Building a $47 Billion Rocketship with Dave Pickles of The Trade Desk

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If you go raise a ton of money and you go hire a ton of people and then you go attack a roadmap in parallel, two thirds of what you build will be useless. Right, Right. Like it won't end up working. And then, not only that, your product is cluttered with all this useless stuff.

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Maybe for a second explain to people what the Trade desk actually.

Sure. So Trade Desk is a platform that allows our customers to buy advertising space and that advertising space can be display ads, but increasingly it's mobile, it's in app, it's video, it's audio, it's increasingly connected television. And we're doing it in a data driven way, in real time. And so we look at about 9 million opportunities every second across the world and try to pick the best opportunities for brands and to give you a sense of scale, if you wanted to spend $100,000 this month, I might need to pick you like 20 of the 9 million. So it's a very interesting data problem to sift through the massive amounts of supply and find the good stuff. And then when we do that, were able to create like really great performance. Right. So you can imagine that instead of buying lots of ads at random, if you can be very specific and if you can put a specific message in front of a specific audience at a specific time in a specific context, it can become very powerful.

How would this make you different from a Google or Facebook that's also basically an advertising business?

Yeah. So Google and Facebook are focused primarily on their own businesses. So if you're, if you ask Google where the best place to put an advertising dollar to work is, they're going to tell you it's search and it's GDP and it's YouTube, which is what they should do. And Facebook, same thing. Facebook is a tool for buying on Facebook, where we look at basically all the rest of it. We look at that stuff, too. We're partners with Google. We used to be partners with Facebook, but we look across the entire Internet, all of connected tv, there's millions of websites out there. It's a really big Internet. Yeah, we fill that role.

And you're doing quite well these days. You IPO to your market cap. I looked it up just before we got on stage. It's 3.9 billion, I think now. Yeah, it was 3.8 yesterday. So it's going up. I think you're doing all right. How did you get to this point? Because you launched in 2009.

Yeah, 2009. We funded in 2010. We spent 2010 and half of 2011 just building stuff. And that was a tough year. Like, we had a lot of failures.

What kind of failures did you have?

So it was technology stuff, basically. When I came into this, I said, we're going to go create a bunch of consumer surplus, right? We've become much more specific so we can make things perform better. But then if we go extract all this margin, we'll eat all that performance. So there was like a ceiling on how much margin we could extract. And I thought I knew where that was. And so then I basically had models that said, here's how well the system has to perform, doing the job the way we want to do it. So we had a goal in mind for how do we want to attack it, but we had to hit that at a number that was sustainable and that was super hard. So there. There was definitely a lot of. A lot of screaming and crying involved.

Was there a moment where you thought you weren't going to make it?

For sure, yeah. Yeah. We had a couple dark moments, but then it was actually. My partner did a great job of pushing me to throw stuff in the garbage and saying, okay, because as a cto, you can get locked into, I want to go to this place and I'm going to get there and I'm going to figure it out. But then just having somebody come tell you, like, stop, you got to think about this differently was super helpful.

That helps. That helps. What was it like raising funding back then? Because a SaaS company in 2010 and 9, there was still a little bit of A new thing for some. For a lot of VCs at the time, for sure.

Yeah. So we actually, I think it was a really good time for us to raise money because we were talking about efficiency, and when the market's really bad, basically every company, every brand needs to continue to advertise, to grow their business. They need to. You can't sit on the sidelines, but they're super focused on efficiency and cost, and so that resonated really well. And then also, I think, similarly with the VCs, there was nowhere to put a dollar to work that they were comfortable with. And so, like, we brought them something that was resonating on a lot of levels at that time. We didn't also raise a lot of money. Like, it was a smaller.

Right. You only raised. Was it $7 million. How much did you raise in total? Up to the IPO.

So we did seven, and then we did a much later round 20. And then the later rounds were not dilutive, so very little.

That's not a lot of money to raise for.

Yeah, no, I know.

Ipo.

We made it stretch. And I'm a huge believer in light capitalization because it creates focus. So not just because you get to keep more of your company, which is wonderful, but because if you go raise a ton of money and you go hire a ton of people and then you go attack a roadmap in parallel, two thirds of what you build will be useless. Right, Right. Like, it won't end up working. And then not only that, your product is cluttered with all this useless stuff versus, like, we got super focused on, I want to be working on the most important story every sprint, every second. And then you only release the things that work, take them out if they don't. So that focus, I think, is really powerful.

How did you turn that into your first customer?

We knew that because we wanted to build a technology company, not a service company. We needed to work with agencies, aggregators, the existing companies in the space. So there weren't that many customers. And so we couldn't go burn bridges at a bunch of customers and develop a bad reputation. So we started out, like, going and getting affiliate deals, or if you can sell a widget for 20 bucks, you can put a dollar in your pocket or whatever, which are actually really hard to make work.

Affiliate deals with small sites or small.

Just, they're like, we'd go to an affiliate network and, like, they would just be advertising, hey, if you can sell widgets for 20 bucks, you can keep a dollar. Right? And so, okay, let's do this. And they're really hard to make work. There's, there's really good price discovery on those. So like they're trying to make it almost impossible. So that kind, that's how we, we cut our teeth. And then once, once we did that, then we started going, talking to agencies and saying, hey, we can, we're not actually here to, you know, sell widgets. We're here to create lasting brand memories and all the other great things we can do.

Got it. How do you scale that up then? Because that's what it's all about here. Right. How do you take that and turn it into the company you are today?

Yeah, so scale came from that, that premise of not doing service, of actually being a technology company, of being a SaaS company. That's what we always wanted to be. It was, we're, we're a tech platform for other companies. And so then you go into an agency and you convince them it's the right technology and then basically like land and expand. So you get one test, you crush it, you get another test, you crush it and then they start giving you more and more advertisers within the agency. So with a single relationship, we can touch a thousand brands. And so that's how we scale business wise.

Was there ever the temptation of going beyond that then and not just being the technology company because you could offer the full package if you want.

No.

Okay.

Because if you look at, so look at WPP, it's like a 200,000 person company.

I'm not sure everybody here is familiar.

Like the biggest agency in the world has 100,000 or 200,000 employees and they all do. And there's just a tremendous amount of work to do. So I think that would be a total act of hubris to say, oh, you can go do all of that. But then also you thought you could.

Compete with Google and Facebook but not with these guys, what you're saying.

That's correct. But yeah, we don't. When you say we compete with Google, that sounds scary. We can, we compete with a very small part of Google. We don't, we're not trying to get into search and everything else that they do.

Not. Not doing email.

No, no. And we're also, we're partners with Google too. So it's, I think it's overstating it to say that we're in some battle with Google.

That's fair. That's actually an interesting point. You say you're partnering with Google. Yeah. How do you get to that point? Where you're partnering with these companies that are also competing with you.

Yeah, it happens a lot in our space because so a lot of companies in our space are both buyers and sellers. And so we're, at the time we found we were unique in that we were buy side only. And so we think it's more healthy if you only represent a buyer or a seller in a transaction.

Sure.

Because otherwise there's a strong temptation to optimize for yourself when you're working with both of them. So given that a lot of these other companies both buy and sell, and so we compete with the buy side, we partner with the sell side because we can bring a tremendous amount of demand and they can't just ignore our demand as a seller.

As you're going through that process and you're scaling up the company, it really changes the culture in the company as well, doesn't it? How do you keep that on track? And as you're hiring more and more people and you're growing and getting ready for an IPO maybe and raising.

Yes. We've always. One of the reasons we started a company was because we wanted to create a certain culture and we wanted to create like a culture of like, contribution and accountability. Basically a place where people who would otherwise be running their own company could come in and feel at home. Right. And hire engineers that feel that way. So like we've been created small autonomous teams, so we operate like a, a bunch of startups within the company. And that's proven to be a really effective model for being able to ship software quickly. I know we're not alone in this. It's not like this is something novel, but it really is effective. And so given that we have been able to grow at a pretty good rate, we're eight or 900 employees after eight years. So it's not. If we had been trying to go brand direct to everyone else and trying to hire 50,000 employees, that'd be a really different thing for sure.

I often hear people talk about that, how they're trying to build all startups within the company.

Yeah.

How does it actually work in practice for you guys?

Yeah. So it takes a lot of discipline and management. Because when you say a team's got autonomy, you have to mean it. Right.

And so often it's not the case.

Yeah. So if you want to have super control over everything, it's not going to work out very well. But if you can, the key is to hire great people and hire people that you want to see do amazing things. Right. And so Then I'm there as a leader to tell, hey, here's how the world works or how we see the world and here's some resources and let me know when you need help.

At some point, then you get to, to an ipo, which is, everybody here has got a startup, probably wants to get to that point, maybe. How did you get there? What, what was it? What made you make that decision that now is the time for us to do this?

Yeah. So we were, we've always been a pretty disciplined company in terms of goals and results. Like we, that part of it was not something that we were afraid of. And so we had just been executing and building and building and it was going great. And I think the IPO thing started for us and I think for everybody else. When you say, when you look around the room at your partners and you say, I think long term independence is the right thing for our company and that we don't want to sell the company, fundamentally we want to continue to run this thing. If we sold the company, like, what would we want to do after that? We'd want to build another company just like this.

Did you have the opportunity to sell? Sure.

Yeah. But it ever made sense to us. Right. Because we, we really thought that there was a lot of Runway. So we had a strong business, we were profitable. We were profitable for a long time before the ipo. So it wasn't like we were flirting with it. We had proven solid profitability and we had a lot of visibility in the future. And that's when you go public.

And you decided to do that in 2016, which was a horrible market for tech IPOs.

But then it turned right.

It turned all right, I think. Right?

Yeah.

Were you scared?

We felt like we were going to be able to execute our business no matter what happened with the ipo. It's not like that a lackluster stock price was going to ruin the company. And so the risk was there.

But you know, ruin employee motivation, though?

Well, yeah, maybe, but. So we're tight enough with our employees and we think we have a long term vision that our people believe in. So we weren't worried about riding through whatever was going to happen. We're just going to go out and execute. We're going to prove it. And if you prove it, you'll be rewarded. And so we, we felt fairly confident in that. But then obviously we weren't alone. Right. There was this IPO drought and it was like somebody just needed to go. Right. And then, and then it was fine, everything's fine. There's been so many cool IPOs that have happened since then. It's just, it was there, I think there was just a lot of pent up.

Somebody had to go first, break the.

Ice and we didn't go first.

That's.

Yes, there was a momentum.

It was a bit of a cycle there. But we wrote about that a lot at the time. Talk about employees, you guys are rated, what was it? Number two on Glassdoor last year. Yeah, that's pretty nice. How do you make that happen?

So it's the same stuff I was talking about earlier. But so all of us, we talk a lot about culture but then we also make sure that we walk the walk.

It's easy to talk about that and.

If you talk about it but then you don't do it, that's actually the worst because everybody knows. So we talk a lot about. There's just things like we encourage people to be leaders, not managers. We show that there is a long term career path outside of management, which is I think is a really important thing for a culture to say. If you're great at whatever you do, you can do that forever. This company, you can succeed. You don't have to step on somebody else to get a management job or a promotion. But in order to succeed. And we've been doing well enough that we're able to reward everyone for, for whatever it is that they contribute. And that's just the, the core of what we do. We, we strongly reward people for collaborating and for helping others, which is hard to create that incentive because there's commission plans and stuff like that. You meet your own number.

How are we actually doing that?

So that's, that's why we're always talking about culture and that's why we're always highlighting people. So we have a weekly call with the whole company. On that call. We, we tend to like highlight people that like they did something awesome for this global account. That's a really common thing is because we work with global brands like the, the team in one country will be like the center of that brand because they're close to them. But then they, they work with everyone globally to, to create that relationship. And they don't get necessarily commissioned on everybody else making all that money, but they all collaborate and it consistently. So it's like there's a symbiotic relationship.

Got it, Got it. And one thing we haven't talked about yet is where are you headquartered?

We're in Ventura, California.

So you're out there.

Yeah.

What's it like hiring There because it's probably true for a lot of startups here that they're not in the center, you're not in the Bay Area, probably, where, you know, hiring is also hard these days.

But so we're, if you don't know, Ventura, California is about an hour north of la. It's like a really gritty little surf town. And then there's basically us in Patagonia are the employers and, and agriculture. And so it is. It is really off the grid. But we're close to Santa Barbara, we're close to Santa Monica in terms of like hiring pools. But I think that in the Silicon Valley, people tend to have a lot of short tenures and that just creates the culture sort of the way it is. And. And then when you're off the grid, you end up with a lot longer stays, which was important to me, just because what we do is super esoteric and it takes a long time to train people. And so if I had churn, it would have been really damaging. So part of this is how I justify deciding to start a company in my hometown. But I think it has been a benefit. But then also that doesn't tell the whole story. So we have something like 100 employees in Ventura, but we have a huge engineering office in Boulder. We've got a site in San Jose and San Francisco. We've had a great success hiring engineers in Sydney, in London, and so we've in Shanghai. So we've got engineers all over. And so because of that, the Boulder thing, the boulder split happened because one of my guys wanted to move into Boulder. And I'm like. And he's, what does this mean for my career? And I said, it means we have a Boulder office now.

That's.

He's hired a great team there. And. But at that point, we got really good at using remote tools and just figuring out what our process was going to look like. And so we also have people that work full time from home, and it all works. We get a nice balance of. We try to get critical mass out of sight because some people actually, some engineers actually want to be around people.

You say that like that's unusual.

Well, some don't. Right. And I wanted to be able to fully accommodate both of those things.

Fair point, fair point. At this point, you've IPO'd. How do you keep the motivation? You've done kind of your thing.

So I don't think our people were ever motivated by exit and money. What we're trying to do is reshape the media landscape. So We've talked about advertising, but we haven't talked about our effect on media overall, which is that if you look at what's happened to cable tv where like there used to be a fair amount of content in an hour, but then it started to become less because more and more advertising because CPMs were dropping and then people got DVRs and CPMs got lower. And what we're trying to do is avoid that dynamic on the rest of the Internet. And we think we can because when we find those great opportunities, we can pay strong prices for those opportunities. So we're trying to move the world to have move media to have fewer ads that are more impactful.

Fewer ads.

Thank you. Ads, absolutely. Like when there's tons of ads, they don't work. It just doesn't work. And let's try to get at the right moment in front of people and we can make that work for the brand at a price that also funds the content and the publisher and we can make it work. I think our people believe deeply in that at this point, especially people who've been there for a while, we really believe we can contribute to that and we can't do it alone, but we can move the world that way. And then also, like, in terms of being done, like we've like scratched a little bit of the revenue off the media pie. Like the. It's a trillion, trillion dollar TAM isn't made up. Right. It really is that and we think we have a lot of growth in front of us.

All right, awesome. We'll talk about that next time. Right on. Thank you.

Thanks, Anton.

This episode is brought to you by Boast AI. Each year, the US and Canadian governments give out billions of dollars in R and D tax credits and innovation incentives to fund businesses like yours. But the application process is cumbersome, prone to frustrating audits, and receiving the money can take up to 16 months. Boast AI gets you access to research and development tax credits and innovation funding opportunities without the headache and red tape. Join thousands of North American Companies leveraging boast AI software to maximize cashback. Check out www.boast AI.

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