly difficult, and it’s unfortunately one of those things where the only way to learn is to actually be a part of it, make mistakes, and just learn it. Fortunately, I do think people are starting to get in, they’re starting to get more … and I think things like this show are helping to educate this market, which I think it’s fantastic.
Rob: It’s light education. Yes, we try. That’s the key is that the whole goal here is to bring the story so that … I’m not directing you to do anything, listening or watching. What I’m doing is I’m exposing you to the things that are around and to what companies, I think, they are doing, which is so important That’s why if there’s anything to glean from, it’s go and try stuff. Don’t be ashamed or don’t be afraid to fail. If you do, or if you don’t have the expertise, please go and find somebody who does because you can save yourself a lot of money and a lot of aggravation. All those guys 2 years … I think it’s done. All those guys 2 ago who tried to do this and failed, and have a bitter taste in their mouth and say that ‘I’ll never do it again,’ that’s just wrong for their business, it’s wrong for the industry and I hate to see that. I’ll contribute where I can.
Last set of questions here is just around where this is going. That example that you just said; because of Telenav, you’re in, obviously, nav systems. When somebody clicks on a restaurant or a location and you can actually drive them to that location; you have a clear attribution, you’ve affected that, ultimately. That’s a great example of it. Where else can this industry go? How does the internet of things, does it play into this, beacons and nodes, and all those kind of stuff? How do you work with those things as you go forward in the next year?
Eli: I think ultimately what’s happening is the location targeting was the core of the infrastructure that you needed. Then on top of that, you can start building really cool and interesting technology. Now that we know where someone is and we can start pulling in iBeacon-type [inaudible: 40:41], you’ve got to figure out what’s in very, very close proximity to them, and we can start using other senses on the phone and internet of things to figure out the temperature, the weather, and the precipitation. There’s so much data that now’s available that you can really get to the Holy Grail of marketing, which is targeting you because I know where you are, what you’re doing, what’s happening around you, and we’re going to see that accelerate and be enabled by all of these developments. It’s very exciting.
Rob: Do you go in-store at any point?
Eli: I think that is an incredibly exciting opportunity. I think we’re still a little bit a ways from that, both from a deployment of some of these technologies like iBeacon and also from that deployment to actually coming back full circle and getting past through an ad request, and some other technical issues. We’re definitely moving in that direction. I wouldn’t be surprised if we start seeing some real gains there in the next year.
Rob: What about you? You seem to be pretty happy inside of Telenav, doing what you’re doingand driving. They’ve left you autonomous enough, obviously.
Eli: I know. Telenav’s been an amazing acquire. They’ve given us a lot of flexibility, a lot of autonomy, and a lot of support.
Rob: You’re there for a while.
Eli: I’m loving it.
Rob: You’re not announcing a new startup on this episode.
Eli: [inaudible: 41:57]
Rob: No scoop there? All right. My absolute last question is around the tools that you use. I often … it has nothing to do with your business, but I use a number of applications and I love discovering new applications. I read a ton of books around the industry and I love discovering new books, a ton of websites or resources. Is there anything out there that you see that’s been inspiring to you, that you look at and you think, “That is so cool. I wish I’d done that,” an app that you’re using, a website, or a book that you’ve read in the last little while that has been inspiring to you?
Eli: There are a couple of apps that I find really interesting. I think one, some of the stuff Foursquare is doing recently has been actually really interesting, with their round of push notifications and contextual location. I think they’ve done a really nice job and I think that’s really cool. One of the things I’ve started doing is reading biographies for these titans over the last 100-150 years because [inaudible: 42:54] history repeats itself and it’s so much about just seeing the stuff that matters in all of the turbulence that happens in this world. Right now I’m reading Sam Walton’s biography, and that’s been [inaudible: 43:06].
Rob: Sam Walton. What do you think happens to Foursquare, any thoughts on that? They’ve done some great integrations with eHarmony and they’ve done some great integrations with Yelp now. Certainly, the push notifications, which is, I think, a step in the right direction. They’ve started to monetize data and their database. What do you think happens to those guys? They’ve been in Neverland for a long time.
Eli: The thing about a startup that’s so incredible is that we have opportunities to pivot. The problem with startups is that if you raise too much money, those pivots get harder and harder. I think they’ve done some really cool things. I think their location data set is one of the best out there and [inaudible: 43:51] don’t. I hope they can make it happen. I don’t know exactly where they go, but I really sincerely hope they make it happen.
Rob: They’re pioneers in this space, that’s for sure. I’m sure that they’ve turned down many, many acquisition offers in order to be able to stay the course, but that’s Foursquare. All right, Eli. I’ve taken up enough of your time. We shall not wait 2+ years until the next time we actually convene. Keep me in mind and I will keep you in mind in a couple of quarters as you guys are starting to roll out new product and roll out new services. Any time you have a good case study that demonstrates how what you’re doing is impactful, like the [inaudible: 44:33] partner piece about attribution, or when you’re pushing out new survey results, I’d love to hear from you. I’d love to have you back on to discuss those, if you’re okay with that.
Eli: Absolutely. Thank you, Rob. I vividly remember our conversation 2 1/2 years ago, and I really don’t want it to be another 2 1/2 years. Thank you.
Rob: It shouldn’t be. I’ve been mesmerized behind you. If you’re not watching this, if you’re listening to this, there’s just beautiful sunshine in Los Angeles, and I’m so envious of you. I guess that’s the compromise.
Eli: Exactly. You should come visit us. When I started the company, my wife told me that [inaudible: 45:07] I started in LA, where she’s from. I can’t complain.
Rob: Eli, thank you for your time, man. I really appreciate it.
Eli: Thank you, Rob. I really appreciate it.
Rob: If you want to find out a little bit more about what Eli’s up to, go … please, please, please, go visit ThinkNear.com. I want to thank Eli for coming on. I want to thank you guys for listening, wherever you are, whatever you are doing, please, please, please, please come back again. Thank you for sitting through this one. Again if you made it this far, I do 4 interviews a month. If you consider that this is worth $0.25 … do you think this was worth $0.25? Please go to patreon.com/untether. Sponsor for a buck. You will have my undying love. I am cheap. I come cheap; $12 a year is all that I’m asking for. If you’ve already done that, I appreciate it greatly. We’ll see you next time on untether.tv. Thanks, Eli.
Eli: Thank you.
A thought leader in the mobile advertising space and a vocal proponent of making location the driving factor in differentiating mobile from other digital advertising platforms, Portnoy has written for and been quoted in numerous publications including TechCrunch, Digiday, MediaPost, Street Fight Magazine, iMedia and Forbes. Portnoy is also a frequent industry panelist and focuses on evangelizing the use of intelligent location technologies in the mobile advertising space.
Portnoy co-founded Thinknear as part of TechStars, the elite technology incubator based in New York. In 2012, Portnoy oversaw Telenav’s acquisition and integration of Thinknear, the largest successful exit of any TechStars venture to date. The acquisition gave Thinknear access to more than 14 years of Telenav’s location data—something that no other mobile advertising company can match.
Prior to Thinknear, Eli was part of the senior product management team for Amazon’s digital video group, where he focused on connected devices and subscription products. Eli has been named a “Top Young Entrepreneurs” by Businessweek and ranked 21st “Coolest Young Entrepreneur” list. He earned a BA from the University of Pennsylvania and an MBA from Harvard Business School.