PubMatic $PUBM CEO Rajeev Goel

Auren Hoffman (00:00.686) Hello fellow data, my guest today is Rajiv Goel. Rajiv is the co-founder and CEO of PubMatic. PubMatic is an independent technology company that helps advertisers monetize their content. Sometimes they call them an SSP. Pubmatic processes 680 billion ads every single day and they trade under PUBM on NASDAQ and Rajiv and I have been longtime friends. So Rajiv, welcome to World of DaaS.

Rajeev Goel - PubMatic (00:27.276) Thanks, Auren, great to be with you. And actually, got breaking news. It's 780 billion ads a day. So we've grown a little bit since. Exactly. It's a lot. It's a lot of ads. It generates a lot of data. So we'll get into that.

Auren Hoffman (00:33.856) my gosh, 780 billion. That's a lot. That's a lot of ads every day. that's the yeah. Yeah, absolutely. Speaking of like data, like what is some of like the non obvious data that like somebody who's listening to this maybe is not deep in ad tech wouldn't like be like, wow, that's really interesting.

Rajeev Goel - PubMatic (00:53.324) Yeah, sure. So I mean, there's obviously there's consumer data, right? So data about the consumer that's looking at content. There's ads, there's data about the website or the app or the streaming show that they're looking at. And then there's a lot of advertiser data, right? So we collect sometimes 10, 15, 20 different advertiser bids for each ad, right? And so we can see who bid.

who won the auction as we auction off these.

Auren Hoffman (01:23.988) you're representing the ad seller which is usually the publisher and there's usually another another kind of company that's representing the ad buyer and so you see you actually you know the the buyer's names when the bids come in

Rajeev Goel - PubMatic (01:38.658) That's correct. Yeah. we, we, you're exactly right. So we represent the content creator and really our purpose in life is to help content creators generate more revenue so they can reinvest back into content creation, right? And over a lifetime, we've, we've generated billions of dollars for our content creator publisher customers. These are some of the largest publishers in the world. And so correct. We, we run that auction on behalf of the seller. We collect these advertiser bids.

And so we can see who's the advertiser, what price point they're bidding at. We can see who lost an auction. We can give them guidance on how they should bid better next time in order to win. So there's all of this data about the consumer, but also the content and the entire ad generation, ad running process.

Auren Hoffman (02:24.846) And so you actually see if you have like 20 bids coming in, you'll see like one bid came in from Procter & Gamble, another bid came in from Colgate, another bid came in from General Motors, and you actually know the name of the advertisers.

Rajeev Goel - PubMatic (02:36.524) That's correct, yes. So we can see all of that. We can see what kind of brand, you know, in the case of a Procter & Gamble, right, they've got many brands under that portfolio.

Auren Hoffman (02:42.828) Okay, so it's coming in from Crest, not even just Procter & Gamble. Okay.

Rajeev Goel - PubMatic (02:45.858) Correct. Yeah, that's exactly right. We can see the price point that they're bidding. You're right.

Auren Hoffman (02:50.702) Okay. And then you're processing 680 billion ads a day, which I actually didn't even realize. like, cause how does it work? like even at a dollar CPM, that means you would be processing like 800, 780 million dollars a day. Right. Yeah.

Rajeev Goel - PubMatic (03:06.102) Yeah, yeah, yeah, which we're not, right? And by the way, with that 780 billion ad impressions through that auction that I just described, our platform generates 15 petabytes of data on a daily basis. So that's petabyte with a P as in Peter. So this is a lot of data, right? And we'll get into that, right, that we need to process. But the win rate is not 100%. So that's the answer mathematically to your question, which is that

Auren Hoffman (03:23.117) Yeah.

Rajeev Goel - PubMatic (03:35.616) And advertising, so ads, some ads will go unsold. Let's say the publisher has a price floor and they say, Hey, I don't want to accept anything, you know, less than eight bucks. so, so it might go unsold. You know, if you watch TV, you see how sad it's right sometimes, right? You see they're, they're advertising a show or you get like, you know, on YouTube TV, you get a moment of Zen, right? Where, where it was just, you know, I don't know, an apple pie baking or something like that. so that happens. And then also.

Auren Hoffman (03:35.822) So a lot of ads go unsold, essentially.

Rajeev Goel - PubMatic (04:01.688) There are oftentimes multiple sell side platforms that are working on the same ad impression. So a publisher might work with us. They might work with our competitors. Google, for instance, is a large player in the ecosystem. And so we may bring back the winning bid, but we may not bring back the winning bid. So that fill rate is key. And that's also why it's so important.

Auren Hoffman (04:22.424) So they might be work out like a publisher might be working with multiple providers at the same time to help them optimize something.

Rajeev Goel - PubMatic (04:30.956) That's exactly right. Yeah. Yeah. And so that's why our infrastructure efficiency is so important because we need to process all of these ad impressions, but we may not monetize all of them until we need to make sure that our infrastructure is as low cost as possible, which I know we'll get into.

Auren Hoffman (04:46.38) Yeah, let's get in. Research is interesting. Like, whereas like most companies, like their stuff is all on like AWS or GCP or Azure or something like that. Like you guys have like your own. You even have like your own metal, right?

Rajeev Goel - PubMatic (05:01.42) Yeah, that's exactly right. you know, what we did when we started Pymatic in 2006, you know, the whole hyperscaler ecosystem didn't exist, right? It's about the same time that AWS launched. And obviously they were years ahead of everybody else. So this whole space was nascent and programmatic. Yeah. Yes.

Auren Hoffman (05:14.861) Yeah.

Auren Hoffman (05:19.47) Yeah, and you and I started our companies like I remember starting, we started like live ramping at the time and like we actually had our own metal too. Like we weren't, this was like pre AWS back then. I remember like going like rack our servers.

Rajeev Goel - PubMatic (05:31.404) Yeah, exactly. So we think it's a huge differentiator. We own the networking equipment. We own tens of thousands of servers. And then of course we own the software. And this is running in 12 data centers around the world because programmatic ad transactions, they're very specific and very high performance. So you've got about 150 milliseconds to show the ad to the user. And if the user is coming from, say Tokyo versus San Francisco versus London, I need to actually process the ads close to the user, right? If you just do the math on speed of light.

Auren Hoffman (05:59.501) Yep.

Rajeev Goel - PubMatic (06:01.944) and moving data back and forth, you can't do it all in one location. So you've got to be close to the user. There's all of that data that I mentioned, the 15 petabytes. And so you couldn't do that in the public cloud. You still can't do it very well today. It's either very hard to do or it's very expensive, right? So I think your listeners will know that if you try to move data out of your cloud provider, they charge you a massive fee, right? And it's always coming down and changing and whatnot, but...

Auren Hoffman (06:28.503) Yeah.

Rajeev Goel - PubMatic (06:31.87) When you're generating 15 petabytes of data and you want to be able to analyze it and provide up to the minute reporting to your customers, you would need to collect all of that data in one location. And so we built our own private cloud. People thought we were crazy. But I think what's interesting is that more and more people are moving out of the public cloud. If you look at the stock market performance of private cloud, infraproviders like Equinix or Iron Mountain or Digital Realty, you can see that they're growing fast.

Auren Hoffman (06:59.468) Yeah.

Rajeev Goel - PubMatic (06:59.544) And think it has to do with control and cost, mean, the public guys, public.

Auren Hoffman (07:04.174) It's because it's much more of a fixed cost when you have a private cloud. And so for some people that's fixed cost is a problem because they have a lot of variable nature and stuff like that. Or they might be really big in December and really bad and really low in May. And so it doesn't make sense to have a fixed cost that's out there. But obviously, a fixed cost, if you're utilizing it at 80, 90 percent is going to be much cheaper.

Rajeev Goel - PubMatic (07:07.436) Yes.

Rajeev Goel - PubMatic (07:31.084) Yes. Yeah. And I think that's probably the sweet spot actually for most companies once they reach a certain level of scale is have a fixed cost infrastructure that you own that does the vast majority of your work and then you can scale up or down. Yeah, exactly. Because remember the hyperscalers are making 30 to 40 percent margins, right? And so you're you as their customer funding them.

Auren Hoffman (07:42.654) And then have the variable for the rest. Yeah.

Yeah, yeah, yeah. The margins are so it's amazing how big their margins are. Like every time they publish them, I'm wow, why, why am I on this thing? Like I was I would like their margins to be like 10 % or something. Yeah. Yeah.

Rajeev Goel - PubMatic (08:01.816) Yeah, it's exactly right. So once you get to a certain scale, then your fixed cost starts to amortize. You need a network operating center. You need a team of infer engineers and whatnot. But you don't need to keep adding to that linearly as you scale up. And so you can get a huge amount of leverage. I the other thing is these public hyperscalers, they are working on a three to four year CAPEX cycle.

But we found that actually you can let hardware run five, six, seven, eight years. Right. If you just look at it it dies, it dies. Yeah, exactly. So you build in an extra, you know, 2 % of capacity because some stuff's going to be dying all the time. and it, and it works great.

Auren Hoffman (08:31.598) Yeah. And if it just goes, if it dies, it dies like whatever. Yeah. Yeah.

Auren Hoffman (08:44.492) Yeah, interesting. What is it? do you like are people like calling you up like other CEOs and other types of like calling them? Hey, I'm in. I want to do this or because I mentioned like, like if you did it from the beginning, like you did and you kind of had to you had no choice back then because there was no cloud. It's one thing. But if you like moving to that, it could be a huge like monumental shift.

Rajeev Goel - PubMatic (09:07.788) Yeah, I mean, it's definitely, I think the biggest thing is it's a mindset shift. And part of that is I think the hyperscalers are the ones that put out case studies all the time. There isn't case studies the other way, right? Which is like, hey, I went to private cloud and like, look at the benefits, right? Like I'm not putting out that case study. So yeah, we do get that question a lot and we're happy to talk to folks. I think the other mindset shift that you have to have is you need to continuously be looking at how do you optimize your infrastructure? So we have...

Auren Hoffman (09:19.863) Yeah.

Rajeev Goel - PubMatic (09:36.778) engineering teams that are looking to see, okay, which database queries are consuming the most amount of processing time, right? What applications or processes are consuming the most amount of memory? And we just look at that, you you just stack rank and say, okay, what are the 10 biggest memory hogs? And then you figure out, how can I rewrite that application or that component and reduce it? I think when you're in public cloud, you have less of a need to do that because you can just...

Auren Hoffman (09:51.117) Yeah.

Rajeev Goel - PubMatic (10:05.452) somebody will say, we need more compute and you'll say yes. And like that, you know, you're on that, that trend.

Auren Hoffman (10:08.045) Yeah.

Auren Hoffman (10:11.918) When I remember when we running around metal, like the types of people we hired were very different. Like the DevOps people we hired, they were like very super crazily organized. And I remember the guy who was like running our team. like, he had like, he almost like almost had like a military, he could have been like the general of like our army or something. He was like amazing. just like

Rajeev Goel - PubMatic (10:32.664) Yeah

Auren Hoffman (10:36.942) He was so, cause everything had to be like, okay, tightly. I remember moving from one data center to another and everything had to be like very, very tightly controlled and tightly organized and, you know, and everything was very different than like the traditional quote unquote DevOps person who we have at our company now who's like on AWS.

Rajeev Goel - PubMatic (10:43.49) Yes.

Rajeev Goel - PubMatic (10:56.556) Right, yeah. I mean, think the reality is when you have your own infrastructure, there's a limiter, which is to deploy new hardware, it can take three to six months. Right? And so that creates, I think, a great paradigm. Yeah. Which is then if an engineer is like, hey, I want to do X, but I'm out of resources, you say, okay, well, I can buy you more. It'll be ready in six months. Or you can figure out how to make something else more efficient. And then you can use that freed up capacity.

Auren Hoffman (11:04.557) Yeah.

Auren Hoffman (11:08.654) You have to plan and you have to think and...

Auren Hoffman (11:23.042) Yeah.

Rajeev Goel - PubMatic (11:25.794) And so then you get really good at like, hey, that guy's application, it's not very efficient. Let me help him fix it. And now I can take over that freed up capacity. And I think that's a good mindset to have as a company around efficiency.

Auren Hoffman (11:31.16) Totally.

Auren Hoffman (11:37.262) Do you have a sense of like, if you just think of like the average company out there, like are they at like 90 % efficiency or they are at 10 % efficiency? Like, I feel like there's, there seems like there's always a lot to be squeezed out of all these things.

Rajeev Goel - PubMatic (11:50.72) Yeah, look, I mean, we have over a decade now, every year we get 10 to 20 % more efficient on our infrastructure. Right. And we have a relentless focus on this because it's like, it's our bottom line. It's our cash every year. So, you know, we look at our investor materials, there's a chart that basically shows the cost of processing ad impressions for us. And there's just this big downward line, right. As we brought it down, you know, that compounding is obviously very powerful.

Auren Hoffman (11:59.607) Yeah.

Auren Hoffman (12:03.342) Every year you're 10 to 20%. Okay. Wow.

Auren Hoffman (12:14.776) Yeah.

Rajeev Goel - PubMatic (12:19.33) So I would wager that there's 50 % gains to be had inside of many companies from an efficiency perspective.

Auren Hoffman (12:28.142) Yeah, I three different companies in the last year where they were trying to cut costs and one thing they're just trying to like even in their channel, like reduce, let's say their AWS bill, maybe their AWS bill was X hundred thousand dollars a month and they want to and in all the cases they were able to reduce it by like half. So they really try to focus on it. And then, you know, one of the scenarios like they had a problem because they had they had signed up for, let's say.

Rajeev Goel - PubMatic (12:38.295) Yeah.

Rajeev Goel - PubMatic (12:46.55) Yes, exactly.

Rajeev Goel - PubMatic (12:55.874) Yes, exactly. And they're stuffed.

Auren Hoffman (12:56.248) a $4 million cost for AWS. And then they're like, okay, what do do? like, do we partner with another company and, know, put the cost together? It's like, yeah, et cetera.

Rajeev Goel - PubMatic (13:03.564) Yeah. I think a lot of companies never thought about this until interest rates spiked after COVID, right? Because we were in, you know, especially a Silicon Valley type of company. Yeah, we're in this free money era and it was like growth at all costs. And so it was not seen as cool to put engineering resources on efficiency optimization. And that obviously has changed quite a bit. And so I think that's good. And we've seen the growth rates in the hyperscalers come down, but now of course they're going back up due to AI.

Auren Hoffman (13:11.692) Yep. Free money. Yeah.

Rajeev Goel - PubMatic (13:32.514) and other use cases.

Auren Hoffman (13:34.049) Yeah. Now you're, you're, you're in an interesting position because you see like both sides of the digital advertising market, like what, and you know, there's been many things talking about these publishers and how hard it is to be a publisher. So like, what do think the publishers most worried about right now? What are the big opportunities there?

Rajeev Goel - PubMatic (13:52.994) Yeah, I mean, think a very significant challenge for publishers today, a couple of them, one is how is generative AI going to affect their traffic, right? So obviously a lot of publishers get traffic from search engines like Google and...

Auren Hoffman (14:04.075) Yep.

Auren Hoffman (14:09.07) Because if you just want an answer, you just get the answer. Yeah.

Rajeev Goel - PubMatic (14:11.85) Exactly. And if you think about your own Google experience over the years, mean, you and I, Google was new, right? I remember when Google first put ads on search results and it was controversial, right? Like, and they had to shade them in yellow and all that stuff, right? This is like, you know, well over a decade ago. But, you know, it used to be that Google would always send you to the website. Then you started to do like weather or sports scores and it would just give you the answer. Now with Gen. AI, it's keeping you inside of that ecosystem even more. So that's concern number one is just, like,

Auren Hoffman (14:23.949) Yeah.

Auren Hoffman (14:33.752) Yeah.

Rajeev Goel - PubMatic (14:41.74) what's going happen with my traffic and the volume of users. Number two, think is, as third party cookies go away, what's the state of the relationship, the depth of the relationship that the publisher has with the consumer? And will the consumer share some piece of identity, like an email address or a cell phone number? So is there that deep of a relationship?

Auren Hoffman (14:43.246) Yeah.

Rajeev Goel - PubMatic (15:08.748) between the consumer and the publisher. And if not...

Auren Hoffman (15:11.342) Yeah, now, and if you're just going to a publisher from a search result, probably not like you may have never heard that. But if you have like a deep relationship with that publisher, I'm always going to ESPN because I have this deep relationship with them. Then, then yeah, sure. I'll provide that information.

Rajeev Goel - PubMatic (15:20.301) Yes.

Rajeev Goel - PubMatic (15:24.534) Yeah, exactly. And that data is really important in terms of driving monetization of the traffic. So what we see is that when the user's identity is known versus a third party cookie, the monetization is 3x higher. And when there's a cookie versus no cookie, a cookie is anonymous, third party cookie is anonymous. So we know it's this device, but we don't know that it's Orin or Rajiv. But when we have that versus no cookie, it's another 3x.

Auren Hoffman (15:40.301) Yeah.

Rajeev Goel - PubMatic (15:53.6) right, in terms of monetization. So.

Auren Hoffman (15:54.862) And also just like they have to get more modern because there are certain, if you go to like a publisher, like a Google or a Facebook or LinkedIn or something like that, you'll always be logged in. Like they're more modern. But it's like every time I go to United Airlines, like I have to like re-log in or something like it doesn't. So they have to get themselves a little bit more modern, even though I have a relationship with United Airlines.

Rajeev Goel - PubMatic (16:04.801) Yes.

Rajeev Goel - PubMatic (16:16.664) Yeah, I think that's exactly right. I think we can talk about commerce media. I think that's a really high growth, interesting opportunity as a CTV. But you're exactly right that I think publishers need to evolve their user experience to give the user a reason to engage and create that login, right? So you probably have seen a lot of publishers in the last couple of years, they put up registration walls. So it's like, you only get two or three free articles a month until you log in, even if you're not paying.

Auren Hoffman (16:32.727) Yeah.

Auren Hoffman (16:42.701) Yep.

Rajeev Goel - PubMatic (16:44.024) You think about gaming, gaming is a big sector online. Casual games, I think, are at risk because you don't log in for a casual game. So more and more games are moving to things like, hey, we remember state, right? That's a reason to log in points, coins, you unlock the sword, something like that, because they want to incentivize you to build that relationship.

Auren Hoffman (16:58.135) Yeah.

Auren Hoffman (17:04.898) And what is there a part like it just, is annoying to have to like re-log into everything. you know, there's been this talk like, there'd be this network of publishers and you kind of log into one and you can get access or you can pay for somewhere and you can get access. like, it just doesn't seem like that's come together. It doesn't seem like the ESPN and, you know,

what, you know, whatever, like, you know, the newer times have come together so I can like have like one type of login or something like that. Do you think that will ever happen? Or do you think that these are just like pipe fantasies that people have been talking about for the last 20 years?

Rajeev Goel - PubMatic (17:44.928) Yeah, it seems today like it's more like a pipe fantasy, I would say. I don't want to say it'll never happen. But I think, yeah, I mean, you're exactly right that that whole user experience is kind of ripe for redefinition. But we've seen over and over again that when a bunch of people have to work together and create and implement a common standard, it's just really, really hard to do. And so usually the way that ends up happening is

Auren Hoffman (18:05.752) Yeah.

Auren Hoffman (18:10.626) By the way, the more they don't work together, the better it is for the big guys, like the Googles of the world, right? Yeah.

Rajeev Goel - PubMatic (18:16.472) 100%. Yeah, right, exactly. So the Googles of the world or whatever the other big medas and whatnot, they benefit, right? Because they're like, hey, we're scale and we're simple all at the same time. And so of course, some of these guys own big browsers. So in your response, Seraan, is the question of are they incented in the browser to make this simple for the user or not, right? So I'll let you decide on that. But I think that's an important question.

Auren Hoffman (18:39.095) Yeah, yeah.

Auren Hoffman (18:43.116) No, if you, mean, in some ways, like you could be in that position because like Pubmatic will be, you'll be on like many, many different publishers. You could have like a common login there in some sort of way that you work together and you share, but it's just, it's just too hard to coordinate all these guys.

Rajeev Goel - PubMatic (18:49.965) Yeah.

Rajeev Goel - PubMatic (19:00.32) It's really hard to coordinate, you know, and then you get into every country. Now states have different privacy regulations, states in the US, right? So you got, know, GDPR in Europe, Australia has their own set of rules. So you've got to abide by all of those rules. If you're the software provider that's doing this and you have some issue in your software, then you're a target for regulators. So there's a lot of reasons why it's difficult as a kind of, let's say, as an investment opportunity.

Auren Hoffman (19:07.896) True. Yeah.

Rajeev Goel - PubMatic (19:28.662) Although I agree with you that it would be great from a consumer perspective to be able to have such a simple standard in place.

Auren Hoffman (19:35.47) Now in the US in 2024, there was obviously we had this election and there's a lot of political advertising that that happened. Did that how did that like distort the advertising market? How did that affect the advertising market? And what did you learn from that like event?

Rajeev Goel - PubMatic (19:39.874) Right.

Rajeev Goel - PubMatic (19:54.22) Yeah, yeah. you political, was huge compared to 2020, right? I mean, every election, every presidential election, the ad spend, you know, amount goes up and then... Exactly.

Auren Hoffman (20:04.045) And also like the linear TV actually went down, right? So the money moved from linear TV, finally, it's finally like reducing in the political world to like CTV, I presume, right? Like those dollars just went almost like one for one over to CTV.

Rajeev Goel - PubMatic (20:12.107) Yes.

Rajeev Goel - PubMatic (20:15.798) Yeah.

Yeah, that's exactly right. So more and more election spend, more and more digital, because that's where consumers are. And in this election cycle, it was a lot less linear and a lot more streaming or CTV. In fact, what we saw is that on our platform, the vast majority of political ad budgets were spent via streaming CTV. And part of that is we built some new technology. So we created a generative AI tool to classify ads more precisely.

So oftentimes large publishers, don't accept political advertising because they're worried about issues that are controversial. Let's say abortion or certain candidates that will alienate part of their user base. Now a tax policy bill or something like that, a local regulation may be fine, right? Less controversial, but gun rights, abortions, those things can upset people. And so we built a generative AI tool that would trap every political ad that's coming in.

Auren Hoffman (20:54.039) Yep.

Rajeev Goel - PubMatic (21:19.256) It would scan it, it would classify it.

Auren Hoffman (21:19.662) I got it. the, so, so some of these guys like me who had a blanket, no political ads and they say, actually, you know, actually we're okay with like 50 % of the political ads. It's just the other 50 % we don't want. And then you'll help classify. So at least they can get the revenue from the 50%. Okay.

Rajeev Goel - PubMatic (21:31.128) Exactly.

Rajeev Goel - PubMatic (21:36.012) Yes. Yeah. So we can classify what was the ad about from a political perspective? Is it a candidate ad? Okay. Is it a federal candidate? Is it a local candidate? Is it a negative sentiment or a positive sentiment? Right. Some publicists say, hey, as long as it's a positive sentiment, it's about what this candidate can do versus about why that candidate over there is bad.

Auren Hoffman (21:44.824) Yeah.

Mmm.

Auren Hoffman (21:54.914) interesting. So I'll even be like, I don't want, interesting. okay. Cause the negative ad might, might, you know, people might be mad about them putting like a falsehood or something like that or whatever about somebody else. Yeah.

Rajeev Goel - PubMatic (21:58.167) Yeah.

Rajeev Goel - PubMatic (22:03.576) Yeah, exactly. It's a negative sentiment, right? So it opened up a lot of incremental revenue. Actually, over 250 new publishers and streamers opened up inventory for political advertising on our platform as a result. And so we saw great results.

Auren Hoffman (22:18.742) And then I assume like they so and then there's just a dial that they could put like I'm okay with this dial or this dial and then based on that dial you run the ads there.

Rajeev Goel - PubMatic (22:27.212) Yeah, exactly. So we would classify everything and then there's, you know, these kind of sentiment dials and they could say, okay, these types of issues I'm okay with these ones I'm not, you know, Trump, yes, Trump, no, know, Kamala Harris, yes, Kamala Harris, no, whatever your preference is.

Auren Hoffman (22:35.373) Mmm.

Auren Hoffman (22:40.942) I assume if they allow Harris to have to allow Trump or vice versa, right? Or no, like.

Rajeev Goel - PubMatic (22:46.07) Well, I you get some, I won't call them out, but you get some publishers that are on the left side of the political spectrum and some that are on the right. And so they may not want, you know, opposing advertising views.

Auren Hoffman (22:55.382) Yeah, but then like who would want to like, why would you want to if you're the opposite candidate to put it there or something else?

Rajeev Goel - PubMatic (23:01.971) Well, you're exactly right, but what we also see with political ads is the spend comes so quickly and the volume is so high that it basically crowds out other types of advertisers. So there's a lot of other advertisers.

Auren Hoffman (23:08.056) So fast, yeah.

Auren Hoffman (23:13.742) Yeah, I assume the CPMs around like October 1st are just spike in CTV. It's like you would. It doesn't make sense to advertise for any other advertiser to advertise at that point. You might as well wait or do it before that. Right. Or is that right? I don't know if that's correct.

Rajeev Goel - PubMatic (23:18.284) are spiking. Yes.

Rajeev Goel - PubMatic (23:27.404) Yeah, so now I would say there's kind of two types of other advertisers besides the political. One is, you know, take like an insurance company, right? They don't need to advertise in Q4. It's not, you know, holiday specific. So they will actually pull back on budget in this environment. And then you have others that are, you know, hey, they're doing 50, 60 % of their revenue in Q4, right? It's the holiday. So they need to be there. So they may...

Auren Hoffman (23:38.968) Yeah.

Auren Hoffman (23:43.436) Yeah.

Auren Hoffman (23:51.886) Right. Cause the Q4 ad rates are already heavier than normal. They're already spiky. And now you have the election. So someone who's doing like conquesting for new customers for Christmas, like their cacks, assume are going to have to go up because of all that like extra spend that came in, or that maybe they move out of CTV into something election, you know, into typical Banner in feed ads or something where the candidates aren't in.

Rajeev Goel - PubMatic (23:55.821) That's right.

Rajeev Goel - PubMatic (24:17.836) Yeah, I mean, you look for the opportunities, but some of it is, you're just going to pay more, right? And so that's there. You got to compete. And I think the political guys are a bit unique in that they're highly incented not to leave any money in the bank, right? Because I remember when I was a marketer, it's like, if you don't bring back the leads and you have marketing budget left, like you failed, right? So you better spend it and then hit your revenue targets. So it's a tricky one, but I think every brand kind of decides for themselves, like, how do they want to play that?

Auren Hoffman (24:30.83) Yeah, of course.

Auren Hoffman (24:38.08) Yeah, yeah.

Rajeev Goel - PubMatic (24:47.94) I think one positive was there was an expectation that the election outcome would not be known as quickly as it was known. And so I think some advertisers were planning to hold back even through November, just given the expectation of the climate and that didn't play out, which was good.

Auren Hoffman (25:00.129) got it. Okay.

Auren Hoffman (25:05.32) interesting. Now, in 2025 will be a very low year for, for least in the U S for political advertising. assume political advertising is not even that big outside the U S. so it'd be a very low year for political advertising. How does, does that like just bring the market back to normal or does that like depress the market in some sort of way?

Rajeev Goel - PubMatic (25:27.554) Yeah, no, don't think it depresses it. I mean, it kind of brings it back to normal. know, there is still obviously there's local elections and state and things like that. So they're a fraction of the volume of obviously the presidential cycle. So there'll be some money there, but it'll be a lot less. That's right.

Auren Hoffman (25:38.669) Yeah.

And it's an odd year anyway, so it's just not that many. You have like the governor's race in like New Jersey and Virginia in 2025 and maybe the New York City mayor's race. You just don't have a lot of big races.

Rajeev Goel - PubMatic (25:53.302) Yeah, that's right. And with respect to other countries around the world, every country has their own regulations, right? So some ban it, political advertising outright. Others are more permissive. US is probably not unique, but it's on the more open side of things, Where unlimited money can kind of come in, unlimited money can be used. There's some guardrails, but there's not a lot of guardrails around political advertising. So you just, see a lot of it here in the US.

Auren Hoffman (26:22.55) Yeah. And then are the, is there anything else like we learned from this kind of like interesting spike, whether it's like on we learned about the CTV systems or anything else that came out of that?

Rajeev Goel - PubMatic (26:37.784) Yeah, mean, think the live events is a growing opportunity around CTV, right? And this is an environment that's notoriously, exactly, Tyson fights a good example. We powered ads for the cricket, the TC 20 Cricket World Cup that was over the summer. So we partnered with Disney Hotstar on that out of India.

Auren Hoffman (26:47.158) This is like the Tyson fight.

Rajeev Goel - PubMatic (27:03.832) So these live events are really tough because you get this surge in traffic. Typically, it's very hard for a publisher, whoever's got the rights to that event, to forecast accurately in advance, right? Like how many users are there gonna be that come? So if you're trying to sell that upfront, let's say you're expecting 30 million consumers, you might get 50 million, you might get 20, so you're only gonna sell 10 or 20 upfront. And then you've got to deal with

Auren Hoffman (27:16.067) Mm-hmm.

Auren Hoffman (27:27.68) Yep. Yep.

Rajeev Goel - PubMatic (27:33.13) In that moment, the spike happens within seconds, let's say when the game starts, or it's going into overtime, then you need to have systems in place. And sometimes those things can flag the traffic as fraudulent. They'll say, hey, all of a I'm getting these concurrent requests for ads that are numbering in the millions or hundreds of millions. It must be fraud, so I'm going to shut it down. So there's a lot of plumbing, a lot of infrastructure work that has to happen. And so we're very much at the forefront of

Auren Hoffman (27:52.542) yeah, yeah.

Rajeev Goel - PubMatic (28:02.594) driving that.

Auren Hoffman (28:03.598) interesting because like to me, I watched like Tyson fight and you know that there weren't a lot of like interstitial CTV as it happened, but there were a lot of like ads that were were were were within the frame. Like there was this big experience and had essentially on the ropes and stuff and you know, and you can imagine in the scenario like in the scenarios where and you know, whenever you watch like a soccer, you know, which you most most places call football.

Right. They have, they have the ads around that because you, might be no ads during the whole thing, but they have the ads around the thing you're constantly seeing. And I think we'll see more of that where those get a little bit more programmatic and you and I might see different ads.

Rajeev Goel - PubMatic (28:36.044) Right. Yes.

Rajeev Goel - PubMatic (28:46.902) Yes, I mean that that would be very logical, right? I think the idea of everybody in the stadium and on TV sees the same ad that's around the outside of the field, like makes zero sense, right?

Auren Hoffman (28:58.998) Yeah. Yeah, obviously in the stadium, be hard to change it if you're in the stadium, but everybody watching it from on, on their CTV platform, whatever it is, Netflix or whoever, whatever the platform is, you should watch it. You should see an ad that's more relevant to you.

Rajeev Goel - PubMatic (29:14.604) Yeah, mean, oftentimes if you're watching like a English Premier League match on TV here in the US, I mean, you're getting a British brand. Exactly. That you can't even buy. Yeah. Yeah, exactly. So it makes no sense, right? So I think that speaks to kind of the some of the challenges in digital advertising more broadly, which is fragmentation of media. Right. And I think this really surged in the pandemic, which is

Auren Hoffman (29:20.746) Right. I see ads for things I never even heard of and I can't even buy, right? It's like life insurance in the UK. I can't even buy that. Yeah.

Auren Hoffman (29:37.41) Yeah.

Rajeev Goel - PubMatic (29:40.972) you know, everybody went home, they bought more devices, right? Phones, laptops, computers, those numbers were off the charts. And then streaming has exploded. And so everybody is watching their content on their own terms. you know, sporting events, shows, et cetera, that used to be a British show, you know, are now available around the world, right? Or, you US shows or, you know, Mexican, Latin American content is available. So people are watching whatever they want to watch.

however they want to watch it on whatever device they want to watch it on. And so from an advertiser perspective, if you compare that to a couple of decades ago, mean, broadcast TV had 80 % market share in its heyday, right? Something like that. Today, the largest is YouTube and YouTube is 10 % of all TV viewing in the US. So it just shows you, right? Like how much fragmentation has happened. And so for an advertiser, it's a lot more opportunity, but a lot more challenge in terms of how do they get the right ad in front of the

Auren Hoffman (30:27.81) Yeah, it's crazy.

Auren Hoffman (30:39.256) Now the, there's also been this surge of podcasts and podcasts. It's almost old school where the ad is the same to everybody. It's like a sponsored ad based on like the reach of the program, like on Joe Rogan or Lex Friedman, like every single listener, here's the exact same ad, which is like almost like it was in like the 1980s and 1990s. It's kind of like going back to that. Could we see the podcast world evolve?

Rajeev Goel - PubMatic (31:06.914) I think we definitely will see the podcast world evolve where you should expect that you're gonna get an ad that's specific to you, right? Based on, let's say you're watching or listening to that podcast. I guess you could say watching too. There's a lot of video on these podcasts now. So you're watching it on, let's say Spotify or something like that, right? So they know your location. They know, do you have a family plan or an individual plan, right? Yeah, so they know, you

Auren Hoffman (31:21.134) Yeah, sure, for sure. A lot of people watch the podcast,

Auren Hoffman (31:28.152) Yep.

They know your listening habits. Yeah. Tell us your Taylor Swift fan or whatever. Yeah. Yeah.

Rajeev Goel - PubMatic (31:35.38) Exactly. They know what else you're listening to, right? Are you listening to NPR or are you listening to, you know, whatever rock music or something like that? So I think there's a lot of opportunity to change those ads and customize those ads. The reality is, that podcast advertising, it's not a huge market today. I mean, it's a couple billion dollars, you know, CTV, 30, 40 billion dollars, retail media, you know, commerce media, that's 50 billion dollars. So I think, you know, people haven't been so focused.

on technological innovation in that podcast space. But I think as it grows, the same innovations that we're applying in CTV and retail media, et cetera, will come into the podcast room.

Auren Hoffman (32:16.972) And you mentioned earlier, cookies are going away. Of course, we've been like kind of preparing for this for like over 10 years now for cookies to go away. And they've been slowly going away under, you they don't have cookies on, you know, iOS on, on Apple on, you know, lot of mobile related things. so they have kind of gone away over time. Like what is like, if you kind of walk us through the next few years, like what does that new world look like?

Rajeev Goel - PubMatic (32:27.789) Right.

Rajeev Goel - PubMatic (32:34.978) That's right.

Rajeev Goel - PubMatic (32:46.572) Yeah, so in just a level set, So cookies have been going away exactly as you said, third party cookies. And I think the challenges that many users didn't know that cookies existed and how they were being anonymously profiled. And I think about Cambridge Analytica as really the start of consumers becoming aware of how their data is being used on the internet, right? You can, I think, go back to that. And that was kind of the first mainstream thing that...

reached the press and reached consumers about how their data was being used. consumers, of course, need to remember that they're getting free content, which is incredibly important and valuable. And so I think that bargain kind of had been forgotten, which is like, the consumer shares data, and in return, they get free content. And we all know the history of Procter and Gamble and soap operas from, I don't know, whatever, 50, 70 years ago.

But I think a lot of consumers forgot about that kind of equation. And so now what's happening is consumers are being asked to explicitly consent to sharing their data. And so they're being reminded of that value exchange. And so we're right in the middle of the process of where the industry participants like us, consumer rights representatives, regulators, big tech companies, they're all figuring out, we're all figuring out how this is going to work in the future.

while we're supporting a nearly trillion dollar digital advertising ecosystem. So I think what's likely to happen is that it's a little bit ironic, but consumers will be at the center where they're asked to consent. But in fact, they're asked to share more information about themselves than was the case in third party cookies. And CTV is a prime example, right? So there's been a huge growth in ad supported streaming content, right? Consumers are saying, hey, I don't have

to go at free. Exactly. Now you log in to all of those services. So you're providing an email address, a credit card, your name, like all of this information.

Auren Hoffman (34:40.514) Yeah, even Netflix. So many people now do the ad stuff. Yeah.

Auren Hoffman (34:48.301) Yeah.

Yeah, they know you're home, obviously, because that's where you're watching it.

Rajeev Goel - PubMatic (34:54.538) Exactly. And they know, you know, where you travel to, right? Cause they see that, you logged in from a hotel room, you know, in, New York city or whatever the case is, or you have a, you know, vacation home or a friend's home or whatever you've logged in the same login. So they can see all of this information. They can see what kind of TV, right? Are you on the latest model 80 inch, you know, Samsung LG or are on

Auren Hoffman (34:59.565) Yep.

Auren Hoffman (35:13.614) And they're getting the TV information too, right? Yeah. Yeah. And they know, okay, this is a, they say they know the, expensive that TV is. I can give you a sense of this kind of user as well.

Rajeev Goel - PubMatic (35:18.08) Absolutely, so they can see all of that information because they've got to deliver the media right the streaming

Rajeev Goel - PubMatic (35:28.824) And you've set up your household, right? So your kids have their own stream going, right? Your wife, whatever, your husband. So I think people should remember like, okay, cookies are going away, but actually now they're being asked to share more information.

Auren Hoffman (35:32.396) Yeah, profiles. Yep.

Auren Hoffman (35:44.494) Of course, yeah, it's way more personalized now than it ever was. Yeah, yeah, yeah.

Rajeev Goel - PubMatic (35:47.158) Yes, exactly. I think that's good because at the end of the day, this is part of the reason why we exist is I think for democracies having free information that educates consumers, whether it's political news, what's the government been up to? How are my taxpayer dollars being spent? What do I need to be thinking about in the next election?

How do I improve my life as a consumer? All of these things, having free content, health, exactly. These are all great things, right? I've got two kids, so I think about all the free educational resources that they use. And it's not because these things are free. It's not that it costs no money for engineers to build them and distribute them, journalists, content creators. So advertising is really what funds this. And so I think it's great if consumers get more relevant ads.

Auren Hoffman (36:16.034) Yeah, health. Yeah.

Rajeev Goel - PubMatic (36:40.401) and they're able to decide who they share their information with and on what terms.

Auren Hoffman (36:46.11) There are certain platforms where to me the ad is the content. Like you get really great ads and like on Instagram, I feel like the ads are quite good. And sometimes the content I'm getting from the ads is better than the content I get from the creators. And on X on Twitter, I just found that the ads were so bad and so untargeted and so that I ended up

Rajeev Goel - PubMatic (36:51.478) Right.

Rajeev Goel - PubMatic (37:02.925) Yes.

Auren Hoffman (37:12.536) there was like an opportunity to pay to not get ads. I'm as well just paid enough because like I want to see that because they were so bad. Whereas on Instagram, I wouldn't want to stop paying because I actually liked the ads. The ads are actually really valuable. I learned that like it actually helps me discover like cool stuff and new things to do or whatever. Like they're actually really exciting and interesting and relevant to me.

Rajeev Goel - PubMatic (37:19.021) Right.

Rajeev Goel - PubMatic (37:23.402) Do like the ads? Yeah. Yeah.

Rajeev Goel - PubMatic (37:34.712) Well, that's the beauty, I think, of a relevant ad, which is that it's like content.

Auren Hoffman (37:39.938) Yeah, I mean, someone's actually paying to get something. They're paying a lot of money to get in front of me. Therefore, you should be incented to show me something I really am interested in. Right. Yeah. Yeah.

Rajeev Goel - PubMatic (37:49.4) Exactly. Yeah, that's exactly right. So imagine like you're in the market for a car, right? And if you get the right car offer, know, lease, and it's kind of the right price point, the right, you're looking for an SUV versus a convertible or something like that. I mean, it's perfect, right? It's like really good content, which is like, okay, great. Like I'm going to click on this. I'm going to learn more about the product and maybe I'll even sign up to have somebody call me so I can go in for a test drive. So I think relevant ads,

Auren Hoffman (37:56.279) Yeah.

Auren Hoffman (38:10.126) Totally.

Rajeev Goel - PubMatic (38:17.94) know, consumers overwhelmingly prefer relevant ads for exactly the reasons that you mentioned. And that is the path. Yeah.

Auren Hoffman (38:25.048) And it's also exciting, like you discover something new and interesting and kind of like, it's kind of fun and yeah, yeah, exactly. Yeah, yeah, yeah, exactly. Yeah.

Rajeev Goel - PubMatic (38:31.458) that you wouldn't have searched for, right? On your own. Yeah. I mean, just myself. So I'm going skiing in a couple of weeks and I was thinking about what I should get the kids for Christmas and whatnot. And I got an ad for heated gloves. And so I bought like three pairs of heated gloves, right? So I don't know, I spent like four or 500 bucks on that. And it was like not an idea that I had thought of myself, but somehow it came to me at the right moment and it's perfect. It's great. So it solved my...

Auren Hoffman (38:49.656) Yeah, yeah.

Rajeev Goel - PubMatic (39:00.77) Christmas gift problem and it also solved the problem of like kids with cold hands that want to go in early on the ski slope.

Auren Hoffman (39:07.01) Now, a lot of what people think about on ads, especially on the RTB side, is these retargeted ads where they went to a store, maybe they abandoned the shopping cart, maybe they bought something from the store and those ads kind of follow them around everywhere. Like there's a certain clothing brand I bought from and I see those ads everywhere I go now. They just constantly want to... And I imagine with cookies, those will be harder and harder to make happen in the future.

Rajeev Goel - PubMatic (39:33.25) Yeah, think retargeting is definitely on its way out. think part of the problem with retargeting is, you know, there was this waste, right, where it's like, even when you bought the product, you would still get retargeted with that ad, right? Which made no sense.

Auren Hoffman (39:43.35) Yeah. Yeah. Now sometimes it makes sense. Like I could buy from the clothing store again or something. So maybe it makes sense. And like, yeah, yeah, the same product doesn't make sense. Yeah.

Rajeev Goel - PubMatic (39:49.398) Yeah. You get the same product like chasing you around and you're like, dude, I bought it. Right? Yeah. Like I bought it. So like we're all good. So I think, you know, look, commerce media in general is exploding, right? Which is companies that are in the retail transaction flow. think of, you know, somebody like a DoorDash or an Uber. It can be, of course, a retailer or a retail, you know, kind of service provider.

like an Instacart, also travel companies, you mentioned United Airlines earlier, right? So, you United is getting in on this. So people that are around the transaction and have consumer first-party data, but they also have a canvas where consumers are coming to their properties and they have an ability to show ads, you know, they're diving.

Auren Hoffman (40:36.878) It seems like they're all, they're all becoming ad networks. I mean, there's always a joke that everyone becomes an ad network, but yeah, you mentioned like United, Uber is definitely an ad network. Instacart is an ad network. Shopify, DoorDash, obviously Walmart and Amazon. are massive. Yeah. It seems like any place like I'm like, like going to shop, like, you know, has like a whole huge, and then that ad business is very high margin.

Rajeev Goel - PubMatic (40:40.406) Yes.

Rajeev Goel - PubMatic (40:49.676) Walmart and Amazon are two of the largest, right?

Auren Hoffman (41:04.778) it's, it's, it's very, very, lucrative for these guys. So you rent a car and all of a sudden you're, you've got like all these ads coming in potentially. I I'm not even surprised. Like when I actually show up in the car, there's not a credit card ad in the car or something, right? Like that's going to be there pretty soon. Like there's all these high margin things to go. Sometimes even when you're flying on an airplane, like

Rajeev Goel - PubMatic (41:09.239) Yes.

Rajeev Goel - PubMatic (41:26.999) Yes.

Auren Hoffman (41:27.694) the last like five minutes of the flight, you're hearing some pitch of the flight attendant trying to get you on the credit card and stuff.

Rajeev Goel - PubMatic (41:31.618) credit card, right? Yeah. Exactly. So you're exactly right that the margins here are massive. So if you think about Amazon, they make more profit from their advertising business than they do from the retail itself. And the retail itself is about 50x the size of the ad business, right? Maybe it's come down, yeah, in terms of revenue, maybe it's like 30x now.

Auren Hoffman (41:48.174) Yeah, it's crazy.

Auren Hoffman (41:52.982) Yeah, in terms of revenues. Yeah.

Rajeev Goel - PubMatic (41:57.608) So the margins on it are very high, right? Walmart is growing a huge business. We've announced partnerships with Instacart, with Klarna, very recently with Intuit, so about 50, 60 million small businesses, right? Yeah, exactly. So people are looking to monetize the data that they have, and it's scaling. I think there's a lot of challenge and opportunity around it, which is, yes, everybody wants to become a retail media network, but I don't think advertisers

Auren Hoffman (42:08.121) yeah, ain't you a great one, great example. Yeah.

Rajeev Goel - PubMatic (42:27.138) can buy across thousands of these things, right? Like just gets too fragmented, too difficult. And so we're actually playing a key role working with agencies and advertisers to aggregate a lot of this inventory and make it, you know, viable at scale across a lot of these retail media networks.

Auren Hoffman (42:43.094) Now question for you to like, okay, so there's these, there's obviously like Google and Meta and you know, et cetera, you know, some of these like very large companies out there. Then you have like all these other kind of like random companies that are in like the ad tech ecosystem, but you've got like two that are just like massive in terms of market cap, right? You've got Apple oven.

which is like over a hundred billion market cap. You've got the trade desk, which is like over 65 billion market capital. Like, why are those two so done so well? Like what, obviously they've got great CEOs and they've got other things, but like what, like I would have never have thought, like I, I, I've known both of those guys for a long time. I would have never thought they would have been able to build a business this big on what they're doing. What are they doing? Right.

Rajeev Goel - PubMatic (43:34.678) Yeah, I mean, think each of their cases, it's a little bit unique, but they've established, I think, category leadership in the sectors that they're in. the tailwinds in the sector are such that just compounding growth year after year, they've been able to demonstrate that, establish that leadership, and therefore, think investors are paying for their companies well into the future. So in the case of Trade Desk, they've

Auren Hoffman (43:37.784) Sure, yeah.

Auren Hoffman (44:02.189) Yes.

Rajeev Goel - PubMatic (44:04.568) They've obviously consolidated and established leadership as the largest independent demand site platform. I think they've gone head to head with Google and shown that, we trade desk or I don't want to put words in their mouth, but more objective, more transparent, we're independent because we don't own media, we're not on multiple sides of the transaction. In the case of AppLovin, they've really taken ownership of app monetization. And most recently, they've combined that with

this commerce media trend that we've just been talking about. And so that's really supercharged their growth. And so you're seeing in case of AppLevin, mean, fantastic growth with really high margins and kind of seeing that compound. And I think there's a lot of tailwinds behind mobile app consumption and behind commerce media. And so think investors are paying well into the future for those assets.

Auren Hoffman (44:36.184) Yep.

Auren Hoffman (44:57.262) Yeah. I mean, we'll certainly well in the future. think Op 11 is like a hundred times PE trade desk is probably 200 times PE or something. So they definitely are like believing in like the long-term kind of growth story. It's kind of like, you know, nowadays, like Googles and stuff like they don't, they don't trade that high in terms of a PE multiple and stuff. Maybe they did back to like long-term in the day, but now, you know, these guys are like the, the, the almost like

Rajeev Goel - PubMatic (45:02.37) Yes.

Yeah.

Auren Hoffman (45:24.994) the tech companies of lore or something.

Rajeev Goel - PubMatic (45:28.044) Yeah, I mean, I think, you know, obviously for companies like Google, it's much harder to grow faster than the rate of the market growth, right? Just given, you know, their scale and their size and also the fact that they're under heavy regulatory scrutiny around the world. Whereas, you know, companies like AppLevin and TradeDesk, obviously, you know, different companies, different scale, different size. So they're not under that scrutiny. Exactly. Exactly.

Auren Hoffman (45:35.82) Yeah, yep.

Auren Hoffman (45:49.74) Yeah, the average person's never even heard of them. doubt like, you know, my, my, my wife or people I know, like just the average smart person has ever heard of AppLovin or the trade desk, but they all heard of Google and Meta, you know.

Rajeev Goel - PubMatic (46:00.472) Yes. Yeah, exactly. Yeah. And we announced a partnership with App11 maybe just a couple of months ago where we're a certified bidder into their platform. So it's opening up a lot of new mobile app inventory for us, which we're really excited about. So we're excited about our partnership with them. And Trade Desk, of course, is a big DSP buyer on our platform that's integrated and bidding and buying the Class C inventory that we present.

Auren Hoffman (46:23.758) Yeah. Now, speaking of being a public company, you guys went public in 2020, about four years ago or so. How does that, how has that changed like the way you run the company and stuff?

Rajeev Goel - PubMatic (46:35.67) Yeah, so I think there's a few advantages to going public. Increased visibility and credibility. It's helped us attract high profile partners and clients.

Auren Hoffman (46:44.838) I imagine like when you, when you, when you sell and you say I'm a public company and people know that you're a public company, there's just like more of like a belief you'll be around and there's more of a, it's probably like a little bit easier to, to, to sell into a company when they know, you're, it gives you some credibility points, right?

Rajeev Goel - PubMatic (47:02.04) I mean, I think that's exactly right. So we're selling to the world's largest brands and publishers. And the established incumbents are companies like Google and Meta, right? And so we're going into them and saying, hey, we're a stable, safe place for you to build your ad business over the next decade. And if you're public, I think it's a lot easier to tell that story, particularly in our case, where we're very capital efficient, we're profitable, cashflow positive for many, many years.

Auren Hoffman (47:08.12) Yeah.

Auren Hoffman (47:26.392) Yeah.

Rajeev Goel - PubMatic (47:31.16) 10 years in a row of profitability, something similar for being cash flow positive. So, you know, we can go to those big brands, those big publishers, those big content creators, and credibly give them an alternative where I think if we were private, they would say, well, I mean, they're telling us a good story, but we don't really know what's behind the, under the hood in terms of the financial. So it's safer to just go with the big guys, right? And so I think that's been a huge advantage for us.

Auren Hoffman (47:55.361) Yeah.

Rajeev Goel - PubMatic (47:59.0) And then, you know, I think for our employees and our investors, obviously, you know, they have opportunity to monetize. I mean, we're 18 years into the business, and so they all deserve a return.

Auren Hoffman (48:08.718) Though nowadays, like there's plenty of ways to do secondaries and give employees ways and other investors ways to do that. Right. Like, so you have companies like Stripe that have had multiple rounds of things that have happened over the year. So there are other ways to do it without being public. Right.

Rajeev Goel - PubMatic (48:19.543) Yes.

Rajeev Goel - PubMatic (48:23.352) So I think that is true. think that gets a lot of attention. The reality though is, is that it's a subset of companies that have that kind of demand where they can do those secondaries. So, I yeah, yeah. I mean, you know, it's not five companies, but it's not 500. Right. And so you, read about that a lot and it's like, it seems like every company is doing that. But in reality, it's very few companies. Right.

Auren Hoffman (48:34.37) Yeah, that's right. Yes. Yeah. Stripe, Databricks, like there's a small number. Yeah. Yeah. Yep. That's right.

Auren Hoffman (48:48.45) Yeah.

Rajeev Goel - PubMatic (48:50.84) And so I think it's a good way to return liquidity and some return on time for all of our employees and investors.

Auren Hoffman (48:59.33) But being public is annoying, right? Like, I mean, you have to like have all these calls and then, you know, somebody, someone's, you know, you say something about coffee and then they, some investors sue you because like, you know, know, coffee somehow affected your, stock price or something like that. Or you just talked about buying some gloves or something. All of a sudden it's like some lawsuit comes like, there are like annoying things about it, right?

Rajeev Goel - PubMatic (49:23.53) It's definitely a shift of priorities, right? So you've got to spend time communicating your story to investors. There is more, let's say, process legal overhead, right? It's one thing when you have...

Auren Hoffman (49:26.113) Yeah.

Auren Hoffman (49:34.262) Yeah, yeah, there's some there's some like X millions of dollars that you spend that you wouldn't have been spending. Yeah.

Rajeev Goel - PubMatic (49:39.222) Yes, exactly. mean, and your shareholder base changes, right? I mean, when you have, let's say, venture capital or private equity investors, they're very sophisticated, right? And maybe you have five or 10 of those on your cap table. So it's one thing to communicate to them. When you go public, your neighbor's grandmother might have stock in your company, right? And so it's a totally different challenge to communicate to that person. And obviously the legal challenge, you know, that that sophistication of that investor is probably lower, maybe lower.

Auren Hoffman (50:08.567) Yep.

Rajeev Goel - PubMatic (50:09.366) And so you've got to do things in a different fashion. So yeah, I would say it's not without overhead. So I think you've really got to think about, what are the, you also get a lot of levers, right? Like it's the lowest cost of capital. So if we think back to our conversation about, yeah, whether it's equity or debt. So back to our conversation about infrastructure, right? If you're not on public cloud, you're on private cloud, you need capital, right? To be able to build that, I think.

Auren Hoffman (50:20.918) Yeah, that's true. Good point. And borrowing too. It's easier to borrow. Yeah.

Auren Hoffman (50:32.706) Good point. Yeah. Yeah. Yeah. You need to borrow $20 million. It's so much easier as a public company to do it. The comps are there. Yep.

Rajeev Goel - PubMatic (50:39.572) Exactly, exactly, right? Yeah, that's exactly right. So you have these new growth levers, right? You have the quarterly reporting cycle, which is a big kind of bully pulpit to put your message into the market. So you have these new levers, and I think you really have to just think about how do I use these levers? And they come with some costs, but how do I use them to help me grow faster and achieve my objectives?

Auren Hoffman (50:59.64) Because you hear from some people like, it's not worth going public if we're not of market cap at least of X billion dollars or something like that. Like, what would you say to those CEOs?

Rajeev Goel - PubMatic (51:13.078) Yeah, I mean, look, I think there is some truth to that, right? So investors spend time with the largest companies by and large. There's no doubt about that. So people are going to do, you know, they're going to do work on the mega cap companies.

Auren Hoffman (51:18.082) Yeah.

Auren Hoffman (51:23.478) Right, right. Someone can't, they can't even put a hundred million dollars into you, right? Cause that would be, that would be too much. right. Yeah.

Rajeev Goel - PubMatic (51:29.1) Too much, right? Yeah, yeah, totally. mean, I had a conversation with the CEO of a $30 billion financial services company and I was just talking to him about being a public company. said, the hardest part about being a $30 billion company is, you know, nobody spends enough time on us. And I was like, man, you're, I was thinking, you know, once you cross 10 billion, that'll change. Yeah.

Auren Hoffman (51:44.01) Right, right, right, right. Right, because some of these funds might need to put, you know, they need to put like a billions of dollars to work. Yeah.

Rajeev Goel - PubMatic (51:51.542) Right, yeah, and he's in a basket with like JP Morgan and Goldman Sachs, right, which are in the hundreds of billions, right? So yeah, I mean, that is difficult, but at the same time, I would say, hey, when you go from being a private company, the number of investors that are relevant to you, to going public, even if you're a small cap public company, there's a whole larger set of investors now, right? So the investment pool grows even though it's not

Auren Hoffman (51:56.088) Totally.

Auren Hoffman (52:16.365) Yeah, that's right.

Rajeev Goel - PubMatic (52:20.338) as large as, let's say, you know, Nvidia is attracting. So I think it's great. I think the debt market's become a lot easier when you're public. We don't have any debt. We're a profitable company. In fact, we announced share repurchase program about a year and a half ago. And maybe two years ago, that's going strong. But if you want to raise debt, I mean, you can raise debt literally in a matter of days.

Auren Hoffman (52:42.012) so when you're buying infrastructure, don't, you don't, you don't buy it with debt. just buy it with your cashflow. Okay. interesting. Okay. Of course. Okay. Yeah. Yeah. Yeah. Of course. Yeah. now you, you founded PubMatic with your brother. and I think a lot of people have talked about doing something with their spouse, doing something with their sibling, you know, et cetera. There's always like these pros and cons, like, you know, what, what's, what's been your experience?

Rajeev Goel - PubMatic (52:47.574) We just buy with our cash flow. Yeah, exactly. Yeah, that's the most efficient form of capital, right? Yeah, exactly. Exactly.

Rajeev Goel - PubMatic (53:03.981) Yeah.

Rajeev Goel - PubMatic (53:10.52) Yeah, yeah, you're exactly right. And actually, this is our, I guess it's like our second or third company together. So our, I guess our third. So our first one, Chipshot, you this was back in the, in the late nineties, you know, custom built off equipment direct over the web. And I remember, I mean, we were like in our early twenties and we shared a cube and like every once in a while we'd get like in an argument and then it would, it would devolve, right? It would be like, well, when, when I was 12, you did this to me and then you did that to me, right?

Auren Hoffman (53:15.213) Yeah.

Rajeev Goel - PubMatic (53:37.88) And so then I'm removed, he moved my brother, he moved to India and he lived there for like eight or nine years. And I think that was actually really good. And we were, you know, running a company together as well there where because the time zones, 12 and a half hours apart, like both people want to be very efficient, right? Cause it's like somebody's breakfast and somebody's dinner. Right. And so like, you don't want to be on that call for very long. So it causes you to be like very clear, concise, and to the point.

Auren Hoffman (53:55.66) Yeah. Yeah.

Auren Hoffman (54:01.698) Yeah, totally.

Rajeev Goel - PubMatic (54:05.164) He's now, you know, he's moved back to the US a number of years ago. But I think that that taught us to be, you know, focused and succinct in our communication, which has worked out well. I think the other lesson is you just have to be very clear on who's responsible for what. think having kind of dual ownership of things can be confusing for everybody, you know, not only yourselves, but also for the rest of the team. And so just saying, exactly.

Auren Hoffman (54:22.36) Yeah.

Auren Hoffman (54:27.758) which I assume is true of any founding team, not just siblings,

Rajeev Goel - PubMatic (54:31.296) Yeah, that's right. So just having that clarity of like who's responsible for what so everybody knows who to talk to. Decision making is super clear. I think that is really important.

Auren Hoffman (54:43.106) Alright, this has been great. Last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

Rajeev Goel - PubMatic (54:49.282) Yeah, I I think there's always this point about you got to find work-life balance, right? In a way that means life is different from work and it's a zero-sum game. And I totally disagree with that. I think if you want to be great at something, you have to be willing to do it way more than anybody else, right? It's just super rare that somebody is born with innate skill or talent, if at all. And even if they do have that, I don't think that's typically sufficient, right? So you've got to hone your craft.

Auren Hoffman (55:12.216) Yep.

Auren Hoffman (55:15.672) Yeah, by the it's like, it's not like LeBron James doesn't outwork everyone else. And he was clearly born with some amazing talent, but he's like the way he gets, the way he becomes like the great or Steph Curry, like he's out there every day, just doing like crazy amount of work.

Rajeev Goel - PubMatic (55:19.564) Exactly.

Yes.

Rajeev Goel - PubMatic (55:31.104) Yeah, that's exactly right. So you have to hone your craft no matter what talent you're born with. And so I think it's best to focus on finding something that you really enjoy doing because then work and your life become one in the same, right? You don't mind putting in the time because it's fun and only when you put in the time can you truly become great at something. And I think your family can benefit from it too, right? They see that you're working hard at something. They see that you're passionate about it.

and they see how you can integrate it into your family life. And I think there's a lot of great benefits that come

Auren Hoffman (56:05.198) Yeah, yeah, I love that. Thank you, Rajiv Goyal for joining us at World of DaaS. I've been friends with Royal, I follow you on LinkedIn. I definitely encourage our listeners to engage with you. This has been a ton of fun.

Rajeev Goel - PubMatic (56:17.4) Thanks, Auren. Really enjoyed it. Super fun to catch up with you. All right.

Auren Hoffman (56:20.782) Yeah, absolutely.