Online video advertising is a $6 billion market and slated to expand to $13 billion by 2018. Yet less than a decade ago, many people failed to see its staggering potential.
One person who did was Jay Gould, the CEO and visionary behind Yashi, a leading location-focused digital advertising platform. In 2007, at the age of 28, he and his wife, Caitlin, co-founded the New Jersey-based company. Initially an idea that no one would fund, Yashi is now a three-time Inc. 5000 honoree and has managed to be profitable since its origin. Here is the story of how Gould bootstrapped an underdog startup to undeniable success, as told to me:
In 2002, I built one of the first social networks, before MySpace or Facebook was created. My website wasn't revolutionary; it was a free version of HotOrNot. My site generated revenue through advertising, which at the time was highly disruptive to the paid subscription model of dating websites. I eventually sold my site to a publicly held dating site. The cash from that sale sustained my lifestyle for a year so that I could try another business.
I built another website that quickly exploded in popularity, with more than 40 million daily video views by 2005. It was the first viral video sharing website that allowed people to copy and paste a video onto another website, such as a blog or a MySpace profile. This business was disruptive to the online music industry, since it allowed anyone to share music videos for free. I sold that business for mostly stock to a company in New York City and became its president.
That's where I met my future wife, Caitlin, who worked for the company as a top sales rep. Her drive and genuinely compassionate nature drew me to her. That company was eventually sued by the music industry, which lead to my company going bankrupt and my stock being valued at $0. I had an idea for a new business, and I wanted Caitlin to join me as my partner. So first I approached her father for his blessing. Then I asked Caitlin to join me in starting Yashi.
I've always trusted my intuition that people want to consume content when and where they want to--and for free. I would read countless research reports. When, in 2007, my instincts seemed validated--broadband subscribers had increased by 44 million in the U.S. alone from 2002 to 2007--we built Yashi. It helps thousands of websites monetize video content through video advertising, by placing TV ads online in front of video content. Simple concept, and again disruptive, this time to the television industry.
We got turned down by every angel investor we pitched in our first year. We were told that we didn't have enough traction; that the idea wasn't defensible enough; that we were geographically challenged living in New Jersey; and that the online video advertising market wasn't large enough. Even if the market grew as large as we predicted, Google or Yahoo, every investor said, could just enter the online video ad market and crush us. We didn't let the rejection deter us; we pushed on, determined to prove the investors all wrong.
We never left the house, working from sunrise to sunset to build Yashi into the company we believed it could become. Even with no capital, we grew the company profitably from inception. Eighteen months later, we saw the worst economic collapse since the Great Depression, yet we remained resilient and continued growing the business. Against all odds, we nearly doubled annual revenue every year. In 2009, we decided to pitch Yashi to venture capitalists. We thought that after years of profit, Yashi was ready for a large investment to accelerate growth. We pitched more than 50 VCs in less than four months.
We did not receive a single term sheet from any VC! At this point, our Silicon Valley competitors had raised tens of millions of dollars from VCs, yet none were interested in investing in Yashi. They told us that our growth wasn't sustainable, that there were too many competitors, and (once again) that we were geographically challenged and not big enough. They even questioned why we wanted to raise venture capital at all, since we were already profitable.
Still, we had momentum and refused to let the rejection deter us. We knew we were building a company in an industry that would see a long, secular trend for growth--so we continued to focus on growing Yashi for the long haul.
They say good things come to those who grind. After four years of grinding it out, overcoming countless rejections, and remaining profitable, we eventually raised a little under $3 million from angel investors, for less than 20 percent of the company. We had remained in control.
In 2013, we repositioned Yashi as the first and only video ad tech company for local advertisers. We built custom tool sets--reporting, analytics, and targeting technologies--that catered to local cable-TV advertisers. We realized that those in this group--car dealerships, for example--weren't running their ads online for some reason. So we sat with them and began to see what's important to them and built it. The results were amazing.
Today, Yashi is an award-winning ad tech company, with more than $25 million in revenue in 2014. We have made the Inc. 5000 three years in a row and received other honors, such as a place in the Red Herring Top 100 and the Deloitte Technology Fast 500.
We finally got an offer, and couldn't refuse it. In January 2015, we were approached by the second-largest television broadcasting company in America, Nexstar Broadcasting, to acquire Yashi for $33 million in cash, and we accepted it. Nexstar shared the vision we had for Yashi: to introduce online video advertising to tens of thousands of local TV advertisers. Nexstar has more than 600 sales reps nationwide and brings decades of experience and deep relationships to help Yashi fulfill its vision throughout the United States.
In hindsight, all of the rejection was a blessing in disguise, because it led to our retaining control in Yashi and the ability to pivot the company when needed, which eventually lead to its acquisition.
It's never the right time to risk everything. In fact, the right time will probably look and feel like the wrong time, but if you can convince one person to believe in you and your idea, that's your green light. It took me a few tries to hit my target, but the insight I gained from each endeavor I initiated propelled me to where I am today. The secret is to go where the puck is going. Once the goal is in clear sight, you'll be in a more advantageous position to hit your target the next time you shoot. If you're lucky enough, you might even score.
Now it's your turn. How will you make your business dream a reality? Let me know your thoughts in the Comments section below.