Magnite $MGNI CEO Michael Barrett

Auren Hoffman (00:00.76) Hello fellow data nerds. guest today is Michael Barrett. Michael is the CEO of Magnite, one of the largest independent sell side advertising companies. Magnite's ticker is MGNI on NASDAQ and currently has a $2.3 billion market cap. Before Magnite, Michael served as the CEO of Millennial Media and also was the chief revenue officer. Yahoo! Michael, welcome to World of DaaS.

Michael Barrett (00:23.396) Thanks, Auren. I'm pumped to be here. First time, long time.

Auren Hoffman (00:27.15) Yeah, big fan of yours now. OK, now linear. We've been friends for a long time. Linear TV, which is kind of like for people who don't know or just kind of like listening and just kind of like old school TV ads still is a huge markets, probably 60 billion ish market of ad revenue and still double what connected TV does. What is that like? How do you expect that trend to go over the next decade?

Michael Barrett (00:54.584) Yeah, I mean, I think the important thing to look at it is consumers have kind of voted, particularly in North America and increasingly globally. And they've chosen to consume their media, entertainment, news, sports via streaming and kind of backing away from the cable bundle. So you have all these eyeballs. And in many cases, they're the most treasured eyeballs from an advertising standpoint.

Auren Hoffman (01:22.161) they tend to be more wealthier.

Michael Barrett (01:24.078) That's exactly right. Younger, wealthier, haven't made brand decisions for the rest of their life where, you know, try to get me to switch toothpaste at this stage is probably ain't gonna happen. So I think largely speaking, there's always been a lag whenever a new media comes along. There's always been a lag between hours spent on the new media medium versus traditional. And it takes a while, but you know, we're seeing a big kick in inflection point and we're seeing all of the

large linear broadcasters launch Avod services, which it seems self-evident now, but three years ago Netflix was the model and that was never going to have an ad, always going to charge top dollar at the subscription and ads were antithetical to our purpose. And now obviously they have one of the largest ad tiers. so that's table stakes now. So this

Auren Hoffman (02:18.062) At what point do you think Connected TV is going to surpass Linear TV in terms of advertising dollars?

Michael Barrett (02:25.85) So it's already surpassed in terms of hours watched. So more people are consuming streaming than they are broadcast in the States. And so, if you look at the charts, streaming's supposed to be growing in the 20 plus percent kigger for the next four or five years, linear slightly down. So it's gonna pass in three.

Auren Hoffman (02:28.877) Yep.

Michael Barrett (02:52.176) four years or so, probably, it always happens faster than we think, right? We look back at it and we're like, five years seemed aggressive and it turned out to be three years. So I would say the next three years.

Auren Hoffman (03:03.372) Yeah, yeah, I mean, it's faster, but then it's also slower than I would have expected too, right?

Michael Barrett (03:11.172) Well, how many times have we, you know, in the early days of, you know, websites bemoan the fact that, you know, print was still getting more money than the internet and the internet had all the people in the world on it. It just takes time. That's all.

Auren Hoffman (03:21.078) Right, right. It's just a point. Yeah.

Auren Hoffman (03:26.926) And so where do you think like AI is going to play in beyond the obviously for content generation, AI is going to have a huge impact, but how is it going to change like programmatic advertising?

Michael Barrett (03:39.994) Well, I think there's going to be several applications of it and probably five more that I haven't even thought of that will probably disrupt the whole industry and put Magnet out of business. I think one of the most exciting aspects of AI as it relates to programmatic and specifically in streaming, CTV, connected television, is the idea of the elimination of a severe barrier.

to SMB small medium sized businesses being able to advertise in the broadcast environment. The creative hurdle to be able to produce creative that's approved by the broadcasters and goes through that system is prohibitively expensive and frankly doesn't actually meet the needs of these advertisers. So therefore they have been spending all their money on social because of the idea that they know what they're getting for their dollar. They are able to creative

Auren Hoffman (04:15.81) Yep.

Michael Barrett (04:39.932) quickly facile and I think with AI being able to generate advertisements for these SMBs, you're going to see a world where streaming today is essentially trying to catch the broadcast dollars and bring them into the streaming world. And that's the world of 500 to 1000 advertisers. And I think you fast forward with AI enabled creative capabilities.

and enhance targeting capabilities, you're going to see a world of 15,000 advertisers. And that's what's

Auren Hoffman (05:15.146) Why is is the why is the creative such a high barrier? Like when I was a kid, there was always that like jinky car dealer ad. There was the crazy Eddie. Like everything's insane. You know, there's all those types of things like you've always I mean, just with a camp back in the day at a camp quarter and a crazy guy like why do you need why is AI so important to to to this?

Michael Barrett (05:36.718) Because that was back in the days where there was fringe time and there was local time and it was local cable. We're talking prime time now. mean, you're essentially saying, I'm going to advertise on Disney Plus and I'm going to advertise nationally. I'm going to target. So I'll be very select, but I'm not, you know, in this kind of fringe.

Auren Hoffman (05:41.496) Yeah.

Auren Hoffman (05:45.336) So you need to have like a super quality ad.

Yeah.

Auren Hoffman (05:57.56) But why do you need to advertise that? And actually you can still, you can be advertising for your local, you know, yoga studio or something in the zip codes that, that are important to you. Right.

Michael Barrett (06:08.282) There's no question in that happens. And that's one of the biggest impacts right now on linear. And that is on the local station level. The concept of local now is just IP targeting, right? By household, it's no longer, it's that channel four programming in the tri-state area that I have to advertise in. And so now everything becomes local. Netflix becomes local because you can target wherever you want to target. So.

Auren Hoffman (06:20.62) Yep.

Michael Barrett (06:36.596) But the bar of entry in terms of creative is still high and Netflix isn't going to be taking Crazy Eddie anytime soon. And so ergo, if you're going to track those.

Auren Hoffman (06:48.024) So they actually want like really, they actually care about the content and they're not gonna, so if I'm just like a talking head, they don't want me on there. Like if it's my local yoga studio, like, I just like come up there, my Lululemon outfit, they're not gonna want that. They're gonna want something like higher production value.

Michael Barrett (06:58.36) I think it is.

Michael Barrett (07:09.186) Yeah, and you never could do that in friends on a Thursday night. They weren't going to run the Yogo either. listen, there's a plethora of inventory out there. And we always think of CTV as just being the province of the big plus services. But you have a Samsung, LG, Vizio doing billions of dollars in advertising on their free TV channels, the fast channels. And so there's always going to be a home for that type of advertising.

Auren Hoffman (07:33.155) Yep.

Michael Barrett (07:38.476) Again, the creative has been a barrier and I think that AI is going to play a huge role in unleashing that.

Auren Hoffman (07:44.622) I found that the ads today do just seem less interesting and less creative than ads of, you know, a few decades ago. Maybe that's just like, you know, old guy being like, it was better in my day or something like that. But do you agree? Do you think like the ads are just less good and less compelling than they once were?

Michael Barrett (08:04.58) You know, I think you go to a festival like Cannes and you see some of the creativity and it almost always isn't America. It's always international that's cheeky, that pushes the envelope, that is funny, memorable. I think, you know, we've kind of gotten risk averse in a lot of the advertising we do. Yeah. And I think that that is something that's a shame because as you point out,

Auren Hoffman (08:13.549) Yeah.

Auren Hoffman (08:23.532) Yeah, the ads are so bland. So risk averse. I agree. Yeah.

Michael Barrett (08:32.765) there used to be some iconic brands and advertising that existed.

Auren Hoffman (08:37.548) How do you think like influencers are going to play into this because they're usually a little less risk averse. People are following these influencers directly. How are they going to kind of play in the advertising landscape?

Michael Barrett (08:51.064) Well, obviously they play a huge role now in terms of sponsored brands and in some cases even, you know, television type ads running in the streams. I think they've had a hard time crossing over. I mean, you look at something like a Mr. Beast and some of the challenges of trying to get an influencer in this world to exist in kind of a programmed content world.

Auren Hoffman (09:21.079) Yeah.

Michael Barrett (09:21.168) I think, listen, they'll thrive. Advertisers are all over them. It's been meaningful. But I don't necessarily think it'll be just an easy transfer in the shows and programs that you watch. It'll all be influencer driven.

Auren Hoffman (09:37.42) And we're seeing like a bunch of players emerging and like the retail media world. Where do you think that that's going to kind of shake up in the ad tech landscape?

Michael Barrett (09:47.896) Yeah, it's been a huge impact as you have existing big advertisers like a Walmart and Amazon creating their own retail media networks. And that has a rate. And yeah, and folks that have never been in the advertising business before, the whole travel segment, they sit on some of the most valuable loyalty data.

Auren Hoffman (09:59.478) Instacart now is doing that, right?

Michael Barrett (10:13.869) and it's volumous and they're all getting into the media game. you know, I do think it's, it'll run its course as it relates to not everyone's going to be able to run their own retail media network. And there'll be fatigue on the same advertisers or CPG clients that they all go to and try to hit them up to shift spend onto their platforms. But it's a huge...

It's a huge impact in the advertising technology world largely because this is all automated. It's all super targeted. And so therefore it's all programmatic by and large. And that's right into Ad Tech's wheelhouse.

Auren Hoffman (10:48.365) Yeah.

Auren Hoffman (10:56.568) I mean, it's both like a good thing, but also sometimes a bad thing for a consumer when you're searching for a random product on Amazon. And it seems like one out of four, one out of three things you see is an ad. And sometimes it's an ad for something that you would have seen anyway. So it's not clear how effective it is or what it's cannibalizing. how do you are we like peak retail media or is it just going to keep going and going and going?

Michael Barrett (11:25.768) I think we're in early innings. think we're going to see more and more. mean, I think the what you're starting to see, which you pointed to was kind of the user experience, you know, on the owned and operated media that an Amazon has, right? They control it. They it's it's listing. You don't know if it's sponsored or not. I think what you're going to start to see more of is those type ads being targeted to Orin.

Auren Hoffman (11:41.357) Yep.

Michael Barrett (11:55.397) on a TV show that he loves that's part of the retail media network or commerce media where off property you're going to start to see ads that are more targeted, are backed up by data and that try to bring you back into the commerce purchase.

Auren Hoffman (12:16.872) and, like the CPG brands, they're spending like, you know, historically they've always spent like billions annually on trade promotion, product placement in stores, little advertisements in stores, getting it at, you know, your, your eye level as opposed to the below level on the shelves. Right. And that's always had like tough attribution. and it's also been like a tax where, where these like trade promotions was a tax on the retailers.

the retailers that were charging, were basically that tax would be extracted from the brands. Are the retail media networks just kind of digitizing that dynamic or is it just taking that from one to another? How do you see that evolution?

Michael Barrett (13:00.208) It's certainly building on the backbone of that, correct? The whole idea of targeted in-store and now the store is the website. However, you know, if you go to a Walmart or a Target, there's a whole different group of guys, gals, executives that handle the in-store and they have a budget and they have for years fed off of those end-isle caps and in-store promotions.

Auren Hoffman (13:08.225) Yeah.

Auren Hoffman (13:28.995) Yep.

Michael Barrett (13:29.068) And the last thing they want to do is see that bleed just one for one into a retail media network in terms of media. So it's actually they're trying to double down on it. So the very same guys that are sometimes being forced to advertise themselves, they have a business model that really predicates that retail media networks have to be found dollars, not just shifted dollars.

Auren Hoffman (13:34.572) Yeah, good point. Yep.

Auren Hoffman (13:51.276) Yeah, it seems tough. So if you're like a random CPG soap company or something like that, right, you've got to, you got to pay to get the right in store things. That might be the discovery. Then you've got to pay just for general brand awareness, right? So general brand kind of things that go on, then you have to pay on the, the website when people are shopping on the whatever.com type of thing. Like at some point, either like prices are going to go up or you just like the margins are going to down. Like it seems like, it seems like

They're in a tougher spot than the Walmarts of the world. Or do you disagree?

Michael Barrett (14:25.912) No, and as you pointed out, there's already fatigue because even though it's great signals, being able to track the purchase in the ad, but as you pointed out, that person's going to buy Dove Soap because they always buy Dove Soap. Are they buying more Dove Soap because of the ad? And are people who don't buy Dove Soap buying it? And I think that

Auren Hoffman (14:44.183) Yep.

Michael Barrett (14:51.748) There's real fatigue that's starting and there's still a real belief in brand building, right? God bless the proctors of the world where

Auren Hoffman (14:58.402) yeah. There's some brands that people just get. just like, I still, mean, I'm totally, maybe I'm super old school, but I love Ivory soap. Like I still love it. I might be like, I'm probably the youngest Ivory soap buyer in America. Like probably everyone else is like over 80 or something. But I still love it. I still think it's a great like product. like for whatever reason I grew up on it and I just like it and I just enjoy it.

Michael Barrett (15:07.631) Yeah.

Auren Hoffman (15:25.355) and, but like you, you build these habits, maybe, you know, in your twenties or something, and then you kind of stick to them throughout your life.

Michael Barrett (15:33.208) Yeah, and you know, you look at the last recession that we just went through, or guess we never went through a recession or we went through seven, depending on your point of view. But the simple fact is that the folks that were able to keep pricing or increase pricing during that period of time were the folks, the very folks that built brands and had folks resonate with it and say, I'm not switching to a store brand.

Auren Hoffman (15:53.741) Yeah.

Auren Hoffman (15:58.71) Yeah. mean, Coca-Cola is just an incredible brand and like people like they just remember it from their childhood and it's like this enduring brand. The newest soda, the Omni Pop soda, which is cool and everything like it's unclear if that's even going to be around in 10 years because like, you know, it's hard to it's hard to build something so enduring that's going to last for so long.

Michael Barrett (16:19.888) Great. Yeah.

Auren Hoffman (16:22.126) Now, how do you think of the world of data and ad tech? how is that changing? mean, you and I have been in this data. I mean, you've been in the business even longer than I have. Like we've been, we've been friends for a long time talking about data and ad tech. Like how do you think that has been evolving over the last 15 years?

Michael Barrett (16:28.794) Good.

Michael Barrett (16:38.99) Well, it's really the oxygen to the whole ecosystem, Programmatic advertising, advertising technology wouldn't exist if it wasn't for the concept of coupling data against media to make it more targeted, more effective, and better ROI. And all the apparatus

Auren Hoffman (17:01.357) Yep.

Michael Barrett (17:05.36) that has been built has been built around that concept. These targeted advertising infused with data signals. So I think that it's just absolutely essential to the story and this is the purpose. I think what you're seeing is obviously privacy concerns. That's been the story for last five, seven years from GDPR to state initiatives. That's right.

Auren Hoffman (17:29.528) data about what we're allowed to know about the consumer. Maybe it's fine to know that they're in this DMA or something, but you might not want to be targeting all the way down to their house or whatever it might be.

Michael Barrett (17:42.776) Right, and it's a very messy world because there's different restrictions in different areas of the world, even in different states. And so, you know, it's probably the only time that the industry is all leaning into a federal solution because it's becoming damn near impossible to be able to run your same playbook across the states, let alone Europe, let alone APAC. So I think that the...

Auren Hoffman (17:48.355) Yep.

Michael Barrett (18:09.892) What we've seen is obviously a acute rise in consumer privacy that's being watched closely. But also I think with the part of the privacy initiative, sometimes it's not purely beneficial in terms for the consumer, but the demise of the third party cookie has really.

kind of changed the game plan in the playbook for targeted advertising. And what we're seeing is more of a shift to the value of the publisher and their relationship with their user and able to create.

Auren Hoffman (18:52.11) Because they've got some sort of context to around the content that they're, you have this great pickleball content or something like that. Well, you have a sense of the type of person that might be watching or engaging with that content.

Michael Barrett (18:55.909) rate.

Michael Barrett (18:59.492) That's right.

Michael Barrett (19:04.974) Yeah, and to date, I mean, it's always been something that the buyers have kind of eschewed because there's been this lack of scale aspect to it. But more and more they're leaning on tech partners like a Magnate and others that can take that pickleball content from a thousand publishers, bring it all into one pickleball segment, and now it's scaled and buyers trust it and are able to buy it that way. yeah, there's been a big shift.

Auren Hoffman (19:12.269) Yeah.

Michael Barrett (19:32.8) that's going to only increase to publishers being able to participate in this data economy, which is really important. It's tough being a publisher these days. And if you can make money off of it.

Auren Hoffman (19:45.166) I mean, it seems like these bigger guys that all have access to all the data, right? The Metas, the Googles, the Apples, Amazons of the world. have they have they have this great quote unquote first party data. And it seems like for whatever reason, like the privacy rules have been like, hey, you can collect as much first party data as you want. You could do whatever you want with the first party data. You could do this crazy, targeting. like.

You can't like, know, which, obviously is very good for the very, very big players, but like, Hey, if you want to like, if two people want to come together and work together on something, well, now you can't do that. Like that's, that's terrible. and so it's been like, and probably cause the big players were the ones writing the rules. Like they're the ones in the room when the legislation gets created or I don't know. That's my conspiracy theory. And if I love to get your take on it.

Michael Barrett (20:34.977) No, there, yeah. You know, when you have the terms of service for billions of people and it's just a click here, we've changed our terms of service and it's 300 pages long and it's page 219 paragraph 3. Yeah, it's hard. It's very difficult. And, you know, they, in order to have a full experience and a lot of the social

Auren Hoffman (20:47.02) Yeah, we could do whatever we want. Right, yeah.

Michael Barrett (21:02.928) know, walled gardens, you need to have presence, right? You need to be, folks need to know who you are. It only adds to the experience. And so having this perfect fidelity in terms of signaling and latitude of what you can do with it, it's a pretty good business model.

Auren Hoffman (21:09.996) Yeah.

Auren Hoffman (21:20.366) Yeah, yeah, that does seem like why can't there be like a first party layer on top of all the third parties? Like people have been talking about this a while. Like why can't like all the publishers kind of get together and be like, OK, we're now part of this quote unquote federated network and it's all kind of first party ask. Yeah, maybe it's a different URL, but it's all kind of first party we share. Maybe even people pay a very small fee.

So they can get access to all the content or something like that, but they're all part of it. And you understand you're part of this first party network. Like, is that just impossible? Like it's impossible for people to kind of get along and stuff. Cause no one's just going to join like Hearst or something. Like it does, you you kind of want something a little bit bigger than that.

Michael Barrett (22:00.591) Yeah.

Michael Barrett (22:05.186) Yeah, I think it has been tried. have been plenty of startups. Heck, I invested in one of them. It didn't actually work out. It's really hard. think that generally speaking, there's always this imbalance of practicality versus perception. And when folks sit at the table and you get 20 big publishers, they all feel as though there's a special, more special, they deserve

you know, or better terms. They're the ones that are.

Auren Hoffman (22:37.228) Yeah, but they're all like they're all like they're all dying together, like they're all getting killed and and just because they need to somehow work together. But it's that prisoner's dilemma thing. And it's just maybe because it's not just if it's two players, they'd be able to do it. But there's like 200 players and they're just not able to. Well, yeah, I'm just way better than them. I don't want to help this guy because they see that other publisher more as their competitor than they do as like a partner.

Michael Barrett (22:41.199) Yeah.

Michael Barrett (23:03.248) Right.

Yeah, or as opposed to really figuring out who the real competitor are, which is the walled gardens where all the money are going to.

Auren Hoffman (23:10.744) Correct. Interesting. speaking of walled gardens, like, are they going to become even more power? Certainly, like in the last 15 years, they've just every year just become more and more powerful. Now they're new walled gardens. So maybe each individual is slightly less because they have competition amongst themselves, which maybe they didn't have before. But

Or are the walled gardens collectively going to be more powerful in the future? Or do you think now it's going to be, you know, the the the rebel alliance is actually going to take in and take down the Death Star?

Michael Barrett (23:51.221) It's hard to believe that they could become more powerful. That would be saying then that marketers are comfortable with 95 % of their budget going to Waldgarten and 5 % going to the rest of the world. So I think they may have reached a zenith, but I don't see a rapid decline as some have predicted. The ease of use.

Auren Hoffman (24:02.765) Yeah, yep.

Michael Barrett (24:14.476) Again, going to small to medium sized businesses, how easy it is to use, you drop a credit card, you have the data, you have the targeting. That's not going away. I do think the excitement in the ad industry is this pool of dollars that has been outside the digital grasp. And that is the broadcast dollars, right? The linear dollars. And that necessarily just isn't going to tumble to the walled gardens. You know, some...

Auren Hoffman (24:35.447) Yeah.

Michael Barrett (24:44.378) Google owns YouTube, Amazon owns Prime. They'll be a perfect home to capture some those dollars, but others don't have the equivalency of a broadcast type experience and a broadcast type of ad. And so I think that that is going to really benefit legacy media in that regards from their streaming platforms that they're creating.

Auren Hoffman (24:44.992) Some goes to YouTube or whatever. Yep.

Auren Hoffman (25:08.011) How do you think the role of middleware providers have changed in Ad Tech?

Michael Barrett (25:16.129) Yeah, I mean, I think it's been a constant theme of kind of consolidation and weeding out that there have been a long history of kind of middleware guys that really were just in it for the arbitrage and weren't providing any additional value. And little by little, the buyers, whether it's a DSP or an agency have

kind of gotten wise to kind of the supply chain economics of those plays. So that's kind of going away at the same time DSPs and their agency partners want to buy from fewer partners. And so therefore, even if you did have a really good innovative ad unit on 300 of the best publishers around the world.

in order for that business to work, you needed to call on those publishers, get the unit on the page, then hire a team to go call on agencies and DSPs, point them in your direction and buy your special sauce. And now agencies and DSPs are saying, it's like, OK, I get it. It's good. But I'm buying from three guys now. Put it on that guy's platform and I'll just buy it from that.

Auren Hoffman (26:20.472) Yeah.

Auren Hoffman (26:36.589) Yeah.

Michael Barrett (26:40.6) It's actually quite liberating to those middleware guys because now they don't have to hire a publisher sales team. They can just come to someone like us or our competitors and say, hey, I've got this cool thing. Plug it into your exchange. And I've already told the buyers it's going to be there and they'll buy it from you. So I think you're seeing kind of a collapsing of what was an incredibly confusing and inefficient ecosystem of middleware.

Auren Hoffman (27:09.976) For those listening who don't know, a DSP is kind of a advertising technology company that represents the ad buyer. And the DSP that is now the most preeminent is the trade desk. There used to be a ton of DSPs. In fact, when you and I met, I don't even know the trade desk even had started yet. so they kind of overtook. Why did they win? Why are they doing so well?

Michael Barrett (27:32.133) No.

Auren Hoffman (27:39.214) I mean, yes, the CEO, Jeff Green, he's an incredible operator. He's one of the best in the business, but it's still unclear to me like why they ran the tables and why they went one so big.

Michael Barrett (27:53.88) You know, I ask that question a lot and have just nothing but the utmost respect for Jeff and the trade desk built a great product, right? But that doesn't always ensure that you're going to win. But they did build an easy to use product in a world where everything was getting more complex. They went to market with a two two differences that they did and go to market strategy. One was

Auren Hoffman (28:04.588) Yeah.

Michael Barrett (28:21.296) They didn't want to get into the managed business. did not want to hire a bunch of folks that would do correct. So they didn't want to do the managed business. So they were willing to forego that, you know, kind of easy revenue, call it kind of ad networky revenue. And they too went after a group that folks had given up on, which was the agencies, the, the

Auren Hoffman (28:25.004) Yeah, they specifically, which was agency friendly, right?

Michael Barrett (28:50.136) meeting mass, the turns, they're like, I'm going right to the client, the client of the agency. I don't want to deal with these guys. They have too much pricing power. They're just going to jam me down every time we renew. And the trade desk ran the table on picking up the biggest users and train them on the software. So now it's super sticky. The agency operates the software, not trade desk. they just, from there that

Auren Hoffman (28:54.712) Yep.

Michael Barrett (29:18.646) started a momentum that they caught a couple lucky breaks. There was consolidation, lot of &A that didn't work out. And some guys just went by the wayside. they had an unbelievable run.

Auren Hoffman (29:34.732) I think it's a tough business because like the whole system, the whole stack basically changes like every five years. And so you have a lot of creative destruction because you've been doing well in one system and all of a sudden everything changes and now your company is no longer positioned to do well. So you see a lot of like folks and then some companies like yourself, like the trade desk, it's never been able to ride multiple waves. How do you

walk us through some of those changes over last five years and then we can get to where you think some of the changes are going.

Michael Barrett (30:11.736) Yeah, and that's partly one of the tough things about being a public ad tech company is that generally speaking, your biggest investors are generalists and it's really difficult to understand the nuance. And then they see something that's cataclysmic and they're like, well, that's going to happen every five years. So how can I possibly be a long term holder of your stock? I don't get it. It's that's something we battle all the time.

Auren Hoffman (30:35.342) Totally. Yeah. Yeah.

Michael Barrett (30:41.174) Sometimes we win, sometimes we don't. the last, I think the biggest changes over the course, when we talk some about the privacy aspects of it and the targeting, but largely speaking, the battle with Google was the story of the last chapter, right? Google had such a dominance in their implementation of their software, their ad server.

which came via an acquisition in their ad exchange, which was partly built, partly in acquisition. so the open web, the non-Google folks, I would say that the last era was all about trying to battle Google's dominance. certain practices came to be to try to compete against them.

I don't want to get too arcane on a call who is just not ad tech, know, header bidding, for instance, this unified auction and putting everything together was direct response to Google's dominance. And I think

Auren Hoffman (31:48.27) It seemed to like make Google even stronger. I'm not even sure if it did. It did work. Yeah.

Michael Barrett (31:54.714) It basically didn't dent Google. It did help. It did help. It did create more competition. But incredibly harmful from an efficiency standpoint, too, if you want to dial back up and the planet we live on in terms of the amount of calls and CPUs and all the volume being done on the same impression is ludicrous.

Auren Hoffman (31:58.584) Yeah.

You made things more efficient for sure, right?

Auren Hoffman (32:19.31) Yeah.

Michael Barrett (32:21.988) So I think we're getting into a of a post-Google phase if we're now looking ahead. And that is going to be more defined by less about trying to trick Google than it's going to be more of a level playing field. There's no question that when the dust settles on this, and we're talking several years out, obviously, that it will be more level playing field for publishers, for buyers, for independent ad tech like ourselves.

And it'll also be this will be the era of streaming in CTV and that will be the tens of billions of global dollars that will be coming into the ecosystem that have been out of the reach because of the way it was being delivered. I think you're gonna look back five years from now and I think you will see those as two major themes that are different from previous things.

Auren Hoffman (33:13.388) Now, because everything is changing every five years, like what type of CEO do you think does well in this environment? Cause it's not a, you know, it's not one where like you're an optimization thing is going to work. Cause it's so hard to know what you should be optimizing. Cause everything could change. You need someone who somehow can like both be a great operator, but also be a great product person and be someone who can embrace, you know, uncertainty.

So if you're like betting on CEOs, how would you bet on them?

Michael Barrett (33:47.17) Yeah, and it's an exercise that I've gone through, exercises I've done on boards, and it isn't easy. I think like anything, whether it's public or private, if it's an ad technology, it has to match the flavor of the company. If it's a product-led company, a product organization-led company, I think it's really difficult and challenging trying to change that DNA.

And so I would say that I would definitely default to someone with product experience. But if it's more of a sales and marketing organization, more of a financially driven, let's just say you're putting together a bunch of companies in a portfolio and it's all about capital efficiency and it's all about purchase price and it's all about running at an efficient level, then that creates another profile. But ultimately, has to be someone that can partner.

Auren Hoffman (34:15.619) Yeah.

Michael Barrett (34:44.024) very closely with their leadership team because no one's going to have the skill set to be able to address all the nuances of it. And it's very nuanced, right? I mean, it is absolutely, you need to know what's happening in the market on a quarterly basis, daily basis to be able to make these decisions for longer term. And I think you just have to stop kidding yourself that there such a thing as called a five-year plan in this industry because it's just not possible.

Auren Hoffman (35:10.627) Yeah.

You know, if you think of the CEOs that have run companies that have had like increasing market caps and been effective, like you are really the only one that wasn't the founder of the company and kind of the product oriented. Obviously, you have Jeff Green at the trade desk, you have Adam Faroqi who is at Aplov. like you're almost the exception, not the rule of somebody who came in who's just like, you know, an incredibly good operator.

makes you successful? Like why were you able to succeed where so many other people who have tried it was not able to be successful?

Michael Barrett (35:48.532) Yeah. that's that we caveat that with saying that I am succeeding. However, you know, generally speaking, if you're in my role and you're not the founder and have never been a founder, you usually get the call when there's like a spell in aisle three and things aren't going up until it.

Auren Hoffman (36:06.606) Right, right. Right, because when you originally took over, which was then Rubicon, it was, it was, I mean, it was like a hundred million market cap or something.

Michael Barrett (36:12.186) Yeah.

Michael Barrett (36:15.92) Yeah, we had $125 million in cash and $100 million market cap. You know, there's a certain latitude in that, In a patient board, yeah, it literally couldn't get worse. You know, if you drove it to negative 50, no one's going to be terribly upset about that.

Auren Hoffman (36:21.035) Yeah, yeah, yeah, it's amazing, yeah.

Auren Hoffman (36:29.036) Yeah, then you have a lot more ways to just, it can't get worse. When your market cap is negative $25 million, it can't get worse, I guess.

Auren Hoffman (36:44.391) Totally.

Michael Barrett (36:45.944) Yeah, no, you know, I think it also gives you a and it sounds kind of weird, but what it does is it gives you a chance to be patient because you can't turn that. If this has been going on for seven years and you've been slowly dying and you didn't realize it and then you wake up one day and it's almost over, you can't. 90 days isn't going to fix it. Right. So.

Auren Hoffman (36:59.255) Yeah.

Auren Hoffman (37:13.102) Correct, yep.

Michael Barrett (37:14.072) You have to, you know, as a matter of fact, when the board did hire me at Rubicon, they came back, they said to me, if you dare come back with a 90 day plan, we know we hired, we got the wrong guy. Yeah. And so there is this, there is this pace where you're, you're basically have a year of forgiven. You're forgiven. You are.

Auren Hoffman (37:26.84) Where?

That's actually that they had a lot of foresight because that's not common. Yeah.

Auren Hoffman (37:41.612) Yeah.

Michael Barrett (37:43.458) making harder decisions, you're doing the right thing. And yeah, it gets worse before it gets better in almost every case because it's almost always more messed up than you thought when you were going in.

Auren Hoffman (37:53.358) Right, right. You come in and you're like discovering, well, I imagine the first 90 days, you're just like, my God, like, another one. another problem. Like, you know, or you thought this was part of, at least this part of the company was going well, but it turns out that company also has had all these issues and everything.

Michael Barrett (37:55.79) Yeah.

Yeah.

Michael Barrett (38:03.443) Lord, yes.

Michael Barrett (38:10.19) Yes, right. And then all of they checked it out and all the fun stuff.

Auren Hoffman (38:16.238) Now, what do you like if you're like if you're advising someone who's doing a turnaround, because you've really successfully done this turnaround, what besides for that, what else would you advise them? Would you be like, OK, cut more early? you like what else would you advise them that that you think is more universal?

Michael Barrett (38:33.072) Yeah, 100%. I think that when you look back on anything you do, and this flies a little bit in the face, what I said, but there's a sweet spot between 90 days and a year. probably it should always have been three months earlier. You should have the confidence in your conviction and knowing full well that there's very little you could do to the company where folks aren't going to be like, I get it.

Auren Hoffman (38:43.767) Yeah.

Michael Barrett (39:01.326) You got to do something to fix it. So you got to use that period of time to your advantage. almost always, when I look back on things, we could have done it faster. Not years faster, but we could have taken the pain quicker and the recovery would have been more accelerated.

Auren Hoffman (39:02.817) Yeah, yeah.

Auren Hoffman (39:13.944) Yeah.

Auren Hoffman (39:20.182) And how do you like, because you have all these constituents, have to, you have to, you have to communicate to the employees. You've got to communicate to your shareholders. You've got to communicate to your customers who are worried that you're going to still be in business, right? Like, how do you think about this like communication problem during these turnarounds?

Michael Barrett (39:40.12) You know, I think the most important folks out of the gate is 100 % your team members, your employees. Because if they don't have the conviction, if they don't have the excitement, then you've lost. It doesn't matter what your customers think, all right? But you have to do that in tandem and parallel with the customers. rebuild faith, trust, get rehired if you've been fired.

Auren Hoffman (39:49.079) Yeah.

They're not excited.

Auren Hoffman (39:58.029) Yep.

Auren Hoffman (40:09.88) Yep.

Michael Barrett (40:10.472) And you know that it's going to be a longer road, but you can't do it without your team on board. And that's not easy because you're very shortly into any of your tenure if you're coming in. There is that come to Jesus moment where you have to turn to the company and say, this may not be the company that you originally joined and liked. And if that's the case, no harm, no foul. But please do us all a favor and

Auren Hoffman (40:33.613) Yeah.

Michael Barrett (40:38.574) depart now if that's the way you feel because we've got work to do. Yeah.

Auren Hoffman (40:40.75) Yeah, okay, here's the new vision. Here's what's going on. You had signed up for this three years ago, but it's changing. And you've got to kind of almost like re-sign up if you want to be here for and be effective.

Michael Barrett (40:54.478) Yeah, and people tend to be very honest about it. do that speech and you walk away and you feel real good about yourself and then 90 people quit. And you're like, well, I hope it's the right 90.

Auren Hoffman (40:59.608) Yeah.

Yeah.

Auren Hoffman (41:06.122) Yeah, yeah. I mean, it's probably like you want people opting into. They're going to be more successful if they opt in and hopefully they're opting in not because it's their only option. If it's like, I can't find another job. Well, that's bad. But if they have many options yet, they're still opting in. Then that's a good sign.

Michael Barrett (41:22.306) Yeah, first sign of signing up, right?

Auren Hoffman (41:25.762) Now part of your success is, I mean, you really been incredibly good at &A. And I mean, you've done a ton of deals at Rubicon, now Magnite. And they've seen, I'm sure maybe you wish some of them went better or some of them, but they've been, they seem to have done extremely well and been very, very successful. Most of the folks.

in ad tech and also really anywhere in technology have had a very spotty record of &A. Most &A has not done well. Like, what are you doing right? Like, what could we all learn from you?

Michael Barrett (42:01.476) Well, my first advice is if you can avoid it, don't do it. So because it never works out exactly as you plan and it is high risk. But I guess my biggest piece of advice is if you're not doing it from a position of strength, it's never going to work. Like how many times do we see, you know, player six team up with player eight? And in theory, they should be player three because of their combined revenue.

Auren Hoffman (42:05.522) Hahaha.

Auren Hoffman (42:10.103) Yep.

Auren Hoffman (42:30.572) Yeah, yep, yep.

Michael Barrett (42:31.184) and they're still the sixth player and the eighth player and the market doesn't care. So if you're not a leader and you're not doing this to accelerate your leadership position, I think &A is a really horrible idea. But in the case of

Auren Hoffman (42:35.661) Yep.

Auren Hoffman (42:46.572) Yeah, I've seen that happen all the time when they're buying and or they're trying a new market. They buy like the number four or five player and they stay number four or five. In fact, it slowly degrades. They don't have because they don't have like the the the product chops at the top to really make it happen. And eventually they just kind of like some ways just like write it off.

Michael Barrett (43:06.222) Yeah, and in almost every case, if you're in that tier and you're doing &A, it's with a cost structure focus first, which is also a mistake. Because if all you're doing is combining and saying we can take 40 million of costs out of the system and that's it, that's hard to charge the Hill and get your people all excited.

Auren Hoffman (43:17.463) Yeah.

Auren Hoffman (43:28.962) Yeah. I mean, there are companies where they have done more &A than all their market cap. They've spent more money on &A than their market cap. It's clearly value destructive, right? mean, back in the day, there was this company, Newstar, that was like that, where they're constantly doing &A and they spent like probably like 3x the market cap of the company on &A or something.

Michael Barrett (43:42.063) Yeah.

Michael Barrett (43:53.821) Yeah, it's just never the quick fix. you know, we so in the case of Talaria, what went well was kind of product market fit. We were the largest omnichannel programmatic platform, but didn't have a lick of CTV. We looked at the build by partner and quickly came up with it had to be

Auren Hoffman (44:06.349) Yep.

Michael Barrett (44:21.488) We couldn't build it fast enough. Partnering it was too strategic. So buy had to be the option. Mark Zygorski at the time is now doing a great job at DoubleVerify. He was running Tulare at the time. We got friendly. We started talking about the things that were keeping us both up at night. He was a subscale public company. I was a subscale public. Bringing it together provided more scale. But more importantly, it made a lot of sense that all of a sudden now

Auren Hoffman (44:28.088) Yep.

Michael Barrett (44:51.492) You have one player that's the leader in CTV and the leader in non-CTV, and it makes a ton of sense. So that went...

Auren Hoffman (44:58.222) But at the time, I remember when you guys were doing it, like that was super risky. It was super ballsy to do that because like you guys were both, you know, somewhat evenly sized and you know, you're both it was a it's very hard to like mash those two things together and be successful.

Michael Barrett (45:17.264) Well, even worse, the way it happens. there's, you know, usually an &A, there's an acquirer and there's a seller. This was the art term was merger of equals. And so it literally was not only never works, you know, have to go outside and get fairness opinions when you're a public company. And so the guy finishes the fairness opinion. And as he's leaving, goes, you know, these things never work. He said, I've never done.

Auren Hoffman (45:24.78) Yeah.

Auren Hoffman (45:28.438) Yes, and those almost never work.

Auren Hoffman (45:41.88) Hahaha

Michael Barrett (45:44.56) I've never been involved in a fairer, more pigeon-of-a-merger-of-equal transaction that's worked. I was like, that's great. The social aspects of it can kill just as easily as the financial structure or the good of market. 100%. Yeah.

Auren Hoffman (45:50.23) my gosh. my gosh, that's crazy.

Auren Hoffman (45:59.032) So it should mean like the cultures, putting them together and stuff like that. And one of the things you did was you then you changed the name of the, so it's like, okay, we're gonna change the name totally of everything. Like that was almost like a necessary thing that one had to do, right?

Michael Barrett (46:06.33) which is.

Michael Barrett (46:11.862) It was dictated by the terms of the merger of agreement. Like, I'm not kidding. Merger of equals is you get five board members, I get four. But if I'm the one with four, I get the chairman. OK, you get the marketing guy, but you have to take our lawyer. You get the sales guy. I mean, literally, it's just crazy. The fact that it worked is nuts. But we caught a lucky break, and this sounds morose. But

Auren Hoffman (46:21.176) Yeah.

Right.

Auren Hoffman (46:28.195) yeah. Yeah. Yeah. Okay. Got it. It's like a real it's like a yeah. Okay.

Michael Barrett (46:39.248) COVID hit right as we announced the deal. And one of the biggest aspects of social challenges, culture, is offices, which, what office are going to pick? Who gets which desk? getting the folks together at a... Yeah, yeah, it kills it. It can kill it. And so now all of a sudden everyone's trapped at home and there's this level of empathy in the early days. I don't know if you remember, but everyone got the benefit of the doubt because everyone's going through this uncharted world.

Auren Hoffman (46:50.527) Auren Hoffman (46:53.868) Yeah, that could be really petty, right?

Auren Hoffman (47:06.282) Yeah. Yeah.

Michael Barrett (47:08.504) And folks were like, that person kind of came across as a jerk, but he seems like an okay guy. I'm going to give him the benefit of the doubt. And it actually really helped us. It didn't hurt us. It went on too long. everyone can say it went on too long. But when we finally got into the office together, it wasn't as jarring an experience. was just an elation to be able to get back in together.

Auren Hoffman (47:14.925) Yeah.

Auren Hoffman (47:19.713) Mmm.

Auren Hoffman (47:23.329) Yeah.

Auren Hoffman (47:31.49) Yeah. And then you did Spodex, which was another just massive kind of like acquisition. Like, how do you, you just feel like, all right, well, we almost like, was, was a crazy first time and it worked out. So we're going to like go again. And that one worked out too. Like, how did you think about that one?

Michael Barrett (47:51.053) That was one of those ones where it wasn't terribly planned because we never thought that Spodox was going to be put up for sale. At the time they were owned by a German company, RTL, and they'd been owned by them for six, seven years. And when that came to market, it immediately...

Auren Hoffman (48:00.332) Yeah.

Michael Barrett (48:17.2) got us rethinking about our marketplace position, we felt as though we'd built a pretty differentiated company. And it's only been for a year. But people could say what Magnite was and what it wasn't. And that hasn't always been the case in ad technology. And our biggest concern is if SpodX were acquired by a competitor, we would lose that differentiation instantly. And so we just needed to do more of more. We wanted to bring on more

Auren Hoffman (48:40.353) Yep.

Michael Barrett (48:46.156) It was actually quite complimentary in terms of the customer set, but it was going to be even worse in the terms of the fact that we knew that one platform had to be deprecated. We knew that there were going to be more losers and winners in the deal because you're going to have redundancy. And so it carried with it its own flavor at risk. And, you know, I like to say it was all up and to the right, but it wasn't. There was some really tough.

quarters in terms of putting it together, getting the culture built. But I feel really, really good that we've come out of it and the assets that we have, the folks that we have, we're so much stronger for it.

Auren Hoffman (49:28.856) Got it. Okay, cool. And a couple questions we ask all of our guests. What is a conspiracy theory that you believe?

Michael Barrett (49:40.157) Well, I think you got to go with the there are UFOs now whether they're being driven by green people from Mars or whatever the case might be, but there's just so much evidence that's coming out about these unidentified aerial objects or flying objects or whatever you refer to them as. And so I'm a big believer there that something's out there.

Auren Hoffman (49:49.902) Aha.

Auren Hoffman (49:59.191) Yep.

Auren Hoffman (50:06.286) Okay, all right, I like it. What, last question, let's call it a guess. What conventional wisdom or advice do you think is generally bad advice?

Michael Barrett (50:16.976) You know, we kind of touched on it and that is the idea that, you know, the default mode of a leader coming in or a leader anointed that came up through the ranks, you know, it's almost like default has to be action, right? Default has to be I need to see something in 90 days. I need to see something in 100 days that puts your stamp on this that that your thumb prints are all over.

Auren Hoffman (50:36.323) Yep.

Michael Barrett (50:43.972) the idea that this is now your company and this is now the vision that we have and the concept that the folks that came before you didn't have any vision and so there go, it only took you three months to come up with a vision or refine it. think that patience is important.

Auren Hoffman (51:02.102) Is it more like, is it less patience and more like humility?

Michael Barrett (51:06.256) I think they kind of go hand in glove, right? mean, you know, humility is the ability to, in my mind, in the business setting, is the ability to kind of walk into the room and know you're not going to know everything that everyone in that room has and go in listen mode. And your default shouldn't be action mode in many cases, I feel, where I've enjoyed a modicum of success.

Auren Hoffman (51:09.612) Yeah.

Auren Hoffman (51:33.102) Well, this is great. Thank you, Michael Barrett, for joining us on World of Deaths. I follow you on LinkedIn and I definitely encourage our listeners to engage with you there. This has been super interesting. I love the deep dive. We've been friends for long time, but I'm really excited to make this happen.

Michael Barrett (51:47.546) Thanks, Oren. Really appreciate the time.