Today we talked to Mike Dougherty - the CEO of Jelli - that about 2 years ago got sold to iHeartMedia. He talks about the 12 years and the multiple pivots he did to get to the point to sell Jelli.
Jelli started off as "Shared Listening" - and then pivoted to B2B media marketplace
Getting a big win from a key customer - iHeartMedia
Their customer were also their investors - and later on acquired Jelli
Very interesting model for using bankers to get the best price - when there are inherent conflict of interest.
Alright, so we are going to start another episode of broadcast today. I'm your host of the veg Pasco and I'm also joined obviously with the only Mahajan and today we have Mike from jelly. So, welcome to the show. Mike.
Mike Dougherty 07:22Hey guys, I'm really happy to be here. Thanks Amy. Good.
Vivek Bhaskaran 07:26Great backgrounds, that's not the real office, but your that's your
07:29Office, I guess we stopped that. Exactly. So Mike, tell us a little bit about jelly. Tell us your story. How did you, how'd you how'd you know you're on the founders and how does the story at Anjali
Mike Dougherty 07:39So Julie started about 12 years ago it was a startup myself and my co founder to team correct CTO
07:46We thought that this very large and kind of old school industry radio, which a lot of people have skipped over and sort of thought L Pandora is already going to when
07:56We thought it had already significant audience and frankly was going to be around for a really long time remaining very largest still is. It hasn't actually rooted that much even call those 12 years
08:06And we thought we'd bring a cloud platform. So technology to this industry to sort of help it both from an audience perspective, but also if we could
08:14Help them from advertising perspective and then over the years developed out and became the largest audio ad platform in the country, creating marketplaces, where people can buy and sell radio ads in a very similar way that you do by Facebook ads or Google ads.
Vivek Bhaskaran 08:29And so like like
08:31Like double click for radio. Is that, is that a bit simpler way of describing this
Mike Dougherty 08:35Correct. We for most of our history were double click for radio and then very recently we were two years ago.
08:43Year and a half ago we were acquired by I heart media largest radio group and audio company us
08:48And we launched last year AdWords for radio. So basically, a off of I heart media com you know the ability to buy
08:56Directly from my heart using your credit card, it creates an audio ad for you if you don't have one. So really easy way for people to get going.
09:05You know the call sales person. They don't know which radio station. They want to get it on this pick their, their, you know, Tiger creative. They're interested like funny or whatever the tone is of the ad will make one forum.
09:16And then they can have it run on radio station. So it's almost like open table or some easy way of or doordash for radio so awesome.
09:25Yeah, that's, that's kind of what we've been up to, and trying to make this medium act much more like digital so
Romi Mahajan 09:32Make you said something interesting about kind of radios persistence right as as a large with a large audience and people still listen to radio and I think for a while there was this whole flood around radio is going to die, you know,
09:46David don't predictions and TV would die, etc. You know, isn't radio still like a $25 billion dollar ad industry terrestrial radio isn't something just insane like that in the US.
Mike Dougherty 09:57It's huge. I mean it's, yeah, it's still roughly the same as it was so it's about an 18 $20 billion market in the US 40 billion globally.
10:07And most of the business about 60% of doesn't start local businesses. So it's a little. It's a significantly skewing local advertising medium.
10:17And it's really great medium for people who are in their car, maybe looking to shop on the weekend.
10:24And an advertiser can reach them at that moment when they're maybe they're going to make a purchase decision, like I'm going to drive over to this retailer.
10:32Or drive over to that one to pick up the item. And so it's used by some national advertisers like they change and stuff heavily. So there's some out like Home Depot and various
10:45Ads. The we're all familiar with because we've been driving around ourselves and hearing them all the time like O'Reilly auto parts, you know, you can sing the jingle. But I'm very effective medium for people use it.
10:57And now it's starting to change. I mean you are starting to see now 12 years into jelly that you're starting to see podcasting, like the one we're doing starting to really expand people are listening to it in the car as well.
11:10It's a great companion like radio
11:14For your drive. And so we are going to start seeing change but but it's still the old AM, FM radio is still a very big channel even 2020 2020
Romi Mahajan 11:25Make you think about radio or do you think about audio as as a larger category right or is it above
Mike Dougherty 11:34We think about audio I'm marketers especially big national brands agencies, etc. Thinking audio.
11:41They're thinking about, they love podcasting. It's a new medium, it's growing very fast. They love radio for scale. But the hot new areas such as podcasting streaming, but also even voice platforms that are audio by nature.
11:56Are very exciting categories and so audios definitely like hot. That's the, that's the overall category radios and anchor channel, I would say for scale distribution effectiveness, you know,
12:08But we look at both an I heart who were part of now is very strong and all of them. So I heard
12:14I think the largest podcasting company now are you any given month, it will be one or number two be behind NPR. And so you look at it sort of multi channel strategy for I heard around podcasting streaming and also radios and anchor.
Vivek Bhaskaran 12:31Mike, I have a question. A long time ago, you had educated me about something that was super interesting. At least for me, it was like, you talked about
12:38Like active listening and passive listening right i mean i think you guys have this nomenclature in the industry.
12:44Tell us about it. Like, I didn't know about it. Once you said that it kind of made sense. But definitely, that was a I opening kind of active versus passive models Douglas, a little bit more law that
Mike Dougherty 12:55Yeah, I think that
12:57We started jelly. We originally started with this idea that we could create social listening. The idea that people together synchronously. So, at the same time could both listen to the same thing and react to it.
13:10And we thought that would be that sort of interaction model would really change it. We even game a fight it made it really fun to do that and are saying back then was, you know,
13:21We all have the same songs. I mean, we all bought the songs, a long time ago, your favorite song you will still get zillion times but there you know when you hear it.
13:27on Pandora versus or on the radio or on Pandora, or when you hear it in a social environment. It just has a different feel epsilon
13:35And we were kind of like the jukebox at the bar. If you've ever had that time where your song got on the jukebox you like. That's why though.
13:41You know, and it sort of you've heard of this billion zillion times. Why are you so excited, but you just, it's cool that it everyone else's hearing it too.
13:47So that synchronous idea was the first one, creating a synchronous social listening and the second one was interaction where you're leaning forward and having some impact on what you want to your next that other people might your next and chatting about it.
14:00So we had all these elements of jelly initially we learned a lot from it, including the fact that it is extremely addictive. It can be very addicted to have your song.
14:11Listening to your song with other people doing at the same time talking about it. Yeah. And the chat room was something that was a huge part of that experience.
14:20Synchronous chat went along with the synchronous listening. It was also a double edged sword because we found that yet to moderate it and you're you're seeing this now on Twitter. You're seeing this now. I mean, we never thankfully it with the
14:35cultural issues cultural wars that are occurring right now our country on chat. We just had to deal with some 14 year old kid, it was a little too, you know, let's call it excited about being in chat. Yeah, but I'm waiting to send a ban hammer his direction or her direction.
Romi Mahajan 14:51It's funny you should see if it ain't going crazy about opera and country music. I mean,
14:57I've got a question. Because, you know, I, I've known you had the pleasure of knowing
15:01Knowing you for, you know, 1213 years and you know you're you. You're a big company guy or Microsoft or it in. Tell me, you know,
15:09Harvard Business School, and then you started the entrepreneurial journey for me that's fasting someone like vague has been an entrepreneur literally from day one, almost right. But you you know you had gone through a different narrative walk us through that a bit. I mean, the boot camp.
15:24People love to hear, stuff like that.
Mike Dougherty 15:27I don't know if I would have been ready to start a company right out of the gates and out of college, you know, it's more power to everyone who can do that even when I did start a company, later on in life.
15:37I needed a partner. I needed a strong partner. So for me it was also finding a good co founder, when I when I got to that point, but
15:44But back in the starting, I really learned a lot. I was always about learning. So I figured like what do I need to know what am I learning what do I want to know.
15:52And I remember I had an infinite amount of learning that was occurring and he's very company. He's in these different industries effect on Wall Street for a while. I learned a lot while I was there.
16:02I would tell you that there was some point, though, where some friend of mine said
16:07Like he was almost poking me a little bit like can you learn any more about business development, which is what I was doing at the time is, I do. What's your problem kind of
16:15Right. And I was sort of thinking like, since I was so important to me that concept of learning. I was like, Oh, you're right. What's the next challenge. And that's when I started thinking, You know what, I think my next step is, I am ready to try to
16:28Start something and and so it didn't happen right away when that occurred, but I do. I was sort of prepared for it and
16:35I did go into with eyes open, that it will be hard, and that I didn't know everything I needed to find good partners around me to help us do it together and
16:47I also was very thoughtful before I started about the industry that I wanted to go into because
16:52I wanted to make sure that I de risked it as much as possible. So I tried to find an area that I can pick up the phone and call people who were important in that industry to help
17:03Us be successful and i i use this idea of a
17:07bull's eye. So I said, if I can pick up the phone and call somebody there in the center of the bullseye. Like if they could help me within like a day or two. I could reach
17:16Somebody there in the second concentric circle and and the last one was like, maybe it takes a week or a month to get a hold of something like who's in those circles. I tried to line up as many people as I knew in those different areas.
17:26Really, and I said, okay, that
17:27That's the area I go into because like we know how risky things are. Yeah. And like, if we can get some other people to help us whether their customer future customers, partners, investors.
17:39You know, employees partners, whatever.
Vivek Bhaskaran 17:43Then that's a, that's a good way. That's a good way of mapping your kind of
17:46Your network, if you will, right, a network, network mapping of internal network like okay, these guys can help me with this, this guy and then you can say, like, where's the highest concentration of outcomes that you can get. Of course, you went to Harvard. So you did all this math and did
Romi Mahajan 18:01I mean you're mapping book, their ability to help and also their desire. Right. So you're kind of
18:08More on that as well. Will the answer my call.
18:12But will they will they want to help meet so
Mike Dougherty 18:14That's totally true like actually Romy that was a really important one, which was I felt that if I was to reach out. I needed to come up with an idea to help them first.
18:23Right point not not not sort of like cheesy quid pro quo. We kind of things I'm we're just like, look, if
18:30If I'm going to connect with this person. Can I bring an idea to them or something I can do to really help them a lot like a big one big thing by pulling some other relationship or something else I can do for them. And once I did that a couple times.
18:44It actually work that one of our first big deal came out of the fact that it was that kind of thing. I brought some really big business that really nothing to do with
18:53With jelly to our first partner CBS Radio and I was able to help them connect and close. I even pitched help pitch it at $8 million radio by revenue.
Romi Mahajan 19:05I mean,
Mike Dougherty 19:05And so they like almost gave me the deal, our deal the jelly deal as certainly. Yeah, just give it to me. It's got a million bucks. So like, you know,
Romi Mahajan 19:12So, so you know 12 years ago a friend pokes you and says, you know, dude, how much more you can learn about business development, go do go be an entrepreneur and at 1.4 years and five years, introduce hate that guy. You're like, Oh, man.
19:27Before you started loving him again.
Mike Dougherty 19:29Totally, yeah didn't take that long.
19:33Yeah, it's hard man is the hardest job I've ever had, you know, most stressful job yeah you know like it's funny, I was talking to a guy who sold his company.
19:43And we had just sold jelly. So we just merged with I heart. And so I was talking to this guy was like sharing stories and he's, he had decided to start another one right
19:54And he's like, I'm not doing this again. He goes, he just he saw the new and goes, I forgot how hard it was from zero to 1 million, you know, like dollars. He goes,
20:02This is so hard. He goes, the only thing I'm ever going to do at this stage. Again, probably by or get, you know, I'll try to get involved with a company got 5 million in revenue already. Yeah, and that's what
20:12So it's sort of like they say that that women when they have babies. You know, they have some chemical that makes them forget how brutal. It was to go
Romi Mahajan 20:20To the
Mike Dougherty 20:20You know the get a process of having a baby.
20:23Yeah. And then we don't understand we see it, but we don't really understand it, but there's some kind of chemical makes them, forget it. So they want to have another one.
20:29And I think that entrepreneurs go through that that same thing where you're kind of itching to do it because you remember all the positive and you remember all the highs and
20:36And everything you read more accomplished but but the flip side is there were so many times that were hard so many times that existentially difficult or stressful and
Vivek Bhaskaran 20:49Yeah so early on broadcast. Like we were comparing starting companies to having babies right so it's like
Romi Mahajan 20:55Boot Camp guys hear
20:57Me guys three guys
Vivek Bhaskaran 21:01Good, good, good. Yeah.
Mike Dougherty 21:03That's probably the wrong.
Romi Mahajan 21:05No, no.
Vivek Bhaskaran 21:05No, it's a it's I think I agree with that. I mean, like, you know, even I know in my experience, like I remember all the highs and probably don't remember the pain, misery and suffering. Try to get like one $5,000 deal closed and
21:16You know, just gonna probably like, you know,
Romi Mahajan 21:19You've done five bootstrap companies that exceeded that that AR so you know you've done it five times right so
Vivek Bhaskaran 21:25Well with everybody else. Right.
Romi Mahajan 21:28You as a founder
Vivek Bhaskaran 21:30Tree, but otherwise have failed. So, and that sort of thing. Right. I mean, I think I love the highs and lows. I mean, I think, either way I look at it as like, Okay, no, it's it's it's a high low situation. So one day you're, you know, you're
21:42Super excited and it could be like literally the three days later you're like, god damn it. This is why this you know either software is not working or
21:50Is that the customers piste and some things like and I feel like, you know, if you're lecturing yourself.
21:56But again, it's the highs and lows both ways. Right. I mean, that's what you know, at least for me that that that's what is exciting that keeps me motivated that keeps me going to you know when a waking up and trying to do new things.
22:07Going back to you. Jelly. I mean, I think, what was your inflection point in terms of as you guys were. I mean, obviously you guys pivoted a couple of times.
22:16When did you feel that, you know, things were like Yeah dude, we got this thing was the revenue metric was attraction metric was it
22:24Anything else where you just felt what was the metric that you guys thought about, like, Nah, this is it. Man, this is, this is the right direction we're headed in the right direction.
Mike Dougherty 22:31It was, yeah, you could tell when you start getting a big customer feedback like when you have a customer deals deployments.
22:38And they started coming in. And I remember there was one day we got we originally were working at I heart media.
22:44As a partner as a customer our customer. And I remember the day we got the call that said, hey, we're going before. Let's start the process to do the technical
22:53You know due diligence and things we need to do to build a deploy and start working on the contract.
22:58And I vividly remember that day, you know, getting that calls in a conference room to watch it and conference room before the private conversation. No idea what they were gonna say
23:06And when they say like, and the deal is big. It was a big deal. It was so that was a company maker. It was also sort of a
23:13Solved the chicken and the egg problem where
23:16We also have agencies working with us on the other side of the equation, buying and so it gave us enough scale on the sell side to have the buy side feel like this is the place they need to be as well and so on that deal was the chicken or the egg, whichever the one
23:32Writing that comes first. So, right, right.
23:34That's a great so
Vivek Bhaskaran 23:36You talked a little bit about finding a co founder, how did you find that they didn't just say to how do you find a job, didn't tip tells that story. How did you go
Mike Dougherty 23:47Yeah, technical founder, since I did. I'm not an engineer myself. I knew that was something really important right, not only for building the platform and getting off the ground architecture, etc.
23:57But also recruiting, you know, we need to bring in great new people and they're not, you know, engineers or
24:05You know that they will resonate with some of the things you can say from someone like my perspective, but they resonate more, you know, somebody who's got a technical background and so
24:17Also, I kind of thought from a supportive perspective, it would be good to have a co founder, not just from a matching technical verse business but having someone to bounce stuff off of so
24:29When I was thinking about this. It's also a test to. I think it's a test for a start up can you pitch, an idea. Can you start talking about an idea with someone who's willing to take a bigger bet as you are.
Vivek Bhaskaran 24:40Right. That's a good idea. That's a great kind of testing scenario as you think about like ideas like we've talked a lot of people are like, Oh, it's everybody thinks their own idea is like you know God's gift to mankind. But can you even get somebody else to quit their job or leave
24:53Take a risk and say, like, look, I
24:55It is good enough that I would quit and jump in with you. So that's also a, at least at least one anecdotal test to a particular to a particular kind of event. How did you find, is there any story around how you found Justin. Did you go on Craigslist and look for technical co
25:12Founder, just kidding.
Mike Dougherty 25:13Well no I it was it was
25:15It was a good point. I was I was I was doing what you said, which was talking to people about ideas testing ideas with them to see if they'd want to help or join or whatever. Who knows, and
25:26Along the way, someone said hey you should meet this guy was a friend of mine, and he said, you know, you, you really should meet him, because I trust him as much as I trust you.
25:36Awesome. And I was like, and you know, and yeah, so it was something like that. And I was like, whoa, you don't
25:43Trust me a lot. So, you know, it was all of a sudden, I was like, You trust me a lot. Dude, I mean I'm great. It's really great. So like fed into my ego.
25:50But um I that I've definitely been a meeting because I knew that one of the biggest things that can kill a start up is having founder divorced or some sort of founder split
26:00Some problem there. And so you know that when you're having a founder, you're getting married. You truly are. And, you know, divorce is not going to work out very well for your startup so
26:09So they had to be a good fit. Also, and I got lucky on all fronts, you know, to, to not only strong background technically can recruit and also he was great with investors, but
26:26He was a great match with personality type. Yeah. You know, I constantly continue to work on issues around, you know, being too fiery or whatever.
26:37And he's got the opposite. He's like, the most like can absorb whatever is coming out him in the most common way which is such a skill.
26:45And so that match was really good as well. And so I think that you know someone's looking for a co founder, so you can find all those things. I mean, it's like you kind of have to get lucky on a couple of them, but
26:58At least I went went in knowing it was really important I needed to be really careful. Yeah.
Romi Mahajan 27:02And it culminated in massive success and one that continues to be successful right as you introduce new products and
Mike Dougherty 27:09Yes.
Romi Mahajan 27:10From what I know. I mean, you know, but they can I did some homework here. I mean you know the team is happy very innovative and so on and and it's not like you have a huge number of people. It's a small number of people doing them in some amazing stuff right so
Mike Dougherty 27:25Yeah, it's it actually was funny, not funny. But I guess after it makes sense. After the acquisition
27:31I heard even could use us even more than they were using us before because they didn't have the same contract terms in place.
27:37Right, so we ended up having
27:41Times for revenue on our platform.
27:45Like, you know, hundreds, hundreds and hundreds of millions of dollars. And so it was one of the things where, when a VC that we used to have asked me about. How's it going, I told him that he's like, Man, why did we
Vivek Bhaskaran 27:57Said,
Mike Dougherty 27:57Right. But I'm like look at wouldn't happen if
28:01Merger hadn't occurred that revenue would have showed up like
Romi Mahajan 28:05Spotify of the success as opposed to right
Mike Dougherty 28:08Right, so
Vivek Bhaskaran 28:10And tell me a little bit, tell us a story and tell me a little bit about like when you decided to kind of pull the trigger with I heart and obviously you guys were running independently and then like, at some point, you know, they were your customers.
28:20Partner and then eventually they ended up obviously acquiring you realistically. So tell us that, you know, how did you go about making that decision.
Mike Dougherty 28:30Well, we were looking at the market is evolving and we we thought we were pretty good position with the way our platform for advertising was working
28:39At that time, but you could see the writing on the wall that was coming with podcasting quickly you can see that what was coming with voice.
28:48And, you know, these sort of new devices and connected cars even
28:52And we realize that we're going to need. We're going to need to. We even had a project name for called big sorry, we're going to need to fund that so we started thinking, we need a big round.
29:01To fund the effort to grow into these areas. These new areas and
29:07And the process of doing that I heard was already partner and an investor said, you know, maybe this is the time for us to talk about connecting together because we have all those things and we can scale faster.
29:17Together and I think that although we had some other folks looking at us. It was a strategic for them right heart that we made a lot of sense.
Vivek Bhaskaran 29:29Do. Were there any conflict of interest there since they were they were customers as well as
29:33Kind of equity holders going to how to manage you you're kind of like in between, you know, you got an equity stake. Obviously there are customers and also see they're also making an offer any secondary offers does a little bit about like that kind of that process.
Mike Dougherty 29:46When 100 yeah for sure. I mean,
29:48That's the challenge of having a corporate our customer Corporation as an investor as well.
29:55There's a natural conflict of interest and even sit on. In this case they send our board so they have access to information so they can even ward off other suitors. If you have a process rolling with other people interested it because they feel like the other party's got
30:09Her hand. You know, they don't have to buy as much of the company. To start with, like, they already have a chunk of the company. So they have to show the less money to get the whole thing.
30:17And secondly, like they have the board seat. So, how you going to manage that it feels like they'll have inside knowledge about how the process is going evaluation, whatever. So there's a whole bunch of issues around having a corporate partner, also a suitor.
30:33When you're running a process with potentially competitors of them. So we had to be very careful and we had a separate committee created that excluded them for finishing duty to the other investors.
30:48And we also had the season, Vol two were very interested in the best outcome. So they naturally wanted to gravitate towards having that separate committee, any way that they would sort of drive. We also hired a banker, which
31:00Not every company needs to do when they're selling. But in this case, because we had the corporate sort of parent, it was useful to have that prop them in place to also keep everyone a little honest.
31:12And make it so that not every conversation had to go to Mike, you know, like calling me
31:18If you're on the board. It's easy. Like, no matter what I say. You can probably get some info out of me somehow you know even if I'm really good at bluffing or just not saying anything. Yeah.
31:27Like, whereas a banker, you know that they contact that it's going to be different kind of conversation which is filter differently so
31:36That is a good reason to have a banker an agent.
31:40To manage that kind of process. If you've got a large corporate investor who is also a potential that's a
Vivek Bhaskaran 31:45Good point.
31:45That's a good point. They can I keep it keep the kind of the all the pieces in the right spots, rather than kind of like everything everything coming back to you. Otherwise, it would have come back to you, frankly,
Mike Dougherty 31:55I think about it like they're just asking for updates. How you doing, right, how many other acquires. I can't tell you.
31:59That they can kind of start asking you. And then, whereas if it's a banker. It's like, yeah, we got a process going. There's for others and they don't like.
32:08They don't know where you are and they just know that what the bankers telling you
32:11And I just push them off and say, talk, talk to that.
Romi Mahajan 32:14Yeah yeah
32:15So, so you know I you know I know that we have this on webcast, we have this notion of, you know, we keep it short and readable and
32:24You know, I wanted to say, Mike, a great, great amazing story. And to me, what you guys have done is revolutionary in terms of re vivifying radio right and and we've ever find the notion that radio is not a dinosaur. It's a very important part of the ecosystem. So I think it's
Mike Dougherty 32:43Around me
Vivek Bhaskaran 32:43That. Yep.
Mike Dougherty 32:44What you guys are doing the podcast. Now you're
32:45At all your family here.
Vivek Bhaskaran 32:46Yes, we are we are we are on I Heart Radio to
32:51publish this up.
32:52Thank you so much, Mike.
Romi Mahajan 32:53Just scream at each other for audio. But now we actually do a podcast.
Romi Mahajan 33:00And say hello to the rest of the team.
Mike Dougherty 33:03I will, thank you guys.
Vivek Bhaskaran 33:04Thank ya. Bye.
Mike Dougherty 33:06Bye bye.