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Chat with Champions · Making Sense of Digital Media: Season 2 Ep 4 Jonah Goodhart
Jonah Goodhart started his entrepreneurial journey while still in college at Cornell University. What started out a bit haphazardly with an email list turned into solid learning opportunities that have informed his business decisions along the way.
After the acquisition of his second company, Right Media by Yahoo in 2007, Goodhart decided to go in a different direction and started investing in other people. This angel fund, WGI, helped to fund numerous data and next generation location companies.
But Goodhart missed creating and running a company. In 2010, Moat was launched to make digital a more effective medium for brands to reach consumers via measurement and analytics.
Building on the belief that people and culture are the core of the company, Goodhart set out to bring in team members that were both positive and paid attention to detail: two key ingredients to a successful start-up.
Throughout the process, Goodhart acknowledges the challenges of raising capital and the importance of finding investors that have the right chemistry.
“One of my conclusions throughout that process is that raising money is sort of like baseball. If three out of ten like you and there’s a fit, then you’re in the Hall of Fame. I think venture investing is hard to do because there’s a lot of signals that investors are juggling. There’s groupthink challenges. There’s a reality that each firm is different and has different goals and not every entrepreneur is a fit with every firm or every partner within every firm, but you have to find the right chemistry. That’s really the key,” Goodhart said.
The full transcript is below.
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Jonah on culture:
People are the core of our company. It’s the people that customers are choosing, it’s the people that employees are choosing to join. And so I think culture really becomes the key ingredient in many ways to success as we grow.
Jonah on team building:
I really believe that in order to build a successful company over the long run, you need to hire a team that will push through the hard times and will keep making forward progress. We can’t control for a lot of the things that might happen in the macroeconomic environment or even in our industry. But, we can control how we approach what happens around us. And I think that’s the key and I think those are traits that you can look for in the folks that you bring onto your team.
Jonah on raising capital:
I was never a huge fan of raising capital, frankly. Raising money is a humbling experience as an entrepreneur. I don’t care if you’ve had success in the past, it’s difficult to go out and ask professional investors to give you money and bet on a future vision.
Jonah on current climate for entrepreneurs:
It’s hard to raise money when the macro economy is not great. But it’s often times the best time to start a company. When everyone is investing and everyone’s throwing money at problems, you get a lot of competition and you get a lot of people sort of driving into markets. I think when people stop doing that as much, it actually creates opportunities to build businesses.
Navin: Welcome back to Chat with Champions. Today I have the pleasure of hosting Jonah Goodhart, a serial entrepreneur. He’s currently CEO of Moat. Jonah was also the founding board member and investor of Right Media, which was acquired by Yahoo in 2007. Jonah started his first company while still in college at Cornell. Jonah, welcome to the show.
Jonah: Thank you for having me, Navin. It’s a pleasure to be here.
Navin: So let’s start with the first question that I usually ask all entrepreneurs. I would love to hear your story or your entrepreneurial journey.
Jonah: I started my first business with my brother, Noah, when I was in college at Cornell University. Our first business was started fairly haphazardly. We actually didn’t realize we were starting a business. At the time, traditional direct response companies, as well as newly funded ecommerce companies, were attempting to quickly build customer bases in digital by offering aggressive marketing programs where they would essentially give away some of their product in exchange for a new customer.
I started signing up for these sites and I started becoming a customer in order to get free products. And one day, someone at school asked me for a list of the sites where you could get free stuff. And so the email that I sent to him, quickly turned into other students emailing me and asking me if I could send them links to free stuff. And the email list was quickly a few hundred students who were asking to get on my list of free stuff. But keep in mind, this wasn’t a business. We weren’t making any money at all.
But one day, I got a call from a marketer, and the marketer said, “Are you the person that’s emailing out links to our site telling people how to get free stuff?” And I said, “Well, perhaps.” And he said, “No, it’s great. If you add an ID to the end of the link, we’ll be able to tell that it’s you and we’ll pay you for every customer you send us.” So we called all the other companies that we’d been sort of emailing out to out to our friends in the expanded list and we asked, “If we added an ID to identify us, could you also pay us to send customers to you?” It suddenly became a revenue-generating business whereby every person who clicked on one of the links and signed up at one of the sites suddenly generated revenue.
And then we got the idea to buy ads ourself, and so we started with email ads. And what we found is that it was hard to get scale, and so we couldn’t turn it into a big business. I remember one day, I got a cold call from a salesperson named Mike Walrath and he was working at a company called DoubleClick, which is now a part of Google. Mike said, “I’ve seen some of your email advertising. Have you thought about buying banner advertising or display advertising?” And my brother and I thought, “Huh, that’s interesting. If we can figure out how to make display ads work, we solve our scale problem.” And over the next year or so, we would spend millions of dollars with this salesperson, as well as others and would become a relatively large buyer of digital media.
Then about three years into running this business, something changed. The world changed. 2000 happened. 2001 happened. Suddenly, the deals got worse and the incentive to become a new customer for one of these companies changed. And all of the sudden, our model and our business was in question. In the midst of this, I got another phone call from Mike Walrath, and he said, “We’ve been talking about the shift in digital and particularly in digital advertising and marketing and the road ahead, over the last couple of years. And we’ve been talking about how impactful digital can be, but how inefficient it is at the moment.” And he said, “It seems like there’s an opportunity to do something about it. Do you want to partner with me and do you want to help create a new company?” We said yes and we gave Mike the money to start the company. We helped him get the company off the ground. We became his first customer. We were his board. And this new company, Right Media, was formed. This is in 2002. Five years later, the company would sell to Yahoo for a value of $850 million in 2007 and really was credited with the launch of programmatic advertising as we know it.
So in 2007, me, Noah and Mike, formed an angel fund called WGI and we started investing in other people. And I really wanted to create a company again, so in 2010, the three of us started Moat. If I look back over the last 18 or so years that I’ve been in digital, digital has been consumed, I believe, by a focus on direct response advertising, think search or app installs or anything of that nature. But we have a belief that ultimately, advertising is storytelling. And the most successful brands throughout the world, not just in digital, are those that are able to communicate their story in a way that creates an intangible connection, an intangible trust to what Warren Buffett calls their “moat.” And so, for us, this has manifested itself in the creation of a software measurement and analytics company, which is what we do at Moat. We help marketers and publishers measure and make sense of digital media, of digital creative, of content and more.
Navin: Got it. I believe companies need to have a strong culture along with a strong vision and strategy. So how important do you think is building a winning culture, especially as you scale the company in terms of size, geography, stage, and time?
Jonah: Culture is everything. When I think about Moat, people are the core of our company. It’s the people that customers are choosing, it’s the people that employees are choosing to join. And so I think culture really becomes the key ingredient in many ways to success as we grow, and figuring out how do you scale your culture. One of the things that we do at Moat is we focus on a few key ideas behind our culture and I would sort of distill those down to two things.
One is positiveness. If folks are not positive, they don’t fit our team. There are a lot of challenges you face when building a startup and it makes it much harder to do if someone doesn’t have the right attitude. And so we look for a positive attitude, first and foremost. The second thing is, we look for a close attention to detail. For us, little things make a huge difference. The small, subtle stuff is what adds up to be your brand and your culture. And so we try to pay attention to the little details and we try to hire teams that focus on those details inherently. I think, as you scale geographically, you’re dealing with different cultures and different mindsets, but I think that everyone can be positive and everyone can pay attention to details. And so our goal is to grow that culture and disseminate that culture throughout our team across the world.
Navin: That’s awesome and I fully agree with you that it’s all about people, because people make products, products don’t make people. So switching gears, I personally think a lot about grit and how that is key to building a lasting company. Any tips on how you look at grit, especially when you are looking at hiring talent? And what do you look for in them?
Jonah: Yeah, I always tell folks who are building companies that when things go really well, there’s often something on the horizon that’s not so great. And when things go really badly, something good’s about to happen. So I really believe that in order to build a successful company over the long run, you need to hire a team that will push through the hard times and will keep making forward progress. We can’t control for a lot of the things that might happen in the macroeconomic environment or even in our industry. But, we can control how we approach what happens around us. And I think that’s the key and I think those are traits that you can look for in the folks that you bring onto your team.
Navin: Got it. And I assume, right, that’s very important for you, knowing you.
Jonah: It’s critical because at the end of the day, I don’t know anyone whose startup that has become successful, started out as it became. In other words, all companies change. Markets change, what you do on a day-to-day basis changes. And so you have to have the ability to push through and to realize that there’s going to be a lot of great stuff that happens if you’re successful, but there’s also going to be some hard times. And so you have to figure out how do you deal with the hard times. Move forward because something good is going to happen soon.
Navin: So let’s talk about struggles. As you mentioned, things always don’t go perfect in startups. Things go up, things go down. So can you share a difficult experience that ultimately made you a better leader and a better CEO?
Jonah: Sure. One of the experiences that I was never a huge fan of is raising capital. Raising money is a humbling experience as an entrepreneur. I don’t care if you’ve had success in the past, it’s difficult to go out and ask professional investors to give you money and bet on a future vision. When we raised money for Mayfield, I met with a number of venture folks at the time. And one of my conclusions throughout that process is that raising money is sort of like baseball. If three out of ten like you and there’s a fit, then you’re in the Hall of Fame. I think venture investing is hard to do because there’s a lot of signals that investors are juggling. There’s groupthink challenges. There’s a reality that each firm is different and has different goals and not every entrepreneur is a fit with every firm or every partner within every firm, but you have to find the right chemistry. That’s really the key.
And so the advice I give other entrepreneurs is don’t spend a lot of time with folks where you don’t have good chemistry. It’s like dating. You know it when you meet the right person and that should be really clear, we think, when you meet the right investor and so I learned a lot from that experience. But it’s helped inform both how I run the company as well as the advice I give other entrepreneurs.
Navin: Yeah, I still remember whiteboarding a win-win scenario for both Mayfield and Moat and I’m glad to have partnered as Mayfield with you guys. So another pet peeve for me is mentor and mentorship. Have there been mentors for you along the way that have influenced the way you conduct business today?
Jonah: There’s definitely been mentors for me and there’s folks that I call on. There’s not any single mentor but what I would say is, I call on people for insights or for specific situational advice. So if somebody’s been there before and has experienced things, whether it’s they’ve raised money before, then I want to talk to them if I’m in the process of raising money or if they’ve scaled internationally, then I’ll ask questions about scaling internationally. And so I look for folks who have done one very specific thing that I’m going through and then I ask for advice on, “How did you deal with x, y, and z?” I think the mentor thing is hard if it’s too general and so I try to be really specific on, “Hey, when you scaled in Australia or in the UK or in Germany, how did you deal with x, y and z or company communication or what have you?” I look for very specific advice and then that advice becomes really actionable.
In the end of the day though, you have to decide what’s right for you and what’s right for your business and a mentor can only give you insights on what they’ve seen in their experience. But ultimately, as someone who runs a company, it’s you and you’ve got to make the call, and hopefully along with a great team that you’ve put in place, you’ll be able to adjust decisions if you don’t make the right call, and get the company on the right track.
Navin: Got it. You’ve been very successful in building companies and also raising money, even in tough times like today. What are your thoughts on the current climate for entrepreneurs?
Jonah: My view is that, yes, it’s hard to raise money when the macro economy is not great. But it’s often times the best time to start a company. When everyone is investing and everyone’s throwing money at problems, you get a lot of competition and you get a lot of people sort of driving into markets. I think when people stop doing that as much, it actually creates opportunities to build businesses. Over time, markets will change. We started Moat in 2010, we’ve seen ups and downs in the macro economy, in software companies and in digital companies. That’s all going to change over time. I think the key is that you’re building a company for the long run. One of the things, Navin, that you might not remember that you said to me is that, “This is gonna take a while. You’re building a software company, and software companies are not a one- or two-year thing. You’re building a company for the next five, seven, ten, or a longer time period.” I think when you have the right horizon, you make better decisions.
In terms of raising money in tough times, successful investors always want to bet on folks that are driven to succeed and are going to execute. And so you can raise money in any time, I believe. But it actually makes it easier to operate a company when less folks are paying attention, which I think is interesting about right now.
Navin: Absolutely, right. My feeling is building companies is a marathon. It’s not running a sprint and one needs to have the patience to run it in that way. So in parting is there any one single piece of advice or guiding principle you would like the entrepreneurs who are listening to this podcast take away from you?
Jonah: I don’t have a single piece of advice. What I would say is that there’s ways to get an advantage. There’s ways to be really smart, depending on what kind of company you’re building. When you’re building a software company or a B2B company, one of the pieces of advice that somebody gave me was meet a tremendous number of people. Meet customers, meet marketplace participants and that was something that I did early on. And as a result, you really get a sense of what’s happening. I remember in the early days of Moat, I did something like 1,000 meetings and really went out 10 meetings a day if I could schedule them 5 days a week and just met everybody, and got a sense of what was happening in the market, what were the challenges, what were the problems. I think that the situation might seem challenging: I’m gonna start a software company in the enterprise space to go after one big idea or what I think is one big idea, but I think that you can get an advantage that others may not see, through specific steps. So in the B2B space, meeting with every single person that you can meet with is a really good strategy.
B2C, it’s a little bit different. In the B2C side, it’s a little bit more of a bright line test on the number of people who download your app and use it every day or download your software. But I think you can do things to get an advantage and through those little advantages, it makes a big difference. And like I said, in the end of the day, no successful company that I’ve ever met started out where they got to. And so your company is going to change, what you do is going to change. Hopefully your vision is going to stay pretty consistent, but the actual manifestation of that is going to change. And so you want to take every advantage you can get to try to get to success.
Navin: Very well said. I think I learned something from that. So, Jonah, I know you’re busy, you’re running a company. Really appreciate you taking the time today and sharing your views on this stuff. Thank you very much.
Jonah: Thank you, Navin, and it’s a pleasure to talk with you and thank you for being such a great partner of ours at Mayfield and we look forward to talking again soon.
