Flurry & Outlier
Flurry from Yahoo is optimizing the mobile experience for developers, marketers and consumers. Flurry’s market leading analytics product sees activity from more than 700,000 apps on over 1.8 billion smartphones and tablets worldwide, giving the company the deepest understanding of mobile consumer behavior. Flurry has turned this knowledge into accelerated revenue and growth opportunities for app developers, and an effective, measurable advertising channel for marketers to engage their audiences on mobile devices.
Flurry Analytics is in an average of seven apps per smartphone and tablet. A technology company at our core, we take pride in the cutting edge platform we’ve built, handling more than three times the data volume of Twitter, and powering one third of all app activity worldwide.
If you can, please give us a little background into the genesis of Flurry.
That’s a difficult question because Flurry started out as a mobile app company. Flurry started in 2005, when mobile applications were installed on your Motorola Razr or flip phone. They had slow processors and bad resolutions, but you could still download apps from the Verizon Store, AT&T Store or the T-Mobile Store.
There were some companies that got to scale at that stage like Digital Chocolate, which made mobile games. The challenge though was in the US, and large parts of the world, people were still thinking about their phones, as phones. Text messaging was being widely adopted but the idea of running applications on your phones seemed alien, and if you were going to do that, typically you might pay for a Blackberry, for large scale work.
When Flurry was coming into the market building freemium mobile apps, it was difficult to get traction in the US, but we did find success internationally. While people in the US weren’t thinking about their phones as computers, people in the developing world (e.g. India, Malaysia and Indonesia), didn’t have computers at home. They’d go to an internet cafe, create a Hotmail account, or read the news, or chat with their friends. Then they’d go home, and leave it all behind, and what we ended up doing was finding that they really enjoyed mobile apps in those countries, because it was a way to use the internet from their device.
The mobile web didn’t really exist back then, so downloading an email app to read your email, or downloading a news app to read news, was the only way to get that experience. The original growth of Flurry was delivering these mobile app experiences to the developing world. Initially, we got to a large scale, but it was hard to make money off of a lot of those markets, especially using advertising.
At that point we had built a robust analytics and advertising platform for our own apps, and we realized that there was probably a bigger opportunity in switching to becoming a platform, than to being an app developer. The iPhone had been out for almost a year, and Apple had launched the App Store. The iPhone was interesting, but the App Store was really what was revolutionary about their whole platform.
The iPhone was a phone that had a full screen interface, but people didn’t actually know what to make of it. The App Store was unique in that it changed the rules of the economy. Before the app store, if you were a mobile app developer, your revenue split with the carrier was 70/30. They would keep 70% of the revenue, and would give you 30% of the revenue. Apple switched it on it’s head so Apple kept 30% and gave you 70%. That was revolutionary, because that now enabled distribution models, and business models, that would actually make a lot of money.
Then they added in-app purchases and the ability to use credit card payments instead of carrier bill payments, and all of a sudden it became possible to make money in mobile, which it was previously very hard to do. We were lucky at that point we had this platform for analytics and advertising, and all of a sudden it exploded underneath us, as Apple’s platform took off. Google followed with Android, and very quickly Flurry became the largest analytics and advertising platform for mobile apps, because we were there at the very beginning working with people in the industry.
In the early days, we went to all the meetups. There was a lot of excitement, but not a lot of volume. When you’re a new market like that, you can’t have a single strategy.You can’t just go after the largest enterprise players, because there weren’t any large enterprise players in the market.
There were a lot of companies we thought would become large players, but they weren’t there yet. You can’t just go after the long tail because the long tail isn’t big enough yet. So we ended up having to follow a two-pronged strategy: we had a lot of sales/biz dev going after the big app developers, or the people we thought were going to become the big app developers, companies like eBay that we were sure were going to have app businesses.
Then, we went after the long-tail through a lot of meetups, a lot of direct marketing, and a content marketing strategy that would focus on the best practices that we had learned ourselves over the past three years of building apps. That worked out quite well because as we got more of the long-tail, the platform got bigger, and once we closed a few large players, you end up with this virtuous cycle of having a few brand name customers and a lot of smaller customers which make you seem bigger, which helps you bring in more brand name customers which then brings in more long-tail.
What ends up happening in an early market is if you can capture that moment in time, people will start recommending you to their friends. If you have a good product in a growing market and are filling a need, people are looking for that solution. I think we really knew we were on to something when we didn’t have to jump on forums and the internet and tell people we existed. Other people who were our customers would jump on and say ‘Hey, you should really try using Flurry, it’s fantastic’.
During that time, was there a lot of competition in the marketplace, or were you guys first to market with the app analytics?
No, I don’t think we were the first to market. There was a company called Pinch Media in New York, which was technically the first app analytics company. We were definitely the fastest growing in late 2009, and we ended up acquiring Pinch Media in early 2010. Then Pinch & Flurry became the same, and at that point we each controlled half of the market in terms of volume of analytics, traffic, and customers, and so when we merged together there was nobody else of a comparable size.
Which is an important lesson in the market, especially in the early days, that winning doesn’t necessarily mean beating out the competition. Winning sometimes means teaming up with the competition to create something bigger. The thing about the early days, when Pinch and Flurry were both in the market, is that we spent a lot of our energy competing with each other: on feature parity, and trying to win customers. It was early so we weren’t really in a zero sum game, so it wasn’t a market share battle, but it came up quite a lot.
After merging, the joint company didn’t have that problem anymore, so we could focus on the future of where we were going, instead of competing, and then that ended up being a key part of accelerating growth even further.
When exactly did you know that you guys were sitting on something that was explosive?
Starting in 2008 through 2009, the company was doubling every 6 months, and continued to do so through 2013/2014. I think that it was not so much that we knew that were on to something, as it became clear that the market was really taking off, and so the numbers just increased so quickly and they never stopped.
Normally you assume that the bigger you get the slower you grow, but that was never true. No matter how conservative we tried to be, we always blew through the most ambitious possible projections we could imagine.
How did investors and VCs react to Flurry in the beginning when you first started, as compared to when things were really taking off in 2008?
There were two early mobile booms, both before the current smartphone bubble. The first was the WAP bubble in 1999/2000, which went nowhere, because nobody used it. Then there was actually a mobile app bubble in 2006, where companies like Flurry got a lot of growth outside the US, and there was a lot of venture funding that flowed in, and so we raised our first round of funding during that first mobile bubble.
It was very easy actually, and took us about 30 days to raise our Series A round. Although, that bubble very quickly died down in 2007/2008. You imagine 2008/2009, when the housing crisis hit, you had nuclear winter for most of the economy, and most start-up companies went out of business.
It was an ironic moment in time, but during the early growth years in mobile apps, investors weren’t investing in anything. It was a barren wasteland of investment. So our existing investors helped us through that hard time, but we didn’t end up raising any additional outside capital until 2010. At that point, after acquiring Pinch, fundraising I wouldn’t say came easy, but being the dominant player in a space that was growing that fast, fundraising was not difficult.
Were there certain other things you guys were working on during the period of 2007-2008 before the app analytics tool really started taking off?
So we were working on lots of mobile apps in our own portfolio, at the point of which we decided to switch to being a platform, and it was a complete switch. We put all our app development on hold, and we focused entirely on the new platform. I think when you pivot any company, especially like ours, it’s all or nothing. You’re either all in, or you’re not. You can’t kind of half pivot, you have to go for it, and that’s what we did with that.
And frankly, I want to make it clear, it didn’t seem like a good idea at the time to everybody. At the time, when we were making this move into mobile, the iPhone first launched and didn’t support native apps at all. It supported web apps through Safari, and Apple had bet big on mobile Safari being the way people would build experiences for the iPhone.
They later launched the App Store and came around to mobile apps, but that wasn’t the plan from the beginning. Nor was it for Android, so being a native app platform at the time didn’t necessarily sound like a great idea. It ended up being a great idea later, but that was only because the market came that way.
One of the reasons of why Flurry ended up being able to grow so big before it was acquired was that all the large players thought that native apps were a moment in time. They thought the mobile web would improve and that native apps would fade away as web technologies got better. Companies like Facebook and Linkedin made big bets on the fact that they didn’t really need to build native apps, that they could just wrap their web experience in a native app. And they paid the price in the early days, and they came around, and now the market is very focused on native apps. It’s a better experience, and it’s a faster experience.
During that time, when people thought it was a moment in time, it was expected that Flurry would fade away along with native apps. And when that didn’t happen, by the time people realized it wasn’t a moment in time, we were already too large to just make us go away.
Was it always the intention to monetize the company through advertising?
Starting with the pivot in 2008, our plan was to always have the analytics free and monetize through advertising. It was for the very simple reason that, if you look at the web, the cost of analytics has always gone to $0.
So if it was going to go to $0 anyway, we might as well start at $0, and make money by using the data to make money, than to try and make money off of analytics and switch later, which is always very painful. If you looked at the plan we had, when we made the pivot in 2008, it was still the same plan as in 2012.
Steve Jobs famously mentioned Flurry in one of his speeches. What was your reaction to that whole scenario?
If people aren’t familiar with why, we published a blog post about something we were seeing across our analytics network which was a new device called the ‘iProd’ which we only saw being used in the Cupertino campus. We hypothesized this was the testing of the iPad which had not been announced at that point. Apple and Steve Jobs were very upset that a company that was not Apple was announcing a new product that they had. It was a mistake, and we admitted it as much, that we should not have published that.
We ended up having a very positive relationship with Apple in the future, and put policies in place, about what we would, and would not talk about of the things we saw. I think that’s what ends up happening when you’re growing so fast, is that you grow up faster than you realize. At the time, when we made that announcement, we did not realize the gravity of how much we knew about the market, and how little other people saw. I don’t know that we treated it with the seriousness that we very quickly did thereafter, so we made sure we were very responsible in how we were using that information.
There’s been an explosion in the amount of options available in the mobile ecosystem, with thousands of vendors across the world. Do you think that this is sustainable, and is there the slightest possibility we’re in an adtech ‘bubble’?
As with any emerging market, where the rules are constantly being defined, and things are changing. These days native advertising is the new hotness. Everybody wants to have native ads in their app. But it’s still unclear as to what that means, and how to optimize for it, and how to measure it. It’s taken us 10 years to have search advertising and banner ads and real-time bidding exchanges on the web kind of sort themselves out. On mobile we haven’t had that much time to figure it out– I don’t know if the definitive ad units for mobile have been figured out yet. So I think it’s interesting how fast things are evolving.
The challenge that makes it harder as a buyer or as a seller, is to figure out which technology platforms to bank on, because you do make a big investment of your business in these technologies, and if you bet wrong there is a serious consequence. At the same time, the market is evolving so fast, that you can’t spend too long analyzing the market and not make any decision, and wait on the sidelines. As long as you realize the market is changing and you adapt your strategy appropriately, you can still do quite well, even though it’s quite uncertain and changing so often.
What do you think will happen to many of these companies? Do you think that something will fundamentally change with the way advertisers work with these ad companies, like many dying off, or advertisers only working with certain specialists, or maybe that a lot of these companies can’t be venture backed because they can’t give an exit that is significant to these VCs?
No, I think that VCs have a very complicated relationship with adtech in general. Notice every time there’s a slew of adtech IPOs like there was when Criteo, RocketFuel and Rubicon go public, people invest in the space. Then they realize how hard it is, and they stop investing in the space, and there’s another spat of IPOs and they invest in the space.
I think the challenge with adtech is that it has high growth mechanics, and can be very attractive, but it often does not generate the multiples VCs look for, because it’s so easily commoditized. So it’s hard to create sustainable advantages if you’re not Facebook or Google and run a property, on which you control the advertising. So the number of pure ad platforms that have survived long-term don’t exist– I mean, even Doubleclick got bought by Google.
I think the struggle you see in investment in adtech is like investing in houses built in a desert on sand. You know they won’t last. The question is, will they last long enough to give you a return? It’s often difficult to tell.
What are your thoughts on mobile programmatic?
It’s there today. I don’t think most of mobile ads are bought programmatically, but they will be soon, just the same way they are on the web. It’s just a much more compelling and powerful mode. I think the reason that you don’t see it as the majority in mobile yet, is this whole format flux. So, they have mobile programmatic native ad networks, native ad exchanges like the Gemini platform from Yahoo!. You have banner ad and video ad exchanges out there right now.
The problem is the creative formats are in flux so much, it’s harder to buy programmatic unless the creative formats are very standard. On the web, creative standards have been flushed out over the years and are very clear, so programmatic buying is more straightforward. In mobile, without that standardization it’s just harder. So I think that until you see some of these creative formats shake out, and just have a few dominant results, you’re not going to see programmatic as dominant as it should be. But long-term, the old ad network buying model is dead.
So do you think there will be a time where everything is bought through one platform, like one self-service platform to rule them all?
No. There is no incentive for anybody for this to be a winner take all market. At the same time, you’re never going to get rid of the premium ad market as well. There will always be reps that are selling the premium placements on all these different sites out there. I think thats what’s going to happen: is that programmatic replaces the old ad network inventory, which is everything from remnant on up to just below premium.
Looking back, what were some of the biggest obstacles you overcame, within the first 2 years, and first 5 years of the company?
I think as any entrepreneur the hardest part is persistence, not giving up in the face of what is almost certain defeat– that’s by far the hardest part of being an entrepreneur. In a new and evolving market, the rules are changing as fast as the game is progressing. You cannot count on the rules being the same tomorrow as they are today. The good news is that that’s offset by the fact that it’s largely greenfield. Customers don’t have 3 solutions. They have no solutions for what you’re doing, and so you’re not trying to replace something, you’re out there selling them something new. So all the uncertainty gives way to added opportunity.
It was difficult surviving through the rubble of the real estate implosion, and the bad economy in 2008/2009. But what always happens is that those end up being the best times to start companies. All the great companies you can think of from Google to Facebook, all got started during the rubble of some financial crash. Or they go through their hyper-growth phase during the rubble of some financial crash, because that’s when you can hire more people for a reasonable price, and there’s less competition.
It’s hard to be at a hyper-growth stage during a hot market, because there’s so many challenges to doing so. I don’t necessarily wish that on anybody, but if you’re going through it, there are ups and downs. It also makes you be very diligent about being capital efficient. I think one of the challenges in today’s market is that capital is so readily available that entrepreneurs are not as capital efficient as they should be. Which means that when the market turns, they’re going to have trouble adjusting.
What do you think were some of the key factors that contributed to the ultimate success of Flurry?
The ultimate success of Flurry was due to a few things. One was the acquisition of Pinch and consolidation of the market so that we didn’t have to compete anymore. Second was, we focused so much on the initial experience of integration, to make that as easy as possible, that even after many years, it was still recognized as the easiest to integrate SDK for mobile apps. That removes a lot of the concern people have about giving it a try. So that means people will give it a try if it’s the easiest possible thing to try.
We also were very sensitive to the market. We listened to customers, and made sure we understood where they were going so we could stay ahead of them, in terms of the growth of mobile, changes in buying habits, and what they were looking for. We navigated that fairly well.
In the end, it’s never one thing, it’s never one decision, it’s a series of small things that add up over time. There was this great quote that I heard which said that “perfection is really the result of doing a lot of small things very well.” That is 100% true. A lot of the decisions you make everyday at your company don’t seem important, but if you do everything and do it well, they add up over time. And that ends up being a big decision in itself.
To the extent that you can reveal, why do you think Yahoo! was interested in acquiring Flurry, and what are your thoughts on the partnership in general?
Probably as you have seen, Flurry has become a big part of the Yahoo! mobile strategy, and that was part of their plan all along. You have to imagine that they wanted to be bigger in mobile, and Flurry has given them a way to do that.
What is your take on the future of mobile analytics and advertising?
I think it’s growing. We’re in the early innings of a very long game still. I don’t even think the creative units have been settled on, or the way we measure conversions. There’s much left to be done, to find out what’s actually working, and how to scale things up.
We know this because the leaders keep changing. I mean, Facebook, going back 3 years wasn’t even a mobile company, and now they are the largest ad company in mobile by volume. We’re seeing these things change so often that, I think there’s a lot of room left for innovation. In terms of mobile analytics I think the same thing is true. I think the things people are trying to measure today are different from what they were trying to measure two years ago, which was different than what they were trying to measure 8 years ago.
So as long as things are changing like that, there will always be new innovations coming out, and I’m lucky to see and meet a lot of entrepreneurs that are working on a lot of really cool things. It’s fun to watch and see how people are rising to the occasion, of solving the problems that people are facing today. It’s a lot of fun.
Lastly, I heard that you’re working on something new and really exciting. What can you reveal about this new project or company you’re working on?
It’s a new company, called Outlier. The goal is to try and solve some of the most fundamental problems of business intelligence that we see across the market, which is that people have lots of data- lots of dashboards, charts and answers- but they still don’t feel like they can make data-driven decisions. They still don’t feel like they know what’s going on in their business. So Outlier is going to solve that.