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One Decade After Selling LiveRamp – What did we learn?

why some acquisitions work

One Decade After Selling LiveRamp – What did we learn?

note: this is a guest post by Auren Hoffman, CEO of SafeGraph.
Auren was CEO and cofounder of LiveRamp from 2006-2015.

So, after eight years of hustling and grinding in the business, we decided to sell LiveRamp to the then Acxiom, for $310 million … and an extra $30 million in incentives on top of that. It all happened on May 14, 2014, and the deal was finally sealed on July 1, 2014. Wild, right?.  

If you haven’t been following, LiveRamp (NYSE:RAMP) is now an independent company.  It is the dominant company that connects marketing applications with over $600M ARR. 

Here are some big lessons learned in the last decade…

Enduring businesses are incredibly hard to kill. 

Jason Lemkin has written about this dozens of times.  Good businesses compound.  Great businesses compound greatly.  

When you have a business that is compounding well, let it keep going.   

When we sold LiveRamp, the business was $30M ARR and growing 80% a year and profitable. LiveRamp has continued to grow (mostly organically) ever since in the last 10 years – growing 20x (on average 30%/year) ever since.  

LiveRamp founders in 2006: Auren Hoffman, Manish Shah, Vivek Sodera, Jeremy Lizt, Dayo Esho, and Sean Carr.

Markets can be bigger than you think.

In 2014, LiveRamp had about 70% market share.  So the size of the market was very small.  Today LiveRamp still has about 70% market share … so the size of the market has gotten MUCH bigger.  

This is why it is very hard to understand TAMs in the early days.   Even when a company is $30M ARR, the TAM can be very deceiving.  

Joel Jewitt was the first senior LiveRamp hire in 2008.  Joel is still a key exec at the company (16 years later!).

Should we have sold the company?

Because these businesses are serious flywheels, we should have never sold.  Of course, there is always a price to sell.  But we probably sold the company for 50% less than what it was worth.  We only understood that with lots of hindsight (obviously we were happy with the offer at the moment – one of our board members told us just a few weeks before we got the offer that the business was worth less than $100 million).

It is hard to know at the time what your business is really worth as only time will tell if it can endure.

Dan Scudder (on the mic) came up with the “LiveRamp” name.  Anders Jones (with guitar) is now CEO of Facet Wealth.

Why has the LiveRamp mafia done so well?

The team was one of the best collections of talent since PayPal.  The people were exceptional and almost all of them were home-grown (hired right out of college). I get a lot of questions on why the LiveRamp alumni have done so well.  

The best predictor of having a strong alumni network is a company that: (1) had a successful outcome but not crazy successful (like a Facebook or a Google); (2) the company went through a bunch of trying times (and almost went out of business); and (3) the employees built a company that was super enduring and even prospered post-exit.

Anneka Gupta now is Chief Product Officer at Rubrik (NYSE:RBRK)

PayPal fits all three of these criteria. It had a strong exit (but not Google-like escape velocity), it almost went out of business multiple times (highly recommend reading PayPal Wars by Eric Jackson), and it continues today as an independent company (NASDAQ:PYPL) that was spun out of eBay (its original acquirer in 2002).

Travis May (in green checkered shirt) succeeded Auren as LiveRamp CEO and went on to found Datavant – one of the most impactful middleware companies in healthcare.  Nathan Marz (in brown) created Apache Storm.

While the LiveRamp exit was only 20% of PayPal, it had many of the exact same characteristics. (1) The exit was good (but not amazing); (2) the company almost went out of business multiple times (and like PayPal, we had to pivot hard from “Rapleaf” to “LiveRamp”); and (3) we built a company so enduring that it ended up being the crown jewel of the acquirer and now is an independent public company (trades at NYSE:RAMP).

Michel Tricot (blue button-down shirt) is now CEO of Airbyte.

Building a company that lasts is the goal

Too many companies die when they are acquired.  In the tech world, not only do most acquisitions fail, they often fail spectacularly.   You want to build a company in an enduring way so that even after you sell it, it prospers.  That means building it to last (assume you are going to still be running it 20 years from now).  

Yes, the acquirer often screws it up.  But it your job as founder to build a company that is not easily screwed up. The highest reward is that the company is successful long after the founders leave.  That is how you know you built a truly great company. 

Help the acquirer make it successful

After selling the company, our number one goal was to ensure that was successful.   Our company was 60 people at the time of sale and the company that acquired us was 5,000 people.  

The mother company had had some very talented people and we wanted to harness that talent.  Of course, Acxiom also had some deadweight (and even some people that were creating negative value) but that is to be expected in a 5,000 person company. 

The first thing we did was recruit the best people at the mother company to work at LiveRamp.  The CEO of the mother company, Scott Howe (who is now CEO of LiveRamp) had the foresight to let that happen.   It was pretty easy to convince the very best Acxiom employees to come to LiveRamp because our smaller size meant we could move much faster than the mother ship.  Having these Acxiom veterans inside the tent allowed us to quickly gain the trust of the mother ship and gave us the ability to keep the company separate (and not have to go through all the customary merger pains).  

Noel McMichael was one of the amazing Acxiom employees who joined the LiveRamp team.

Keep the brand

One of the reasons LiveRamp has prospered is because it kept the brand. Today the LiveRamp brand is stronger than ever.

B2B companies often kill the brands of the company they acquire (like EchoSign, ExactTarget, and BlueKai). Which, when you think about it, makes no sense.

B2C companies almost always keep the acquired brand. Instagram, Ring, and YouTube all continue to be great brands today. The best branding companies in the world, CPG companies like Unilever, have hundreds of well-known sub-brands; Unilever’s portfolio includes Axe, Dove, Hellmann’s, Lipton, Pond’s, Vaseline, Ben & Jerry’s, Breyers and Q-tips, among others. It would be unthinkable for Unilever to rebrand Lipton as “Unilever Tea.”

Killing a great brand immediately decreases the value of the company acquired and hurts the morale of the people acquired. It also makes it hard to differentiate products within the mother company – and it seems they all use the same “Marketing Cloud” moniker.

Travis May, Michel Tricot, and Auren Hoffman in 2024. Still working together after all these years.

Be Humble

Acquirers often think they can run the acquired companies better. Their reasoning is “we acquired them, not the other way around.”

But a humble executive would think, “Wow, I just spent all this money acquiring this company. I wish we could have built it ourselves. I could learn a lot from it.”

Scott Howe, CEO of Acxiom, did something very few CEOs would do when acquiring a company that was 22% of his market capitalization: He left it alone. Scott checked his ego and said, “I’m going to trust the people who built this company.” He gave the team a very long rope and let them run.

company now trades as $RAMP

Most CEOs would have meddled with this new shiny object. Sure, they would have added some value but likely also caused a great deal of pain. Scott entrusted the team to do great things, and for that, his company was greatly rewarded.

amazing engineers Abhishek Jain and Dayo Esho (now CEO of TravelJoy)

Buy A Great Company

While there are no absolutes in acquisitions, a few heuristics identify companies that will stand the test of time:

  • The company clearly does at least one core thing better than anyone else.

  • The business has a moat, meaning that it is defensible.

  • The engineering team is better than yours.

  • It invests more in R&D than in sales and marketing.

  • It has a deep bench of leaders.

  • The company is not reliant on a charismatic founder.

  • It has an amazing brand.

Here’s to another great decade!

and Travis May, former LiveRamp CEO, also published a great post today on Startup Mafias — check it out!

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