Web Masters Episode #28: Kevin O’Connor

Listen to Kevin O’Connor, founder of DoubleClick, share the story of how he helped pioneer the online advertising industry on the Web Masters podcast.


File:DoubleClick Logo.svg - Wikimedia Commons

Kevin O’Connor:

Some people were obsessed with privacy. When privacy, all of a sudden blew up, then it became this huge, huge issue. People stealing data, what it is today. People stealing data and not getting anything returned. And our pitch was, and it’s an accurate pitch, is that someone’s got to pay for it. Someone has to pay for you getting access to the world’s knowledge and poor people don’t have money. They’re not going to pay subscription. So by moving everything to subscription, you end up really making it for the elites. People that can afford it. And not very democratic. Or if advertising doesn’t work, the publishers go out of business. So it’s really this symbiotic relationship. People always choose free over paid and you need effective advertising.

Aaron Dinin:

If anyone should have well-informed opinions about the trade-offs between privacy and advertising, it’s the person you just heard from. His name is Kevin O’Connor and he was the CEO and co-founder of DoubleClick. DoubleClick was the online advertising company that basically invented the ad tracking technologies that make online advertising so effective. For those technologies to work as well as they do, they have to record all sorts of details about people’s online, browsing activity, things like their locations, what types of devices are they using, what websites they’re looking at, how long they’re looking at them. Those kinds of things. So if you’re well human, there’s a good chance. Some of the information ad tracking technologies collect about what you’re doing online. Isn’t stuff you’d want people to know which as you can imagine, raises some challenging issues related to personal privacy. And those were just some of the important challenges Kevin faced during his time at the helm of DoubleClick.

Are you ready to hear the story? Let’s get dialed.

[INTRO]

Aaron Dinin:

Hi there and welcome to Web Masters. This is the podcast where we use internet history to explore important lessons about entrepreneurship. Why do we do that? Well, my name is Aaron Dinin. I’m a serial entrepreneur and I teach innovation and entrepreneurship at Duke University. Through those experiences, I know firsthand that the second best way of learning entrepreneurial lessons is by listening to the experiences of other entrepreneurs. Oh, and in case you’re wondering about the best strategy for learning entrepreneurial lessons, it’s personal trial and error. But that strategy is much less efficient if you can learn from other people’s successes and failures, you’ll save yourself a lot of time. I think you’re going to learn a lot from this episode’s guest, Kevin O’Connor, founder of DoubleClick, the company that basically pioneered the online advertising industry as we know it. But before we can learn from his story, I want to take a moment to thank the company that’s helping me share it.

This podcast is being created just for you thanks to the support of Latona’s. Latona’s is a boutique mergers and acquisitions broker that helps support the buying and selling of cashflow positive internet businesses and digital assets. I’m talking about things like content websites, SAS apps, Shopify stores, Amazon FDA’s, domain portfolios, and any other kinds of online work from anywhere businesses. If you have a profitable internet business, and you’re thinking about selling it, talk to the team at Latona’s, they’ve been supporting business owners, just like you for a long, long time. And they can help you get a great return on your years of hard work. And if you’re one of those people thinking of purchasing an internet business, then head on over to the Latona’s website where you’ll find a huge collection of profitable online businesses, looking for new owners. That website is Latonas.com, L-A-T-O-N-A-S dot com.

As you just heard, DoubleClick’s founding CEO, Kevin O’Connor pointing out at the beginning of this episode. Internet advertising is how lots of online businesses make money. It is according to him a necessary part of the media ecosystem because it’s what allows those same businesses to exist and be accessible to everyone. We’re going to talk more about this relationship between advertising and access, because it’s obviously an important part of Kevin’s story. However, in order to do that, I think it’s helpful to have a bit more background on where Kevin’s opinions are coming from. Specifically, why you might think someone who helped lead the charge for sophisticated internet advertising would have come from a strong advertising and marketing background. That’s actually not the case.

Kevin O’Connor:

Well, the first time I discovered computers was taking a programming class in high school where you had to do punch cards and you got your results week later. And I swore that I would never, ever, ever do computers as a career. But it really wasn’t until I had an internship at Michigan State where I got to use the Atari 400 and that totally transformed my life. Because it was instant feedback. It was the first sort of personal computer that I’ve had ever seen. So then I was totally hung up on that. The first time I saw the internet and that was back in 1981, somewhere around there, I got really hung up on computers when the IBM PC came out and I was fortunate enough to have an internship at IBM and got to work on the first PC and then started my first company around the IBM PC, connecting it to mainframes.

The first time I saw the internet, it was probably 1992 and it was probably over a 1200 baud modem. And the web had not been invented. It was wholly unimpressive. It was like, “Okay, this is not that interesting.” And it probably wasn’t until the first, I think the company had a T1 line and that was probably 1994. I was like, “This is interesting.” And it occurred to me that anyone in the world was going to have access to the world’s knowledge. And I was like, “This is going to be big. This is going to be transformative.”

Aaron Dinin:

That was a pretty good guess. But before that you mentioned you had an opportunity to work on the first PCs at IBM. What was that like?

Kevin O’Connor:

I was working at IBM. The PC was developed down in Boca Raton. I was in Austin and that group was developing the first connectivity product for the PC to the IBM mainframe. And I got stuck. It’s a long story, but I was fortunate to get into this skunkworks group. And as an intern, they said, “There’s no way you’re ever going to code. Interns don’t code. You do QA.” So when everyone left that night, I would fix people’s code and they come in the morning and they’re like, “Wait a second. I had bugs last night and it’s gone. It’s working now.” And I was like, “I’m the code fairy. I fixed your crap.” So then they said, “All right, you can be a coder.” So that’s probably when I first became sort of a hardcore coder.

Aaron Dinin:

So wait, even though you created an enormous advertising company, it sounds like your background wasn’t really advertising at all. It was coding. Is that right?

Kevin O’Connor:

I knew nothing about advertising or direct response. I didn’t know anything about marketing.

Aaron Dinin:

And you mentioned starting a different company too. So does that mean your first company wasn’t DoubleClick?

Kevin O’Connor:

Yeah, it was Intercomputer Communications Corp.

Aaron Dinin:

And what did that company do?

Kevin O’Connor:

Back in the old days when you have a mainframe, mainframe’s had terminals that talk to it and terminals are really the first PC. They’re just dumb PCs, no disc drives or anything and a sole purpose of communicating with the mainframe. So we had the PC mimic these terminals. And so we were connected to the Burroughs, mainframe, the UNIVAC mainframe, Honeywell, DAC, Wang, all these different systems. The only interesting part about that story is that we’re the world’s leading terminal emulator. We did all these terminals, but it was a dying market. And I had this idea one day, I said, “Hey, why don’t we come up with a unified, the grand unified terminal. We’ll call it the object-oriented terminal. And we’ll use TCP/IP. And this PC will be able to talk to any computer system in the world with a visual screen.” And everyone looked at me like, “Nah, that’s a bad idea.” And it would have been the first web browser. It was basically the web browser. The web is just basically a terminal is what an old terminal used to be.

Aaron Dinin:

So you’re saying that you basically had the idea for the worldwide web back before it existed, and everyone told you it was a bad idea?

Kevin O’Connor:

Ideas are cheap. Yeah, I didn’t do anything with it. It was a really interesting idea. It was called OOT, object-oriented terminal, terrible name. But we canned it.

Aaron Dinin:

And this here is a good reminder from Kevin. That ideas by themselves don’t really mean much as you just heard. He came up with the idea for the worldwide web before it existed. And we’ve heard similar stories here on Web Masters before in episode 23, we heard about how Michael Merhej, founder of Audio Galaxy, tried to launch a Dropbox like product years before Dropbox. And couldn’t get significant traction with it. In episode 18, we heard about how Friendster founder, Jonathan Abrams created social bookmarking about five years before anyone else, but it didn’t take off. And even Kevin and his DoubleClick partner, Dwight Merriman created a Slack like product that didn’t go anywhere before ever creating DoubleClick.

Kevin O’Connor:

We created the best product it was with Dwight Merriman. Dwight Merriman went on to do MongoDB. DoubleClick a MongoDB. He’s a great engineer. I was like a really good engineer. He’s a stud engineer. It was one of the best. So we created this thing. We wanted to capture organizational intelligence and we created this thing called open mind. And it was one of the first sort of we used a web browser and it was a server and it captured communications and documents and everything else. It was basically Slack. It was an early form of Slack in 1993. And a bunch of corporations put it in and it got incredible. People were using it and people loved it, but destroyed productivity. So everybody ripped it out. They all ripped it out. Cause it was the worst product for the company. And so it was a complete failure.

Aaron Dinin:

The lesson here is that there’s a lot more to entrepreneurship than just having a good idea. And just as importantly, recognizing good ideas in the moment is also terribly difficult. For example, in Web Masters episode, number one, you can hear the story of how Louis Monier, creator of Alta Vista, turned down Larry Page’s offer to buy the search engine technology that would go on to become Google. Kevin has his share of similar stories, including the story about how he turned down the founder of Twilio.

Kevin O’Connor:

Well, I turned down an investment. Jeff Lawson, who I had worked with in the past. And Jeff Lawson pitched this idea. He’s the CEO and founder of Twilio. And he pitched this idea. This is mid-2000s. And he goes, “Yeah, people are going to use text messages and stuff like that.” I’m like, “What?” I’m like “Jeff, there’s this thing called email. People use email, no one wants to get a text message as the dumbest idea I’ve ever heard.” And then of course he went on to build it. I think it’s worth $50 billion. So it’s really hard. Innovation is just it’s pretty low probability of having a good idea and a low, even a lower probability of building a company. You just got to have a lot of them.

Aaron Dinin:

Cycling through lots of ideas was a key part of Kevin’s entrepreneurial strategy after selling his first company, Inter Communications Corp, and working for the company that acquired it for a couple of years. He left to launch another new venture. That’s when he came up with the idea for DoubleClick, but he didn’t create DoubleClick based on any singular experience with advertising and marketing. Instead he followed a rigorous process of identifying potential areas for innovation based on market opportunities. And then he and his business partner explored possible companies that could fit within those broader market trends.

Kevin O’Connor:

We picked a whole bunch of different areas to brainstorm and internet was just one of them. We weren’t a hundred percent convinced. We were pretty convinced, but we wanted to look at a whole wide range of ideas, technology ideas. And the big thing that we were trying to really figure out was how people are going to make money on the internet, because that was 1995. And it was a transition from a government experiment into the commercial internet. It’s like building a city from scratch. You want to sell them the pipes, the steel, the cement. What is it? How people are going to make money? And so the original idea, I actually came up with, which was, I thought that it was going to be a very fragmented that there was going to be disconnect between the providers back then it was AOL and CompuServe.

They were both the communications provider and the content provider, but we felt that the web was going to split into maybe a thousand content sites. So it was going to be fragmented. And so it looked more like cable TV. And the original idea was to do a network of subscriptions, which by the way, the world really needs it still needs it. It’s still a really good idea. Someone needs to do it. But it was going to be subscription. We thought it’d be more like ESPN, your cable company. And then Dwight goes, “You know what? I think advertising is bigger and media. You look on television and you look on print, you look on radio, it’s all advertising.” There’s not many subscription products and media. That was the epiphany, a pivot, but that was one of a hundred ideas that we had looked at.

Aaron Dinin:

Just curious, do you remember any of the other things you were considering?

Kevin O’Connor:

Idea I was really hot on, was doing a job board online. So I talked to 10 VP of HR and I said, “Hey, how would you like it? If you could post a job on the internet and anyone in the world could see it.” And they’re like, “First of all, what’s the internet. I don’t know what you’re talking about and why do I want someone all over the world to see my job? I just, I put my ad in the newspaper and people apply and that’s how I get work.” So we passed up that idea. That was a bad idea.

Aaron Dinin:

Yeah, internet job postings was probably a good potential vertical, but I’d say you didn’t do too poorly going after internet advertising. Why’d you finally settle on that?

Kevin O’Connor:

How are people going to make money? Advertising. Highly fragmented. Let’s build a network of advertisers. So I went out and bought two books. One of them I still remember? Nash and Direct Response. And the other one was a Vanderbilt professor who wrote about branding, brand advertising. And I was reading it and I’m going, “Wow. All this theory we can actually do.” The theory of advertising is probabilistic. It’s very inexact. The Direct Response was far more interesting because it’s highly measurable, but I’m like “We can combine these two areas together.”

Aaron Dinin:

As you heard Kevin, wasn’t someone with decades of experience in the advertising industry before launching an advertising business. And to me that’s a really important entrepreneurial lesson from his story rather than being idea focused, Kevin and his colleagues were focused on identifying a market opportunity. They carefully studied the world around them to understand how social and technology trends were moving. Identified a big shift in the market and then pursued it, despite the fact that they didn’t know anything about the specific industry. Is this the only way to identify an entrepreneurial opportunity? Of course not, but it can be an effective strategy in part, because it allows the entrepreneur to bring new resources into a market that doesn’t currently exist, which is exactly what DoubleClick did.

Kevin O’Connor:

So a lot of people have different forms of advertising, but the end of the day, it’s all advertising. There is a piece of real estate that somebody pays you for. And then it gets exposed to somebody and then something happens to it. People respond. So it’s all the same things. So we really modeled what does advertising look like on TV, on print, and radio? And just what is the format? What’s the layout going to be for the internet. And then trying to set standards. The reason we thought the network was going to be so powerful because we really believed it was going to be a fragmented media. We predicted there was I think going to be 10,000 websites. We were off by several orders of magnitude, but there’s just no way that people are going to be able to present this unified audience. We would be able to give you isolated audiences.

Kevin O’Connor:

People get a little confused on… in traditional media people will advertise on ESPN because they want to reach young men, right? The media is just a proxy for really the audience that they’re trying to reach and not the other way around. And we’re like, “Look, we can give you young men no matter where they are.” We believe that the only rarely do that with an effective way was on the internet.

Aaron Dinin:

And how did your technology do that?

Kevin O’Connor:

The unique thing was you go to a website, there was the content, and then they have a blank empty box. And then we would take a look at all the information that we knew about that person as well as the content. So we would take all that information and then we would have hundreds and tens of thousands of advertisers over time that were competing for that space. And then we were able to sort of dynamically allocate that inventory. We’re also an accounting system. So publishers wanted to get paid. Advertisers wanted to know what they were paying for. And then we were also able to measure how people responded to that ad, right? So they saw the ad, did they click on the ad? Over time, we could track it all the way to did the person purchase? And so it was a virtuous circle of gathering information, consumers, all anonymous. That was a basic concept. So we had a very efficient system. Micro-transactions. Each ad is worth a fraction of a penny. And I think we were delivering 18 billion ads a day. Now DoubleClick delivers probably a trillion ads a day.

Aaron Dinin:

Here we’ve got Kevin explaining how DoubleClick was basically using its technology to shift the core paradigm of the advertising industry. With traditional offline media, the media entity itself, for example, an NBA basketball game is just a proxy for the demographic it caters to. Marketers would buy an ad tied to that piece of media in order to reach the demographic most likely to be engaged with it. But obviously that’s an inexact process. Kevin and DoubleClick’s technology offered an alternative. They could use their tracking technology to identify specific demographics of people no matter where they were on the internet, which meant ads bought through DoubleClick would always appear to the right audiences. Ultimately that became a much more compelling value proposition than what offline competitors could offer.

Kevin O’Connor:

The internet was exploding and people are spending more and more of their time on the internet. As an advertiser, you’ve got to go where your clients are. TV was declining. Print was getting starting to get decimated. So all these dollars are freeing up. They’re paying the same amount of money for less of their audience. And they were trying to really chase our audience. So our big pitch was, “Look, it’s going to be media consumption.” If people are spending 10% of their time on the internet, it’s going to get 10% of the advertising dollars. It’s highly correlated. And then the other one was that it’s a superior medium in some ways, brand advertising was always tough, but we can measure. You can measure that somebody saw the ad and they actually bought a product. Print can’t do that, radio can’t do that. And we started to really make people question those other mediums. Really a rip off. That they’re unmeasurable. Have them prove to you that you’re actually getting a return on investment. We’re always like, “You can’t. Because you’re probably not. So come to us.”

Aaron Dinin:

Functionally, your quote, unquote secret sauce. DoubleClick was just a what? Better use of advertising budgets?

Kevin O’Connor:

Well, the secret sauce was… I hate the word new economy because it was not a new economy. It was just a new medium and people needed to make money. And we were there. We had a really, really good product. We were very product focused. We had great technology. Able to get investors to back us. And positioned ourselves as the thought leader, it helped in the persona. And the public markets were really… There weren’t that many public internet companies, but there was this pent up hunger for it. And we were growing very fast. We were growing, I forget how big we were. Probably 30, 40, $50 million in revenue when we went public. A year after that companies were going public with like $500,000 of revenue or no revenue. I mean, it was just, it became completely insane, but there was also a big shift at that time too. It was a fake economy, right?

So it started out with venture money. If you take a look at venture investing during that time, it probably 10 X, 20 X. And there was all going to internet companies. Internet companies needed to advertise. They needed to buy advertising. So they’d come to us and they buy advertising. Then those companies would go public and the public would give them hundreds of millions of dollars and they expected them… They needed to grow the revenue. So they bought more internet advertising. And so it was just this insane circle of money flowing in. I remember there was a sort of an arbitrage at 10 to 1 for every dollar of revenue. You get $10 of enterprise value. So people are doing anything to jack up revenue.

Aaron Dinin:

So it sounds like DoubleClick was a perfect combination of technology and timing. Because of course that was a time for ridiculous growth on the internet. So I guess I’ve got to ask, what was it like leading such an important company for the growth of the commercial internet during that critical time in internet history?

Kevin O’Connor:

So we went from, I guess, two people in the basement to 2,500 people in 25 countries in probably five years. So I was the CEO during that time. I was a reluctant CEO. I never really envisioned myself being CEO, but I loved it. Because I guess I’m a visionary. I love technology. I love disruptive technology. I love talking about it. I love product. So I was having a great time. Kevin Ryan was the president at the time and I’m good at designing trains and but terrible for getting them actually on schedule in the station. And Kevin was really, really good at that. So it was a great tag team. Back in early 2001, I decided I was spending less time on product, if any time. And I was spending it all on politicians, the media, Wall Street, lawyers.

The four groups that I’m not really… I can take a little bit of them, but I wasn’t really having fun anymore. And I wasn’t really doing… It was difficult to do a great job when you’re not really into it. So Kevin Ryan loved to do all those things. So I said you should be CEO now. And then a few months after he became CEO, the .com crash came. I’m not blaming Kevin Ryan. It wasn’t his fault, but it was correlated. Highly correlated. So Kevin Ryan did a great job marshaling the company through that disaster.

Aaron Dinin:

So I’m glad you brought up the crash because it seems to me that a company like DoubleClick should have been sort of the poster child for why the internet economy was a real and viable thing. Since DoubleClick was A, a real business that was making legitimate money and B, it was also helping other companies make money with the internet. So why do you think despite all that the .com it?

Kevin O’Connor:

Look, there’s a lot of hype on the internet. And a lot of it was (bleep). People talking about the new economy like we had discovered some new form of economic theory and principles and it wasn’t. Bill Gates described it, I think best, which was “Technology reduces friction. Makes things move faster. It creates efficiencies.” That’s all. So we’re very, very focused. A lot of our competitors were focused on giving their products away and we were very much like, “No, we’re going to build a real business. And there’s nothing new here. We’re going to use good old principles.” We had, I remember sitting in a room in 2000 with Kevin Ryan and I looked at him and I said, “Kevin, this has been too easy. I’ve done startups before. This (bleep) is going to hit the fan. I don’t know what’s going to happen, but something bad’s going to happen and it’s going to rock us.”

I had no clue. I just knew all good things come to an end, at some point. After living through several downturns, we had a CFO, Jeff Epstein, whose philosophy was when people are giving you money, you take it. And so we raised money. We raised a large secondary round right before the crash. I think we were one of the last companies to get out the door. And so we were, from a cash perspective, we are really well positioned. We had $400 million on the on the balance sheet. So, but the problem is that 75% of our customers went out of business. And so Kevin Ryan’s tough. He had to make a lot of tough decisions. He was CEO at the time, which was like, “we got to right size of the business. If 70% of our customers go out of business, we got a right size it.” And we did some shifting going towards more traditional companies.

That was a rough, we ended up laying off, I think 40% of the company. We thought it would be better to overreact and to under-react. And a lot of companies under-reacted, they were wishing this to go away and it didn’t. Now a lot of those people that ended up getting laid off ended up going to build the ad systems and advertising products at Google at Facebook, Yahoo. It turned out it was probably some of the best thing that ever happened to their career was to go to these other young startups. For us, my mantra was always we’re in business to stay in business. If I have one job as a CEO, that’s the not run out of money, to keep the doors open, and make up decisions.

Aaron Dinin:

Gosh. That just sounds like a crazy time to have been running a business.

Kevin O’Connor:

Well, I’ll tell you a funny story… I remember going to the airport and almost every magazine had internet stories on it. And then Kevin Ryan and I got listed in W Magazine. If you know, W magazine, I didn’t know what W Magazine was. But we were listed as, I don’t know, the top 50 most interesting people to have lunch with. And that’s what I told Kevin. I go, “This is totally out of control. They don’t know us and we’re boring. This is not going to bode well.”

Aaron Dinin:

And of course, for a lot of companies, things didn’t go well during the .com crash. But as you heard, Kevin explained DoubleClick not only survived, it even thrived by rightsizing the business. That’s not to say things were easy. And as I alluded to at the beginning of this episode, one of the biggest obstacles Kevin had to overcome was related to concerns about privacy. Specifically while DoubleClick was giving businesses and incredibly powerful new form of advertising, it was doing so by tracking lots of things consumers were doing online. And that created plenty of controversy for Kevin and his team.

Kevin O’Connor:

I think privacy becomes this hugely emotional issue with people. We were the first ones to have an opt-out and people thought that, that was going to be the demise of all advertising. We would get 10 people a day would opt out. The people that really, really cared about privacy really, really cared about it. And it made for good press.

Aaron Dinin:

It sounds like you’re suggesting that privacy concerns were exaggerated. They were presented in the press as a form of spying, but is it safe to say that’s not what you were trying to do?

Kevin O’Connor:

So, yeah. Okay. Let’s say I’m Ford Motor Company. And most trucks are being sold to, whatever, 20 to 30 year old men. What if I knew that somebody was looking for a truck. Which is what Google does, right? So intent information is really, really powerful. What people bought in the past is really indicative of, I know you own a Ford truck. I know you might be interested in tires that go with Ford or, or what have you. So information is incredibly valuable to the advertiser.

And for us, the fact that you’re giving people relevant advertising, it was beneficial to the user. So let’s say I am shopping for a truck. Wouldn’t I be interested in knowing that there’s $3,500 rebate on Ram trucks. Those are like helpful to consumers. And in fact, the more you know a consumer, the better you can tailor the advertising. Then the more it’s like information rather than spam. That’s the pitch. Doesn’t always go over so well. And it did not go over so well. It got so out of control. One little story USA Today, they were speculating that we could know that you’re a smoker, and then we’d sell that information to deny you insurance. And I was like, “What?” You like yellow sweaters. And I’m going to show you yellow sweater ads. That’s all, I’m not trying to like ruin your life, but that’s not the way the media works.

Aaron Dinin:

There is of course, a fair bit of irony in what Kevin is describing about his technology versus how it was portrayed in the popular press at the time. Specifically, while countless news stories and editorials were being written to decry DoubleClick and the online spying it was propagating. Those same companies were actually using DoubleClick and technologies like it in order to monetize on all the people reading their stories about how terrible online advertising was and the associated violations of user privacy. Of course, this is still a huge debate. Particularly as online advertising has consolidated around Google and Facebook. And to be clear, I’m not arguing online privacy isn’t important. I do however want to point out the piece of the debate that often seems to get lost, but you actually already heard Kevin talking about it at the beginning of this episode.

Kevin O’Connor:

Someone’s got to pay for it. Someone has to pay for you getting access to the world’s knowledge. And poor people don’t have money. They’re not going to pay subscription. So by moving everything to subscription, you end up really making it for the elites. People that can afford it. And not very democratic. Or if advertising doesn’t work, the publishers go out of business. So it’s really this symbiotic relationship. People always choose free over paid and you need effective advertising.

Aaron Dinin:

In other words, operating businesses is expensive. Those expenses have to be covered. And the two options are either one consumers pay the companies directly for the value they provide or two those companies find some other way of getting paid. Yes, a subscription-based model could remove the need to track and share consumer browsing data with advertisers, but that would limit access to a lot of online content and services. Is that fair? I realize consumers have a right to privacy on the internet, but don’t they also have a right to access the internet. How do you give them that access without either charging them or charging advertisers to advertise to them? That’s not to say digital access is more important than digital privacy. I’m just pointing out that it’s a difficult issue to grapple with, which is exactly what Kevin had to do as CEO of DoubleClick.

Though, I think it’s fair to assume he would definitely come down more on the side of digital access over digital privacy. After all his company devoted itself to making advertising as effective as possible. And by the way, they came up with some strategies that are still some of the most effective advertising techniques in the world.

Kevin O’Connor:

We invented retargeting. We’re always looking for signals. Keywords were obviously a very strong intent, but we stumbled on this. And what’s a really incredible intent is that someone’s actually been to your website. That’s the strongest, intent signal they could ever send. Or the fact that they put diapers in their basket, but didn’t buy it. And so we invented this and we call it boomerang, we used to call it dog (bleep). Once it sticks to your shoe, you there’s no way to get it off. And the results from retargeting were discovering cold fusion. This was a signal that was so strong and so cheap and worked better than anything we’ve ever seen. And we ended up not making any money from it. It’s billions of dollars of business now, but never made money. That was the strongest signal that we could find.

Aaron Dinin:

Wait a minute, you invented retargeting? Can you share more of that story, please?

Kevin O’Connor:

We were obsessed with what data can predict either for targeting, whether it’s demographic data, whether it’s purchase data, any data. To us, any data was valuable. And we’re always looking for that. The most valuable. I actually pitched Larry Page on residual keywords. I said, “The fact that you’re searching for a Ford truck, you’d get Ford truck results. That’s great. Why don’t you remember that they’re searching for a Ford truck and now you’re going a thousand other opportunities to advertise Ford trucks to them or Ram trucks or anything.” So, we are always looking for predictive data. I don’t know exactly how we stumbled on it, but it was just working backwards. We talked about, someone’s been to your website, you have a billion users on the internet and a thousand people have been to your website.

I don’t know how they got to you… Forget about why they came to your… They came to your website. That’s a really good signal that they’re interested in you. When they could have gone to another a hundred million other websites, they came to you. Retarget them. And it works. It works really well.

Aaron Dinin:

So why didn’t you make any money off of it?

Kevin O’Connor:

That was the meltdown of 2000, the .com meltdown. And it was a privacy meltdown. So it was two very bad things converging at one time and we sold it a little bit, but then we sold the company and people picked it up from there.

Aaron Dinin:

And what did Larry Page think of the idea when you pitched it to him?

Kevin O’Connor:

He didn’t respond. I’m almost positive. He did it though. I’m sure he did. It was a good idea.

Aaron Dinin:

So it sounds like maybe Google stole the idea for retargeting from Kevin O’Connor and DoubleClick, which is wild, but eventually Google wound up owning DoubleClick anyway. So maybe that’s not a huge deal though that sale to Google actually happened after Kevin sold the company to someone else.

Kevin O’Connor:

We decided in 2006, we basically had three companies and we needed to reposition the company. And doing that in a public market there was so much risk that we decided to sell the company. And then Hellman Friedman, a private equity firm came in and took it private. Then I was gone. They ended up splitting the company up and selling off the pieces for a lot more money. The big one being where they sold the technology to Google, I think three years later. So we sold it for like 1.4 billion and they ended up probably I think 3.2.

Aaron Dinin:

Do you have any regrets about that?

Kevin O’Connor:

I saw somebody had done an analysis of acquisitions by companies and they had listed DoubleClick as number two, most successful acquisition for Google. And I had met a corporate development guy at Google and he also told me the same thing. That DoubleClick was the most successful. I’m glad, I’d have greater regrets. If somebody sold a piece of crap product to somebody and then they ended up having to do a massive write-off. So I’m fine. I try not to have regrets. I can’t change the past. So…

Aaron Dinin:

Of course Kevin is right. Entrepreneurs can’t change the past. No one can. And let’s be honest. It doesn’t sound like his outcome was particularly bad, either. Not only did he achieve a billion dollar exit, he also did it while laying the foundation for one of the most important advertising companies in history, which is a pretty good past. And as Kevin also points out just like he can’t change the past, the future can be equally tricky for entrepreneurs to deal with.

Kevin O’Connor:

The wisdom I can give people is that you don’t know what’s going to happen. We got hit by the .com, we got hit by, we got hit by 9/11. And it was just one thing after another. Be prepared and we could have been more prepared, but I don’t know, I don’t regret anything. It was fun.

Aaron Dinin:

And honestly, even if you get nothing else from your entrepreneurial journey, but you have some fun along the way, that’s a pretty good outcome too. Speaking of which I hope you had a little bit of fun listening to Kevin’s story, if you did be sure to subscribe to Web Masters on your podcasting app of choice so you’re sure to get the next episode as soon as it’s available. And also share this episode with a friend, no reason to keep all the fun to yourself, right? A huge thanks to Kevin O’Connor for taking the time to talk about DoubleClick. If you’d like to see what he’s up to these days, you can find him on Twitter. He’s @KGPOConnor. Web Masters is on Twitter too were @WebMastersPod and I’m on Twitter @AaronDinin. That’s A-A-R-O-N-D-I-N-I-N. Also be sure to check out all my articles about entrepreneurship and startups over on medium.com.

I want to thank Ryan Higgs our audio engineer for his help pulling together this episode. And I want to thank our sponsor at Latona’s for all their support. Don’t forget if you’re in the market to either buy or sell an internet business, make sure you head over to Latonas.com. And lastly, I want to thank all of you for listening. I hope you’ll join me again soon for our next episode, which we’ll be releasing in just a few days. But for now, well, I guess it’s time for me to sign off.

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