One of the largest exits of a venture-backed company based on the East Coast was when Right Media sold to Yahoo for $850 million in 2007. In this episode of Founder Stories, Mike Walrath tells host Chris Dixon how Right Media got started in the middle of the online ad bust, lost its biggest customer and almost went out of business, just before it launched its eventual business idea of an online ad exchange.
The ad exchange turned out to be quite lucrative. Right Media signed MySpace as a customer, and then attracted an investment from Yahoo, which bought the entire company. In the video below, Walrath continues to explain how he went about to build a liquid exchange for ads. The way he did it was by getting the ad network intermediaries first. He also recalls the buying frenzy that began when DoubelClick was put on the market, drawing a $3.1 billion bid from Google, followed by Microsoft’s $6 billion deal to gobble up aQuantive. “It was a wild time.” Walrath remembers, “I was getting calls from bankers every day.”
When DoubleClick was put on the market by its private equity investors that forced a decision point on the other players. “As long as DoubelClick stayed independent,” explains Walrath, “nobody else had to do anything.” But “once one went, then they are all going to go.” He had to figure out where he wanted Right Media to be in the sequence of M&A events which unfolded. At the end of the interview, Dixon asks him if the fact that Yahoo was already an investor predetermined the outcome, and teh two get into a nuanced discussion about the difference between rights of “first refusal” and of “first offer.”