How Jelli CEO Mike Dougherty grew Jelli to $12M revenue and 2.3K customers in 2018.

hello everybody my guest today is mike dougherty he is the chief executive officer and co-founder of jelly the technology platform for the 40 billion global audio advertising market he has 20 years of experience with online and mobile services and corporate development under his leadership the company jelly has developed a cloud platform that transforms audio advertising enabling advertisers and publishers to buy and sell audio advertising programmatically through a suite of demand side and supply side services mike are you ready to take us to the top yeah all right good so audio's hot right google home alexa audio input devices audio listening devices they're all over the place and it's easier than text-based stuff like reading so it's going to maybe expand faster than even the web did back in google was indexing search stuff how are you indexing all this audio data and walk me through the product how are you enabling it folks to programmatically advertise in it well actually jelly was built the concept of this building the largest audio ad platform creating innovation for audio so it can compete in this era where you have google you have facebook uh winning eight out of uh every 10 new dollar coming into advertising audio is this amazing category of billions of people use it globally and as you just mentioned it's going through this sort of very interesting inflection point where voice and the connected home and the connected car and talking to these devices is as you just described shifting digital engagement from your mobile phone or from your desktop to something where voice is the input and audios the output for certain types of services like music some of us subscribe but sometimes we consume free free music free audio and in those cases monetization having a business model for free the free tier is important so we build a platform to help audio advertising flourish in this era so walk me through how it works and actually let me just use this show as an example right so the show does about five million downloads right now i do between two and three million a year and podcast sponsorships the issues i have is i have all this you know i have 800 episodes that are historical where i've already hit the impression counts that the advertisers paid for but i have no way to go back and reuse that inventory without me opening them on audacity and putting in new reads do you solve that problem and how does the tech work we're we're working on solving that problem so this year jelly will get more and more into podcasting um but the way we you know let's look at the last five years what jelly's been solving um if you look at adwords if you're a marketer let's say you work at lyft or grubhub or somewhere you want to get your the word out uh you log into adwords spend potentially millions of dollars you're buying search display other types of advertising from google uh if you're uh gonna buy from facebook you log into facebook advertising again search target and buy social ads or mobile apps from facebook we've built a platform at jelly that allows you to log in and through jelly buy over 2 300 radio stations across the us almost like reserving a table on open table making it really easy to do something that traditionally has been very offline so your radio that's your inventory right now it's all radio for the last four years it's been all radio in 2018 that's changing i'll talk a little bit about that in a second but the reason why we started there was that's where like basically eight out of ten dollars of all audio advertising was sitting that's you know the terrestrial traditional radio business is still very large in the u.s but it's extremely manual it's extremely um i've seen the rate cards they'll they'll make you i mean they'll make you sicker than any you know food is poisoning you've ever had right well i mean it and also if you think about it from someone who wants to buy an ad they don't want to talk to a sales rep they don't want to go through that process when they can just log on adwords and buy at google so you know we wanted to make the process a lot more digital a lot more modern so quantify the success for me i mean what have you processed over the past 12 months in terms of spend through the platform uh we're processing about a hundred million dollars of spend to the platform right now our business model for the company is software so we don't sell the ads uh we are the software that allows all the people who are buying and selling from each other to work together so they they so you don't take a cut we do take a cup but we take a software fee so it's sort of like a processing thing got it so you have a dual business model there's a there's a software licensee like a pure place sas model and there's also a small kind of cut model exactly that's interesting interesting on the broadcaster side for radio stations they typically are part of a staff recurring revenue model okay um with a small percentage on upside what do they pay on average per month we have lots of different deals we generate currently about a million dollars a month from 2 300 radio stations and recurring software that's okay so i mean this is a healthy it's a little healthy little business there on that side yeah and then on the uh let's say you want to log in to buy some ads in that case you're going to pay anywhere from five to fifteen percent depending on who you are um on the processing fee essentially on the basis of how much you're spending so if it's a million dollars or a hundred thousand dollars or whatever you're spending on the audio ads there'll be a processing tech fee that we'll receive for for that i love this model because uh a lot of people look at a marketplace model and beat the hell out of it and say you can't make any money until you have both sides and you have to be matchmaker what you've done is said you know what let's just give by to both sides and actually make them pay on both sides and you have a dual business model on both sides so 2300 radio stations basically paying you a million bucks a month right for you to get access to their inventory and then on the other side for buyers of these placements they're paying you anywhere between you said five and ten percent of total spend right and you know by the way that didn't happen overnight so last i don't know four years has been going from 100 stations to 300 and then we signed in 2015 about three years ago a huge deal with iheart media which is the largest radio group in the us and they brought 800 900 stations to the table we powered their large-scale radio ad exchange with our software and that really solved that chicken the egg issue of a marketplace where you try to get skill on one side of the other how do you do it a lot entrepreneurs try to figure that out sometimes you're given uh advice fake the chicken i love that idea but um fake the chicken chicken that's hustle yeah chicken you know if you got to get drivers on your uber platform just get the driver somehow and because you got the consumers starting but in our case large-scale advert advertisers and ad agencies didn't want to work with us if we didn't have enough scale and yet the broadcasters didn't want to work with us unless there was money and so you did have that chicken in the egg but the chicken in our case was iheart i heart ended up signing a huge deal with us multi-year contract uh they provided that scale on one side of the marketplace and from there all these ad agencies that work with them said you know i want to try this i want to use this this industry needs to move more toward this like digital transaction model more like digital and so uh it sort of started from there and then we went from maybe 1200 radio stations to 2 300 now the scale is huge you log into jelly you're looking to buy some ads you can reach 250 million people a month through our partners what penetration do you have right now how many total radio stations are there there are about six thousand commercial stations in the us 40 50 yeah and we have the big ones too so if you look at like audience scale because not every station's equal um we picked the big ones first so la new york et cetera all the big cities uh so if you look at listener share we probably had about 65 listeners share right now of all listening of radio that you can essentially address if you want to buy an ad upload an ad it gets cash down on our platform all across the country the places you want to buy and run the ad and uh our software takes over from there we run it in an automated fashion when the ad runs on our platform you get a log in your dashboard that says hey my ads running right now in boston so as a marketer you can see your ad running and you can listen to it on the air so for the first time you have that kind of transparency that sort of digital access to real-time data and that's really valuable for a lot of people so when you add up both sides of your marketplace i mean are you what are you doing somewhere right now around 24-ish 25 million per year or a little under that we're doing a little under that but i would say this year we're expecting to do something like that yeah and i'm just doing the math if you do a million a month from 23 radio stations that's obvious or sorry 2 300 that's obviously 12 million there and then if you process 100 million it's unbalanced right now we started with the supply side they they're like more of our revenue okay they are that 12 million is...