Meet the Operators: Q&A with Tod Sacerdoti, CEO/founder of Brightroll (acquired by Yahoo!)
In 2006, Tod Sacerdoti decided to start Brightroll, which is now the largest video advertising network in the industry. Tod sat down with Zaw to discuss the key ways he scaled and grew Brightroll to a $640mm acquisition by Yahoo!
Read the full transcript of the interview here.
You can download the full interview as a podcast on iTunes here.
Some Fun Facts about Tod:
Favorite Superhero: Never looked up to superheroes… mostly athletes, such as — Michael Jordan and Don Mattingly
Who in history would you like to meet? Ben Franklin, Da Vinci
Favorite childhood memory: Collecting baseball cards
Key Take Aways
After working as the Director of Revenue for Plaxo, one of the fastest growing internet companies at the time, Tod Sacerdoti went on to start Brightroll, a video ad network and platform. Tod attributes the success of Brightroll to staying focused and (surprisingly) having a lack of capital. When first starting Brightroll, Tod had trouble raising money from venture capitalists, which made it difficult for him to try to develop ancillary features. Instead, Tod had to focus on the few core competencies that he identified as the most important for his company to thrive.
Key Take Away #1: Staying focused on the core competencies allowed Brightroll to win market share against better funded competitors
When hiring new people, Tod says that the most important thing to do is to figure out from a cultural perspective what the definition of the ideal hire is for your company. For him, the ideal hire was someone who could “get shit done.” So when he interviewed people, he would try to figure out if the interviewees were execution-focused. One unique thing that Tod did was try to make sure that his hiring process illustrated Brightroll’s culture. The execution-focused company did this by always responding back to prospective applicants within 24 hours, whether it was to schedule interviews or to provide feedback. Brightroll would also assign each interviewee an employee who would wait for you to arrive, and be your companion throughout the entire process. One of his key measures of success was how many candidates were referred by people that Brightroll had not hired.
Key Take Away# 2: A company’s hiring process says a lot about their culture (and even people you don’t hire can be ambassadors).
Now managing hundreds of people at Brightroll, Tod says that the key to staying organized is having efficient weekly meetings. On Monday mornings, the entire team reports to Tod and updates him on what’s going on. After that, Tod meets with the operating team and talks about what is going on with the company. Tod emphasizes transparency in these meetings, as it is important for the operating team to know the current state of the company. Throughout the week, Tod follows up with team members on a one-on-one basis. When individual meetings became unsustainable due to the company’s growth, Tod adapted by meeting bi-monthly with the entire company.
Zaw ended the interview by asking Tod if he had any parting words of wisdom for entrepreneurs. Tod wanted to reiterate that to be qualified to be an entrepreneur is to have already been one. What this means is that there’s really nothing like actually starting a company, so the best way to learn is to just try. Silicon Valley has a great support system for failure, so take risks and dive in, and at least at the end, you’re qualified to do it the next time.
Key Take Away# 3: The best way to be a qualified entrepreneur, is to try and fail, then try again.
Take a look at the highlights of the interview below…
Highlights
Why did you feel like Brightroll was an execution play?
There was an epic meeting in the history of BrightRoll where myself and the head of product and engineering were … I think this was three years before the acquisition, and just saying, “Okay, is this going to be like an iPhone category, where someone’s going to invent something that just changes the trajectory of their success and everyone else will be left behind, or is this going to be like an execution business where there’s a large surface area that you have to continually add value to, but you’re never going to kind of 10x the category and invent something that just changes everything?” I think that it’s really important to know which type of category you’re in. Of course, a lot of times people think they’re not in an iPhone category and then get innovated around, so it’s actually pretty hard to know for sure.
My assessment was this was going to be a blood sport category, where it was a huge amount of surface area, competing every day, a relatively narrow feature war and customer‑by‑customer battles, and as such, execution was going to be really our defining characteristic. Of course, you have to innovate as well, but I just didn’t think there was going to be this singular innovation that changed everything. That essentially changed how we went to market, it changed how we hired, it changed how we invested, but I think it was true for us in retrospect.
How did you communicate your strategy to the company?
Everything starts with strategy of the company, and our strategy wasn’t we’re going to put every single resource on innovating in this one area. It’s like here are what we ultimately defined as three strategic areas we were focused on and we’re going to make significant investments in each, and as a result we’re going to be spread really thin.
How did you choose who to hire?
We wanted people that were going to be very knowledgeable of the category we’re in, understood the competitive landscape, understood how to incrementally differentiate our platform versus other platforms, and every week or every development cycle, figure out how to add value to our platform.
We spent a lot of time nailing down the definition of what made somebody a BrightRoll person, from a cultural perspective. Two of the elements of that were really collaboration … so someone who really does like to work with other people in the company … and we call it GSD, which is Get Shit Done, so very execution‑focused. During the interview process, we would, in addition to other things … you know, passion and transparency were really there too … we would try to tease these things out.
If someone wasn’t what we would call a GSD person by nature, that just wasn’t a good fit for us. It doesn’t mean they’re not a good fit for business, just not for our company. I would say it became very clear, when somebody joined the company, did they fit into the GSD culture or not, and it was a filter for us up front. It was a terminatable … I don’t know if that’s the right word … offense if you were not that way once you were here. If you did not focus on execution, we just weren’t interested.
What was your hiring process like?
One of the examples that I think I recommend to other companies is make sure that your hiring process, the actual process itself, purely, to its core, reflects the values of the company. If you value getting shit done, then they shouldn’t be waiting for a response for two weeks in the middle of the process. If you value getting shit done and execution, that person should say, “Wow, I sent an email in and I got a response in 24 hours. I went in to the interview and I got feedback in 24 hours.
If you were going to do it over again what would you change?
I would say first and foremost, it’s a huge advantage if you start a company in a category where your mission is something a large number of people are drawn to. That’s a huge advantage in the hiring process, like number one. I would say number two, knowing who you are, which whether it’s culture or values or something looser than that mission, really does help you filter the process.
We had a speaker come in who runs a company called Madison Reed, which is a female haircare‑focused tech company, and she said, “We talk a lot about love at the office. We love our product, we love our colleagues. We want to work in an environment with lots of love.” It’s like that’s a clear filter. If someone comes in and says, “I don’t want love at the office, that doesn’t resonate with me at all,” that’s great. Then they’ll stop interviewing, right? Knowing who you are in terms of being able to express that to candidates really helps you filter in terms of knowing who should be a fit. I think it’s like know who you are and express that in the process.
I think the third thing is the process should really, really, at its core, reflect the best things about the company, and I didn’t really appreciate that at all. In my prior companies, I always remembered we felt good when we turned a candidate down because we felt like that showed to us how high our bar was, and I think that’s really the wrong lens. It’s fine to turn people down, but you should make sure they feel good about that process as much as you feel good about that process. Any personal or corporate value in turning other people down or being … or displaying your high bar I think is really a negative lens and doesn’t have a place in the hiring process.
What were some of your other keys to success at BrightRoll, in terms of operational or ways that you manage the business?
I think number one was focus, and focus was in a huge amount driven by the fact that we struggled raising large amounts of capital in the beginning. It’s the classic story of poor us … and this doesn’t apply to everybody … but poor us. Not having a lot of resources, people, engineering talent, money in the bank, et cetera, really forced us to be extremely frugal and focused. Of course, when we reflect, that was actually our greatest strength. Many companies we competed with early in our trajectory had more money, more people, more marketing value in the category, and those things really ended up not being turned into lots of long‑term value.
I think, your default being no, like, “No, we’re not going to do that, no, we’re not going to expand into areas that aren’t core, no, we’re not going to spend money on these,” having that bias of we’re only going to do the very few things that matter, and being ruthlessly consistent in that perspective, became a huge advantage.
Our core was, “Television is a $70 billion market. It’s one ad product. It’s really simple to understand. People are already buying it. Let’s just focus on moving dollars from what people already know into the digital category, and just never veer from trying to change the way people buy media,” rather than just make the way they buy media much more efficient in a new category. We were just laser‑focused on that. I could go into the nuances of that, but I would just say don’t try to change too much, particularly in a category that already has a channel that’s working. It’s just focus on the areas in which you can add value, and that was a huge part of our success.
As the CEO, how much time did you devote to the sales process, in terms of working with the clients?
I think the best CEOs in technology companies are people that can straddle the line between sales and product and engineering. I think … and this was the quote from the Mark Leslie business school … you know, the sales team and the engineering team are the drivetrains of the company, and everyone else, including the CEO in the company, supports those two organizations.
This isn’t 100 percent true across Silicon Valley, but I used to say at our sales conference … I would say, “My job is to make the sales team feel like we’re a sales‑driven company and everything is about sales, and I’m a salesperson and sales is what matters, and we’re going to focus on the sales first and foremost. Then when I talk to a product and engineering organization, you need to make that team think that we’re a product and engineering organization. All that matters is, you know, software development and best‑of‑breed product engineering processes, and we’re going to temper the sales team’s enthusiasm and make sure they’re supporting product and engineering,” and I would say that all with tongue in cheek, because both teams knew that I was saying that to the other team.
I think that, particularly in the media category, we really do straddle the line. It may be the same way enterprise software does, if you think about coming out of Salesforce or B2B business, because we are a B2B business, right? I sort of tongue‑in‑cheek made those statements to those teams, but on a personal level, I had to do that individually. I needed to go to sales calls. I needed to be in front of customers, and when I was in front of them, I would tell them, “I’m not the sales guy. The sales guy’s sitting next to me. I’m the product and engineering guy, but I’m here because I want to hear your feedback. We want to build products that drive value for you,” and it let me have credibility in the sales meeting as not a salesperson.
Of course, when I would go to the product and engineering offsites and shragging sessions, I would say, “Let me tell you about the revenue of the business. Let me tell you what customers care about. Let me tell you how somebody who’s in the product, using it to drive their business, speaks and feels and experiences our product.” I think that if you can straddle that line, you can really drive I think more value than someone who is best of breed in one but can’t understand the other side.
Now, of course that happened to be my background, so that was where I was biased. I don’t think you have to be that way to be successful. I would just say if you’re not that way, you really need to hire people that can counterbalance your skill set.
How do you manage or did you manage your day‑to‑day and week‑to‑week interactions with the team?
I think that there are few things that I believe to my absolute core, and that’s because they worked for me. I was very much a fan of the weekly meeting. Monday morning, the entire team that reports to me, and eventually we had a few people that didn’t report to me. The operating team that’s running the business, being super‑clear and transparent within that team about what’s going on, and then doing one‑on‑ones with people that report to you and being religious about them during the week, every week. Those were the two things I was absolutely core to, and then we did an all‑hands with the whole company once a week, and then eventually that became an every‑other‑week, once we were over a couple of hundred people. Those were my cadence of communication.
How far ahead do you think a CEO should be thinking?
I do think it depends on where a company is in its maturity, where the category is in its maturity, and where the competitive set is. I would say now, in reflection, I think startups actually have an advantage … which is super‑ironic … in being long‑term thinkers. If you think about it, startups are being capital‑constrained and you’re thinking about how you’re going to meet your burn rate in 12 months, but on the flip side, public companies and companies that are measured on profitability and EBITDA multiples really do have a hard time thinking far out. I didn’t really think about at the time, but I think we were always thinking a few years out, and I think that was a huge advantage for us in retrospect.
I think, as a CEO, you should have clarity a year out, not perfect clarity but a sense of where you want things to go. I think you should be thinking a few years out, but I never did any real work more than a year out in terms of defining strategy and roadmaps and things like that. I think in my mind I was always saying, “Where is this going to be in a few years,” but we were very clear in a quarter, a sense in six months, clarity but nothing really documented over the next year, and then at an individual level I was thinking beyond that. That’s how I think about it.
You can read the entire transcript of the interview here.
To learn more about Brightroll, check out their website here and be sure to follow Tod on twitter.
You can find all of the MTO interviews as podcasts on iTunes to download and listen on the go
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Postscript
This is interview #1 of what I’m calling “Meet The Operators” or MTO for short. The mission is simple, to allow anyone to learn from some of the best in the business on how they scaled their company or organization to success. As an entrepreneur turned investor, I’m constantly getting asked for advice from my portfolio companies and others. Turns out, I don’t even have a small % of the answers. So, I turned to my network and started asking them the same questions. Interestingly, some of the most interesting conversations and answers came from leaders outside of tech (military, science, music, government, NGOs, and more) — whom you’ll hear from as we release more interviews. We’ve got a full slate of interviews queued up and ready to go, so please follow MTO on medium and twitter to stay up-to-date with the latest and greatest!
I fully agree with Reid Hoffman’s now infamous quote that, “if you are not embarrassed by the first version of your product, you’ve launched too late.” Well, consider this the first alpha release of MTO. It’s far from perfect, but I wanted to get it out. At Signia, we pride ourselves on having built a firm that strives to be the most helpful investor that an entrepreneur can have. I believe that should apply to not only companies we’ve funded, but also to the ecosystem as a whole. This is one small way I want to give back to an industry that’s given me so much.
Big thanks to Rahim Noorani, my rockstar intern for the summer. I expect big things out of him, so please give him a follow. Also, thanks to the rest of the Signia team for their feedback and support.
Enjoy,
Zaw
