Ted Krantz App Annie CEO : We’re taking our domain as the industry standard for market data on mobile, and marrying that with first party data. So that you have insights into your own performance on the advertising side, both ad spend and monetization. So you have the full footprint of mobile performance. Then what we’re doing is we’re moving from metrics that we do traditionally like downloads, revenue, monthly active users, daily active users; to strategic C-Suite metrics that we can now calculate with these two datasets … that get us to customer acquisition costs, lifetime value, return on ad spend.

This is a completely different game changing equation that gets us from an element of sometimes mission critical with some accounts and not so much with others … to ‘No, we’re mission critical for everyone!’.

Stephen Cummins: Welcome to 14 minutes of SaaS! The show where you can listen to the stories and opinions of founders of the world’s most remarkable SaaS scale-ups!

This is episode 116 of 14 Minutes of SaaS, the second of 3 episodes where I chat with Ted Krantz, CEO of App Annie. This episode’s discussion is all about Ted’s transition into businesses built around mobile data and marketing – and his personal migration from enterprise SaaS businesses to DaaS; Data-as-a-Service

Stephen Cummins:  Now around 2012 I think it was …  you moved into Kenshoo..

Ted Krantz: Kenshoo, yeah.

Stephen Cummins:  Which is kinda media and digital marketing if I’m right?

Ted Krantz: You are.

Stephen Cummins:  So moving into media and digital marketing, but then also having kinds of delivery teams, service teams, marketing … even though you would have been involved with marketing and in the sales role. But having a plethora of responsibilities and moving into a fundamentally different domain, you know, how much of a learning curve was that for your years at Kenshoo?

Ted Krantz: It was pretty substantial. Digital marketing is kind of an entity all in of itself and established in the digital realm. Kenshoo’s the market leader even still today for bid management. Unfortunately, it has to compete with Google and DS3 and Facebook Power Editor …  but it has an Amazon play too. And when I got into that opportunity … it’s a Sequoia backed play and market leader as well. But like you said, the deployment of that technology was very different. You had a pretty intensive on-boarding process to get that technology working the right way. Billions of dollars going through that platform! That’s the thing from the bid management perspective I don’t think most people appreciate.

Stephen Cummins: Yes. Yes.

Ted Krantz: All those dollars are flowing through those bid management tools and the execution is mission critical. If there’s something wrong with the software … if you’re down, they’re losing dollars. So it is a 24X7, mission critical, 911 arena to operate in. So that was different.

Stephen Cummins: Wow.

Ted Krantz: The other thing that was different too, even including C3, but the big enterprise companies. The millennial, the younger generation, were not part of that ride up until that point too. So I got a dose of, you know, how the younger generation is motivated, how they think about their work and what they want out of a job. And that was the first time that I had that part of..

Stephen Cummins: Did you find that hard to adjust to?

Ted Krantz: I did. I also found it rewarding. I think there is a way that millennials come at the game in the corporate world that is refreshing. They couldn’t care less about title. They’ll ask you anything. They’ll tell you anything that’s on their mind. I think they’re, in some ways, better at execution. And, because they just are there to get it done and get to the next level. They were (on a) relentless career progression track, in general. So, I think they’re there and they’re highly motivated. The trick is balancing that without talking about a promotion every 12 to 18 months.

Stephen Cummins: Yeah, that can get expensive.

Ted Krantz: Right. But I do think they’re very self motivated, very strong and independently minded and you’ve just gotta figure out a way to motivate them.

Stephen Cummins: Okay. Okay. And did that form like a good bridge for you … for your move into App Annie as President? Was that kind of a decent preparation for moving over into a slightly different domain again?

Ted Krantz: I don’t think it could have been better.

Stephen Cummins: Okay.

Ted Krantz: Because I got the full picture of digital in the advancement of that … up into the point where you could see that mobile was starting to be the primary window for all things digital. That was the device. That’s where the game was going. Off of desktop. And so I got a chance to look at App Annie. It’s a market data play. I have not done that before.

Stephen Cummins: Yeah.

Ted Krantz: It’s more of an asymmetric business model because we’re gathering market data and that play, versus a traditional SaaS play, that’s a big jump. So I’ve gone back to the gaps you were trying to identify, I’d say that’s the primary gap. Going to App Annie is that migration from enterprise SaaS to DaaS; Data-as-a-Service.

Stephen Cummins: Absolutely. Yeah. Yeah. And so, you know, digging into that data as a service… tell me a little bit about how… well first of all, for the listeners, would you just tell us what value does App Annie bring to the world?

Ted Krantz: Simplistically stated, we help companies win on mobile. So what we provide … and the original thesis of the company was essentially to be the SMP 500 index for mobile apps.

Stephen Cummins: Okay.

Ted Krantz: So key metrics like downloads, revenue; there was clear line of sight into where you stack rank against others that you want to benchmark against. And there was a viral effect in the market of companies coming at us to get that lens into the market data, because they have data on their own app … but they don’t really know relative performance-wise where they sit. So that… that was really the opportunity the jump-started App Annie … is that window into downloads and most notably revenue. And coming up with those estimates is very difficult to do.

Stephen Cummins: And is it mostly companies in a competitive space that are… that are your customers? Do you have, like, investment houses using you? Who are your customers? It’s probably everybody nearly.

Ted Krantz: It is everybody at this stage. We’re now over 100 million. We’re on public record for that. We’re in all verticals. But you can really break this market down as kind of a tale of two cities.

[1] You have a mobile first cohort; call it big gaming, the big app publishers. And, you know, some of these companies like venture capitalists and hedge funds where the data is able to be monetised and there’s a mobile first dimension. And they all have very sophisticated teams, probably data science in play – and that data is mission critical.

[2] And then literally, there is everybody else … where the app plays a role in the journey, but that door through the app is not the only door. It’s just part of the user journey. And how to construct, how to work with the app for all these different businesses and all these different verticals is a little bit unique.

Stephen Cummins: Absolutely. And you… you recently acquired, I think it was reported 10 days ago in TechCrunch …  Libring for mobile analytics. Tell us a little bit about how that acquisition extends the body you can bring to the world.

Ted Krantz: Yeah. I get really excited about this, because this is a new blue ocean for us. It’s hard enough to come up with a blue ocean once. But we re-identified another opportunity where nobody else is playing. And the premise for this, Stephen, is essentially solving the enterprise manual intervention that’s required to drive ROI positive outcomes on mobile.

Stephen Cummins: Okay.

Ted Krantz:  So the way companies work today …  you have your own data and you have an analytics framework for that and maybe a couple of different systems. You have a…probably a CDP player, maybe a DMP player, you have ad tech players – like a Kenshoo in the mix. You should attribution players in the mix. You have all these systems.

Stephen Cummins: Yup.

Ted Krantz: And with that comes heavy systems integration. Some of that you might do in house. Maybe your system integrators.  You most likely have agencies involved. You have spreadsheets flying all over the place. This is the reality of how you orchestrate ROI in mobile. It’s crazy.

Stephen Cummins: Yeah. Yeah, Yeah.

Ted Krantz: So what we’re doing with Libring that’s game changing … is we’re taking our domain as the industry standard for market data on mobile, and marrying that with first party data. So that you have insights into your own performance on the advertising side, both ad spend and monetization. So you have the full footprint of mobile performance. Then what we’re doing is we’re moving from metrics that we do traditionally like downloads, revenue, monthly active users, daily active users; to strategic C-Suite metrics that we can now calculate with these two datasets … that get us to customer acquisition costs, lifetime value, return on ad spend.

This is a completely different game changing equation that gets us from an element of sometimes mission critical with some accounts and not so much with others … to ‘No, we’re mission critical for everyone!’.

Stephen Cummins: Absolutely. And it feels like …. even though you’ve created a big chunk of the space as you said, your original blue ocean space when App Annie arrived on the scene …

Ted Krantz: Yeah.

Stephen Cummins: You know, it does seem to be… a bit of a land grab at the moment …  because it’s so lucrative and it’s growing so fast. Another company I respect, Branch, for example, bought Tune and they’re moving into the attribution side of things. And they have…you know … I think they’re official mission would be to supercharge your mobile growth, but I… I believe they have a mission to index the mobile app ecosystem, because of course, they’ve built over 100 billion links. I mean, there’s these massive plays like yourselves and Branch. Do you think this is the most exciting period in the history of the mobile … of the mobile app ecosystem, and the mobile web?

Ted Krantz: I think it’s definitely the point in time where it’s chapter two.

Stephen Cummins: Okay.

Ted Krantz: I’d say that we’ve been living in the first chapter of smartphone for the better part of 10 years. And you can see from a consumer perspective with Gen Z how they behave. You can see from some of what I’m describing here in terms of this opportunity to start consolidating and solving the higher level problems that all of the players are facing in terms of how they actually get there. So I would agree with you whether it is Branch or, you know, an AppsFlyer or Adjust in the attribution space or it’s a Segment and the CDP place space. All of them are grappling for that next level of ground to take as a result of where the market sits today. And data science is the fuel behind all that.

Stephen Cummins: If you were to think of a company that would absolutely love to own App Annie, who would that company be?

Ted Krantz: I don’t… I can’t think of a company that shouldn’t be using our data…

Stephen Cummins: Okay.

Ted Krantz: Mobile is the central nervous system for where the market is going.

Stephen Cummins: But who would be the people …  who do you think are the people that are looking at you and going … ‘We wish we could acquire you?’ What are the companies that would absolutely love to have you?

Ted Krantz: I do think that the cloud providers, most notably, you know, Adobe and Salesforce, I think, are king in the marketing cloud. Oracle has a play, but I do think that Adobe and Salesforce are distinguishing themselves amongst those three. And then after that, there’s not a lot of players … that really drops to point solutions. And I think pretty equally waited strategically between attribution, CDP, DMP, which … that’ll be interesting to see if that plays out or not.

Stephen Cummins: Okay.

Ted Krantz: And then ad tech players and market data players. All of us are this orchestration to get to ROI, but every one of these players is looking for what that next level looks like.

Stephen Cummins: Now when you moved up into the CEO role, I can just see at a top level that some changes occurred and I know… I know you had a big funding round around 2016, that might have been your series D. You would have done a lot of hiring. And I saw two years ago you maybe had 700 heads. And I know your revenue is growing all the time…But then you had this big drop down to 580 a year ago. And you’re up to about 640 now. Was there a point in time, you know, there was a pressure maybe from one of the VC sees that you just started hiring like crazy … and you just had to kind of put the brakes on a little bit? Tell me about those two …  like what’s happened in the last two years?

Ted Krantz: Yeah. Well it hasn’t been for, you know, lack of moving fast. I’ll tell you that. The optics on it are awkward. Let me explain to you what was really happening on the inside. The app store has been growing at about 20 percent annually for a number of years and for the foreseeable future. We’re an 80 percent market share category winner.

Stephen Cummins: Okay.

Ted Krantz: To net it out simplistically stated. I feel we were a big fish swimming in a small bowl. There’s more we should be doing.

Stephen Cummins: Yeah.

Ted Krantz: There’s more that we can tackle especially with the advancement of data science as a scale provider. So I actually did a Student Body Right within the first month. [for anyone listening, that’s an American football play where the quarterback holds on to the ball and runs with it i.e. Ted changed things up]. We had a go-to-market philosophy that there’s plenty of total addressable market, it’s a sales and marketing execution game. And I came in and I basically said” No, it’s not!” We need to get to world class unit economics on sales and marketing. And we’re gonna double and triple down on product and engineering. So that’s what we did. We made a big adjustment that way and it put our employees through a lot of chaos. “Is the company in trouble?” “What’s really driving this?”

Stephen Cummins: Yeah, it’s tough transition.

Ted Krantz: It is. But we are in a position now where, you know, we’re a business with 80 percent gross margins.

Stephen Cummins: Amazing.

Ted Krantz: We’re profitable and we’re over 100 miilion, and that’s a pretty small list.

Stephen Cummins: In the next episode, we learn a lot about App Annie’s brand by examining why after so many years of having the friendliest logo in the universe, it decided to change things up completely.

You’ve been listening to 14 minutes of SaaS. Thanks to Mike Quill for his creativity and problem solving skills, to Ketsu for the music and to Anders Getz for the transcript. This episode was brought to you by me, Stephen Cummins. If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and give the show a rating

You’ve been listening to 14 minutes of SaaS. Thanks to Mike Quill for his creativity and problem solving skills, to Ketsu for the music and to Anders Getz for the transcript. This episode was brought to you by me, Stephen Cummins. If you enjoyed the podcast, please don’t forget to share it with your network, subscribe to the series, and give the show a rating

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