Rubicon Project, the programmatic advertising company that went public last year, acquired Toronto-based search and ad regargeting company Chango on Tuesday for approximately $122 million in cash and stock (but primarily stock).
Toronto-based Chango specializes in “intent marketing,” mixing information from search queries with behavioral, contextual (the kind of content a web user is consuming), and advertiser data to allow brands to better target their ads.
As AdExchanger points out, Chango gives Rubicon Project (which originally started out as a supply-side-platform – or SSP – to help publishers and app developers monetize their content) more clout on the other side of the market, the buyer-side. Rubicon Project itself says Chango will open up an incremental $35 billion “intent marketing” revenue opportunity.
We spoke to Rubicon Project’s founder and CEO Frank Addante over the phone to dig into why Rubicon Project is bolstering up more on the buy-side now, and how its ad tech stack stands up to the likes of Google and Facebook which are rapidly building up (or acquiring) their stacks on both sides of the digital ad market too — serving both publishers and app developers on one side, and the advertisers, agencies, and the other ad-tech companies in the ecosystem (like demand-side-platforms/DSPs) that serve them.
This transcript has been lightly edited for brevity.
BUSINESS INSIDER: Chango is an interesting acquisition for you as it’s on the buy-side of the ad market, rather than the sell-side. Is this a pivot for Rubicon Project?
FRANK ADDANTE: It’s actually not a pivot at all. Our mission from day one at the company has been to automate the buying and selling of advertising, and from day one we’ve had technologies that we’ve built for both buyers and sellers. Initially it was about connecting publishers and ad networks through ad network optimization, then we pioneered real time bidding, and that led to the creation of DSPs (demand-side-platforms.)
Then a couple of years ago we launched our direct orders product, which enabled buyers and sellers to transact directly with each other. They also have the ability to use a DSP in that transaction. So we have a history from day one we’ve been developing technologies for both buyers and sellers. so this is very much in line with that vision and that plan.
BI: OK, you’ve worked on the buy-side before, but most of your revenue is sell side, and that can be a difficult place to make money. SaaS (Software as a Service) can be a difficult place to make money, and, as a you’re a public company, you need to show that you’ve a long-term growth strategy, and Wall Street loves high margins as well. There’s one interesting theory that the idea of SaaS in the ad-tech market is a dying breed. Do you any thoughts on that?
FA: [Laughs] There are always conspiracy theorists out there. So, first, our business is obviously very healthy, you can see that very clearly in our financials.
Comments about most of our revenue [coming from the seller side]: We actually haven’t disclosed and don’t disclose how much of our revenue comes from the buyer piece and seller piece, they do come from both.
To give a bit of perspective, a few years back, we had acquired a company called Fox Audience Networks a company we acquired from Fox, part of News Corporation. It was a fairly large acquisition at the time, and a lot of people were confused by that because Fox Audience Networks was effectively perceived to be an ad network, for MySpace, and News Corp, and Fox, and a bunch of other companies. But we acquired that company for their technology, scale, and their team.
Those three things really led to a lot of the success we had introducing products like real time bidding or direct orders into the market. And those were technologies we made available and for all buyers and sellers in our market: Publishers, application developers, the DSPs, the ad networks — we had the technology at the company at the point in marketplace.
Chango is exactly the same. Chango has built incredible technology in intent marketing, and intent marketing dollars today are primarily directed towards search. A lot of people, when they think of search, they think of the ads that show up next to search results, but a large portion of search is actually going to … keywords on pages, content on the page.
The intent for us is to make those capabilities available to all buyers and all sellers in our marketplace, including the DSPs, ad networks, and the agencies. What this deal does is it gives us the ability to bring this technology from search into premium advertising. We see it as a $35 billion dollar incremental market and it accelerates what we already have in this area, it accelerates our buyer technology by more than a year. There are 150 people in the Chango team, and that accelerates our hires quite a bit, as well as the customer relationships. Sixty of the Fortune 500 advertisers are on their platform today, and they are now part of Rubicon Project marketplace.
BI: How does your ad-tech stack compare to the rest of the market?
FA: I think that its fair to say that we’ve established a leadership position. Us and Google are the two largest exchanges in the market. With Google … they are starting to try to service themselves: They are a major publisher and app developer.
Whereas we’ve built our technology and our platform for the rest of the market, where we are focused on trying to power an open marketplace. Google has invested billions of dollars in buying DoubleClick, Invite Media, Admeld to try to put together the stack, whereas we’ve built the stack organically … Our exchange tech is very strong, our seller cloud is very strong, and our buyer cloud is … an area in which we are accelerating, and that part of the business has got more and more clout.
BI: Facebook is also considerably building up its ad-tech stack. There’s the rumor it’s launching a DSP, and it’s expanding Atlas. Do you credibly think you can stay the number two to Google for long?
FA: By the way, we are not saying we are number two, we are aiming for number one with Google. But there’s certainly room for a couple of winners in this space.
Facebook has built an outstanding business, obviously. They are trying to generate revenue on their own property and they’re doing a good job in doing that. But they have got to solve their monetization needs first before they focus on the rest of the market. I think that’s actually what they’re doing, which makes a lot of sense.
I think for them to try to get into real-time-bidding, or an exchange, or a marketplace for the rest of the market is a huge huge leap for them to make.
If they were to move in that direction, I think they would be more likely to be a buyer like Google. Google is one of our largest customers. I look at Facebook more like a partner or a customer.
Oscar Health Insurance, a New York-based startup trying to bring modern tech thinking into the health insurance industry, is in talks to raise a round of funding that would value it at more than $1 billion, according to Bloomberg.
We don’t know yet who would be participating in this round, but famed investor Peter Thiel’s Founders Fund led an early $30 million round of funding in January of last year.
A few months later in May, Oscar closed an $80 million round of funding at a valuation of just under $1 billion, led by Joe Lonsdale of Formation8 and including Khosla Ventures, General Catalyst Partners, and others. Its total funding sits at $150 million.
The way Oscar Health Insurance competes with the established markets is pretty straightforward: Customers in New York and New Jersey can buy their coverage from the marketplaces created by the Affordable Care Act, better known as Obamacare. Their website is slicker than the competition and lets its customers consult with doctors over the phone for free.
Oscar was founded by venture capitalist Joshua Kushner, an ex-Microsoft exec named Kevin Nazemi, and current CEO Mario Schlosser. Oscar was founded in July 2013, making the company a little less than two years old.
If true, this report would make Oscar Health Insurance the second member of the so-called Unicorn Club of startups that have raised $1 billion this week alone, after Sprinklr announced its own round of funding.
The New York Auto Show is kicking off this week at the Javits Center in Manhattan.
I’ve spent the past 10 years in Los Angeles, a city whose automotive extravaganza starts off “car show” season in November. There’s always a strong sense of optimism in the sunny Southern California air.
But by the time April rolls around and the New York show fires up, as grueling winter slowly shifts to bright spring, everyone who makes cars, markets cars, or covers cars is typically pretty wiped out.
I couldn’t have picked a better time for my first New York show in a decade, however, because the vibe in NYC in 2015 is unlike anything I’ve ever experienced in my entire career as an automotive journalist.
No one is wiped out. The mood is extraordinary.
The industry is buoyantly self-confident these days. Take Cadillac, for example.
Cadillac is in the process of rebranding itself as a New York car company. Okay, Caddy is still part of General Motors and still builds its cars in the Midwest. But it moved its sales and marketing operations to New York last year, in order to more aggressively focus on being a true luxury brand.
On Tuesday, Cadillac began to make good on that promise by throwing one of the biggest new-car reveal parties I’ve ever seen. Droves of people spent an evening in a vast, soaring space in the Brooklyn Navy Yard, checking out Caddy’s flagship CT6 sedan. And enjoying a spectacular spread of sushi, lamb, lobster, live music and a great variety of beverages.
It was a very strong signal that Cadillac is going to challenge its German rivals in the luxury realm — and do so with big-time New York style.
Ford is in on the action, too. The company rocked the automotive world when it revealed its new GT supercar at the Detroit Auto Show earlier this year (they’ve brought the glorious machine to New York).
In New York on Monday, Ford revealed its Lincoln Continental concept car, the latest thrust in an effort to revive Ford’s own luxury brand.
The car is stunning. The ambition is palpable. The philosophy is distinctive — Lincoln is bucking an industry trend of creating every-more sporty luxury sedans, aiming instead to create a sort of modern-throwback, a big car that’s plush and dignified: “elegant beauty, not aggressive beauty,” as Lincoln head Kumar Galhotra put it.
And that’s just the two biggest US carmakers. Around the world, there’s a powerful sense that the auto industry has recovered from its dark days during the 2008-09 period. True, Europe has been a weak spot, the Russia market is falling apart, Latin America is struggling, and growth in China is slowing. But a rocking and rolling North American market is making up for all that. After falling below 10 million new vehicles being sold annually in the aftermath of the financial crisis, the industry is back up to around 17 million. Some are saying it could go to 20 million.
Supercars are breaking out all over. McLaren revealed a new one in New York. The recent Geneva Auto Show was an absolute supercar-palooza. Acura has restored the much-loved NSX to its former glory. New Lamborghinis and Ferraris are appearing in the landscape.
And speaking of Ferrari, the grandest supercar brand of them all is being spun off from parent Fiat Chrysler Automobiles, with an IPO happening later this year. So even if you’ve always dreamed of owning one of Maranello’s exotic red dream cars, but can’t quite swing the financials, you can own a piece of the company.
As lively as things are for the traditional auto industry, the story is even more dynamic on the disruptive front.
Tesla continues to captivate the imaginations of anyone who cares about the Car of the Future. Elon Musk unveiled a new version of the company’s Model S sedan last year. Sometime in the third quarter of 2015, Tesla’s new Model X SUV is slated to roll off an assembly line in Northern California. If there’s a superstar who bridges the gap between the world’s of cars and Silicon Valley tech, it’s Musk. Who, it’s always worth noting, also runs another company, SpaceX, that enables him to launch rockets to the International Space Station when he’s not trying to reinvent the automobile.
Tesla gets a lot of attention, but two other Silicon Valley companies of some reputation have also leapt into the automotive space in the past six months. Google has been testing its self-driving car technology for years, but it’s now officially become a carmaker. Production prototypes of its Google Car are now tooling around the Bay Area.
That’s right: Google is a car company!
And of course the talk of the auto industry for the past month has been the Apple Car. No one seems to have any idea of what Apple is up to — Driverless car? Connectivity platform? An expanded version of Apple’s CarPlay in-car infotainment system? — but there’s been abundant speculation. From where I sit, Apple’s “Project Titan” spreads excitement and fear in equal measure.
So there you have it. It’s thrilling to be in the middle of it all.
Because as of April 2015, the auto industry has fully entered the 21st century. It’s a great time to have a front-row seat.
Earlier this week, IBM announced that The Weather Company, best known for The Weather Channel, was “migrating its weather data platform to IBM Cloud.”
The deal included some other aspects, like integration of weather data into IBM’s analytics tools, but the part that caught our eye was this:
“The Weather Company, including WSI will shift its massive weather data services platform to the IBM Cloud.”
This is interesting because The Weather Company had been a pretty vocal customer of Amazon’s rival cloud service, Amazon Web Services. They even participated in a case study.
A “shift” and “migration” seemed like a nice takeaway by IBM.
Except today, we heard from Amazon that this wasn’t true. The Weather Channel would continue to be an AWS customer.
Amazon’s chief technology officer Werner Vogels even went so far as to call IBM out on Twitter:
Vogels also retweeted a tweet from Weather Company CIO Bryson Koehler who insisted that the company’s relationship with AWS remained strong and growing.
So we called Koehler and got the real story.
In fact, the company is using both clouds.
It’s going to move its business-to-business unit, TSI, from a private data center to IBM’s SoftLayer, but it’s also going to continue using AWS for its consumer business, although it might migrate some workloads from other businesses over to IBM’s cloud as needed.
“I am excited about moving to the IBM cloud for B2B. I remain excited about our partnership with AWS for other parts of our business,” he put it.
“I believe in a multi-cloud story,” he told us. “I’ve said this for years — we’ve built technology at The Weather Company that allows us to be agnostic to cloud providers, I think being agnostic is the right decision. Being able to run in multiple cloud vendors in a hot, hot, hot way is right to do for resiliency, latency, and global deployment.”
Koehler said he particularly likes IBM’s technology for shifting workloads among physical data centers around the world.
But in the end, he hasn’t signed an exclusive deal with anybody.
“We’re going to balance our workloads in real time based on what works best for our business. If that turns out to be SoftLayer, we’re going move more workloads there. If that turns out to be AWS, we’ll move workloads there.”
So my original story was wrong. I am sorry about that.
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WASHINGTON â€” Construction spending in the United States slipped in February, pulled down by a drop in single-family home building.
Seasonally adjusted construction spending fell 0.1 percent in February after a revised 1.7 percent drop in January, the Commerce Department reported on Wednesday.
The result in part reflects bitter winter weather that constrained construction in many parts of the country during the month. It also joined a series of mostly discouraging economic reports, including on manufacturing and jobs, that weighed down the stock market on Wednesday and stoked concerns about corporate profits and global growth.
Analysts are hopeful over all for a rebound in construction spending as the economy strengthens in the spring and summer. Still, economists at IHS Global Insight called Februaryâ€™s numbers â€another poor reportâ€ and said in a research note that sluggish construction spending was likely to pull down overall economic growth for the first quarter of 2015.
In Wednesdayâ€™s report, private spending on construction of single-family homes declined 1.4 percent â€” the biggest drop since 2010, noted Gregory Daco, head of United States macroeconomics at Oxford Economics. Spending on apartments was up 4.1 percent. Nonresidential construction spending rose 0.5 percent, led by a 5 percent jump in hotel construction and a 6.8 percent surge in factory construction.
Total private construction spending, which rose 0.2 percent, was offset by a 0.8 percent retreat in public construction spending. State and local governments cut spending by 1.6 percent. They account for more than 90 percent of government spending on construction. The federal government increased construction spending by 9 percent.
Overall construction spending was up 2.1 percent from February 2014.
On Wednesday, the Institute for Supply Management, a trade group of purchasing managers, said factories in the United States expanded last month at a weaker pace as orders grew more slowly and hiring was essentially flat. The group reported that its manufacturing index slipped to 51.5 in March from 52.9 in February. It was the fifth straight drop. Still, any reading above 50 signals expansion.
Domestic manufacturers have faced a drag in recent months from falling oil prices, a rising dollar and winter storms.
Paul Ashworth, chief North American economist at Capital Economics, said that the slowdown wasnâ€™t â€œalarmingâ€ because nonmanufacturing companies still appear to be faring well. And there is the expectation that manufacturing will rebound as the impact of the winter weather fades. Production improved slightly between February and March, a sign that growth may accelerate in the spring.
â€œWeâ€™re well positioned for the distinct possibility of an uptick, an upswing, in momentum as we go forward, not unlike last year,â€ which also started with a particularly harsh winter, noted Bradley Holcomb, chairman of I.S.M.â€™s manufacturing business survey committee.
Out of 18 manufacturing industries, 10 reported growth and seven reported an outright decline in March. Among the sectors that declined were apparel, textiles, petroleum and coal, electrical equipment, plastics and rubber products, and furniture. â€œIn balance, weâ€™re still positive,â€ Mr. Holcomb said.
Also on Wednesday, the payroll processor ADP said companies added a seasonally adjusted 189,000 jobs last month. Thatâ€™s the first month of gains under 200,000 jobs in 13 months, and itâ€™s a decline from the 214,000 jobs added in February.
â€œJob growth took a step back in March,â€ said Mark Zandi, chief economist of Moodyâ€™s Analytics, which analyzed the survey data.
The federal governmentâ€™s report on jobs will be released on Friday, and economists are forecasting an increase of 250,000 jobs. The ADP numbers cover only private businesses and sometimes diverge from the governmentâ€™s more comprehensive report, which includes government agencies.
Several economists say that the ADP survey can be an unreliable indicator of the government jobs report. â€œADP is far from infallible,â€ said Jim Oâ€™Sullivan, chief United States economist at High Frequency Economics.
Few economists responded to the March setback by changing their yearly forecasts, including Mr. Zandi of Moodyâ€™s Analytics.
He still expects consumer spending to rebound and the economy to add jobs at an average monthly pace of 250,000, or three million for the year. This would represent a solid improvement in the job market, although it would be less spectacular than the last four months, when monthly gains averaged 321,500 jobs.
A burst of hiring in the last year has lifted the number of Americans earning paychecks. But average hourly wages have risen at a sluggish 2 percent pace, possibly making many Americans hesitant to spend their savings from cheaper oil and gasoline.
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McDonaldâ€™s announced on Wednesday that it would raise wages and offer benefits to employees in the 1,500 United States stores that it operates itself, just a day after workers massed outside its stores to protest their low pay.
The company plans to increase wages by at least $1 over the local legal minimum wage, to an average of $9.90 an hour, by July 1 for some 90,000 workers in stores under its direct corporate control. That average will increase to more than $10 in 2016.
The decision does not affect the 750,000 employees who work for the more than 3,100 franchisees who operate more than 12,500 McDonaldâ€™s restaurants around the country. But the move could add to pressure on franchise owners to lift wages in their restaurants as well.
Employees who have worked in company restaurants more than a year will also be eligible for paid time off, whether they work full or part time. An employee who works an average of 20 hours a week might accrue as much as 20 hours of paid time off a year, for example.
â€œWe know that a motivated work force leads to better customer service, so we believe this initial step not only benefits our employees, it will improve McDonaldâ€™s restaurant experience,â€ Steven J. Easterbrook, who has been chief executive for one month, said in a statement.
The announcement was the boldest move yet by Mr. Easterbrook, who broke the news in an interview with The Wall Street Journal. He has moved quickly to introduce changes aimed at improving McDonaldâ€™s standing with consumers, this week alone announcing plans to offer breakfast all day and to revise a grilled chicken sandwich to remove ingredients like maltodextrin and use an â€œartisanâ€ bun.
Organizers behind fast-food workersâ€™ calls for a $15 hourly wage have been pushing a bigger national strategy. They hope to galvanize low-wage workers under the banner of civil rights.
By Samantha Stark on Publish Date March 30, 2015. Photo by Joshua Lott for The New York Times.
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For some Google employees, one of the biggest debates in the company’s history circles back to the name of a pie being served in the campus cafeteria back in 2008.
Google’s head of human resources Laszlo Bock details the experience in his new book, “Work Rules!: Insights From Within Google That Will Transform How You Live And Lead,” which launches on April 4. The Wall Street Journal’s Christopher Mims got an early look at the book and relayed the anecdote.
In 2008, a dessert called the “Free Tibet Goji-Chocolate Crème Pie”was being served in Google’s cafeteria.
The name sparked a heated debate among employees. Some say it was the fastest email thread to hit 100 responses in Google history, according to Mims’ account of the book. It became the longest internal email chain in Google’s history at the time exceeding 1,000 responses.
Google CEO and co-founder Larry Page even received the following email:
“This is from the menu today. If there is no good answer or action from the company I will quit in protest.”
Google employees around the world were concerned for a number of different reasons. Some were angered at the idea that Google would suggest Tibet should be free, while others took the opposite view. A few employees thought the chef should be free to call his pies whatever he pleased, while others were peeved that the name of a dessert had caused so much trouble in the first place.
Bock was in charge of handling the situation — the chef responsible for the name was suspended, but Bock later reversed that.
Bock’s book is bound to be chock full of workplace tips including how to handle experiences like these. The book will dive into the company’s staffing secrets and the steps it takes to make Google one of the best places to work in the world.
Bock wants companies to follow in Google’s steps, as he said in an interview with Forbes.
“You spend more time working than you do with your family, with your kids, with your friends, more time on a given day than you do sleeping, it’s such a huge part of life and for most people it’s a pretty miserable experience,” Bock said to Forbes. “I don’t think it has to be soul-draining and awful, I think it can be ennobling and empowering and have this connection to some broader impact.”
U.S. car buyers tapped the brakes in March, a sign of a long-expected slowdown in the blistering pace of sales.
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GoDaddy shares had a huge first day on the public market.
Shares of the web hosting company opened for trade at $26.15, up 30.75% from its IPO price of $20.
Shares closed right at this opening price on Wednesday, giving the stock a nearly 31% in its first day of trading.
GoDaddy priced its 22 million-share initial public offering at $20 per share on Tuesday night, above the expected range of $17-$19.
At the current stock price, the company has a market cap of around $6 billion.
On Tuesday, we highlighted analysis from Briefing’s Dennis Hobein, who noted that the 18-year-old company known for its commercials is unprofitable and has a mountain of debt.
It may come as a surprise to some to learn that the company has actually been around for 18 years. In fact, this isn’t its first attempt at becoming a publicly traded company. Back in 2006, GDDY was looking to launch an IPO, but, the company cited poor market conditions at the time. Since then, the company has gone through a shake-up in management in 2011 with the CEO stepping down, followed by private equity firms acquiring the company for $2.25 billion.
So, the company certainly has some history — and some scars — but because of the highly-recognizable name, and its strong positioning in the internet domain name registration market, its IPO should find some interest among institutional investors.
Hobein added that overall the company’s valuation at around $18 per share (his article was posted before the IPO priced) is attractive, and that the IPO should easy enough for the market to “soak up.”
Seems that the market did absorb GoDaddy’s new shares.
HSBC, the giant British bank that reached a multibillion-dollar settlement to resolve accusations of money laundering, still has a long way to go to root out the problems, federal prosecutors say.
The criticisms, gleaned from a 1,000-page report prepared by an independent monitor, were disclosed on Wednesday in a federal court filing.
To avoid a criminal charge for money laundering, the bank reached a so-called deferred-prosecution agreement with federal and state authorities that required HSBC to pay a $1.9 billion fine and install a compliance monitor.
The report stems from allegations that HSBC failed to spot at least $881 million in money laundered by Mexican drug cartels, and at least $600 million transferred from Iran, Sudan and other countries blacklisted by the United States.
The court filing â€” a summary of the monitorâ€™s finding from the bankâ€™s first year under scrutiny â€” provides a glimpse into the challenges that face the bank as it works to improve fortifications against illicit funds flowing through the financial system.
In his report, the monitor, Michael Cherkasky, found that while the top ranks of HSBC were â€œcommitted to addressing the bankâ€™s longstanding compliance deficiencies,â€ progress had been â€œtoo slow,â€ the court filing said.
Mr. Cherkasky singled out two central problems: the bankâ€™s corporate culture and its compliance technology. The systems, despite some improvement, still suffer from â€œfragmentationâ€ and â€œlack of connectivity.â€ As a result, the filing said, the reliability of data gathered by the bank could suffer.
The persistent problems could present a quandary for prosecutors, and point up the limitations of punishing bank missteps with such agreements. Prosecutors chose to seek a deferred-prosecution agreement with suspended charges in exchange for promises to shape up. But continuation of the problems could fuel concerns that the deals amount to little more than a slap on the wrist.
Stuart Levey, the bankâ€™s chief legal officer, said: â€œThe Justice Department recognized in its letter that HSBC has made material progress toward meeting the most stringent compliance standards imposed to date upon a global financial institution.â€ Mr. Levey added that the bank is continuing to meet all its obligations under the deferred prosecution agreement, and its leaders â€œare making steady progress toward that objective and appreciate the monitorâ€™s ongoing work.â€
Leslie Caldwell, who heads the Justice Departmentâ€™s criminal division, said in a recent speech that the government had â€œa range of toolsâ€ at its disposal to deal with corporate recidivism, including extending the term of a deferred-prosecution agreement while prosecutors investigate allegations of new criminal conduct. And when a breach has occurred, she said, â€œwe can impose an additional monetary penaltyâ€ and â€œmost significantly, we can pursue charges based on the conduct covered by the agreement itself â€” the very conduct that the bank had tried to resolve.â€
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