
Marin Software acquires Perfect Audience (YC S11) for $25.5M - dangrossman
http://blog.perfectaudience.com/2014/06/02/marin-software-acquires-perfect-audience-25-5m/
======
brandnewlow
Hi, folks,

I'm swamped with emails and press inquiries and stuff but wanted to take a
minute to say a quick thank you to the Hacker News community. I am not
exaggerating when I say that most of what I've learned about building a
startup came from things I read here. Thank you.

If you're a Perfect Audience customer, everything's going to get better. We're
hiring hiring hiring and it's all going to be engineers aimed at making the
product better.

~~~
jordo37
Just to echo Brad from the tech side specifically - HN has been a tremendous
source of help, advice, network and everything. It really has made much of
what we built possible in that I cannot imagine doing this without HN and the
people we have met here.

From having Jedburg reach out when I had some foolish question about high-
concurrency applications, to the number of folks who helped us trouble shoot a
burgeoning Mongoid/Ruby memory problem at the very beginning - Thanks a
million!

~~~
drudru11
Huge congrats to you two and your amazing team! This is a well deserved
milestone!

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laughing_stock
It'd be really interesting to learn about founders' calculus in this sort of
situation. What makes $25MM enough? What is it about existing growth that does
or doesn't suggest selling in this fashion?

(I mean this in an entirely un-cynical way. Genuinely curious, and not trying
to imply anything negative, $25MM ov value in less than two years is pretty
amazing.)

~~~
callmeed
_(disclaimer: I don 't know what I'm talking about)_

Well, they only raised a $1.1M seed round [1]. I will guess they gave up 25%
in that round [2]. YC got about 7%.

At this point, I think AdRoll has become the market leader in the retargeting
space. Without raising a huge VC round, there's no way PA could catch them.

Marin is a public company, so the cash + stock offer is probably higher than
an all-cash offer would be elsewhere. Plus, since they're public the PA people
can sell the stock sooner rather than later if they want.

So, investors get $5.75M on a 1.1M investment. Not a home run, but definitely
a double in the gap with 2 RBI.

YC gets $1.6M on a $17K investment (old deal).

Founders + employees have 68% remaining, or about $15.6M.

Not selling means raising another round, giving up more equity, and still not
having a guaranteed exit.

[1] [http://www.crunchbase.com/organization/perfect-
audience](http://www.crunchbase.com/organization/perfect-audience)

[2] [http://www.quora.com/What-is-the-average-amount-of-equity-
to...](http://www.quora.com/What-is-the-average-amount-of-equity-to-give-
first-round-seed-investors)

EDIT: Changed numbers to reflect YC's ownership. Still don't know what I'm
talking about.

~~~
balls187
Several unknowns here.

Typically seed rounds are for convertible notes, to which no equity is
assigned.

Standard note terms have conversion during an actual price round, or during
transfer of control of the company, or during expiration of the note.

Since they're a YC company, they opted to give 7% for $120k. That leaves 93%
for the founders/employees.

Minus that, they raised ~ $980k, on seed terms, which have a valuation cap at
between 3.5-6 million. The valuation cap basically says that the price per
share is at _most_ calculated by the capped valuation, not the _actual_
valuation. So investors may have actually bought $980k of stock, at a
valuation of ~3.5-6million, instead of the full $25.5 that was purchased.

Add to that that convertible notes typically have a discount ~20%, they bought
even more shares, leaving them with considerably more ownership, than if they
were straight $980k of post-money $25.5m

I don't know the details, and it sounds like the employee's, founders, &
investors are all happy, but this does underscore that Convertible Notes can
be _very_ costly to founders.

Had their seed round been priced, the founders & employees would have made a
lot more money.

~~~
fraserharris
Anecdotally, hot YC deals (which PA was one of) are done at $8m+ with no
discount.

~~~
balls187
Wow, that's pretty awesome.

------
tptacek
Brad's one of the hardest-working people in show business. When he worked in
Chicago, he was my reference example for friends of "hustle". I'm grinning
ear-to-ear that this team had a good outcome. Congratulations! _Richly
deserved._

~~~
EC1
What are some identifiable qualities you've recognized in a 'hustler'?

~~~
tptacek
Sales ability. Getting shit done. Being a rainmaker.

------
shostack
Firstly, congrats! Big accomplishment in a short timeframe and Marin is
definitely a leader in the space doing good things.

That said, I have a concern. PA was on my list of retargeting networks to
check out along with AdRoll, Simpli.fi and maybe a couple others (mostly on
the SRT side of things). However I'm also going to be in the market for a bid
management platform in the near future, and while Marin is on my short list,
so are DS3 and Kenshoo.

Will PA services and inventory remain available to customers who are NOT Marin
customers in the future? Curious what sort of meaningful guarantees you can
provide when I imagine the reality is that you could say one thing today, and
if Marin changed their mind tomorrow, I'd be SOL. Not saying you'd lie or
anything, but I know that in the real world a statement alone doesn't hold
much weight when dollars start speaking, so I'm more interested in any
tangibles with regards to company structure, product functionality, etc. that
you can share that would be easier to put faith in.

Also, what can you tell us about customers' data being accessible to Marin if
your customer is not a Marin customer? Is there any chance that audience data
could be fed into an anonymized audience segment or something equivalent and
leveraged by Marin customers (who might potentially be competitors)?

~~~
brandnewlow
Howdy!

These are great questions. There's nothing I can write in a comment on Hacker
News that will assuage any of your worries besides saying that you should try
all these platforms and pick the one you like the most. Perfect Audience is
free and easy to try and isn't going anywhere. If you like it, awesome. If you
find another platform you like better, that's great too. Just let us know what
we could have done better.

~~~
shostack
Thanks for the response and acknowledging the nature and realities of the
situation.

I like that you have a free trial to see the platform without requiring a
contract. Other providers let you see a demo account, but actually getting to
test a live campaign is always better because you can see the speed and
integration with your analytics.

Are you guys still in Mountain View by any chance?

~~~
brandnewlow
San Francisco and Chicago these days.

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foton1981
Can someone tell me what's special about retargeting these days? Its
commodity. Implementable in several month as PA showed. Marin must be
desperate.

------
aresant
Congrats to Brad and the team - well deserved for bringing a beautiful UX and
simplified system to retargeting on social (first anyways)

~~~
brandnewlow
Thank you, kindly.

------
robryan
Good for them to get some reward for providing a solid product and great
service.

I do worry though if we will be seeing the product rolled up into some kind of
expensive enterprise offering from Marin, which would likely price out a lot
of the current customers of it.

~~~
brandnewlow
That's not the plan!

------
jacquesm
That's a super nice exit for a company this young and quite nicely priced too
(about what you'd expect in this space).

Congratulations to all involved, it's nice to see such hard work pay off.

~~~
jordo37
Thanks Jacques! Your writing, especially about the business of startups was
one of the things I read when just starting out and when the times got tough.

~~~
jacquesm
This is one of the under-appreciated things about start-ups. It doesn't matter
one bit how good you are when the sun is shining. It matters so much what you
do when the going gets tough, how you deal with crisis (and they will happen,
just when you can't use them) and what your attitude is when it seems the
whole world is conspiring against you.

Best of luck to you and your team, so curious what you'll do next! But given
how this one worked out for you I'm not at all worried :)

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UnethicalHacks
that's awesome. I met Brad in mountain view when they were just getting off
the ground. really nice to see this happen.

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jasonwilk
Nice work!

