Part of Brad Flora’s story is familiar: He packed a team of coders into a Mountain View, California, house, built a product that solved a simple problem, and then, two weeks ago, sold it for $25.5 million. But the parts before, when Flora was trying to create a self-financed journalism startup while living in Chicago, about bending but not breaking when his ideas failed to take off year after year, are just as instructive.
Flora never harbored any romantic ideas about being a reporter, even as he worked toward a master's degree at Northwestern University's Medill School of Journalism. "I was always the weird guy thinking, 'What's he working on, what's she working on?'" he says. "I found I was more looking forward to seeing what classmates were working on and getting that up on the Internet than writing and reporting my own stories."
Windy Citizen, Flora's first major endeavor, launched in 2008 with a social approach to Chicago news and featured reader-submitted links alongside a network of original blogs. Like Digg or Reddit, the homepage comprised stories that readers voted up or down. The site was born out of a project he developed 18 months before to showcase otherwise unpublished articles his grad school peers created.
"Perhaps I had enough misplaced confidence that I thought I could strike out on my own using crowdsourced, locally produced content," he says. The Knight Foundation awarded him $35,000 in 2009 to fund Windy Citizen upgrades. The Chicago Tribune championed its future, predicting "The Windy Citizen is doing enough thinking, digging, and innovating to give itself a fighting shot at success."
Even as the accolades rolled in, Flora struggled to turn a profit. "Windy Citizen was academic: I thought, 'No one's tried this,'" he says. "But then I saw that's why nobody's tried it." Flora scraped together funding, but Windy Citizen wasn’t making anywhere near enough money to survive.
One aspect of Windy Citizen, however, showed more promise than the rest. Flora developed NowSpots to deliver real-time, social-media-fueled local ads. The publishing tool pulled the latest updates from business's Facebook, Flickr, and Twitter feeds and packaged them into ads that were ostensibly more engaging than a static banner. In 2010 the Knight Foundation again rewarded Flora's social innovation, this time with a quarter-million dollars to test and expand the concept.
Flora spent the next six months traveling the country with a PowerPoint deck trying to drum up interest from publishers. He was accepted into the startup incubator Y Combinator (YC)—birthplace of Dropbox, Airbnb, and Windy Citizen's spirit animal, Reddit—and relocated from Chicago to the Bay Area, where he raised $1 million in seed money and started testing NowSpots at major newspapers.
Again, the good press followed. The Paley Center for Media dubbed NowSpots the Next Big Thing in Digital News Innovation. Flora partnered with software developer Jordan Buller, who at the time was working at Accenture, and shuttered Windy Citizen in 2012 to focus full-time on his new venture.
"We were taking this advanced technology and making it available to companies of any size," Buller said. "We were doing some democratization of technology, which I thought was pretty great."
While NowSpots functioned beautifully, publishers couldn't motivate their sales teams to sell the concept. Flora questioned his YC peers about what they wanted from an advertising platform. Like a Greek chorus, they replied: ad retargeting.
"The market pulled the idea out of us," Flora said.
So in 2012 NowSpots developed the Perfect Audience product: Flora, Buller, and other programmers took over the Mountain View house to build the idea that would finally take hold. Perfect Audience works by posting ads on Facebook, YouTube, and other sites after someone visits a business's website and leaves without purchasing anything. The idea is to target customers who are already interested and give them the nudge that makes them buy.
The newest feature, Perfect Audience Connect, allows complementary businesses—say a sock retailer and a shoe company—to link and retarget each other's customers via a social platform, fulfilling Flora's original collaborative vision. By November 2013, with 5,000 customers in its portfolio, including American Apparel, Bebe, and Eventbrite, Perfect Audience was a success. Then Marin Software called.
"We started using Perfect Audience for our own retargeting ad campaigns and found it to be such a powerful, easy-to-use product," Marin's chief marketing officer Matt Ackley wrote in an email. Nearly seven months of talks ended June 2 in the $25.5 million acquisition of Perfect Audience. Flora and Buller have both agreed to join Marin, as have many of their Mountain View housemates.
Flora says the years of hard work have taught him the importance of listening. "Before Perfect Audience, we were basically trying to change everyone's mind and convince them what we were doing was exciting," Flora says. "But when you have an idea in a big space, your customer will tell you what to do."