How One Mba Dropout Sold His Business To Google For $750 Million

How One MBA Dropout Sold His Business to Google for $750 million Serial entrepreneur Omar Hamoui has spent his career founding and working mobile businesses, some of which have fared better than others. He founded and ran software program consulting business Vertical Blue, before cell photograph sharing GoPix Inc., and foto chatter, a mobile picture-sharing social network. Then came AdMob, one of the first and largest cellular promoting platforms, which Hamoui founded and at which he served as CEO. The firm attracted Steve Jobs, who was thinking about shopping for the enterprise in 2009, but Hamoui held out for a greater supply which came only a few months later, when he offered AdMob to Google for $750 million. Omar is now Partner at venture capital firm Sequoia Capital in California, the place he focuses on mobile investments. Newnham: What have been you like rising up? Hamoui: I grew up in Central California and was planning on being a physician. That was the course I was alleged to be taking, but after about sixth grade, my household moved to Southern California and I eventually studied Computer Science at UCLA. I discovered I really enjoyed both the engineering and enterprise aspect of the course, and that’s when I began taking a look at it extra as a career path. It was additionally proper around the time that the internet started to take off. I graduated UCLA in 1998, and so definitely by my third and fourth year there, all these loopy net corporations were being launched, like Amazon and Google. I was seeing, hearing, and studying all about them on the news, and that’s when I got really involved within the thought of enterprise and technology combined. Newnham: What was your first experience of technology as a child? Did your loved ones personal a computer? Hamoui: Yes, I think my father bought us an Apple II pc after I was in third or fourth grade, and I at all times loved using it and enjoying with it however I didn’t actually start coding until I was in my senior year of highschool.I appreciated it sufficient to take the course at UCLA, and there I realized pretty shortly that I wanted to run my very own company. My first firm, which I started in 1998, was referred to as Vertical Blue, Inc., and we supplied consulting on software program improvement for companies; it was web site development and Flash. I started it in my senior 12 months of college as a result of I was getting a bunch of contracts, and so I started hiring some of my pals to do a number of the work and ended up hiring about 20 individuals. Vertical Blue existed until about 2001 as a result of when the dot-com crash happened, lots of our customers went out of enterprise and we slowed down. Then I ended up becoming a member of Sony Pictures and a few year in, we have been looking at some of the stories inside Sony about how the pictures taken from digital camera phones have been going to exceed photographs taken by analog and digital cameras mixed. That’s what received me enthusiastic about the concept that digital camera phones had been going to turn into so necessary, and yet there was no software program or companies written for them. So, a few my colleagues and I left Sony and started a company called GoPix, Inc., constructing software for Symbian gadgets, since Symbian gadgets were the only phones that would permit you to get API access to the camera on the time. We basically built a photograph-sharing app on Symbian that allowed you to add audio to the pictures, which then could be performed again on a browser. It was very cool and used neat software program, but we ran into a giant distribution downside because to be able to get distribution with anything on mobile at the time, you had to both get a provider deal or a handset deal. Thos e were actually the one two avenues to get distribution and, being only three folks, we might get neither. We didn’t have contacts or connections, and I didn’t even know what the process of elevating cash would be like, so we did it for simply over a year â€" then principally gave up because we couldn’t get the software out there. After GoPix, I did a little little bit of consulting for about five months, but then I thought some extra about GoPix because at this level social networking was beginning to take off. Facebook hadn’t began, however Friendster and LinkedIn definitely had so I thought, “Maybe the idea right here is rather than concentrate on the software program, I’ll construct a cellular internet service that enables folks to share pictures by way of a social graph.” So, I built a social community known as fotochatter. Again, it was a social network, around photographs on cell, nevertheless it went somewhat higher. People could make pals and post a photo; the n it might send a text message to all your mates which were primarily “following” you then they might see your photograph and remark back. It was going fairly properly, but additionally, while I was working on that, I decided that if I was going to maintain going back and forth between beginning companies and getting real jobs, then maybe I ought to get an MBA. I felt that an MBA would be useful in getting me further in my career, because it opened up different career avenues, and so I went to Wharton. One of the things I found in my first yr, was that I saved stumbling up in opposition to the same issues. Fotochatter had possibly 19,000 international customers, nevertheless it wasn’t rising as quick as I wished. The whole website was based mostly on WAP, so I thought probably one of the best factor to do can be to advertise â€" so I tried promoting online. I tried running advertisements on Google as a result of there was no different approach to do it, and I spent about 30 ¢ a click on to get people to return to my web site, and then on the website, I put them by way of this circulate where I educated them and informed them concerning the cell opportunity after which they could go to the cellular website and use my service. I spent about 30 ¢ a click and about 1% of the people lastly made it to the cellular web site and signed up â€" so that was $30 per person for a free service, which isn’t great. But then I started operating ads on other websites that had been extra directed in the direction of cell lovers â€" there were numerous chat boards and smaller discussion groups about WAP usage and stuff like that, so that got it somewhat higher, however it still wasn’t that nice. It grew to become fairly clear to me that the exhausting part wasn’t getting the clicking; it was that leap from net to cell â€" the transition. So, I figured I ought to advertise on mobile web, however there was no approach to do it. I looked for any service that might permit me to do this on a self serve foundation, but there wasn’t any, so then I thought I would simply advertise immediately on a cellular website. I tried to find any kind of listing of massive cellular websites, and, once more, there was literally nothing there. There were all these half-baked listings, the place half of the websites listed have been already gone, so it was actually difficult. Ultimately, I ended up discovering one cellular website that seemed to have an honest amount of visitors, and this was GetJar â€" so they have been the company I first ran ads with. GetJar was primarily based in Eastern Europe and I emailed them saying I want to run some ads on their web site, and they stated, “OK, nobody does that, but OK.” I said I would pay them a penny per click, so I gave them hyperlinks and paid them a penny per click to run ads for fotochatter. Very quickly, I was getting a lot of traffic, and somewhat than 1% of people signing up, 10% of individuals had been signing up. That penny per click on and 10% meant my cost of acquisition went from $30 to 10 ¢, so that hole was clearly massive. I thought, “I can both try to benefit from this for so long as potential, and develop my social network as rapidly as I can, or I could be the one who makes the market efficient in the first place.” From what I had seen, normally, looking at plenty of other alternatives on the internet and even speaking about this in enterprise faculty, these types of alternatives the place creating market efficiency or being the one who brings the market to effectivity quicker can truly be a very good-sized opportunity. So, I went again to GetJar and requested them, “If I bought adverts for you, as a result of I think there are in all probability different individuals like me, could I take a commission?” And they stated, “Sure.” At the time, I didn’t know what an ad community was. I considered it as eBay for advertising as a result of I didn’t understand that ad vert networks existed or how they labored. So I constructed a self-serve system that allowed folks to purchase advertising on GetJar and fotochatter; these have been my first two publishers. The self-serve system additionally allowed people to enroll their very own WAP websites. This was all constructed as a aspect project while I was at business faculty in 2005. I started it in the September of my first 12 months and launched it in December so it took three months of work to launch the preliminary version of AdMob. Newnham: How was that preliminary launch obtained? Some mobile bloggers picked it up fairly rapidly didn’t they? Hamoui: Well, there were a number of individuals I had been in contact with through my previous mobile enterprises, so I emailed a couple of bloggers â€" considered one of whom was Russell Buckley, who ended up being the first employee of AdMob. To rewind somewhat bit, I had run sufficient firms that hadn’t done properly, so before I built something for AdMob and after I had talked to GetJar and they agreed I might get a fee, I talked to a pal of mine, Ian McCarthy, who was now working for an organization referred to as Orb Networks, and Orb had software that allowed you to stream media from your laptop to mobile gadgets or laptops. It was like a software model of Slingbox, and since they wished to stream media to cellular gadgets, I figured they may use clients who had mobile units with information connections. So, I requested him, “If I had this method the place you would advertise on mobile and therefore reach individuals with cellular units with information connections, would you be excited about promoting?” And he said, “Sure. I might spend $1,000 on that. ” So once we launched AdMob, we had that $1,000, and the adverts began operating instantly, and I think we probably spent that $1,000 in two days, at two or three ¢ a click on. It was very, very cheap, however there was a lot of site visitors on GetJar and fotochatter put collectively, with click-via rates at the moment at 6% or 7%. Users just hadn’t seen adverts on cell earlier than, so there was a novelty to them as nicely. Other advertisers then started signing up, on a self-serve foundation, and I bear in mind telling my spouse, “If I can get two or three folks that I don’t know during this primary week to really put their credit card details into the system, then we’re really on to one thing,” and I assume by the tip of the week, I had four or five, so I was pretty excited. It’s hard to appreciate now, however it was so easy on the time and so new and customers were so thinking about it that people couldn’t really imagine it worked the way it worked. Because whe n you put $50 into this system and you clicked “start,” your advertisements just started to work and you'll see all of the statistics stay and your money can be gone in maybe twenty minutes, at most; most likely ten minutes. Many people thought it was pretend or that I was simply taking their cash, but they might take a look at their logs and they could see that, certainly, that user had clicked on the advert. Newnham: When did you go for your first spherical of funding? Hamoui: I didn’t actually go after funding as a result of I didn’t know how to try this. I wasn’t from Silicon Valley, and I didn’t know anything about it or people there. But I started getting some emails from Nokia and other massive corporations, and, I would get excited as a result of this had never occurred to me with my other corporations. Typically, I would e mail again and say, “Thank you a lot. This is superior. I am only one individual, although, so I am fairly positive we will’t work together, but I will get back to you.” But then, I started getting some emails from VCs, and that was wonderful to me as a result of I had no clue that it was even possible to have issues occur this way. I could be on the telephone to them while I was in Philadelphia, and so they were largely right here in San Francisco, and, after a while, I seen there was lots of speaking â€" however nothing additional occurred until one invited me out to the Valley on a Thursday after class. He introduced me to a number of other buyers there as a result of I suppose he was interested but wasn’t sure he needed to do something. I guess he was making an attempt to drum up assist and see what different folks thought so, after two of these journeys, I ended up having, basically, a big group of people that would invest if someone would lead. There were fairly a number of leaning forward, but no one was leaping forward. It was really irritating as a result of I had all these dominoes in place, but nothing was falling. Also, it was March, 2006 â€" my first 12 months of business faculty â€" and AdMob launched on the finish of 2005, with its formal announcement in January, 2006. By May, I was meant to have an internship and hadn’t done something about it as a result of I had began AdMob, so I was getting nervous. But then, the VC and one different individual I had met showed curiosity and actually sent me a time period sheet â€" it was pretty one-sided of their direction, so I wasn’t really happy with the phrases, however the primary thing that worried me was the truth that they wished two board seats, which meant I solely obtained one. They took a really hard line with that time which nervous me because if I signed, the day afterwards, they could get rid of me based on the fact that that they had two board seats. I asked a friend of mine what he thought I ought to do. I also informed him to not inform anybody concerning the proposal as a result of it was very confidential and it had to stay a secret. I don’t know why it was sneaky and secret, however that was my understanding about how this stuff worked. It was Monday and the time period sheet expired on Friday, so I needed to resolve shortly. He stated he would give it some thought, and then he known as me an hour or two later and mentioned, “I’m actually sorry. I know you informed me to not inform anyone however… I told a friend of mine and that good friend of mine is aware of someone at Sequ oia and he talked to him, and they want to discuss to you.” Then, Jim Goetz from Sequoia referred to as me. He had learn everything concerning the company and principally laid out a deal that was much better than the previous offer I had obtained. He mentioned, “If we had been to make this provide, would you sign it?” I agreed so he advised I fly out to fulfill them, which I did the subsequent day. I flew on the Thursday and I met with Jim and the group, confirmed them a stay ad campaign, and on Friday, literally twenty 4 hours after meeting, they gave me a time period sheet. It was 4pm and my different time period sheet expired at 5pm, so I was taking all of this very critically. My lawyer wasn’t answering his phone, so I just checked out it and I was like, “You know what? I am a enterprise school pupil; that is Sequoia; I don’t really know what's in this term sheet; but how dangerous may or not it's?” The worst case was I might say I signed a time period sheet with S equoia. So, I simply signed it. Within twenty minutes of getting it, I signed it. And that was that. “If that they had offered me one million dollars in cash, I would have completely offered it.” Newnham: So, this was in May, having began the enterprise in September the yr earlier than. That’s impressive. Were you amazed at how rapidly it happened? Hamoui: Yes, I started coding myself in September, and within the May after, I was funded and right here. So, I was shocked, yes. Really, even starting to code in September and launching in January after which the term sheet in May was quick. And there have been a lot of adventures along the way in which… I met a lot of fascinating people and talked to a couple of corporations who wanted to buy AdMob. And I would have offered it: they wished to purchase it for equity in their firm, but if they had offered me one million dollars in money, I would have absolutely bought it. I was a enterprise faculty pupil, only one individual, having coded for 4 months. Would you promote that for one million dollars? I would sell it for a million dollars. Newnham: It ended up quite nicely that you simply didn’t sell for one million… Hamoui: Yes, a lot of issues ended up working out fairly nicely. Newnham: What were the key lessons you took from your previous businesses to AdMob? Hamoui: First of all, I realized that when things are working, you’ll know they’re working, so I began to shift ideas quickly. In the beginning, it was like a labor of affection, and I believed the conventional business spiel of never giving up. It was simpler to know when something was working than when it wasn’t. Like, when you’re pushing a boulder uphill, and then it runs downhill, you possibly can feel it. But I suppose the people who have never skilled the downhill, even somewhat bit of downhill, don’t know. They think issues are alleged to be that onerous, and they don't seem to be. It shouldn’t be that hard to get the market to undertake or adapt to your product, if there’s a fit for it. The second lesson was that I had carried out sufficient consumer stuff to know that I wanted to run a company that made cash, so getting that first greenback through the door, and on this case, having an agreement from a buyer and a seller, and figuring out that literally the sec ond I turned AdMob on, I would generate income. “There have been lots of us that knew something big in cell should have occurred but hadn’t, and we also knew we may make it happen.” Newnham: What influence did the launch of the iPhone have on your business? Hamoui: AdMob had been round almost a yr and a half when the iPhone was announced. It was announced in June, 2007, and previous to this, we had already tried to run adverts inside of purposes â€" J2ME and BREW applications â€" but they'd never labored. There were latency points and ad-serving points. It seemed adverts on the web have been good and adverts on mobile had been dangerous; that was the lesson realized so, when the iPhone got here out, we had been pretty excited. Not because it was such a fantastic, wonderful system or experience, however this was the first time, as we mentioned beforehand, you could serve ads through JavaScript, so you didn’t have to try this crazy server factor anymore. We constructed a JavaScript SDK, and as we had at all times been gadget-agnostic, we built an iPhone SDK. When the iPhone launched, there was no App Store, however it was introduced eight or nine months later, so we went upon our way and we checked out how the iPhone was trending; click on-by way of charges were good and every little thing, nevertheless it was not the be-all and end-all. Then, when Apple announced the App Store, we had a long, inside dialog because we knew that “apps had been unhealthy and internet was good” and we needed to know if we should always even trouble constructing an SDK for functions. Moreover, there have been all these NDAs with Apple and you couldn’t share code, and we didn’t even know if an SDK was authorized or if it would get accredited in the App Store so we questioned if it was worth all this trouble. We hadn’t been in functions but, and we felt like these gadgets had been completely different sufficient that after they announced the App Store in March, we have been going to build a new set of Ad Units for the iPhone for purposes and for the online on the identical time â€" and that we'd have an enormous announcement right around the time the App Store came out. So, the App Store launched on July 10, 2008, and we had b een working on our SDK for those three to 4 months earlier than, and, I think, on July twenty fourth â€" two weeks later â€" we announced our iPhone Ad Unit. In-app Ad Units, net Ad Units â€" something you could do on the iPhone, we had an Ad Unit for, mainly. Some clicked to maps; some clicked to the App Store; some clicked to this; some clicked to that. Even the notion of working an advert into the App Store so that folks could advertise apps was new; nobody had done that earlier than. We had no competitors. I don’t assume our next competitor received there with ad items for possibly another six months. Shortly after we launched the Ad Units, just the traffic that was coming â€" the greenback quantity that was being spent â€" indicated to us that this was not an extension of the line of the vector that we were on. This was a complete new thing, so we had an internal company assembly, and I bear in mind it because I made the choice, somewhat pushing away slightly from what the ma nagement team needed, I decided we were accomplished with WAP, although 95% of our enterprise was on WAP, and that every little thing moving forward can be for the iPhone. So, we had been going to dedicate zero vitality to WAP â€" which was a controversial thing to say, however in the company meeting… have you ever seen the movie Apocalypto? Newnham: No, I haven’t. Hamoui: I haven’t seen it either, truly, but I know the plot. My understanding is it’s a movie about Mayans â€" a Mayan warrior and his struggles and the battle between these Mayan tribes, and at the very finish of the film, after all of the conflict and battles, they simply see on the coast, the Spanish galleons touchdown. So every thing that they had carried out beforehand was fully irrelevant â€" all the battles and conflicts, and that’s what I told the company. Everyone was nervous what would occur if we deserted WAP because we would be competing with all these different individuals, however I just said that we had been going to do that because it just didn’t matter anymore. And aside from beginning the corporate, that was most likely essentially the most pivotal choice we made as a result of it meant we were first, and far and away the fastest, and probably the most successful community on the time on the iPhone. Newnham: Can you talk me via the process that led to AdMob being acquired by Google? Hamoui: I don’t know how much I can say due to NDAs, but I will give you an summary. The whole process began in January or February, 2009, after I was in a meeting and the office supervisor came and said, “I actually have a name for you.” I told her I was in a meeting and she or he was like, “Yes, I know, nevertheless it’s Steve Jobs.” Funnily sufficient, he had really sent me an e mail a number of weeks before, but I never saw it as a result of it went into my spam folder! Anyway, he had just referred to as the primary office line, so I received on the cellphone, and he stated, “Hi, Omar, this is Steve Jobs. How are you? I actually like what you’re doing with AdMob, and I puzzled if you want to come back by my home and chat about it?” I said, “Sure,” so he gave me his address, and I went to his house that night. That evening, we talked about the business, and Steve mentioned he was actually excited about what we were doing and that he would really like us to re turn on board however, the terms weren’t nice. We mentioned it some more over a period of time but we may never agree on terms. He principally wished to pay lower than we thought it was price so we weren’t ready to sell. It was actually a really draining time as a result of with an enormous firm like Apple, you'd have anticipated to deal with the mergers and acquisitions team, however it was just Steve. It was literally me and Steve going backwards and forwards, and that made it draining, not because of him however because of the scenario. That was the wonderful thing about Steve, though: regardless of Apple being such a giant firm, he tried to maintain the business like a startup. Soon after the deal fell by way of, we had emails from Google, who additionally expressed an interest in the enterprise. Following what had occurred with Apple, we have been a lot more assertive when it comes to what we needed and defined that if a deal was to be carried out, we'd need certain terms a nd for it to be completed by a certain date. We were very very like, “If that is going to happen, it has to maneuver at a decent pace.” Luckily, they had been really versatile and accommodating, and I think a deal was drawn up inside per week of them approaching us. However, once the deal was in place, rather than celebrating, we obtained hit with a second evaluation from the F.T.C. (Federal Trade Commission), who wanted to review the deal again as a result of we had been in the mobile advertising area and Google’s position inside promoting meant they were involved about how our joining forces may damage competition in the same subject. The review meant we had eight months of limbo that ended up being really hard as a result of we didn’t know what was going to happen, and I simply wasn’t prepared for it. I additionally wasn’t knowledgeable on this space as a result of it was out of my remit, going back and forth to Washington. I had gone from an amazing high to a crushin gly disappointing low, which was extraordinarily frustrating. As an entrepreneur, I actually felt that this was not what I had signed up for. Newnham: Did this contribute to you leaving Google so soon after the deal was completed? Hamoui: Once we joined Google, and after the eight-month evaluation period with the F.T.C., the euphoria had waned. Everyone involved with the evaluation from AdMob mentioned it was the most stressful time, and it definitely affected how we felt as soon as we were integrated into Google. Also, by then, the business had needed to carry on, and we had carried out OK. During that time, we couldn’t say we have been a part of Google but, so we had to carry on as we had been, and we grew the company and gained extra traction and customers. In truth, we did so nicely that I questioned whether or not we really wanted to have accomplished the Google deal, not because it wasn’t good but extra that we had been capable of develop the company anyway. Also, as soon as we were in Google, there were various layers of administration that have been brought together for collaboration, and I felt like I wasn’t wanted. There had been people doing the jobs that I had carried out, and so I felt I was n’t required so as to take the enterprise further. Google wasn’t precisely pleased about it, however they understood, and that’s why I left. “Value is all the time in the execution â€" and that's best. You can have an idea, but executing it nicely is what matters.” Newnham: What lessons do you assume you discovered from working and promoting AdMob? Hamoui: I realized several. One being that value is always in the execution â€" and that is finest. You can have an concept, however executing it nicely is what issues. Another was about being coherent from start to finish. AdMob never pivoted; it remained the identical from the start. We additionally believed in values. Once you acquire traction, get shifting but at all times hold on to your values. It’s actually necessary to remain consistent. We at all times handled clients and clients the identical, and our expertise did what it mentioned, and always delivered what was promised. Culture is essential, too, and shouldn’t be missed. Once you get past, say, 70 workers, folks can’t and won’t look to only one leader to guide the culture. People used to inform me how necessary it was to inform your employees in regards to the tradition of the enterprise, and I by no means obtained that, however as soon as we grew really huge, I totally did. Newnham: If you would, what recommenda tion would you provide a younger Omar pre-AdMob? Hamoui: Enjoy the experience of working a successful startup, because it’s a once-in-a-lifetime expertise. Don’t wait until it’s too late to take pleasure in it, as you may only do it once. Some entrepreneurs go on to achieve the identical success over and over again, possibly even three or four occasions over, but that’s rare. It’s uncommon as a result of it’s not just you who does it. It’s a whole staff that creates something particular, and getting that kind of staff collectively again doesn’t always happen. I guess it’s like most issues in life: it goes too quick, so cease and savor it for a bit. I was at all times too stressed or too busy shifting on to the subsequent factor to enjoy it as much as I may have. (This article originally appeared on Medium) Enter your e mail tackle: