Exit Interview: Thinknear Founder Eli Portnoy Leaves Telenav
Two years ago this week, Telenav acquired mobile advertising startup Thinknear to help the firm build its location advertising business. Eli Portnoy, the startup’s founder, has spent the intervening time helming Thinknear and further building the Telenav division into a location services powerhouse.
Portnoy recently left the company, making way for VP Loren Hillberg to succeed him as GM of Thinknear. We caught up with Portnoy earlier this week for our own exit interview. Below, he talks about some of the surprises in the mobile advertising industry over the past few years, whether location merits its own sandbox, and how his views about the small business market have evolved.
Rewind to the early days of Thinknear: what did you get right and what did you get wrong?
About three years ago, as we were transitioning the Thinknear business from a small business solution to a local-mobile ad network, I sent a pretty extensive email to my investors laying out the reason why we’re going after this market. In the letter, we made some bold predictions: we said that the majority of impressions would have latitude and longitude — and that scale would no longer matter. We talked about how brands would understand that location was so core to understanding context and audience on mobile that they would be using it for the vast majority of their campaigns.
These were hypotheses that no one thought we’re going to pan out. Everyone thought there would be a scale issue. They thought it was so far afield from how advertisers were thinking about things that they wouldn’t be using it widely. Looking back, those things really did happen. Pretty much every brand at this point has, or is trying to, deploy a location-based advertising as a core part of their mobile strategy; and scale is no longer an issue.
So what did you get wrong? What did you expect to happen that didn’t?
One of the things that I thought would have happened was that a bunch of pure-play mobile ad networks would push hard into location. I thought Millennial Media would do a much better job of incorporating location into their strategy. I thought Mojiva, InMobi, Jumptap and the other big networks would start following the money into location-based ads and the space would get a lot more competitive.
What’s been really surprising is that the four companies that really set themselves apart as the leaders in location were all-purpose built around location. I didn’t expect that. I thought we would have had a lot more competition from the bigger players than we did.
Why do you think they didn’t move in?
All of these companies recognize the value in location. What ended up happening, I think, was that [the location business] was such a dramatic shift from what they’re doing that it simply was too difficult. The infrastructure, the technology, even the business-side — it’s just so different that it was too cumbersome for them to move into this space. I don’t think it surprised them, and I don’t think it’s a lack of wanting to move into this market — it’s just a radically different business. They couldn’t manage to protect the legacy business while going after this new market.
Pretty much every brand at this point has, or is trying to, deploy a location-based advertising as a core part of their mobile strategy; and scale is no longer an issue.
Right now, the mobile-local firms are making a lot of money, but most remain in the pre-IPO phase. Do you think that these companies can build a sustainable, freestanding business around location? Or, is consolidation inevitable?
Absolutely, yes they can [build a big business around location], and here’s why. With every new media channel, it ultimately comes down to a single targeting catalyst that makes it work. In search, there were tons of opportunities from a business standpoint but no one figured out how to make it work for advertisers. Then Google discovered that search was all about intent. And they built a business around helping advertisers take advantages of it. In the display world, it was about retargeting and understanding the sequence of how people were going about the browsing history.
When it comes to mobile, people were searching for that targeting catalyst. In my opinion it’s all about location. The reason a lot of big companies will emerge out of location is that its more than just a tactic — it’s inherently what makes mobile unique.
Recently, the ad tech industry has fawned over a cross-platform approach in which the device sort of fades into the background. Do you believe that sort of device agnosticism is inevitable as the industry matures?
The cross-screen idea is interesting, important and does have legs. At the same time, the way consumer interact with each screen is different. There are different inputs that matter when I’m making decisions with each device. When I’m search for a pair of skis, it means I want a pair of skis. But it doesn’t mean that I’ll buy a pair of skis via my phone on the way home from work.
You will have cross-screen tactics. But at the same time, if you want to get to the core of the experience — the core of what people are doing and thinking about — you need to get a little more endemic to the device itself.
You shifted Thinknear’s focus from small businesses to brand marketers in 2012. Are you any more optimistic about building a business around SMBs today?
I think small businesses are a massive opportunity. We’ve actually had a channel business that has sold to small businesses for a while — and it’s quite a considerable part of our revenue. The insight we had around small businesses was that you cannot sell to them directly. The economics do not work. It’s too fragmented and the customer acquisition costs are too high.
The reason that most people fail in the small business market is that it’s extremely difficult to do in a cost-effective way. As the world has changed, the local sellers — the guys who were selling classifieds or yellow page ads — transitioned away from a single product sales team to a mini-agency reselling to their customer base.
Legacy media firms are betting big on the marketing services business to buoy an increasingly estranged content play. At what point does it no longer make sense for the agency to support the content product?
That’s part of the existential crisis that a lot of these companies are going through. On the one hand, they have a product that is losing mindshare — it’s losing its audience. It probably will have a very difficult time going about it alone. At the same time, they have these sales teams selling their product along side a number of other services doing some interesting things.
My intuition and my gut tells me that a lot of these products are being supported by these sales teams — and that probably shouldn’t be the case.
Steven Jacobs is Street Fight’s deputy editor.
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