DURHAM — Serial entrepreneur and Durham native Jud Bowman appears to have the Midas touch.
His first mobile tech startup, Motricity, which stemmed in part from a company he co-founded as a high school senior at the North Carolina School of Science & Mathematics before taking an indefinite leave of absence from Stanford, completed a $50 million IPO co-led by Goldman Sachs and JP Morgan. Motricity came after Bowman cofounded Pinpoint in 1999, and it later merged with Motricity.
Then in 2008, he founded his second, Appia, delivering more than 100 million app installs for hundreds of advertisers, including 60 of the top 100 grossing apps on the App Store and Google Play. Digital Turbine acquired it in March 2015 for approximately $100 million.
Now the 38-year-old is four years into starting Sift Media, which sorts through 50 billion mobile ad requests daily, leveraging advanced artificial intelligence and machine learning algorithms to hyper-target app install ads for clients. And again, it’s also growing like gangbusters.
This week, the Durham-based company raised another $1.5 million for working capital just to keep up. WRAL TechWire’s Chantal Allam recently sat down with him at the startup’s American Underground headquarters to check in. Here’s what he had to say:
- Why did you do the raise?
It’s always good to have cash in the bank.
I’ll be transparent. This is the third debt offering. We don’t normally announce debt offerings. Companies that have a decent amount of revenue can get working capital lines to help finance. The reason you need working capital is if your revenues growing really fast. Your revenue might outpace the working capital that you have in your balance sheet. That’s what this is about. It’s really just solving this working capital issue.
- So you’re growing quickly. What is behind the growth?
Well, we’ve had a really strong four years; we’ve been extremely lucky. But in particular, the fourth quarter was an all-time record. We saw an acceleration in fourth quarter, which was really nice. I think that’s where it was at our December board meeting that we looked around and said, you know, let’s just add a little bit of cash to the balance sheet, given the revenue acceleration that we’re seeing.
- What are you going to do with that capital?
It’s really just solving this working capital issue. I think the thing that’s really encouraging to me is that we just finished our third year, the profitability, your profitability, yeah. We’re only four years old. So, you know, for me as an attorney,
This is my third company.It was the fastest to get to profitability that I’ve seen. So we’re extraordinarily lucky in that sense. And we’re trying to be very capital efficient, which is why you haven’t seen us raise large rounds of equity capital that that we did at the end. Motricity.
- So let’s go back to the beginning. What exactly is Sift Media, and how is it different from the other companies that you have started?
So Soft Media is very similar to Appia, and the idea that we’re working on here is actually an idea that we got at Appia. It was a project that we were working on the last year. But [then] Appia was acquired by Digital Turbine; this was an idea that they weren’t interested in pursuing. So we started Sift Media, originally as a spin out so that we could take that idea and run with it. And the early team, the four of us co-founders [Slawek Pruchnik, Jesper Rasmussen, Aaron Schwager] all work together at Appia. And the basic idea was if we could figure out the set of apps that you have on your phone, that’s like a digital fingerprint of who you are. And then, how can we monetize that? And the idea that we came up with was to serve targeted ads.
- So who are your clients? How do they come to you?
We hired our first sales guy back in September. We waited four years to hire a sales person, and yet the Triangle Business Journal said a couple months ago that we were the fastest growing revenue company in the Triangle. How’s that possible? But other than a sales guy we just hired, the whole team is a really technical team. We are an engineering-led company. But it’s just the nature of this industry that ads are all programmatically traded, and you can have a somewhat small team with really great technology and great IP and reach a huge scale of people.
- So you don’t necessarily need to have clients come up to you personally, and have that exchange?
We haven’t, but I think that’s starting to change. That’s one of our big focuses here in 2020. We just hired our first sales person and we’re starting to be a little bit more externally focused. What we’ve been doing the last four years is just really building the product out so that we could target and serve all those ads at a pretty big scale — 200 million ads a day. We have data centers in Singapore and US East. We spend way more on our server infrastructure than we do on our rent. To put that in some kind of scale, that’s about a billion users a month. So think about the number of apps out there that have that kind of scale. It’s a huge infrastructure to serve that many requests.
- That’s incredible. So now going forward, how do you plan to scale now? It sounds like you’re going to change your strategy a little bit.
Yeah. So over four years, we’ve been really perfecting the product and I think we now have the confidence that this product really works. We have worked with a lot of customers all over the world, and seeing the results. So now we’re opening that up a little bit. We hired our first VP of sales, a guy named Jeremy Lovelace. He started in September, and he was one of our top sales execs at Appia. So I’ve worked with him there. He brought in $50 million of orders for us at Appia, so we’re hoping that he can repeat that success here.
We’ve also opened two job positions that we’re actively searching for: a dev ops engineer to help with our growing server infrastructure, and a controller or a head of finance. I think that’s a sign that we’re also thinking okay, we’re going to be scaling this business up a little bit more in the coming quarters.
- So how many people do you have working for you now?
Sixteen. The metric that we look at we talk about a lot is revenue per employee, and the revenue per employee at Sift Media is significantly higher than my first two companies.
But it’s really a nature of the industry, and the product that we have. Our product uses AI (artificial intelligence), and I think a lot of people throw out this AI term. But it’s the combination of AI and machine learning technologies with programmatic advertising, and that allows you to get to a pretty interesting scale with an efficient headcount. And this isn’t the kind of problem that you could just throw people at, either. To try to amass the profile data, and to figure out where to target ads and how to do that — it’s a computer science problem.