NRI's Company
"BlueLithium" sold for $300 Million to Yahoo
Gurbaksh Chahal is one of the youngest and one of the most successful
internet entrepreneurs of recent history.Chahal has created companies
worth over $340 million by the age of 25.
In 1985, Gurbaksh moved to US at the age of two along with his
parents. His father Avtar Singh Chahal was a commissioner for persons
with disabilities at Santa Clara County, California.
On December of 1998, at the age of 16, he dropped out of Accel
Middle College to start his first venture ClickAgents. ClickAgents
was one of the first performance-based advertising networks in the
industry. Two years later, on November 1st 2000, ValueClick announced
it agreed to buy ClickAgents in a $40 million all-stock merger.
Chahal had a three year non-compete with ValueClick. He was 18 years
old at the time.
Gurbaksh said:
I have only one business goal for 2006, to deliver the greatest
value to our advertisers and thus become the No. 1 ad network. That's
it. Everything else we do -- technology innovation, hiring the best
people in the business, building a reliable, high-quality publisher
network, making it easy for agencies to work with us -- in support
of this one goal.
The early days of the Internet represent a sort of Big Bang. From
just a few sites grouped tightly around a small number of ideas,
we suddenly had massive quantities of content exploding in all directions
at an ever-accelerating rate of speed. And we had the Internet users
following them. Today, some of the most valuable real estate for
advertisers is out on the fringes, on social networking sites, video,
multimedia and photo community sites, and other places that didn't
exist two years ago. As user-generated content sites become more
predictable, those will become valuable to advertisers as well.
Ad networks are the best way for advertisers to get at the juiciest,
fastest-growing parts of the Internet, supplying inventive technologies
that improve efficiency and doing it cost-effectively, with scale
in a way that's easy to buy.
BlueLithium
"BlueLithium" was founded by Gurbaksh Chahal in on January
12, 2004. The company's office was set up office in San Jose, CA,
and got investment from Walden Venture Capital and 3i. The company,
which has 120 employees and its network focused on data, optimization,
analytics and a pioneer of behavioral targeting. Gurbaksh Chahal
has been recognized as an innovator in the online advertising space
by Business 2.0 as well as a sought-after speaker, featured at conferences
including Red Herring, JP Morgan, Bear Stearns and Ad:Tech.
Under his leadership, BlueLithium was named one of the top 100
private companies in America three years in a row by AlwaysOn. On
September 4th 2007, Yahoo! announced that it has agreed to buy BlueLithium
for $300 million in cash. He remains CEO of the company through
the transition period
BlueLithium was serving 100 million+ unique users and reached more
than 60% of US internet users. What’s more, they made $100M+
in revenue in 2006 - run the sums and you have another huge acquisition
price (DoubleClick, by comparison, did $300 million in revenue in
2006 - Google paid $3.1 billion for that one).
BlueLithium already serves up 8 billion ad impressions a month
to 100 million users of the Web's top sites. Each of those ads drops
a cookie on your browser, and when you show up on another site that
serves BlueLithium ads or on one of its advertisers' Web sites,
it adds that history of clicks to its database. Using this "clickstream"
data, it determines within 10 milliseconds which ad to serve up
the next time you come to any of the 1,000 handpicked sites where
it buys ad inventory.
By building a picture of your clickstream, BlueLithium can target
you individually. "The more we see you, the more we know about
you," Chahal says. He might not know your name or address,
but he knows what sites you've visited, what ads you've clicked
on, and what ads other people with similar clickstreams have clicked
on. Most display ads on the Web are random because they're targeted
to the site, not to the viewer. But if you visit T-Mobile's Web
site to check out pricing plans and then click off to a news site,
BlueLithium might show you a T-Mobile ad even though you're now
reading about Iraq. Chahal is also using BlueLithium's 100 million
clickstream histories to direct behaviorally targeted video ads.
Couldn't Google do the same kind of thing? "They might be
coming out with the next microwave too," Chahal quips, "at
the rate they're going." Chahal knows that Google was a classic
disruptor. But in his view, this time around Google is the incumbent
-- and Chahal has the disruptor's advantage.
The acquisition of BlueLithium enables Yahoo! to accelerate its
advertising, product, and engineering roadmaps, and gives the company
increased capabilities to sell and measure performance-based campaigns
both on and off the Yahoo! network.
BlueLithium and Yahoo! share a common goal of providing both advertisers
and publishers with high quality inventory and the essential targeting
and analytical tools that are necessary to reach the right consumers
at the right times. The addition of BlueLithium is the logical next
step in creating the largest and most effective online ad network
globally, which also includes inventory on Yahoo!’s owned
and operated properties, the Yahoo! Publisher Network, and the Right
Media Exchange. We believe that together Yahoo! and BlueLithium
will help drive the next evolution of the online advertising industry.
The BlueLithium acquisition is about boosting Yahoo's behavioral-targeting
capabilities for display advertising across its network and third-party
sites, according to Greg Sterling, principal analyst at Sterling
Market Intelligence. He added that it's also about increasing the
size of that network.
"This acquisition can be seen as partly offensive and partly
defensive, as an effort to retain brand advertisers that have more
choices today across the Internet and to build out a broad and efficient
online ad network that offers a kind of one-stop shop: huge reach,
as well as targeting and search," Sterling noted.
Sterling pointed out that that display and search advertising were
recently consolidated at Yahoo under David Karnstedt, which is now
part of a new larger organization within Yahoo headed by Hilary
Schneider and called Global Partner Solutions. That group is now
responsible for sales, marketing, and business development.
BlueLithium will become a subsidiary of Yahoo. The transaction
is subject to customary closing conditions, including regulatory
approval, and is expected to be completed in the fourth quarter
of 2007.
It's not often that you find a startup CEO openly mocking Google
(Charts). But Gurbaksh Chahal, founder of BlueLithium, thinks Google
is a one-trick pony when it comes to Web ads. "They've miserably
failed in the last year with display ads," he notes, "because
they look at the world through text advertising
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