Building Ad-Tech Companies that Reach Massive Scale

Interview with Michael Rubenstein: President, AppNexus

645 Ventures
Jan 28 · 12 min read

Background: When the history of the ad-tech industry in New York is written, Michael Rubenstein will surely be a protagonist. Rubenstein has helped shape the ad tech industry, playing a key role in two of the largest exits in ad tech in history: the $3.1 billion acquisition of DoubleClick by Google, and the acquisition of AppNexus by AT&T. Both of these companies were built in New York, and are indicative of the scale of successful exits that the New York ecosystem is capable of producing. They also speak to the important role that New York has played in the development of the ad tech industry.

Beginning his career as an entrepreneur in Canada in the mid-1990’s, Rubenstein found his way to New York through the acquisition of the Toronto startup FloNetwork. Recognizing the sweeping changes that were impacting the advertising industry with the rise of digital advertising, Rubenstein made bold entrepreneurial moves. After Flo was acquired by DoubleClick, Rubenstein deftly played the role of an intrapreneurwithin a large business, building what became DoubleClick Ad Exchange, which in turn became a key element of Google’s acquisition of DoubleClick.

He then departed Google to join the legendary ad tech entrepreneur Brian O’Kelley to help build a new startup, AppNexus. AppNexus grew to become one of largest companies in the programmatic market, scaling to 27 offices across North America, Latin America, Europe, Asia and Australia.

We had the chance to interview Michael Rubenstein and learn about his entrepreneurial journey. In this interview, Rubenstein shares valuable frameworks for evaluating industry changes and developing competitive strategy to capitalize on those changes. He also shares key learnings on building high-performing, inclusive company cultures that embrace diversity.

Over the course of the interview, Michael covers the following key topic areas:

  • Beginning a career as a tech entrepreneur in Canada
  • How to develop a business strategy to compete with Google
  • Becoming an intrapreneur within a large company
  • Joining forces with a successful founder to scale a new startup
  • Building a team that embraces diversity across skill sets, gender and race

Interview with Michael Rubenstein (MR):

Q: How did you start your career?

MR: My parents are both entrepreneurs, businesspeople, so I had that in my blood. And I started my first company when I was at McGill University, as an undergraduate. I didn’t really realize it at the time, but it was a marketing and advertising business. And when I graduated, I found this company, a startup in Toronto, that was a pioneer in online marketing and advertising.

Q: What was the name of that company?

MR: It was called Media Synergy, which is like the most “Office Space” name you can come up with. We rebranded it to FloNetwork. And it turned out to be an early pioneer in the ESP space, email service providers. This was in the mid-90’s. It actually turned out to be one of the few success stories in Canada of the dotcom era, and we sold it to DoubleClick around 2000. And that’s how I got from Toronto and the startup world to the world of DoubleClick. I moved to New York after that.

Q: How many years were you growing Flo, and what was the experience of building that startup and then joining DoubleClick, which had reached large scale by that time?

MR: We built Flo for about 3 years. It was a cool little startup. DoubleClick had been one of the stars in the late 1990’s, but by the time they acquired our company, they were going through a tough time. They had seen around half their customers, which were dotcoms, go out of business. So, DoubleClick was this public company with a shrinking valuation, trying to figure out how to stabilize and grow the business. Even though it was the early days of digital, it still felt like a turnaround. And so, I think that experience of both startups and turning around businesses, is something I’ve come to enjoy. And I don’t think of them as that different, to tell you the truth.

Q: What was your role at DoubleClick?

MR: I had a number [of roles]. I joined at the close of the acquisition as a member of the account management organization, and I moved into the sales organization, and closed some large deals, including some very strategic deals with AOL. Then I became the leader of the strategic accounts group, working with large customers. I was also in business school, doing my executive MBA at Columbia. When I finished it, I had all this great experience, and I aspired to start a company. The CEO at the time, David Rosenblatt, made me a deal. He said, “Why don’t you start a business, but do it inside DoubleClick?”

Q: You became an intrapraneur?

MR: Exactly, I was an intrapreneur. I would get great experience, and it was a win-win, because the business I founded turned out to be DoubleClick Ad Exchange, a multi-billion-dollar pioneer in the programmatic advertising space. It is still today a huge business.

Q: What was the opportunity you saw when starting DoubleClick Ad Exchange, and what did that market look like at the time?

MR: The programmatic advertising market was just beginning. There was one company at the time, Right Media, which was very innovative but still small. Brian O’Kelley was the CTO. But the real motivation of DoubleClick Ad Exchange was fear. Fear of Google. Google had started to become this giant force. This was in 2004, 2005. Google had built an ad server, and they were rumored to be giving it away for free to publishers.

Q: And this was going to crush DoubleClick?

MR: It hadn’t yet, but the threat existed. All of DoubleClick’s revenue at the time came from licensing our ad server software. If Google comes in and just gives it away for free, it just makes money off monetizing the inventory, then that disrupts our entire business model. So, our feeling was that we needed a defensive play. And we came up with a number of them. One of them was DoubleClick Ad Exchange. The idea was that we would monetize this great premium inventory that we had access to, and create a marketplace, a premium marketplace for advertising, and it would allow us to start writing checks to our publishers, instead of asking them for money.

We launched the business, and it grew very quickly, and it became an important tool to enable us to compete with Google. Google eventually decided that it would be easier to buy the company, and in 2006 they announced the acquisition of the business, and the Ad Exchange was one of the key reasons they did it.

Q: That is an amazing story. How did you put that team together within DoubleClick to build the Ad Exchange? How did you marshal the resources?

MR: I had worked with some great people at DoubleClick over the years. A really smart thing our CEO did was he allowed us to create an autonomous unit within the company, and he elevated the visibility of it, so that people inside the company wanted to work on this new business.

Q: DoubleClick gets acquired by Google for $3.1 billion. What was the experience of now working within a much large company? And how did you decide to leave and join AppNexus?

MR: I valued my time at Google. It was an interesting place to learn and to meet people. I don’t think that culturally it was the place where I felt I was going to grow my career for a number of reasons. I felt at the time that if you weren’t an engineer at Google, you wouldn’t be in the flow of great opportunities. At AppNexus, we strive to create a more balanced culture, known for technology prowess, but also very strong functions across the board. And I also wanted to be in New York, and Google at the time was a Mountain View-centric company. And the idea of doing something entrepreneurial again became appealing to me. So, I was introduced to Brian O’Kelley. He had started AppNexus as a cloud computing business for the ad tech industry but was starting to move into the ad tech space in its own right as the non-compete he was observing expired, from when he had sold Right Media to Yahoo.

Q: What was AppNexus doing at the time?

MR: It was a cloud hosting business, designed specifically to meet the needs of online ad companies, that had the use case of acquiring very high scale, and low latency. Because the world of online advertising is very high scale. If you think about where things have gone around programmatic advertising, the scale at which a business like this operates is staggering. There are hundreds of billions of real-time decisions made every day.

Brian and I had been competitors, and I had heard great things about him.

Q: And you guys hadn’t met each there up to that point?

MR: No, we hadn’t met. We spent a lot of time together in the summer of 2009. We really liked each other. We felt that we had very complementary skills. We shared a lot of values and interests. The idea of helping to build a company from the ground up was very appealing to me. And it was a great decision.

Q: How many people were at AppNexus at the time?

MR: Maybe 20 or 25, so it was still pretty early.

Q: When you joined AppNexus, it was a cloud hosting company. How did it evolve from a cloud hosting company, to very scalable ad tech business?

MR: In the beginning, we sought out differentiators, things that would enable us to stand out and compete in a crowded marketplace, as ad tech turned out to be.

Q: What had changed in the market? Because before, there weren’t many players. What did you see when you joined AppNexus?

MR: When we sold DoubleClick, and the team at Right Media had sold to Yahoo, there was also the sale of AQuantive to Microsoft. So, there was a string of huge exits in a sector that had not been highly regarded until that point. And that changed a lot of minds. There was a big VC boom after that. And AppNexus got funded, and so did dozens of others. This gave rise to the Lumascape. In the first generation of ad tech, there was no Lumascape, there were only a handful of companies. But after 2007 it was a tougher competitive landscape.

So, we were trying from the very beginning to find our competitive differentiation. And our thinking was to figure out those differentiators and put as much energy and investment behind them as possible. And one of those differentiators was, we felt that we could serve both ad buyers and sellers. We didn’t like this distinction that was developing in the industry around DSP’s and SSPs. We felt that if we really want to provide a platform that helps buyers and sellers do business together, that we needed to do both. So that was a big bet and a differentiator.

And we were very early in embracing concepts such as transparency, lowering overall take rates, and cost efficiency.

Q: I wanted to transition to the topic of leading and scaling organizations. What are the unique aspects of your leadership and organizational style? And how do you think about the elements of a culture that you want to put in place? You joined AppNexus when it was 20 people, now it is over 1,000 people. What are some of the elements that you played a role in establishing at AppNexus?

MR: I’ve always been a big fan of designing a culture and values and thinking that those play a key foundational role in a business. And Brian is similarly inclined. Early on, we decided that we wanted to be intentional about the company’s mission and values. We spent a lot of time, a lot of time, we used professional facilitators, who helped us develop and codify the important cultural pillars, then we rolled those out. We found it to be a fascinating exercise. So many things have changed, but the cultural values have remained the same. I don’t know if we got everything right, but it’s work that we are proud of.

Q: How early did you design the culture and values?

Fairly early on. We were a much smaller company than we are today. It’s really cool to see people embrace those values. Some of the other things we aligned on, we really wanted to hire people who didn’t necessarily come from ad tech. We wanted to invest in developing human capital, training people and helping them build expertise. And that has worked extremely well for us as a strategy. There are so many people who are executives at AppNexus and other companies who started their ad tech careers here. And I think it’s well-known in our industry that people that come from AppNexus are really smart, great to work with, and very knowledgeable about the industry.

Q: You also mentioned building a culture that had a balance between the engineering orientation, but also a broader type of employee. How did you do that?

MR: This goes to another important theme, which is inclusion. We’ve always sought to build an inclusive, balanced environment. It’s a very transparent, very open culture. We think great ideas can come from anywhere, and it’s our job to tap the maximum potential of the company, and all the people in it. And I think whether it’s inclusion from a technical vs. non-technical perspective, or a geographic perspective, or from a gender perspective, or a race and ethnicity perspective, we’ve really tried to be forward-thinking, and to place that at the forefront for a lot of what we’ve done along the way.

Q: Looking back on your career, what are some of the key learnings you’ve had? What advice would you give to entrepreneurs who seek emulate your success? And what advice would you give your younger self?

One thing that I’ve embraced is collaboration. I’m a big believer that great collaboration unlocks a lot of value and creativity. Even if you’re as brilliant and talented as Brian O’Kelley, you can still create magic if you partner deeply with people who have different skills. And I’ve always been a believer that you can make 1+1 equal 3 in those situations.

It requires some investment in understanding yourself, and understanding your own strengths and weaknesses, and also the things that you like doing and you don’t like doing. And it requires finding people out in the world, and investing and building relationships with people. Having other people that you can take the journey with, is hugely valuable.


Key Learnings from Michael Rubenstein:

Intrapraneurship Can Be an Effective Way to Scale a Startup: Conventional wisdom is that startups can’t effectively be built within large companies. The logic is that large companies are too slow-moving and bureaucratic, and they stifle entrepreneurial creativity. But this conventional wisdom is sometimes wrong, as Rubenstein demonstrated by building DoubleClick Ad Exchange.

Rubenstein recognized a challenge and opportunity for DoubleClick. Google was threatening to give away its ad server, which was DoubleClick’s main revenue stream. Understanding that the next big opportunity was to build an advertising marketplace and monetize ad inventory, Rubenstein understood the opportunity for a win-win within DoubleClick. He was able to marshal the needed resources within DoubleClick, while capitalizing on the company’s existing base of premium ad inventory.

Rubenstein is a great example for founders who wish to scale a new business within a larger company. Although larger companies are not always conducive to new startups, from time to time it is the best path to launch a new business within an existing business. The benefits of this are having capital and talent already available, as well as being able to leverage a company’s existing brand, customers, and suppliers. This path is often less risky than startup a business from scratch as a new entity. A key consideration is determining how equity and compensation are determined, to enable the principals in the business to benefit from its success.

Diversity Across Skill Sets, Gender and Race Can be Powerful Asset in Building Company Culture: AppNexus has repeatedly been recognized as one of the best companies to work, receiving recognition from publications such as Glassdoor,AdAge, and FairyGodBoss. One of the reasons is the company’s embrace of many forms of diversity. AppNexus prides itself on hiring individuals who may not have had previous experience in ad-tech, but who bring a diverse set of perspectives to the table. The company embraces non-technical individuals, and also focuses on gender balance and race/ethnicity balance. The company codifies its mission into its diversity and inclusion program. AppNexus is an excellent model for new startups who are seeking to build an inclusive culture from the ground up.

Repeat Entrepreneurship within a Sector Can Yield Tremendous Outcomes: Rubenstein is a great example of an entrepreneur who has innovated repeatedly within one sector. Although we often celebrate entrepreneurs like Elon Musk who build startups across disparate industries, entrepreneurs like Rubenstein should perhaps be studied more closely, because their success can be more easily replicated by aspiring founders.

Rubenstein innovated sequentially, working his way up in the ad tech industry by recognizing a new opportunity and then choosing the best platform to develop that opportunity. He was also humble enough to recognize the resources he needed to achieve his vision, and to not go it alone. Lastly, he put in his “10,000 hours”, in the words of Malcolm Gladwell, learning the industry over a period of more than twenty years. Aspiring entrepreneurs would be wise to study his success.


This is Part 10 of our on-going series, SAAS Founders at Work. Read more interviews with visionary founders here.

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