Michael Katz is the co-founder and CEO of mParticle which is a customer data platform for multi-channel consumer brands. The company has raised $120 million from top tier investors such as Greylock Partners, Google Ventures, Battery Ventures, Bain Capital Ventures, Social Capital, Correlation Ventures, Eniac Ventures, Golden Ventures, and Bowery Capital to name a few. Prior to this Michael Katz founded Interclick which he sold to Yahoo for $300 million.
In this episode you will learn:
- How your company changes at the 150 employee mark
- How to keep up innovation and growth
- Michael Katz’ top advice for new founders
- The key to business growth
- Operating in times of downturns and economic uncertainty
- How he invests in himself to keep growing as a leader
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Michael Katz:
Michael Katz is a co-founder and the CEO of mParticle, a customer data platform that helps app developers make use of analytics and data. mParticle is backed by Google Ventures, Greylock, Nas, and others, and Michael drives mParticle’s vision and strategy as it provides industry-leading customer data solutions to multi-channel marketers.
Before mParticle, Michael founded and was the CEO of Interclick, which was a publicly-traded company on the NASDAQ before its $270 million acquisition by Yahoo in 2011. While at Yahoo, he served as Vice President of Optimization & Analytics.
Connect with Michael Katz:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a very exciting founder. I think that we’re going to be learning quite a bit on the whole process of building and scaling companies, but without further ado, I’d like to welcome our guest so that we don’t lose more time without him. So, Michael Katz, welcome to the show.
Michael Katz: Thank you. Thank you for having me. I’m excited to be here.
Alejandro: So originally born and raised where Michael?
Michael Katz: Outside of Boston, Massachusetts, so I am a diehard Boston sports fan.
Alejandro: Very cool. How was life growing up there?
Michael Katz: Life growing up outside of Boston was good. I think I had a normal childhood, quite a lot of sports with the neighborhood kids. My brother and I are about two years apart. We’ve always been really close. I was the one rounding up the neighborhood kids to go play basketball or football, and he was teaching himself how to code on our family computer. Though we were close, we were also different, and that served us well as we started a couple of companies successfully together.
Alejandro: Very nice. What got you into the whole world of financing because you went to Syracuse University, and that’s what you studied.
Michael Katz: Yeah. I didn’t know what I wanted to do or what I wanted to study. I think a lot of people grow up with visions of themselves doing something or being something. Admittedly, I never thought about that kind of stuff. When I was a kid, I enjoyed being a kid. I got to college and wasn’t sure what I wanted to do, but I was always interested in business, so I picked two majors, a little bit of a hedge, but ended up graduating with two degrees, one in finance and one in economics. I felt like one of those would serve me well. In hindsight, it was probably more of the degree in economics that has served me better over the course in my career, but it’s also good to understand the basics of finance and having taken a company public. As we’re now in year seven of mParticle thinking about what the future holds for us being able to understand the public markets. It’s been great.
Alejandro: In your case, why did you go after consulting?
Michael Katz: Similar to why I chose finance, I felt like consulting would serve as a strong foundation for whatever I would want to do next. I always knew I was going to do something entrepreneurial. I just didn’t know necessarily what that would mean, when, how, why, where, any of it. So I felt working at a bigger company such as Accenture. When I got there, it was still Anderson Consulting, and it rebranded to Accenture. It felt like working at a place like Accenture I could learn what great looks like. I would say that I would credit the time that I spent there to working with some great people, working on some really interesting projects back in the day. I think the biggest takeaway from working at a company like Accenture was the commitment to producing high-quality work and treating everything as if it’s a customer deliverable. I know from having a bunch of friends that pursued entrepreneurial things without having ever having worked for a bigger company, I think it’s tough to understand what good looks like or what great looks like without having ever done it. So I felt the big thing was building the right muscle memory and developing some good habits before branching out on my own.
Alejandro: And you did branch out on your own, but in this case, in the company of your brother. How did that happen?
Michael Katz: Yeah. We’ve always been close. I think our skill sets are complementary. He’s the technical one with the strong business background. I’m the business guy. I like to think that I’m technical enough. In that Venn diagram, there’s a little bit of overlap, but it’s mostly complementary. After leaving Accenture, I was presented with an opportunity by one of my friends, and that became the basis for what became my last company. Along the way, I convinced my brother to leave his job and to help me build this thing out and made him a co-founder. We’ve had a really great run together. A lot of what our father instilled in us in terms of getting along and prioritizing family and being respectful and working out our differences, all that stuff served as a strong foundation for a lot of our success. Not only in that first company, but all the way to the current day.
Alejandro: How many companies have you guys done now together?
Michael Katz: Two companies that materialized into real enterprises. Then there were one or two other ones where we kicked around some ideas. I’d say two, two and a half.
Alejandro: Because, typically, doing business with family is not easy. There are books like The Founder’s Dilemmas by Noam Wasserman, where he goes into detail. But in your guys’ case, it has panned out well, and you’re talking about the good relationship that you guys have always had. How do you materialize that relationship that you’ve had as family members into being able to transition that into business and be equally successful in terms of having a healthy relationship? How did you guys manage to do that?
Michael Katz: It’s a good question. I think for us, it was about treating the businesses, not as a family business, but thinking about how do we build something that can scale? I don’t think this is limited to myself and my brother, Andrew. I think it’s required in any business. Putting ego aside, I think we both come to the table with some strong opinions on the way that things need to be run and what needs to happen in order to ensure success. We don’t always agree on everything, but we’ve taken this approach since day one that as long as we’re talking through anything, there’s nothing that will get in our way. I think the other thing that we’ve done since he’s the CTO, and I’m the CEO, we’ve made it a point to hire strong heads of product. We had an incredible head of product at interclick. We have an awesome head of product at mParticle. They’re effectively the arbiter between the business side and the engineering side. That also helps us get to whatever resolution or get through whatever decision-making process we’re trying to get through.
Alejandro: What was the name of this first company that you guys started?
Michael Katz: It was called interclick, and it was in the advertising technology space. We started it in the mid-2000s. What made us unique and differentiated was we built this incredible data platform that could ingest data from a variety of sources and systems. A lot of the innovation was around breaking down data silos. A lot of this ended up serving as the basis for what we’re doing at mParticle. The big difference was it was tied to a fundamentally different business model, so the first company was an ad network. When we built out our data platform, it was effectively a bigger, better, smarter brain that allowed us to do more with data and to do it faster. In 2009, when we launched the platform, we were doing about 20 million in revenue with about 20 salespeople. Fast-forward two years, 2011, the year that we got acquired by Yahoo, we were on pace to do 150 million in revenue with 22 salespeople. So a lot of growth as a result of the investments that we made in this data platform. It was an incredible ride. I learned a ton about the entrepreneurial journey. We had an incredible team. I think we built an awesome culture, and I think we nailed the timing.
Alejandro: In this case, you guys took the company public.
Michael Katz: We did.
Alejandro: How old were you when it went public?
Michael Katz: I forget exactly how old I was. I was in my mid-20s. I know there was one year where I was the youngest CEO on Nasdaq, so I want to say 26 or so.
Alejandro: That’s amazing!
Michael Katz: Yeah. More per se than it was to do.
Alejandro: Let me ask you this. The company got acquired by Yahoo. Tell us about this process. It seems like you guys were doing a very good job. There was very nice growth. Why did you guys make the decision to go at it and get the company acquired?
Michael Katz: Ultimately, it was about being able to realize our vision faster with more resources, or at least that was the premise. We had grown considerably. We had built what I believe was best-in-class technology. It was ahead of its time. I would say if we put out that platform today, it would still probably be an industry-leading solution, just to give you a sense of how advanced we were doing those things 11 years ago. Yahoo came to us and said, “We love what you’re doing.” They were a partner of ours, so they had a good look into how much business we were doing together and how we had scaled over the previous handful of years of working together. The thesis from their standpoint was taking a lot of the best-in-class data capabilities that we had built, leveraging all of the data that they create as a result of users engaging with all their different properties, and applying that to their personalization and ad-targeting products, which, at the time, had started to become a little outdated or antiquated, and taking one plus one and hoping it would equal three. I think the spirit of the thesis was right. The timing was good. There was an incredible team over there that we were excited about working with. Then we got over there, and there were five CEOs over the course of a year. Needless to say, the thesis never materialized, and the opportunity never materialized, and then we left, and we started mParticle.
Alejandro: Very cool. What were the terms of the acquisition?
Michael Katz: They bought us for a little under 300 million dollars.
Alejandro: Wow! That’s quite a run. Did you guys raise any money for this business?
Michael Katz: We actually bootstrapped interclick in the early days. We started with a check from our friend’s father. As he was handing it to me to start the business — it was a $25,000 check, which, for me, at that time, was the most money I had ever seen at one point. He’s handing me the check, and then he pulls it back and says, “Make it last because I’m not writing another one.” “Okay. I can do that.” I didn’t know what I was signing up for. He kind of had a roll with what I said I was going to do, and we made it work. We got really profitable quickly, albeit very different point in time, the digital advertising ecosystem was much more the wild, wild west, and still very relationship-oriented, and it predated a lot of the programmatic revolution. It was a lot of hustle. We got to a point, I think, within 90 days where we had a million dollars in the bank. It felt like we had made it. We bootstrapped for the next few years. I had a conversation with my co-founder, whose father put in the money. He wanted to try to sell, and I wanted to keep going. We found a way to recapitalize the business, and we found some investors that were willing to do that and get him out and put some money on the balance sheet. It wasn’t a ton of money, but it was a few million bucks, and that was a few million more than we ever had in the past. We took that all the way to the point where we ended up listing on Nasdaq. Then we did a “real” IPO, but it was still pretty modest. We only ended up raising right around 20 million dollars to be invested in the company. At that point, we were already hyper-profitable. It was a great lesson that I think built the right muscle memory in terms of being really disciplined about how we think about capital allocation and investment in growth. I would say it’s interesting because I think we’ve done it almost the exact opposite at mParticle. We raised a large seed round here about 9 million dollars before we even launched the product.
Alejandro: We’ll talk about mParticle, and then also the round, but before getting into the details of the round, let’s talk about — the business has been acquired by Yahoo, and obviously, you’re not as excited with all of the changes with CEOs, and probably you guys start to think, “Maybe there’s something else that we could be doing here.” Tell us about that process until you said, “Let’s go at it. Let’s do mParticle.”
Michael Katz: As an entrepreneur, you’re always looking at the world and saying where’s the opportunity? What needs improvement. I do fundamentally believe that for anybody out there listening if you have entrepreneurial aspirations, you have to start with the problem. You have to identify a problem, a need, and then you start working on the solution. Any time you’re building a solution and looking for a problem, that typically doesn’t go well. For me, I was at Yahoo running a large product team focused on analytics and optimization. Anytime I had any questions as they related to user insights across channels — at that point, mobile apps had just started to become a thing, and you started to see in 2012 the mobile consumption across that of web consumption or desktop consumption. Leading up to that point, the ongoing joke within the industry was, is this the year of mobile? It was that repeat joke for six or seven straight years. Then it finally happened, and a lot of people weren’t ready. I saw it early because anytime I had any of these questions, nobody had any answers. It felt like anytime we were talking about mobile usage or cross-platform usage, there was no way to get good answers other than having to submit a ticket to the help desk, and then I’d get an answer two weeks later. It was like, “I stopped caring about that about 13 days ago, so I’m on to the next.” For me, I took note of that because it felt like you had this really exciting platform shift, but you had no infrastructure. Having just gone through this ecosystem explosion where in the early days of digital advertising, you had very direct paths between buyers and sellers. Then you had fragmentation, a number of exits, and then you had more specialization and integration along the data supply chain. Our bet on mParticle was based on everything that we had seen at Yahoo and leading up to the acquisition, where you have these rapidly evolving ecosystems. What happens in those opportunities or in those instances where opportunity gets created? We felt like if anybody was going to do it, why not be us?
Alejandro: Then, in this case, why did you go with raising so much money? On the other operation, you guys were bootstrapping and being very careful as you were thinking about growth and investment allocations you were describing. But here, you went at it right away with funding, and you guys have raised quite a bit. How much capital have you guys raised to date?
Michael Katz: To date, we’ve raised 121 million dollars. We’ve definitely done it completely differently. I don’t know if there’s a right way or a wrong way to do it. I think for us, here, we’ve had a big vision since day one. That was to provide brands with modern data infrastructure that could accommodate a number of things. Like, the changing consumer landscape in terms of people interacting with more consumer touchpoints across more screens and devices than ever before. Then, also, accommodate on the flipside the growing need to address the personalization and the privacy tradeoff. So, building for lots of scenarios around activation and the privacy meant that there was going to have to be a lot of technology built. We started the company with our ten best engineers from our previous company. I said, “Let’s just go.” So we built, and we stayed heads down for the first couple of years. Then we finally got into market about 20 months later. Fast-forward a couple of months, and we started to close business, and we haven’t looked back since. It’s been an incredible ride, but I never felt like at my first company we had the opportunity in front of us where we could go out and build a category, weave the category, and transform the way that people were doing things. We were always just part of an existing set of solutions, and it was about being incrementally better than the next guy. Whereas this is effectively greenfield, and we’re solving some universal challenges that I think every company in the world faces.
Alejandro: I’ve heard you talk about culture, also, especially with the previous company interclick. How do you think about culture, and how are you guys building the culture for mParticle?
Michael Katz: At interclick, I think we ended up building a great culture, somewhat by happenstance. We hired a bunch of great people, and the culture came together, and we were really fortunate. This time around, while we were doing our retrospective on interclick and thinking about what were the things that made us special and unique? I wrote a post on the 15 things that helped us build a 270-million-dollar company. I started thinking about culture through the lens of this thing that could be purposely created. For us, it was like, “How are we going to do it differently next time around?” One of the first things that we did as we started the company was not only to start thinking about what are the product features that we need? What is the brand identity going to be, but ultimately, what is the culture that we want? So we set out to identify a number of values by which as we hired more people throughout the organization, we looked to make sure that these people exuded these types of values because ultimately, the values are the DNA of the team, and the collective personality of the team is essentially the culture. You can start to shape these things through your hiring practices, through your compensation plans, through your communication protocols. That ultimately becomes the culture. We set out to create a culture of extreme ownership and accountability in the early days. I think that served us well to make sure that we would come out on the other side. And not only just alive but alive and thriving. You also have to continue to evaluate your culture. Your needs change as you grow. In the early days, it’s about how do I ensure that my basic needs are met? Where we are now with 150 people or so, it’s not just about ensuring survival anymore. It’s about things like psychological safety and creating a work environment where people can do their best work; where they’re also motivated to collaborate with others, and play nice in the sandbox, and treat people with respect, while also eliminating the fear and anger that can come with the stress of growth and the uncertainly of building and leading new categories. The thing that we’ve seen over the past year or so is that as companies grow and they get to that 150-person mark, and they start thinking about moving out of the startup mentality into more of a mid-sized company and to become a large, independent company. You have to look at the things that are happening within the orb that ultimately can prevent innovation. Innovation is the precursor to growth, but nobody does their best work when they’re operating under a sense of fear or anger, or they’re under extreme stress. Those are the things that we’ve been focused on over the past 12 months or so.
Alejandro: Very cool. For you guys, and for you, what a ride! What an entrepreneurial journey. One of the questions that I typically ask the guests that come on the show is if you had the opportunity to go back in time and have a chat with your younger self and give that younger self one piece of business advice before launching a business, what would that be and why knowing what you know now?
Michael Katz: Man, that’s tough. I get asked that question a lot. I don’t know if I would go back and tell my younger self anything because it’s all part of the journey. I think in order to experience growth as a business, you have to experience growth as an individual. There are a bunch of different reasons why growth happens. Some people are intrinsically motivated. Some people do it out of perhaps fear or necessity, or you go through a tough time, and you have to figure out, “How am I going to get through this?” It forces you to become introspective. I think, for me, we’ve had two incredible rides so far, but obviously, the entrepreneurial journey is not always easy. You have to embrace the good and the bad. If I were to go back in time and try to short-circuit that opportunity for growth to younger me, I’m not sure that I would end up in the same spot. So I would say maybe if you’re looking for a concrete answer, embrace all of it. I tell the team, “You’ve got to keep growing in order to keep going, so don’t ever become complacent.” Especially in today’s time, where you have things like the coronavirus dominating the headlines, and you have lots of venture capitalists posting about economic uncertainty, and potential downturns, and what that means in terms of hiring and cutting spend. The thing that has served me really well over the past number of years has been to continue to invest in my own personal wellbeing, whether it’s physical and/or mental. I’m working out more than ever, and I’ve always been really active, but combining that with meditation, and reading a lot more, and continuing to hone my craft. You have to be obsessed with what you’re doing, but that doesn’t always come easy for everybody. Sometimes, people have to be forced into that. Just enjoy it all.
Alejandro: I love it. Michael, for the folks that are listening, what is the best way for them to reach out and say hi?
Michael Katz: They can email me: [email protected]. I’m happy to email with people. I typically don’t pick up phone numbers from numbers I don’t recognize because I get a thousand spam calls per day. I’m also active on Twitter @mkatz0630. Feel free to reach out. I would love to connect.
Alejandro: Amazing. Well, Michael, thank you so much for being on the DealMakers show today.
Michael Katz: Anytime, man. This is awesome.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].