How Acemetrix CEO Peter Daboll grew Acemetrix to $12.5M revenue and 95 customers in 2017.

hello everyone my guest today is peter de bal he has more than 25 years of experience in the science and business of advertising effectiveness he spent his career developing and implementing analytical models and testing systems to measure consumer response to advertising a CEO of asymmetric he's led the company in developing innovative metrics and methods for helping advertisers make better more impactful video creative he was the CEO of bunch Bal chief of insights at Yahoo and president and CEO of comScore media metric he's received numerous industry awards recognizing his leadership and advertising research including a 2011 great mind award from the AR F and is a regular contributor to media outlets and advertising industry associations Peter are you ready to take us to the top I'm ready my gosh that's a mouthful you've seen a lot huh yeah I've been around the block I'll say that it's from old school just basic television all the way through some of the new media and some of the new formats out there has really been an exciting ride so tell us about ace metrics kind of what space are you playing in and how do you make money what's your business model yeah so we when I came out of Yahoo and I look back at the TV world at the time this is like 2010 it really hadn't changed a lot in over a decade TV was still bought and sold the same way advertising was done the same way and so we decided to build a technology company around evaluating ads and the fundamental difference for asymmetric was we wanted to say we want to test every ad in the United States not just a client ad here or there and so our philosophy is you only know if an ads good if you know how good every ad is good because we're all being bombarded with ads every day and so we build a technology solution that basically grabs every ad that airs tests it put it in syndicated database in 24 hours as opposed to the four to six weeks it used to take sold on TV that's on TV and then about two years after that there wasn't much video back then until 2010 a couple years later we launched into digital video so now we cover anything that moves basically from six-second ads right on up to 5 minute long form and how are you technically getting this I mean is it's just a more advanced form of scraping essentially to get these video files exactly and there's a lot of third parties out there that actually collect the video ads and we all get a lot direct ads from clients if they want us to test them before they air so that's another key part of our businesses hey we've got these five versions let's test them and see which one works best before we you know waste all the media money and what are some of the inputs you are looking at to decide if an ad actually does perform so there's some standard metrics on attention and likability those are kind of ones that measure breakthrough so are you gonna pay attention in the first place because now of course we don't have to watch right we can skip through it we can you know watch it on on Hulu we don't need to see the edge so as you're wearing your your Disney shirt and Hulu sounds like we'll soon be part of Disney or at least a steak I know I know I'm telling you they're beefing up aren't they for this for the battle but so we test attention and likability we also measure things like information purchase intent do people remember the brand a lot of time they'll love the ad they forget that the brand is for but then we've also started to collect verbatim comments so comments that people actually talk about the ad and then we mined those for emotion and that's been the most exciting part of really over the last year so is really getting at that emotional driver interest are you updating having to pay these folks to watch these ads to give you the feedback where you're doing it some way organically no we we actually get them to watch it because our view was we want a pure sense of the creative we don't want to see whether they remember seeing an ad last night or that gets all mixed up with how much media weight is high behind it we really want their initial reaction to that creative and so we work with a lot of different sample vendors to actually get people to participate and we have over 500 people per ad geo demographically balanced to the US Census and then they turn those nine simple questions into a into our database so you you have ways to make sure it is a representative cohort exactly exerting and what your business model I mean it appear play SAS or what yeah so it's it's well it's not pure play but it's pretty close I mean we we sell us a subscription so we basically charge clients a subscription and they not only see their ads but they see every ad in their category which is really important for cute competitive benchmarking and and really understanding what your competitors are doing and then we have more of an on-demand service for people that have creative that they want us to test that has an aired yet so so the test ads that everybody gives us and just focusing on this a side give me a general sense of contract size are they paying a grand a month at ten grand a month million a month roughly and then they get access to all of the ads as I said all the ads in their category and and it also depends a little bit you know on how many ads are in the category if you're talking mobile phones you're seeing dozens of ads every that are new every week if you're talking about other categories they may have only two or three creatives a year interesting and are they I mean so how does it compare to other things on the market I mean we mentioned Nielsen a little bit in the in the in the intro do they not already do this no so Nielsen and Millward Brown and some of these other copy testing out that's a really pre automation guys and so our fundamental difference was on the technology and the normative data and all of the competitive assets Nielsen measures more on a recall basis so what you watched if you watched your show last night they'll ask you questions about the show and they'll try to ask you questions about what ads you saw and it's much more about do I remember seeing it that's valuable for certain things but for us that gets tangled up in where the ads running how much media waits behind it not necessarily the creative itself and so we wanted that pure form measure of the creative effect okay that makes interesting sense okay give me some other backstory here when did you launch the company so we launched in 2010 the cool thing now is we have campaigns going all the way back there so you know we were talking with with e-trade and you know e-trade wants to know on how the baby campaign compared to some of their new work well the baby campaign is now five years old but we all remember it right so that's the kind of thing that you know it's really fun when you can able to go back with that much history now we have like largest ad database in the world now measured by what measures by number of ads that have actually been scored interesting interesting um where was your head at in 2010 I mean were you already kind of you know you had an exit your wealthy Pat honey and savings this is just fun for you or is this something like I want to do this and by the way I have to make it work otherwise I'm broken on the street well it's kind of a weird passion of mine but everybody focused on the measurement of ads they ignored the creative and so they measured everything else they measured how much we bought how many eyeballs we hit you know all of those things about delivery but they didn't measure with what and we all knew that in our heart of hearts you know a great ad when you see it and so that was really the passion that we wanted to go after and you know coming out of spending ten years in digital we thought we were kind of uniquely qualified to build this for TV at the time but for video because no one else was doing it everybody else in TV land was doing it kind of the old way okay interesting now have you bootstrap this or of your ice capital no we wait raise capital we you know it's given this was my first merry-go-round we wanted to make sure we had really quality VCS and how much total have you raised we've raised about 20 million okay and what are they kind of when you have conversations with them about valuations and things like that what are the critical a critical kind of business things they're looking at to decide valuation yes the key things obviously are growth you know they want to see subscriber growth in the SAS model and recurring revenue growth which which is good we're actually making money now so so would you think would you think of that say that again we're making money that kind of built as you know that kind of gives you a lot of freedom to to kind of try new things if you keep on the plus side of that the other things are you know really really just looking at gross margins and I think the cool thing about a syndicated database Andy coming from comScore which is the same model you know you collect the data once and you sell it many times the incremental margins are fantastic and so that's another key key part of the business that that's good are you in there kind of 85 90 percent typical SAS gross margin range or do you have kind of human touch on your service the side of the business that drives that down yeah it drives it...