Matthew: Hi, this is Matthew Wise with FounderLY. We empower entrepreneurs to have a voice and share their story with the world, enabling others to learn about building products and starting companies.
It’s with great pleasure today that I’m here with Niel Robertson, who is the founder of Trada. Trada is a crowdsource marketplace for paid search. But that’s it, Niel. We’d love for you to give our audience a brief bio.
Niel: Sure. I think I had entrepreneurship in the blood since I was very young. I just started my first software company when I was 14 years old in high school, back in the day when everybody was getting online with bulletin board systems. I wrote one for the Apple IIe with a business partner I found, actually, through the bulletin boards, spending lots and lots of my parents’ long distance minutes back in the ’80s.
I started the company and sold that and ended up going off to school. Thought that I would end up writing software and stumbled into, essentially, a very early internet software company called NetGenesis on the East coast, which was sort of a central point for a lot of things that happened later on. And started actually working as a software developer, which is where I’m at.
Brad Feld, who now runs the Foundry Group, a very successful venture capital firm, spun my first company out, which took me to Boulder, Colorado, where we found the CEO who wanted to run the business. Built that business, sold it after 17 months, had a great exit. Worked for a couple venture capital firms, Mobius, Fidelity. Started another business, that one was a crater. So, I’ve got the good, I’ve got the bad.
I went and worked for another venture firm, General Catalyst. Then, actually built a business in Iceland, inventing the data center industry there. Did that for about six months, helping them get that off the ground. Ended up coming back to Boulder. Along the way, literally having the idea on a boat in Scotland for Trada. And hunkering down and starting Trada, which has been what I’ve focused on in the last three years. We just had our three year anniversary.
Along the way, I opened a couple restaurants. I’ve angel invested in a bunch of stuff. I helped my friend start three other companies in the last four years which are all funded and running, too, in San Francisco now. So, I just can’t help it. Have ideas, have fun, get stuff going, build teams.
Matthew: What makes Trada unique? Who’s it for and why are you so passionate about it?
Niel: This is a little bit heady, but one of the things that’s really interesting about what has happened about our advertising is, I view it as a very democratizing force, the ability for any business, whether it be a small business or a large business, to essentially compete on a relatively even playing field. It was, I think, a pretty egalitarian and revolutionary thing that happened. Especially around, you know, Google’s AdWords product, which is now, generally speaking, paid search.
I think what has happened is that the ability for people to compete hasn’t gone away, but the complexity required in understanding how to compete has increased as the systems have become more sophisticated and as different advertisers have demanded different things from them.
Also, just the sheer complexity of the different kinds of advertising you can do online has gone up. So, it used to be just paid search. Now it’s paid search and display and Facebook and LinkedIn and Twitter-promoted tweets and you sort of keep going down the list.
And for large companies that are able to invest in marketing departments or hire agencies, that’s a very tenable thing to deal with. But, for a small or medium sized business, a kind of marketing department of one, it’s almost impossible to keep up on a regular basis.
So, the idea for Trada really came from the fact that the challenge of small, medium sized businesses is not are they smart enough, do they understand their business well enough. It’s simply do they have the expertise and the time to commit to essentially have equal footing with other players that are essentially competing against them in all the underlying options.
At the same time, I got very fascinated by the crowdsourcing model and actually thought that those two things mapped together brought a really good solution, as for scale and power solution, to solving the expertise problem. So, rather than trying to make a market and help you find the best paid search expert, we just decided to let the market determine which group of paid search experts could do the best collaborative and competitive work for you.
And that’s what we’ve been really working on for the last three years. A lot of that came out of my own personal experience. As I’ve been building companies, from time to time I’ve run the marketing departments and I got very involved in actually doing a lot of the paid search myself. It’s a completely addictive thing. It’s really fun to do. But, I did spend about four hours out of my day doing it and I realized that there just had to be a better way to do it.
And what we’ve tried to do, and continue to aspire to do every day because our journey’s not over, is leverage this wisdom of the crowds, this wisdom of these paid search experts, to give any business, essentially, an equal advantage to succeed against their own personal goals with performance based advertising. And paid search is just the beginning of that.
Matthew: What are some of the technology and market trends that exist and where do you see things developing in the future for your space?
Niel: Fred Wilson actually gave a really great keynote at the last OMMA Conference. And he talked about his philosophy of investing in businesses. One of the things he said is that on the net, every kind of medium or interaction is getting its own localized form of advertising.
So, Foursquare is inventing a new ad unit. Facebook comes out with new ad units all the time. LinkedIn has it. Twitter’s coming out with promoted tweets. Paid search we’ve known for a long time, but that was an ad unit specific to search. Every day something new comes out. And for those things that become prevalent, you know, you have to learn how to take advantage of them to sort of keep up and have the distribution that you need.
The other thing that’s becoming really important is that the things are commingled now. So, you can’t just do one type of advertising, whether it’s something traditional like buying a billboard or a radio ad or just doing paid search.
For example, Bing integrates Facebook Likes into its search results. So, that signal is used for SEO purposes. That signal gets higher click-through rates on your organic links. And the way that you get those Likes is either by putting a bunch of great content on Facebook or doing Facebook advertising.
Google actually integrates Google+ +1′s into their ads now. So, if you go and you type in “Trada” and you look at the ads that come up on Google, if someone of your friends has actually +1′d Trada, you’ll see that as part of the ad.
So, there’s an inter-connectedness between all these different forms of advertising. And I think that the sort of trends that dominate are the increasing diversity and distribution of mechanisms you need to use, but also how inherently tied together they are. And the fact that one plus one does not equal two, one plus one really equals three for a lot of these mediums. Just more complexity, more complexity, more complexity for small and medium sized business owners, where that’s the last thing they can deal with.
Matthew: What inspired you to start Trada? How did you come across the idea and identify the opportunity?
Niel: So, the first business I built was right when the web was an emerging phenomenon. I remember reading articles in the ‘Boston Globe’ about what’s the Telnet protocol versus the Wavs. If you remember what that is, protocol, etc. And that was kind of the era where everybody was getting online with modems.
The business we built actually measured the performance, the speed of websites, from all over the planet, 127 locations, and gave website owners that external perspective on their business. The reason I say that is that we were on the edge of innovation. It was really interesting to be inventing really a view into this extremely important emerging commerce phenomenon, etc., and be working with customers that were really early on in taking advantage of that.
The second business I built went backwards in time. It actually was building testing and change management software for packaged applications. So, PeopleSoft, SIP, Oracle EBS. While those are big dollar investments and super critical to the businesses that run them, it’s a six month sales cycle, selling to CIOs in a very technically non-innovative arena, even though those companies do innovative things. SIP has, you know, been around for ten years and it doesn’t change that quickly.
I promised myself that I would go find in the next venture that I really devoted my life to, because that’s what you do when you’re an entrepreneur, that I would do something again on the cutting edge. And at the time I thought that was really something in the mobile space or something in the advertising space. I don’t know much about consumer facing applications, so mobile kind of counted itself out. I spent a lot of time working with Seth and Ryan at Foundry to find an interesting play in the advertising space.
The idea for Trada literally came to me when I was on a boat in Scotland. I’m a British citizen. My parents have a house on the West coast of Scotland. My dad decided it would be a great idea to rent a boat and go drive around. There’s a big, unnavigable whirlpool called the Corryvreckan. Like literally 30 foot high, you know, will take you to your death kind of thing and he thought it would be a great idea to go ride the boat around it. But it takes about two hours to get out there and I was thinking about what I wanted to do next. I was staring off into the hills and literally, you hear about those light bulb ideas? I had that, just sort of thinking about advertising and crowdsourcing and the challenge of paid search.
And went home that night, wrote the PowerPoint presentation, had the businesses funded with five employees in an office in three months and five days.
Matthew: Who are your co-founders? How did you meet? What qualities were you looking for?
Niel: So, I don’t actually have any co-founders in this business. I have had co-founders in the other two businesses that I’ve started. Let me sort of maybe make a general statement about my experience with co-founders. I think there’s a direct correlation in the valley between success of businesses and the fact that they generally have two co-founders. Clearly, I’m trying to buck the trend here.
But, one is that the CEO is a very, very product centric CEO. The second is that the co-founder is usually a very operationally focused co-founder. If you take a look at really the successful businesses out here, whether it’s Facebook or Google or Twitter or whatever the case may be, they’ve kind of drossed it around and drossed it around until they’ve gotten that match. Even Jobs and Tim Cook kind of reflect that.
The CEO could be the operational person and the cofounder could be product, i.e., Dick Costolo and Jack Dorsey or something like that, if you wanted to make that pairing. I think that’s very, very important. So, I’ve compensated for not having a co-founder that did that by bringing in really great, talented operational executives into Trada that had a lot of experience. They’ve really filled out the operational sort of part of the puzzle because I prefer to be a very product centric CEO. I think that’s important for a very long time, if not forever, in the life of a company. I’ll let you know. I think Apple has sort of proved that point.
Matthew: Are there any unique metrics or social proof about Trada that you’d like to share with the audience?
Niel: Yeah. We have grown the business pretty dramatically. In reflections of that, we’re almost about 500 customers now. We just crested, paying out about $2 million a year to our optimizers. So, we’re open for business. There are a number of people in the market that basically make the equivalent of a full-time living. And some people, sort of, that’s what they do, is they work for Trada. You know, we’ve got 2,000 optimizers.
We have customers now that spend, and this is really demonstrative of the fact that we’re a marketplace, everything from hundreds of dollars a month to customers that are in the hundreds of thousands of dollars a month. The market has essentially pulled us both up market and down market. We originally focused on sort of the $3,000 to $50,000 a month customer. That’s still definitely where the bulk of our customers are, that’s the amount of money each spend on paid search a month. The market has really pulled us up and down.
We’re almost 100 employees and we’ve done all that on less than $8 million of financing. Which, these days, $8 million of financing is almost nothing.
Matthew: We know founders face unique challenges when they decide to build a company. What was the hardest part about building Trada and how did you overcome this obstacle?
Niel: I don’t think you can ever answer what is the hardest part about building a company because you never have come across the hardest thing you’re going to come across. It always gets more complicated as you go.
You know, I talk to a lot of entrepreneurs that go through different growing pains in their companies. And I think the first few growing pains they go through, which might be, “How do I scale the system?” or “How do I start hiring salespeople?” and it’s a different thing happening. We had 45 salespeople now, where we had three in the beginning, and how do you manage those people and how do you get an office space big enough and get it to run and do all those things?
A lot of young entrepreneurs who are think that they’re going to go through one or two knotholes and then everything’s going to be just simple after that; that’s really not the case. I think you have the same amount of pain constantly in a start-up. Your problems are just bigger and bigger and bigger. I deal with incredible problems all the time. This is just the nature of the business getting bigger and bigger as we go. You just have to put on the armor every day and go and figure it out.
So, I don’t think there are any fundamental problems that we’ve conquered. I think the ongoing, underlying challenge of the business, that I think at turns ends up being the most valuable thing that we are going to have built, is that we’re really trying to build a system to motivate human beings to do the things that our advertisers want them to do and make it easier for them to do that than to try to do anything else.
We’ve invented a whole set of gaming mechanics layers on top of paid search. We experiment a lot with human dynamics and incentive systems, how we match people together. There are all sorts of bits and pieces of it. I think really, at the end of the day, our core IP is learning that, because it’s not something you can draw on a whiteboard, code it up, and you’re done.
In the same way, though, if you look at the progression, for example, of eBay. They didn’t start with a Buy It Now button. They didn’t start with PayPal for escrow. They didn’t start with seller ratings. They learned that all those things were necessary to make the dynamic of the buyer and the seller work. And they constantly still find new edge cases that they need to solve for. As do we as we go forward.
But, the better it gets, the stronger it gets. The more invested people get in engaging the right way, the more powerful the system becomes for everybody involved.