Brandzooka Revenue & Funding (2024)

hello everyone my guest today is achilles legrav he is the founder and product leader at brand zuka he develops and scales web services that disrupt and delight in addition to building teams that create and create the space for people to deliver extraordinary results and develop product market fit he writes for publications like ad age dow jones and speaks regularly on subjects ranging from entrepreneurship and ad tech to agile and product development practices for organizations such as stanford and ido all right achilles are you ready to take us to the top absolutely all right so tell me more about brand zucca and also the revenue model is it is an agency or a sas model uh yeah so uh bransouka is a video advertising platform that is for the first time unlocking the crown jewel of advertising and that is the tv screen so we basically marry digital advertising with tv making it possible to run ads in the same way that you would expect to from google in a very targeted way uh and then delivering those ads on primetime tv which we think it's uh uh it's pretty cool okay so hold on hold on hold on so the obvious question right which i'm sure you have an answer for is okay you saw that i visited travelocity on my computer you know i have an upcoming trip to tulum mexico when i'm watching the voice tonight on abc how do you put a tulum ad on my tv is it cookie tracking what's the tracking uh well so in terms of tracking technology um we leverage over 20 dmps these are data management platforms so there are giant companies think of the nsa except not not government funded whose entire job is to keep track of behavioral segments online these are companies like uh oracle datalogics that also help fuel targeting on facebook we're able to uh access all of that data why that seems like a big deal how are you able to access it all uh well dmps actually are marketplaces that sell that data it's gotten programmatic platforms uh and dsps such as principa or the trade desk for example but why isn't abc again i'm using the voice as an example here and i forget what channel it's on but doesn't abc if the voice on abc have its own sales and they're putting the geico commercial there on the other one there how do you override that yeah so let's talk about actually the higher level story here which is really interesting we are living through the largest media transition in history sorry i want to go high level but i want to understand the the detail first what is it that people listening right now how should they think about actually experiencing the tech that you're providing well the way you experience it is by going to bransuica.com it's a free to access platform so you can actually access it with a click sorry i mean if an advertiser is trying to reach them using your tech right so if they're watching the voice tonight on abc you they see a geico commercial and then after that a hot dog commercial and something else you're saying your tech is the biggest breakthrough hasn't happened before you can override essentially those commercials somehow and turn that tv ad space in no no no we're not overwriting anything so there is this huge transition from linear tv to what's called ott over the top tv we're all experiencing this by accessing services such as sling hulu the tv apps on on roku on apple tv on fire tv etc that is a whole different channel that is a digitally fed channel rather than your traditional um linear got it you're playing on those ott channels not the linear stuff that's exactly right got it so when that happens those commercials that you're seeing over ott happen over the programmatic spectrum so unless you're in media or in advertising programmatic might be a new term for you programmatic is basically the marketplace that fuels the buyer seller relationships in advertising we're very used to this on web so when you load a uh when you load cnn.com the ads that you get served are different than the ads that i get served right because they're targeted in a different way we're carrying that thesis and that technology over to the tv screen and what do you do that's unique from everyone else why can't everyone just go buy access from these data players and do the same thing you're doing um so to this point this space has been serviced by enterprise dsps such as rocket fuel app nexus and the trade disc these guys build very high-end pieces pieces of software that allow professional media buyers at large media agencies to transact media in this way no one had gone out and made a self-service platform that literally allowed a coffee shop for five dollars a day to do the same i see so that that is spring suited so you would say the big difference is they're going after the kind of the big enterprise folks they have a big inside sales team you're going after the long tail which is much bigger but it has to be a no touch sale that's exactly right so what we find is um you know when you go out to a large agency like starcom unless you have a quarterly spend that's literally in the millions of dollars there's nothing those media agencies can do for you yeah because we end up seeing very large brands and it's very repetitive uh bransoka gives you a cell service model that allows anybody to in a couple of minutes launch a primetime tv campaign over programmatic um and then or um or internal machine learning and algorithms allow those media buyers to significantly outperform what humans are at agencies are able to uh to achieve got it okay makes good sense i get the product now um tell me more about the business so how are you making money is is it a cut of spend through your platform is it a sas play what's the revenue model yeah so you know uh we uh we spent a lot a lot of time looking as to the positioning of uh of the uh platform from a revenue generation standpoint and what we found is a lot of people have tried to provide self-service advertising platforms for folks and they generally have gotten it wrong you can't monetize the long tail through subscriptions you can't monetize the long tail through flat fees it just does not um it does it does not set the right relationship with the end user and what the end user is trying to achieve which is performance so at bransuica we take an approach that should be readily similar to uh to what folks experience on facebook or adwords it's again a completely free platform to uh to access and use and we monetize off of the targeting features that you engage in the platform so if you go in and you decide to launch a campaign that is targeted very broadly let's say you want to target anyone in in the universe there's no value-added uh features that we are um that we're engaging for that campaign and so for that campaign brand success monetization would be zero dollars if instead as you're creating an audience you decide that you want to find folks who are in the market to buy a house in a specific zip code and have x amount of income as you refine that audience and you engage those targeting features and we start engaging our targeting algorithm to deliver your ad to that specific pool segment then you start seeing uh our monetization go up through our uh targeting charges yeah but just to be clear you have to pay sling and the ott guys some amount on that like how do you how do you win that inventory over all the other guys with the same inventory oh that's a fantastic question so then at that point you're talking about what are the the market dynamics um that allow a yoga teacher to be gm well yeah i want to specifically figure out though where you have to be taking by the way rubber is not a bad thing i just want you to tell me where you're getting the revenue from so if the yoga teacher let's use the real estate example actually what you just talked the real estate agent a specific zip code let's say i'm making this up they pay a hundred bucks uh to run i don't know what that would get you one ad and one market very targeted walk me through where that 100 bucks goes yeah so that 100 bucks is distributed into two costs media cost and that's what it takes right to get the adam sling that is what i pay sling to get that ad on tv right the other cost center well which is what typically which is what typically on a hundred bucks let's say it's 100 of the spend what percent typically so so sling will charge you on a cpm basis right so on a per impression on average uh you're looking at about a penny okay right yep so so to actually serve that inventory you're paying a penny uh to sling depending on how refined or how broad right that hundred dollars will be split also into targeting costs and then what's your markup you have to make money here the targeting cost is the value that branzuka is providing it's our monetization yeah again so achilles if i put 100 bucks through your platform brandzooka.com you'll say okay 80 bucks of that's going to go to sling 20 bucks worth keeping that's our targeting charges what i'm trying to figure out what margin are you taking well it would be that 20. oh you're taking 20 percent i guessed it right yes oh okay i didn't know that you didn't say that no no no but it's not a flat fee right it's 20 percent of whatever it's 20 of whatever spend you put through the platform no it is whatever the percentage of your targeting costs come out so if you apply no targeting if you apply no targeting there's no monetization for branzuka if you apply every bill and whistle to to hyper target an audience that can be 20 30 in targeting cost okay got it so so it's a variable it's a variable it's variable based off how many targeting things but that is all tied back i imagine to the fixed cost that sling charges you for that same amount of targeting is that accurate no because it's a cpm basis the sling only charges us when they place an i i understand sling doesn't care about you know that it's in a market with this household income and in this location sling doesn't care you're making your margin because of that extra data knowledge that you have which you pay to get that data from all these big data providers the dsps that's exactly right i understand now okay very good all right when was the company launched what year so we launched um 2015 very much as a uh as a research project uh the uh the founder and chairman of the company is um alex bogusky who's got a uh distinguished track record in advertising what are you are you founder are you co-founder what are you co-founder okay that's right i'm the uh i'm the i'm the ceo i run day-to-day operations but for all extensive purposes uh this was very much the brainchild of uh of alex that's great so 2015 that would have been what three i guess three years ago so you're you're obviously in early you'd say on the kind of market adoption curve this stuff is just now really i would say taking off um walk me through some of your you know the metrics you care most about for example last year how much volume did you process through your platform would you say um yeah so the uh the uh ramp in terms of growth has been just absolutely stunning for us right so in 2015 uh we started we um we launched uh our public beta in uh late october of that year and i remember we were pretty stoked because we closed that year with about 400 users and did about 40 000 which you know in volume for the talent uh yeah yeah pull that forward what was that in 2016 uh 2016 we scaled the platform to 25 000 users across 110 countries and did a million and a half that's great all right so give me the most give me the most options give me the most update here 2017. well uh our guidance for this year we're shooting for five million in revenue and to top one hundred thousand users um across our crosstalk five million five million in revenue or five million in dollars processed through your system those are different in gross revenue and gross revenue got it yeah yeah right cool so once you want to take out your hard costs to sling and stuff it'll be it depends on what your again your variable kind of targeting fees are but your revenue will be obviously less than five million yeah i know i i i know you're really good at getting data out of people um well what do you mean it's not a skill set yeah i just asked yeah no no absolutely um i'm not gonna share or or uh average average margin but i would say that it is uh many times higher than what you traditionally see in media yeah yeah well you sit on the high side it's 20 or 30 percent so we can assume it's large it's lower than 30 percent but higher than traditional media yep yeah that's fair enough i don't need a more specific range that helps us understand the business um what about funding history have you raised or you're bootstrapped oh no we have uh we have raised uh pretty aggressively so uh to date we have raised uh four and a half million and are in the middle of our uh of closing our series a how much are you how much you want to raise in the series a uh we are raising seven okay and you might be asking what valuation you're aiming um well it's going to be uh our expectation is it's going to be north of 20. okay 20 pre money that's right got it ruining that's great um and i guess again well i'm curious about this space because like i've never used sling or these otd providers i'm not a huge tv watcher like when i binge on something i just open it up in a browser window and go watch shark tank on abc.com versus using a bunch of these providers but do you see anything you'll see you'll see your ads there okay so like we address what about like netflix hulu uh well netflix doesn't serve ads yet um we believe that netflix will need to address uh a monetization tier through advertising at some point but that's up to the good folks at uh at netflix and hulu is just in the process of uh moving from fully native advertising that is you need to call hulu get a service rep and buy inventory that way um i think they're minimum ranges from 50 000 to 100 000 up front to last year they announced embracing uh programmatic and opening themselves up to the channels that were able to serve got it so we expect to be able to address hulu um over the next uh over the next year very good all right achilles let's wrap up hero with the famous five one word answers here number one what's your favorite business book getting to yes num number two is there a ceo you're following or studying right now jeff green off the trade desk he's incredible number four or number three is their favorite online tool you have for building your business i'm sorry you cut out there yeah sure i didn't hear the question the question was do you have a favorite online tool that you like using for building your business that would be trello trello number four how many hours of sleep are you getting every night never enough how much on average um i would say about four to five okay four to five and what's your situation married single kiddos uh i have one perfect five and a half year old who takes my entire weekends and i wouldn't have it any other way that's great married or single uh single that's crazy all in on the company i love it and uh last question here how old are you i am 38. okay and sorry actually i lied last question what do you wish your 28 year old self knew how amazing everything is guys there you have a guy who's wearing a venice t-shirt i would expect nothing other than that answer how amazing everything is you have achilles again joined up with his co-founder back in 2015 taking advantage of kind of a programmatic approach to ott advertising either through sling roku these kinds of platforms maybe soon netflix and hulu as well again adding a data layer to these placements they have fixed costs in the form of placement fees with these guys they make their margin essentially on their targeting capabilities they've raised 4.5 million bucks in capital currently raising another seven uh last year sorry in 2017 sorry in 2016 actually uh reached 25 000 users 1.5 million in volumes going through their platform that's gross revenue achilles thank you so much for taking us to the top hey thanks man