Viant $DSP CEO Tim Vanderhook - ad tech, fraud, and the first-party data revolution

Tim Vanderhook is the co-founder and CEO of Viant Technology (NASDAQ: DSP), a leading advertising technology company that went public in 2021 at a $2.5B valuation. In this episode of World of DaaS, Tim and Auren discuss: The trillion dollar advertising market opportunityWhy linear TV is massively undervaluedThe explosive growth of streaming audioFighting fraud in modern ad tech Looking for more tech, data and venture capital intel? Head to worldofdaas.com for our podcast, newsletter and even...

• 0:02Speaker 00

  Hello, fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdaas.com. That's world of DAS, D-A-A-S, dot com. Hello, fellow data nerds. My guest today is Tim Vanderhook. Tim is the co-founder and CEO of Viant Technology, a public ad tech company with the NASDAQ ticker DSP, and that powers digital advertising through its identity-based platform. Viant even acquired MySpace, if you remember them from News Corp. in 2011, Viant Public in 2021. Tim, welcome to World of DAS. Yeah, thanks for having me, Orin. Great to see you. Excited to chat with you today.

• 0:48Speaker 00

  Oh, super excited to chat. Absolutely. All right. Now, we can get a bit all over the place, since we're both kind of like OGs in ad tech world. You're more of an OG than I am. But let's talk about ad tech fraud. Like, what's the scale of the problem? Ad tech fraud. Well, I mean, the hardest part is just describing what fraud is. You have things that are not necessarily fraud, but certainly low quality, like made-for-advertising websites was a big discussion earlier this year. But let's say those are low quality, not fraud. When I think of fraud, I'm thinking bots. The ads are going to bots and not to humans. You know, if you look at the bigger players like IAS or Double Verify, they'll

• 1:28Speaker 00

  tell you this is a sub-5% problem on any given campaign with roughly reputable publisher partners on there. But there's some new technologies that have come out, like Dr. Augustine Foe, an MIT scientist. He's created Foe Analytics, which is giving new insight into bots. And his numbers are between 25 and 35% on any given ad campaign. So based off of Dr. Foe's analysis, it's a bigger issue than we originally thought. If I'm a scammer and I run like a random site, the Orin Hoffman Movie Review Random Site kind of thing, then yeah, I definitely have like an incentive to create bots, to

• 2:10Speaker 00

  go to my site to pump up the ad impressions. But if you're running ads on ESPN or something... Like is there fraud that could come in there? Yeah, it's actually interesting. When you talk to the experts in this space, what the bots need to look like humans. And so they'll visit advertiser websites, they'll visit publisher websites. Ah, got it. So they visit the UASBN first to look like a human. So then when they go do the fraud somewhere else. Exactly. And then hit their owned and operated inventory. So that's been a big issue. And these guys, it's very cheap to buy a domain name. And really, they used to have to steal content. Now you're seeing they're not even stealing content.

• 2:50Speaker 00

  They're using things like headless browsers and all types of way to try and get through without actually even hosting content and paying for web hosting. So the sophistication level is very, very high when it comes to ad fraud. Interesting. And so for somebody like you that's like in the advertising, because obviously you don't want like your clients' dollars going to waste and stuff like that. So is it just like a cat and mouse game every week of dealing with it? And is everyone in the same boat? And so there's like a collective action? Or is there some people who are benefiting from fraud more than others in the ecosystem? Yeah. Well, when we look at where does the fraud originate? It's hard to put your finger on a person or an organization that's doing it.

• 3:35Speaker 00

  But you can see the bad actors popping up. And so if you take this approach of, hey, we just won't buy ads on this big giant blacklist of domains that are there, the fraudsters have another thousand domains ready to spin up as soon as they shut the other thousand down. So I would say historically, it's been a cat and mouse game. The go forward is now entering the world of artificial intelligence, being able to train it on what fraud looks like in a more real time environment and making a prediction on whether it is or isn't fraud. From the buy side, that's where we see the future going. That's where a lot of our internal efforts is making that same decision right prior to purchase.

• 4:19Speaker 00

  So you don't buy unknowingly a bot and then it comes through and what a waste of money for ads going to bots. So more and more, you're seeing. Artificial intelligence and real time decision making and all the AI can do that very effectively. Obviously, historically, we've had machine learning to kind of do it. But as domains get shut down and pop up every single day and IP addresses rotate between the bad guys. Making that real time decisioning is pretty critical. And there's new companies like Dr. Pho who's come out and he evangelizes all over for you to look at with the bad actors. Working with experts like him as well to improve the way that we go to market has been huge in gaining a leg up in this market.

• 5:03Speaker 00

  Let's say there's a privacy safe person who's going to visit ESPN.com or something like that. And they're a legitimate person, but they're going in Safari and they're somewhat privacy centric. And then separately, there's a bot that's going to ESPN. I'm like, how would you know one from the other? Like, how would you know one's a bot versus one's a person? One of the easiest ways is to figure out bots run on servers inside of data centers. And so you're trying to identify what does a server look like versus say my handheld iPhone or my MacBook I operate on. And a lot of things that you'll see too is the number of cores available on the machine.

• 5:43Speaker 00

  Where a server that's being used as a bot will have, let's call it 60 cores or more that are actually inside of that server. Oh, and you could see that when that request comes in. Oh, interesting. Okay. You can look at the device itself and what it's capable of handling. And when you see very high powered devices like a server and a data center, that's usually sign number one. Cause I would assume it could be buying like gazillion iPhones and running it off through there too. On social media and China where they've got them all on the wall. And those are farms. Those are effectively farms and those are hard to detect as well. There you've got to look at other things like network signals, how are they accessing the internet, where it's coming from?

• 6:25Speaker 00

  So there's a million different data points that you could analyze at any given time. And the truth is it's a hard problem to solve. But I think from our side, since we represent the buyers of the advertising only. We're taking a much more aggressive stance in bringing commercial products to market where we're not going to buy everything that we bought. Historically, because we now know more. Okay, you want to have a 99% belief that it's not a bot before you buy or something like that. So therefore you will like not buy good users. Exactly, and you're using artificial intelligence to create predictions kind of in real time on the fly. And as the bad guys change, hopefully the AI detects it and can change very, very quickly as well.

• 7:08Speaker 00

  Because like you said, the cat and mouse game, it's a real game. There's new approaches to it. And when you're the buyer of the ad, you'll find out over time, but then what do we do different today than we used to do before? And that's real time decisioning. Now, on the data front, what kinds of data are advertisers most interested in right now? Yeah, I mean broadly speaking, you're seeing third-party data get replaced with first-party data. And I think that's a generic term, like the word data is generic, so we got to break it down a little bit. CRM data, their customer data is being used tremendously. And everyone looks at the big platforms like Amazon and say, what has that company done so brilliantly?

• 7:48Speaker 00

  And it's leveraging transactional data and advertising has been probably the broadest move into first-party data. But it's your CRM data, you want to put that into action. And what is that replacing? It's replacing retargeting. It's like a custom audience or something like that. Very much like custom audience. And I do think more and more you're seeing third-party data providers starting to offer data enrichment. And so if the old way was third-party data marketplaces, and now I'm Hulu and I know who the subscriber is, but I don't know anything about them, the gender, the income level, the education level, whatever it may be.

• 8:26Speaker 00

  So I do think for third-party data, they're going to be enriching first-party data of advertisers and publishers on a go-forward basis. So more and more, everyone used to activate on third-party data. Now it's, I've got to match Snowflake or whoever their platform is that they're using. Their customer data, they want to activate it in advertising. And it's really two use cases. The old way, or when you were still heavy in ad tech, it was all about targeted. Advertising, you know, was finding that exact audience segment. Now that data is used equally or more for measurement purposes. Just to answer the question, what am I getting for my money?

• 9:07Speaker 00

  In a world of cookies or single devices or very few devices where consumers would browse and buy on the same device. In an omni-channel, omni-device world, it's very hard for marketers to understand what they're getting for their money. And so first-party data, the first use case that we talk to customers about is using it in measurement of advertising. Let's first understand what we're getting. Got it. So did this person then later on engage with your brand? And did they have a higher propensity to engage with your brand or something like that? Exactly. So I would say measurement's been the big area where first-party data and understanding or enriching that data to get more insights. Kind of the original principles, just a different way in order.

• 9:52Speaker 00

  Back in like the day, pre-internet, when like Crest wanted to do measurement of like a TV campaign or something. They would run like a specific TV campaign in Phoenix and not run it in Tucson or something. And then they would try to see the lift, if that lift happened in Phoenix, but that would take a long time, could take like many, many months later. So obviously kind of an expensive thing to run before you can kind of learn. Is that the type of thing that's like still going on today? Oh, absolutely. Geographic holdouts is very, very common. I would say in measurement, the most exciting part or the report that everyone looks at is measuring incrementality.

• 10:32Speaker 00

  If you're Coca-Cola or Ford, there is a certain percentage of customers that are going to buy your product this week because they buy it every week. So the question, and I think most marketers, digital advertising did a good job at data-driven decisioning and measuring what you're getting and trying to figure out how to attribute what drove it. But that no longer is the reality today. We used to log into DoubleClick and you'd be able to attribute 90-plus percent of the conversions to who drove it. Now when marketers log in. A double click, they can attribute maybe thirty percent or just chrome within that ecosystem from a last touch attribution. So that has created the opening for all new ways of measurement.

• 11:14Speaker 00

  And you're right, geographic holdouts, I think panel based methodologies are going to come back in the near term. And you're always going to have a bucket that's addressable and measurable. And I think there's always going to be a bucket that's not addressable and therefore less measurable, but still really, really important. And we even acquired Iris, which provides an ID. It's a content ID. And we think Iris, the potential to move to still do bidding, buying and targeting and measurement against a content ID in non-addressable environments. So even back in the day, you would buy a specific magazine or you'd buy a specific TV show or something like that because of the types of audience that that would attract.

• 11:57Speaker 00

  Absolutely. So there's contextual relevance of the content, like I'm Bass Pro Shops. And if I target Western sports like bull riding, fly fishing, you're going to sell more fishing lines than if you're on Bloomberg. So there's that contextual relevance there, but I think what Iris provides from a universal ID. So we make it available to everyone in the ecosystem. Think of it as the MPEG file loaded in the content management system that's going to be consumed or viewed. That MPEG file gets put into a number. And therefore I don't know what you're watching, but I know when Bass Pro Shops targets that number, the conversion rate is pretty similar, whether it's that video was watched through Hulu or Vizio

• 12:41Speaker 00

  or LG, because content comes out in many different apps as well. So it really is a global video ID, regardless of the app where it's consumed, that as a marketer, you can buy it and bid against it and have predictable returns. And we think that's going to be a very privacy friendly, unique approach to bidding and buying, but not around addressable targeting. Now, people have been predicting like the decline of linear TV advertising for a very long time. And it seems like just in the last couple of years, have we actually been really seeing that decline happen very, very, very fast on the linear TV? What's your prediction on like the linear TV? World and then where those dollars go.

• 13:26Speaker 00

  Well, linear TV is such a unique world. I think it ends in a huge cataclysmic explosion. Because what you have is content owners license their content. And then to license the content, you have to guarantee a number of subscribers. If you're an MVPD like DirecTV. And so your content costs go up as the lower subscribers you have. And you're not going to be able to meet the needs of writing the check for the content to get it in. To offer that MVPD service. If the declines on the consumer side, switching to digital versions of MVPDs like Fubo or even DirecTV Stream, which is the streaming version. So I do think it ends abruptly.

• 14:10Speaker 00

  Given those dynamics of the way you have to commit content costs and subscribers. So to me, I think it probably has five years or less. Before it's now all digital versions of MVPDs. But I do think MVPDs serve a place in packaging and bundling content. And these content channels, they somehow still have a premium. They still command a premium like. My YouTube TV bill is like eighty-five bucks a month or something like that. So I pay over a thousand dollars a year. To basically watch football. And I've got the football package on top of that, which is probably a few hundred bucks a year or something. I never do anything else on like, quote unquote, live TV. Is it just sports that can command that or for some reason, I assume like.

• 14:53Speaker 00

  Even though I never watch CNN, I assume CNN is still commanding something on YouTube TV. Oh, I mean, definitely. Live sports equals the NFL. Just this last year, out of the top one hundred shows. By viewership and mass viewership, ninety-four out of the hundred were NFL games. What? Wait, ninety-four? So even more than like the NBA Finals or whatever. And the one below that, I believe, was the. College football championships were in there. So in America, football is the dominant thing. By far dominant. When I think of the opportunity, even though the viewership of the content is concentrated to the NFL, that just means the NFL is worth a lot of money because everybody's mass appeal.

• 15:35Speaker 00

  When I think of that space and the opportunity, my brother Chris and I are also the founders of Zumo, spelled with an X, now owned by Comcast. And we always believe you had the traditional coaxial or satellite cable delivering the content. IP-enabled content streaming created much more flexibility, interactivity, the ability to change what is just flat video content. And I still, to this day, believe that Zumo, even though I'm biased and we're the founders of it, is best positioned with Comcast's ownership because you buy your internet access from them. They're giving you a TV that will auto log you into Netflix, Max, all your services that are out there, all through a single bill.

• 16:19Speaker 00

  And I think Zumo is by far, cable companies are best positioned to win this because they've laid that wire to your home and can offer such outstanding service levels. As well as frictionless in getting from one app into the other, it could be a lot less friction. What is going to happen to these like legacy media companies like CNN's that are getting one to two bucks a month per person for cable and stuff like that? Are these guys going to all go out of business? Are they going to change their business model to like a special subscription where like a small number of people pay 20 bucks a month for it? Or how do you think things are going to change? Yeah, I mean, number one, just look at the most successful companies in the space.

• 17:02Speaker 00

  And I think that's where you look at someone like a Netflix who's pure subscription. Just the fact that everyone's getting into ads, I wrote a LinkedIn post about this like a year and a half ago when. They did the announcement or whenever it was. The available average revenue per user, the ARPU associated with advertising on a monthly or quarterly basis is so substantial, you can almost double your revenue. If you look at the old traditional way. We certainly can double your profit. Profit even more, yeah. Because I believe Amazon makes more money from profit off of the ads than they do from the retail business. It's a digital good, so you really have some labor associated. And that's that. But when you really look at the ARPU for an organization coming from

• 17:47Speaker 00

  ads, it's too great to ignore, which is why Netflix came in. The other reason is if you want to sign live sports to carry it on Netflix or Prime Video, live sports equals ads. You must have ads. There's time breaks. There's all this stuff. So they have to build all that infrastructure and get it all in place. And I think you're seeing that with the Tyson fight that aired on Netflix. These are dry runs to getting more live sports content across their app. Well, we start to see like better ads that are like within the live sport. Obviously, you always see it on the billboards when you're watching the sport or on the people's jerseys and stuff like that, like they already have kind of ads built in.

• 18:28Speaker 00

  But we see more targeted ads where Tim and Orin will see slightly different ads when they're watching the same game. Yeah, no, everyone's going to see different ads. I mean, the principles of digital advertising, buying the users who are likely to buy your product or service, that's going to continue. I think the exciting innovation, the things that we think about in the future is how do you make an ad like for Bank of America in context to a scene that ended on a beach? You're going to have problems like that where the ads I do think will be modified on the fly, using artificial intelligence to be placed in context of that episode that you're watching. I got it. So it's kind of a continuation. To a degree, yeah.

• 19:14Speaker 00

  Or just rather than I'm at a veterinary clinic, maybe I need to be in a jungle or maybe I need to be on a beach. How do you make that advertiser be more in context of the video versus the old way of I want to target my ads at the context category of finance users or whatever? So I think in making the ad relevant to who that audience is behind the content, I think there's big opportunity to improve the results. Of your ad campaign with that type of approach. Yeah, like I watched the Tyson fight on Netflix and on the ropes had Experian ads, but they were a little like painted on the ropes. So like every single person who watched the Tyson fight,

• 19:54Speaker 00

  whether they were in the arena or they're watching on TV like me, all saw the exact same Experian ad. But I can imagine in a scenario in the future, those ropes are just green and maybe in person you'll all see the same thing. But outside of it, you'll see something if you're watching on TV, everyone will see something different. Yeah, I mean Omar, the old Blue Kai founder, if you look at his new business Rembrandt, very much virtual product placement. So yeah, when we looked at the business at Zumo, it was how much ARPU are we getting? That's number one, but how much time and consumption of the video content is there? The problem with the current setup is someone watches, let's say, an hour worth of content and you have ad pod breaks.

• 20:38Speaker 00

  And we know that those pod breaks create friction and users leave. They'll change a channel, whatever it be. So I think the future model, if I were on that side, which we're not anymore, is you need to monetize every second that a user is consuming your content. Virtual product placement, on-screen banners, things like that. I think you're going to see more experimentation to drive advertising revenue from the moment someone tunes in versus today's setup, which is the old way of a minute and a half or two-minute pod break every seven minutes, which creates a lot of friction. The way people consume content, especially like kind of live, is so different where they may have like a screen on their phone

• 21:20Speaker 00

  at the same time that they're watching something. My son, who's kind of like crazy, he watches four football games at once. So he's got the four things all on the same screen, on the big screen. He watches it at once and then he just kind of like moves around on the sound to the one. Three of them have commercials. He goes to the other one that doesn't have commercials or the one that looks, oh, they're in the red zone. He moves to the sound of the one in the red zone and somehow because he's younger, he can like bring it all in at one. And I see like more and more. People are gonna kind of multi-watch stuff. Oh, definitely. I mean, you see the generational changes. Multitasking, just in general, I think our generation is pretty good at multitasking.

• 22:01Speaker 00

  We're more used to having something on TV and consuming through our phone. Kids are that on steroids times 10. I mean, even if you look at YouTube videos now, you've got two videos playing at once. I asked my son the other day, how are you paying attention to what's going on? And he explained, no, he's making fun of this and it's a point of view video, so you need both. But their ability to ingest information is like no generation we've seen. So it's gonna be very interesting to see how it changes. Yeah, it's unbelievable. Now, on the data front, I assume like this third-party data is like gonna become smaller and smaller part of the ecosystem? Or have we kind of bought them and it's not gonna get any smaller?

• 22:44Speaker 00

  I think cookie deletion already hurt third-party data providers. There's chunks of the market that you couldn't activate spend, therefore you had. Yeah, you safari and. Yeah, so I think a lot of the pain has already been felt that's there. But certainly you're seeing a breath of fresh air from data companies getting into the enrichment game and trying to work with other parties who want to learn more about their audiences. And it's just rather than activating at the real-time ad moment, they're gonna be integrating their data to tell you more about your customers for you to learn new insights from. So I still think there's opportunity. I think they've felt a lot of pain that's out there.

• 23:26Speaker 00

  But I think your point is well taken that it's probably a first-party world first and third-party world second moving forward. But I see room for everybody and that maybe market share changes a little bit. And there's this joke in the tech world that everyone becomes an ad network. And that joke seems like more and more real every day. Like every company, you talked about Netflix, which is maybe more obvious. But it's like everybody, Walmart has a massive multi-billion dollar ad network. And it just seems like everyone is becoming an ad network. As everyone becomes an ad network. Does it mean like the ad tech companies, whether it be Vine or all these other ad tech companies are going to become like more important because they can't like all do it themselves and need to power? Or how do you think like dynamics change over time?

• 24:11Speaker 00

  We serve advertisers, so I think about solving their problems a lot. And if you think about an advertiser that's very large, pick anyone, Procter and Gamble, Nike, McDonald's, they're going to work with everybody. They're going to work with Google, Meta, TikTok, they're going to be all over the place. Their big need is understanding what they get for their money from all that ad money being in market simultaneously. And that's a big challenge to solve and one that data and analytics can really bring lots of insight to tell you how to spend that smarter. Or at least that's the long-term goal and the ambition. Everyone else, there's buy side and we break down the world when we talk to investors or customers. There's really only four DSPs.

• 24:55Speaker 00

  There's a lot of people who say I'm a DSP, but self-service where you could log in with a username and password and self-direct all your activities. And by size, there are Google, Trade Desk, Yahoo, still a very large ad tech assets and Vine. Everyone else is just a sell-side pretender that they're a DSP and they're there to sell you more of the advertising either off their property or not. And that's Google's point of view, it's Yahoo's point of view. So there's really very few buy-side only DSPs. And on the buy-side, everyone else is a publisher and we're going to work with you to some degree. The question is, how do you measure and attribute what drove the sale? And there is no perfect science to it if you're Coca-Cola or McDonald's.

• 25:40Speaker 00

  You have to make assumptions and make bold claims, but letting data lead you that way. Yeah, yeah, that makes sense. You mentioned Trade Desk, like, why have they been so successful? Like, why is that company done so well? I mean, we both know CEO, we know other people work there. They're obviously super smart, talented people, they've run a great playbook, but like, they're just so much bigger than everybody else. Like, what did they do right? Yeah, I mean, a lot of things as an entrepreneur. You know this are the right move at the right time. And I think the trade desk made the right moves at the right time. Number one, starting with their name, which was the trade desk, which is to power and claim allegiance to agency trading desks.

• 26:25Speaker 00

  That's where the name comes from. And at the time, agency trading desks were trying to get created and ad networks were making a lot of money. We ran an ad network back then and it was very successful. And the DSP became a way to partner with the agencies and drive a lot of spend. Their anti-Google positioning also played really, really nicely. I think was really strategic that in any world, Google has competitors. So in theory, you can win 20% of the customers in the market by being anti-Google. So I do think both of those combinations of things were the right moves at the right time. But I don't think those same moves, if executed today, would create another trade desk. Yeah, for sure.

• 27:08Speaker 00

  In today's world, you've got to out innovate, use new technology that's coming to market, be first to market, be the thought leader behind it, and then innovate faster than everybody. And that's the hardest part of ad tech, just in the long run. We've been in this for two and a half decades now. In the long run, you can never stop innovating when it comes to ad tech, because there's always someone else out there who's been thinking about a problem for a long time and can execute really, really well. So to me, the go-to-market today is very, very different. And it really stems with the use of artificial intelligence on top of this industry that is the big data industry.

• 27:49Speaker 00

  Programmatic advertising deals in more volume of data than most other industries out there. So it's like a great blend. The business is so much bigger than even like me, who I was in the business for so long. But if you had asked me 10 years ago, like, could you build a DSP, which is really just like a piece of the business that has a $60 billion market cap? I would have said, no way, like, that's impossible. Like, you're smoking something. I wouldn't even like thought it was possible, let alone like that. So it's just crazy that these things are happening. Like, this market is so much bigger. That I think anybody has understanding of. I mean, when you hear things like it's a $1 trillion market, we're so used to big numbers.

• 28:32Speaker 00

  But $1 trillion being spent every year buying ads is crazy. That's super crazy. I mean, that is a huge industry when you look out across and I think we get lost because we're used to big numbers just in society. You get lost into how big of an opportunity that is because we've seen advertising built Google is generating all the profits at Amazon. We know Apple's lurking and they're coming and their app store, their ads for app stores driving huge increases in profitability. So just an absolutely massive market and what a great ecosystem to participate in to try and drive growth. No, the agencies are really interesting and they're your partner, they're your customer.

• 29:16Speaker 00

  Now we're seeing two of the very largest agencies that have decided to merge together. Like, how do you think the agency market is going to change over the next few years? Yeah, what you have is a very mature industry that's a service industry. So it's heavy people costs that are there. I think in the future, the answer is obvious. You need productivity gains and the way you get those is you invest in technology through build, buy, partner, whatever. They'll go through that whole analysis on their own, but that's an industry that needs substantial productivity gains to continue and be, I guess, more compelling. But they've tried like over the years, like every few years, they buy some sort of tech company and either the antibodies for whatever reason doesn't work.

• 30:00Speaker 00

  And they go back to that kind of more service oriented thing. And I do think that's going to change because it's how they get paid by customers. The traditional ad agency holding model is one of temporary staffing. If you're GM, you need 1,000 people to run your advertising account. They hire them, they fill the roles. I think where you're starting to see lots of discussion is advertisers talking to agencies about producing outcomes with the ad budget. And in a world of outcomes, you're able to change the way the compensation model goes. So I do think the compensation model of the historical agency model has held them back from really investing in technology. But you're seeing the early discussions have now moved to outcomes. We'll see if that's followed by. Action by the actual advertisers.

• 30:45Speaker 00

  If you had to kind of like think about generally the winners and losers over the next decade, are there like non-obvious kind of categories that you would be thinking about? When I think of winners and losers, it's really about price dislocation right now. And I think when I look at where is the carnage, the carnage is in linear television right now. I do think out of home historically has gotten, had a lot of carnage. And billboards in strategic locations work really well in terms of notifying the general consumers about whatever it is, the product or stuff. So I think there's been the most carnage in linear TV. And I think there's probably a lot of value to be had there, given where they're all trading right now.

• 31:29Speaker 00

  And so you're seeing a lot of M and A trying to take advantage of that potential future value creation. That being said, if you were linear only with no streaming assets, you're in a real tough spot. I'm talking about just simply transitioning that content to a streaming platform. There's a lot of uncertainty in that market, so values are down. And I bet a whole bunch of people are going to make a whole bunch of money by picking up linear TV assets that are probably undervalued right now for the entertainment value they deliver. This idea of like a network or a channel, you and I grew up and we would go to like Channel Seven, ABC, or something like that. Or even when there's cable, maybe we didn't exactly know the channel, but we'd go to MTV

• 32:12Speaker 00

  and we'd turn it on and we'd watch MTV or something like that. Like, all of that has gone away in the last 10 years. I mean, there's still some people who are like over 60 that may do that. Or maybe some people still like they're news junkies and they still go to like these news channels and they watch them. But even those are like really starting to go down pretty dramatically. Like, you still may have an allegiance to a show or something, but like, I don't know that my kids know who produced it, where they produced. Like, they might know they can find it on Netflix versus on Disney Plus versus Hulu or something. Sometimes I don't even know that. I'll just like go to the Apple TV and put it in and then I'll like tell them where it is. Exactly. I mean, the linear TV world. World was asking too much of consumers.

• 32:55Speaker 00

  You need to show up in front of a TV at this time if you want to watch this show. Yeah, it's crazy. In today's world, no one can do that. So it makes sense. Everything's on demand and the ability to pull it down. And what does that do? It grows consumption because I get to watch that show on my time when I actually have the time versus that set timeframe. So I do think it just grows the overall category of consumption by having more flexibility on how you can access that content. And that's going to grow the overall category and pie for CTV. Now, like podcasting is growing and more and more podcasts have ads, but they have like old school ads where like the Lex Freeman ad is for everybody who listens to Lex Freeman.

• 33:37Speaker 00

  And then almost like it's him reading a script almost like it's really old school. It's like really going back to like the 50s of like him reading a script about why he likes this particular shampoo or something and it goes out to everybody. Now, I know that the amount of dollars spent on podcast ads is really tiny today, but how do you see something like that evolving? Oh, I mean, streaming audio over the last year was growing, probably the fastest grower of all channels. We said on our last earnings call, it now represents 10% of ad spend across the platform. Wait, what? Streaming audio is 10% of ads? Holy, I had no idea. It's that high. Yep. And it's growing gangbusters. And so what's great about podcasts, there's similarities and differences.

• 34:22Speaker 00

  The similarities is you have high attention by consumers when they're listening to podcasts or watching. As opposed to like music where it's like in the background. Social media, you might get me for a split second. Yeah, it's a good point. Looking at different stuff. So it's very, very high attention relative to pricing, relative to CTV. Because it's more audio, it's usually cheaper, but you have the same level of consumer attention. And so we see audio driving huge contributions to incremental conversions by advertisers who are measuring it. And so I think streaming audio could get as high as like 25% of the spend of a marketer. I think TV, if you look at the historical, it's always been around half.

• 35:06Speaker 00

  So combined, that's 75% of marketers budgets. And it's because you have such high engagement by consumers, the impact of the advertising potential relative to a banner ad, relative to. A billboard on the side of the freeway. Yeah, it's really interesting. Now, a few questions about being a public company. First of all, like your ticker is DSP, which I love. It's just great branding. And a few other guys did it, like Salesforce did that with CRM. I know Nextdoor did that with Kind, P I N D. But it's pretty rare for companies to like brand their ticker. Like, why did you do that? And why don't more companies do that? Yeah. Well, our biggest issue when we went public, we were trying to solve a lack of awareness

• 35:48Speaker 00

  in the industry problem. There's also balance sheet and all other reasons to go public. Because you could have been like Viant, like V I N T, or I don't know, would have been something like that. V N T or something. Basically, no one knew who Viant was. Everyone knows what a DSP is. So we wanted to put the association together and we were clearly thrilled when we looked up the ticker and it was available. It felt right from the very beginning to associate what are we? We're a DSP. Let's put what we are as the ticker to drive the association to investors, customers, partners. So everyone understands we are a DSP. And I think it's a pretty clear sign to our customers that we're going to be buy side only for the long tenure of our.

• 36:32Speaker 00

  Right, because it's like hard to change your ticker. Yeah, yeah. Exactly. Why do more people don't do that? Because like you could imagine like most people, it's like some sort of shortened version of their name or something. Yeah. I mean, I think if you're a company with huge awareness, the ticker of your name makes a lot of sense. But I think if you're a company, a B to B company like Viant, that's a small cap, it's very hard to stand out and like getting to being a public company. Few amounts of companies are public companies, but even amongst the public companies, very small amounts of companies are who investors are keyed off of. So even when you get public, it's like there's another door in the private club you just got in that you've got to get through as well. So it's a never ending mirage that we're forced to deal with as well.

• 37:17Speaker 00

  It's just driving awareness that, hey, we even exist. Just look up the ticker, then they'll analyze the financial performance. But it's hard being a public company, even once you get there. We've been public now since. 2021 and it still feels like every other meeting I ask people, hey, do you know who we are? And they say, no, never heard of you. And it's like, oh, 25 years in, no one's heard of us. So yeah, marketing matters a lot. And that ticker symbol, the association, we try and be really thoughtful when we came to market. And it felt right from the very beginning. So we just rolled with it. Now, being public in some ways gives you more credibility. So I assume if you're like, working with customers or they have more of a sense you're going to be around.

• 38:00Speaker 00

  And is that part of the reason that you went public? It's just like the credibility that it gives you? Absolutely. And as well as having public financials goes a long, long way when people are evaluating partners. And so like, we have a really strong balance sheet, $200 million of cash, no debt. We generate cash flow every quarter, even profitable, all the great aspects of a great company. But now it's public for everyone to see. God, because if you just told customers that before, they wouldn't know that if you're telling them the truth. But now it's like, it's there. It's like, anyone can go see and look it up on Yahoo Finance or something. Absolutely. And that's a great part of being public. There are major negatives to being public.

• 38:42Speaker 00

  Like when our stock price went from post IPO high of 69 down to 330 or whatever it is, the same amount of cash we had. That too is public. So it is an adjustment in running it, but after three years now, and we've already hit rock bottom. Once you're there, you're like, well, it can't get worse for the most part. What is it like? Cause like, I'm sure there are weeks where your valuation changes by 10 to 20%. Nothing in the business has changed. And sometimes it's 10 or 20% up, it might be 10 or 20% down. And it's just like the market doing whatever the market does. Like, how do you deal with either the super highs or the super lows of your employees? During those times.

• 39:24Speaker 00

  Yeah, it's really hard. The great part is on the upswing, it's great because then people are firing on all cylinders.

• 39:31Speaker 00

  Yeah. Woo hoo. Yeah. There's no detractors internally, everyone. It's kumbaya. It is certainly hard to, one thing when the stock price is sliding, we had a tough time recruiting new executives into the org because the one thing that Wall Street does is it is validating to the public. They either validate you a winner or validate you a loser. And so when that volatility happens in stock price, you've got to sell really, really hard at why this is a great company and why you feel good. You're running twice as fast just to stay in place. So that's certainly a big part, but if I back up and I say, is it better or worse

• 40:11Speaker 00

  to be a public company, the positives far outweigh the negatives in running a public company. The credibility you mentioned, access to capital, as soon as you become a public company, you have cheaper access to capital than almost every private company. Do you need access to like, you need debt? We don't, but let's say if you're a public company and you want to do a large acquisition, something. Okay. So if you want to acquire something and you want to quickly get $200 million of debt or something. In 48 hours, you can have it all debt, equity, what's the right structure? Obviously things have to make sense and logical, but access to the capital markets, both equity and debt is a tremendous advantage. And the biggest advantage that big tech has over everyone, they can raise money with the cheapest cost of capital.

• 40:56Speaker 00

  Therefore they can do any industry that they want aggressively. But certainly the positives of being a public company, I encourage everyone, if you're running a company and you have the ability to get public, you should do it. And you even think like if your market cap is $250 million, like you should go public type of thing? Or is there some sort of threshold? There probably is a threshold around 500 million. I saw investor interest when we were below 500 million, very low. Hard to fill a room when you're giving presentations at investor conferences, your meetings get real thin. You got a lot of time for lunch. Right, because they can't own more than 9.9%, so all of a sudden, yeah. And what are your daily trading volumes? If I get in and I need to get out, can I get out?

• 41:41Speaker 00

  There's all these very logical concerns, but I think around 500 million to a billion, there is a great set of investors that focus on small, mid-cap companies that they're deploying money against. And if you are successful, you're going to naturally get the big investors over the course of time when your market cap allows them to get there. So to me, I mean, after having done it, run, I've raised VC, I've raised private equity, we've raised 150 million of debt. We've taken a company public and access public equity. Private capital raises are 10 times harder than public capital raises because you've got so many more credibility questions. Who's your auditor? Tell me more about you. I got to do customer checks.

• 42:26Speaker 00

  When that public equity side, if you have the ability to cross that chasm, you really should because it also helps you become a better run company as well. You have quarterly board meetings, you've got to have the materials done, and it really makes you a machine because of the regulatory framework. You've got to be to the right stage, you can't be too small, but if you can do it. We're only today, post-Iris acquisition, we're 380 employees. So we're not a huge company by employee size, but we're a billion three market cap and have a great balance sheet because the public markets enabled us to get public. And I would say, what a great setup if you're running a company to have a great balance sheet, no debt, access to investors overnight, almost if you need to.

• 43:10Speaker 00

  I mean, those are great things to have on SpeedDoll. By the way, the market cap to employee ratio is quite high. Oh, yeah. Oh, yeah. Once you do pull out of the rut, because we fell in a deep, dark hole from 4.4 billion market cap to like 300 million market cap, and we had almost the same amount of cash. So it was effectively zero. I mean, at one point, I told investors, if you do the math, we have 350 cents per share of cash. The stock's trading at 335. If you buy the share... It's effectively free. Like if that's not convincing enough, you just don't have a sell. So the whole bunch of people got into that time and just made boatloads in pulling out of it.

• 43:52Speaker 00

  But when you crawl out of that hole, the team that you had in place does feel invincible. And I think that's what creates the next potential trade desk is you go to war and you win, and you come out of it stronger, stronger for having done it. Another company that we haven't talked about that I'd be interested in your thoughts on, which is to me like the biggest surprise over the last 10 years is AppLovin. And it's like 100 billion plus market cap. Like, what is your thoughts about like what they did right? Yeah. I mean, they're the world's best ad network. They're an ad network business model. They've bought a bunch of assets, they bought an SSP, but they operate as an ad network. And I think what you get there is much more volatility around the revenue and profitability

• 44:37Speaker 00

  versus a trade desk, which is going to have a lower growth profile, more predictability, because self-service DSPs are stickier, but it's a net revenue GAAP accounting reporting. AppLovin is gross accounting, GAAP revenue reporting. Just that change alone means huge volatility in revenue growth rates. So I think the challenge for AppLovin is can they maintain these unbelievable growth rates? Unbelievable. Unbelievable, more power to them. But I think what separates both the trade desk and AppLovin, regardless of which business model is best, I have my opinion. If I'm, if I'm choosing between the two, I go with the trade desk, but I'm biased. We're a self-service DSP versus AppLovin.

• 45:21Speaker 00

  We used to run specific media, large ad network. The volatility of having to go re-win budgets quarterly versus training and certifying people on how to use your software. I prefer the trade desk model versus AppLovin. But if you look at public investors, they're saying AppLovin's better and it's pretty incredible. That being said, the difference of AppLovin and the trade desk versus all other public companies is that those are founder-led businesses and those are the most valuable public companies, I believe, over the long run. If I'm an investor, if it's founder-run, I'm willing to prescribe more value. It's a lot easier for them to make hard decisions and they have long-term skin in the game, where they're going to own like a fairly

• 46:05Speaker 00

  Large chunk of the company. All incentives are aligned and they're the smartest people in the room. And you got to find those two. And I tell everyone that knows myself, my brother Chris, you should buy our stock and make money off of the Vanderhooks. Cause that's what's cool about the founder led public companies. You can actually make money off of that person's brain power. And we may fail and we might suck at it, but after 25 years, we can't fail that bad. So if anything, it peters out, but you should bet on known horses. The one, the biggest things I kick myself is looking at the Google valuation when they did a double Dutch auction for their IPO.

• 46:46Speaker 00

  And I've made fun of it and they were at a $1 billion valuation and I just poo-pooed them. But clearly was one of the best businesses ever created. Yeah, absolutely. Time. And so I always encourage people in ad tech to invest in other people in ad tech that you think are smart. Cause you might as well make money off of them. Yeah. To me, such as the founder led thing per se, but it's just like, what percentage of the business is owned by the CEO and the board? And then the employees, like what percentage of the business is owned by that? And a lot of these companies, it's like 2% is owned by the employees, the CEO and the board or something like. To me, they're going to have very different incentives for a long term.

• 47:26Speaker 00

  Now, in some other scenarios, you see like the CEO, the board and the employees own like 50% of the company. Okay. Well, now we're much more aligned with where the company is going to go. The comment around founders is founders provide a sense of urgency that no one else can provide. Through the org. And I think that's what's special is like I, what keeps me awake at night? The next morning at 8:00 AM, I'm emailing that person. We got to get on this and at 10 o'clock, I'll have a different fear that I'm addressing. And I just think it's that overall sense of urgency. And over time, it plays out in the financial results by having that call it founder mode or whatever you want.

• 48:05Speaker 00

  But that autonomy of being the smartest person in the room and the ability to implement change that they know instinctively needs to get put into the business quickly. You guys also have been a good acquirer. Like you bought MySpace for $38 million, just a few years after News Corp paid $500 million for it. You don't have to talk about something specific, but where today, do you think like the undervalued assets are? Or sectors that people are dismissing. I mean, we talked about linear TV. I think it's massively undervalued of wow, so important in society, but the values are pretty low. All things in streaming audio, Spotify, these platforms are going to be huge.

• 48:45Speaker 00

  Because what's unique about streaming audio is the niche nature of the content. And that's what's so cool about podcasts is that they can go very niche into B2B applications, data, talking about it. Yeah, yeah, world of Das. This is the most valuable podcast. Yeah. And when we look at the world of advertising, who has the best products in market today? Meta does. Meta dealt with Signal going away across Apple, revenue downturn and brought it back very fast. And I think we pay attention a lot to how they solve that. In the niche nature of content across social media, that if I'm thinking of men's health and fitness, hitting me with vitamins for guys over 40 is really effective.

• 49:30Speaker 00

  And I think podcasts have that unique ability to get very, very niche levels of content, which is signal for marketers, and it's going to be a win-win. CPMs are going to go up, revenue is going to go up and podcasters are going to make more. I think that's a huge, huge area. The thing about podcasts is I'm a huge podcast listener. I love podcasts, but even in podcasts like playing podcasts I listen to, I've never met the host. I don't know the host, but I feel like I do know the host. I feel like this person's my friend. I have this relationship with, and maybe I don't listen to every single one, every single podcast that they do, but they're almost inviting me to our home. It's this conversational thing. I don't have that relationship with anybody else that I don't know.

• 50:13Speaker 00

  Definitely. That I think is the most misunderstood part of social media in general. When you interact in social media, those that are connected to you, they feel like they had a conversation with you, even though you didn't directly. And I noticed this, even at dinners, someone would come up and say, hey, Tim. And in my head, I'm trying to place them and I can't place them for the life of me. And I realized, oh, and they make a comment and it's like, oh, LinkedIn, they follow me on LinkedIn or over. Yeah, interesting. Yeah. I definitely, I just experienced that myself as well. But that niche nature of podcasts, you're going to see huge. Value creation in the future. Interesting. Now, a few personal questions. You founded the company with your brothers in 1999.

• 50:56Speaker 00

  I think you were like 19 at the time. What's it like to working with your family? How does like family dynamics go, et cetera? When people find out about that, half the people are like, oh, my God, I could never work with my brother or sibling. And other people are like, that's amazing. I wish I could. Us, it was always natural. We shared a bedroom from the time we were like four. We negotiated who was shutting the the light off at night, every night for our whole lives. So for us, working together, it's pretty easy because you already know when the person's agitated or whatever it may be. I think from a business perspective, though, working with family creates more long-termism in the outlook versus I'm going to build something for five years and I'm

• 51:41Speaker 00

  going to sell it for 100 million. That approach, which there's nothing wrong with either, both are good. But I think because we all work together, we had just naturally a more long-term outlook. Like, we were never racing to put the business up for sale. And very few times did everyone ever come and say, I want to buy your company. That happened twice, but those are very rare events. And I think we always felt like being a public company would be the destination that we want. And we always say internally, we want to try and build a company that can last for 100 years. Because that's really hard, a whole nother level. Yeah, totally. To exist. I mean, I won't be running it during that entire time, but we think about the world like

• 52:22Speaker 00

  that. And then you try and do the right approach that always like you don't short circuit anything. It's like, okay, I can make a lot of money this next quarter, or we could do it the right way. We're not going to have the money, but it'll pay dividends for five years. And I think we do generally side to long-term approaches. Okay, I'm going to call you up in 2099, and we're going to have this conversation about it. Hopefully, we're still around. I hope so as well. Okay, a couple more questions we ask all of our guests. What is the conspiracy theory that you believe? There is no way there was a single shooter, Lee Harvey Oswald, that took out JFK. Okay, that's a very common thing. It's not possible. It's not possible. I'm the son of a LAPD SWAT.

• 53:05Speaker 00

  My dad was LAPD SWAT. So just like, we've had these debates since the beginning of my life going on. So. Oh, so he's like, there's no way that guy could be. That good? No, no way that you're hitting a moving target with a bolt action rifle and multiple shots. And it's the president of the United States. It just to me, that's the conspiracy I believe in. There's more than one shooter. Okay. The thing that really gets me, I don't know enough about guns and stuff, but it's the Jack Ruby thing where he kills Lee Harper Oswald a few days later. That to me like creates the whole conspiracy in my head. Exactly. So, yeah. Last question we ask all of our guests, what conventional wisdom or advice do you think is generally bad advice?

• 53:47Speaker 00

  This might be controversial, but my brother and I do not take the advice that you should not judge a book by its cover. We judge a book by its cover to a large degree because that cover was designed by the person to present them to you. Like if I meet someone and they have teardrops tattooed on their face, I'm not second guessing whether that's a real teardrop. I just go with it. I judge a book by its cover. And to me, what people want you to see, the way they present themselves is accurate 98% of the time. Yes, sometimes you never thought that about someone and it's 2% of the time, but I'd rather be accurate 98% of the time

• 54:25Speaker 00

  and wrong 2% of the time upfront and learn that over time. So for me, we judge a book by its cover in hiring, in the way people present themselves. If you don't present yourself appropriately, you are out. So to me, never listen to that advice of don't judge a book by its cover. Always judge them by the cover. Oh, I love that. What about when people say something like, do you believe? Or do you try to like uncover what they're truly motivates people or something like that when you're hiring or whatever? To me, when I'm hiring and asking questions with people, I'm trying to figure out if this person actually did the work to solve the problem at the other company or the task at hand.

• 55:06Speaker 00

  And there are so many individuals in corporate America that didn't actually do the work, but were in a position that they get credit. And so to me, a lot of my questions are finding out, are you the person who actually implemented this strategy and did it and brought it across the finish line? Because everybody will take credit, but there was one person there that had 85% of the idea and usually were in charge of implementing it as well, because they're the smartest person in the room who came up with it to implement. So, yeah, I mean, we are by nature, my brother and I are generally cynical people, but I think lots of people are cynical. And in ad tech, you gotta be cynical in this industry. 90% vaporware everywhere that's out

• 55:50Speaker 00

  there. 10% of really good businesses, though, and it's harder to identify those. We used to have a saying that like in ad tech, like 90% of businesses are ad and 10% are tech. But they're all called ad tech.

• 56:05Speaker 00

  Yeah, it's like when Rocket Fuel was around, which was a public company that blew up and every public investor that I talked to has a rocket fuel story. They used to claim artificial intelligence and we used to say, yeah, it's 0% intelligence and 100% artificial.

• 56:23Speaker 00

  All right. Well, thank you, Tim Vanderhook, for joining us on World of DAS. I follow you on LinkedIn. I definitely encourage our listeners to engage with you there. This has been a ton of fun and a long time coming. I really appreciate you coming on World of DAS. I'm so thankful that you had me. And, Oren, it was great to chat and catch up.

• 56:41Speaker 00

  Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review and check out worldofdaas.com. That's worldofdaas.com. And of course, connect with me on Twitter, at Oren. That's A U R E N. Would absolutely love to hear from you.