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Jan 23, 2018 · 23m · top-founders

913 Adtech: Revenues of $110m on $500m Spend, How it breaks down

Sean Riegsecker · 14m spoken Nathan Latka · 6m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs, host Nathan Latka interviews Centro founder Sean Riegsecker to analyze how the ad tech company scaled to over $110 million in revenue on $500 million in ad spend. Riegsecker discusses the economics of balancing managed services with software margins, technical infrastructure investments, and the launch of Centro's unified Basis platform.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 31.8% of the talking time here. How this is scored →

Nathan as informed peer 4.7 Guest teaching 4.5 Guest disagreement 2.0 Nathan pushing back 4.2
05100:0010:0020:000:49–3:53 · Nathan as informed peer 5/10 Introducing Sean Riegsecker and Centro's Core Platform Capabilities Latka challenges Sean on how managed services impact company margins compared to pure-play SaaS multiples. Sean defends the strategy by explaining how the services arm serves as a built-in testbed and cash-flow engine for software development.3:53–7:35 · Nathan as informed peer 4/10 Historical Evolution, DSP Acquisition, and Launching Basis Sean narrates the historical evolution of Centro from local ad buying to programmatic, detailing their platform rebuild and DSP acquisition of SiteScout. Latka asks clarifying questions around acronyms and self-serve splits.7:36–11:16 · Nathan as informed peer 6/10 Take Rates, Margin Dynamics, and Client Self-Sufficiency Latka pushes on why the margin take-rates for self-serve (8-20%) and managed services (10-25%) are so similar despite managed requiring higher headcount. Sean schools Latka on unit economics, explaining cost per line item and the stacking of tech and service fees.11:19–17:25 · Nathan as informed peer 6/10 Sponsor Message: ProsperWorks CRM Integration and Benefits After an initial sponsor ad read, Latka pins Sean down to a specific revenue bracket ($110M-$130M) and probes the recent growth slowdown. Sean details how their new product combines ERP, DSP, and BI functionality.17:26–20:58 · Nathan as informed peer 5/10 Bidding Infrastructure Costs, Fundraising Philosophy, and Acquisition Valuation Sean details the staggering infrastructure scale behind real-time bidding (3 million queries per second and 7 billion hot-storage profiles), prompting Latka to admit he learned something new. Latka then presses on hypothetical acquisition offers, which Sean counters by requiring at least $500M.20:59–23:31 · Nathan as informed peer 2/10 The Famous Five Questions and Episode Conclusion Latka runs through the rapid-fire Famous Five format. Sean playfully refuses to disclose his age before Latka presses him into admitting he is 45.0:49–3:53 · Guest teaching 4/10 Introducing Sean Riegsecker and Centro's Core Platform Capabilities Latka challenges Sean on how managed services impact company margins compared to pure-play SaaS multiples. Sean defends the strategy by explaining how the services arm serves as a built-in testbed and cash-flow engine for software development.3:53–7:35 · Guest teaching 5/10 Historical Evolution, DSP Acquisition, and Launching Basis Sean narrates the historical evolution of Centro from local ad buying to programmatic, detailing their platform rebuild and DSP acquisition of SiteScout. Latka asks clarifying questions around acronyms and self-serve splits.7:36–11:16 · Guest teaching 6/10 Take Rates, Margin Dynamics, and Client Self-Sufficiency Latka pushes on why the margin take-rates for self-serve (8-20%) and managed services (10-25%) are so similar despite managed requiring higher headcount. Sean schools Latka on unit economics, explaining cost per line item and the stacking of tech and service fees.11:19–17:25 · Guest teaching 5/10 Sponsor Message: ProsperWorks CRM Integration and Benefits After an initial sponsor ad read, Latka pins Sean down to a specific revenue bracket ($110M-$130M) and probes the recent growth slowdown. Sean details how their new product combines ERP, DSP, and BI functionality.17:26–20:58 · Guest teaching 6/10 Bidding Infrastructure Costs, Fundraising Philosophy, and Acquisition Valuation Sean details the staggering infrastructure scale behind real-time bidding (3 million queries per second and 7 billion hot-storage profiles), prompting Latka to admit he learned something new. Latka then presses on hypothetical acquisition offers, which Sean counters by requiring at least $500M.20:59–23:31 · Guest teaching 1/10 The Famous Five Questions and Episode Conclusion Latka runs through the rapid-fire Famous Five format. Sean playfully refuses to disclose his age before Latka presses him into admitting he is 45.0:49–3:53 · Guest disagreement 1/10 Introducing Sean Riegsecker and Centro's Core Platform Capabilities Latka challenges Sean on how managed services impact company margins compared to pure-play SaaS multiples. Sean defends the strategy by explaining how the services arm serves as a built-in testbed and cash-flow engine for software development.3:53–7:35 · Guest disagreement 1/10 Historical Evolution, DSP Acquisition, and Launching Basis Sean narrates the historical evolution of Centro from local ad buying to programmatic, detailing their platform rebuild and DSP acquisition of SiteScout. Latka asks clarifying questions around acronyms and self-serve splits.7:36–11:16 · Guest disagreement 2/10 Take Rates, Margin Dynamics, and Client Self-Sufficiency Latka pushes on why the margin take-rates for self-serve (8-20%) and managed services (10-25%) are so similar despite managed requiring higher headcount. Sean schools Latka on unit economics, explaining cost per line item and the stacking of tech and service fees.11:19–17:25 · Guest disagreement 2/10 Sponsor Message: ProsperWorks CRM Integration and Benefits After an initial sponsor ad read, Latka pins Sean down to a specific revenue bracket ($110M-$130M) and probes the recent growth slowdown. Sean details how their new product combines ERP, DSP, and BI functionality.17:26–20:58 · Guest disagreement 3/10 Bidding Infrastructure Costs, Fundraising Philosophy, and Acquisition Valuation Sean details the staggering infrastructure scale behind real-time bidding (3 million queries per second and 7 billion hot-storage profiles), prompting Latka to admit he learned something new. Latka then presses on hypothetical acquisition offers, which Sean counters by requiring at least $500M.20:59–23:31 · Guest disagreement 3/10 The Famous Five Questions and Episode Conclusion Latka runs through the rapid-fire Famous Five format. Sean playfully refuses to disclose his age before Latka presses him into admitting he is 45.0:49–3:53 · Nathan pushing back 4/10 Introducing Sean Riegsecker and Centro's Core Platform Capabilities Latka challenges Sean on how managed services impact company margins compared to pure-play SaaS multiples. Sean defends the strategy by explaining how the services arm serves as a built-in testbed and cash-flow engine for software development.3:53–7:35 · Nathan pushing back 2/10 Historical Evolution, DSP Acquisition, and Launching Basis Sean narrates the historical evolution of Centro from local ad buying to programmatic, detailing their platform rebuild and DSP acquisition of SiteScout. Latka asks clarifying questions around acronyms and self-serve splits.7:36–11:16 · Nathan pushing back 5/10 Take Rates, Margin Dynamics, and Client Self-Sufficiency Latka pushes on why the margin take-rates for self-serve (8-20%) and managed services (10-25%) are so similar despite managed requiring higher headcount. Sean schools Latka on unit economics, explaining cost per line item and the stacking of tech and service fees.11:19–17:25 · Nathan pushing back 5/10 Sponsor Message: ProsperWorks CRM Integration and Benefits After an initial sponsor ad read, Latka pins Sean down to a specific revenue bracket ($110M-$130M) and probes the recent growth slowdown. Sean details how their new product combines ERP, DSP, and BI functionality.17:26–20:58 · Nathan pushing back 5/10 Bidding Infrastructure Costs, Fundraising Philosophy, and Acquisition Valuation Sean details the staggering infrastructure scale behind real-time bidding (3 million queries per second and 7 billion hot-storage profiles), prompting Latka to admit he learned something new. Latka then presses on hypothetical acquisition offers, which Sean counters by requiring at least $500M.20:59–23:31 · Nathan pushing back 4/10 The Famous Five Questions and Episode Conclusion Latka runs through the rapid-fire Famous Five format. Sean playfully refuses to disclose his age before Latka presses him into admitting he is 45.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 59.4% · guest 40.6%0:00 · Nathan 59.4% · guest 40.6%3:00 · Nathan 8% · guest 92%3:00 · Nathan 8% · guest 92%6:00 · Nathan 17.5% · guest 82.5%6:00 · Nathan 17.5% · guest 82.5%9:00 · Nathan 28.8% · guest 71.2%9:00 · Nathan 28.8% · guest 71.2%12:00 · Nathan 52.5% · guest 47.5%12:00 · Nathan 52.5% · guest 47.5%15:00 · Nathan 24.8% · guest 75.2%15:00 · Nathan 24.8% · guest 75.2%18:00 · Nathan 18.2% · guest 81.8%18:00 · Nathan 18.2% · guest 81.8%21:00 · Nathan 49.3% · guest 50.7%21:00 · Nathan 49.3% · guest 50.7%
Sharpest disagreement ▶ 20:45 Sean rejects a quarter-billion dollar buyout valuation

When Latka presents a hypothetical $250M acquisition offer from Vista or MediaOcean, Sean firmly rejects it, stating the conversation only starts at double that amount.

 Hardest push from Nathan ▶ 9:17 Latka pushes back on identical managed service margins

Latka directly questions Sean's economic model, refusing to accept that high-touch managed services could carry the same margin spread as automated self-serve software.

 Biggest teaching moment ▶ 18:20 Sean educates Latka on programmatic auction infrastructure

Sean explains the technical realities of processing 3M queries per second and storing 7B audience profiles in hot storage, leading Latka to explicitly concede he did not know that.

 Nathan holds their own ▶ 17:03 Latka analyzes the industry transition from take-rates to pure SaaS

Latka synthesizes knowledge from multiple adtech CEO interviews to argue why market forces will compel agencies to move to dedicated SaaS platforms instead of percentage-of-spend models.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Sean Riegsecker and Centro's Core Platform Capabilities 5414 Latka challenges Sean on how managed services impact company margins compared to pure-play SaaS multiples. Sean defends the strategy by explaining how the services arm serves as a built-in testbed and cash-flow engine for software development.
Historical Evolution, DSP Acquisition, and Launching Basis 4512 Sean narrates the historical evolution of Centro from local ad buying to programmatic, detailing their platform rebuild and DSP acquisition of SiteScout. Latka asks clarifying questions around acronyms and self-serve splits.
Take Rates, Margin Dynamics, and Client Self-Sufficiency 6625 Latka pushes on why the margin take-rates for self-serve (8-20%) and managed services (10-25%) are so similar despite managed requiring higher headcount. Sean schools Latka on unit economics, explaining cost per line item and the stacking of tech and service fees.
Sponsor Message: ProsperWorks CRM Integration and Benefits 6525 After an initial sponsor ad read, Latka pins Sean down to a specific revenue bracket ($110M-$130M) and probes the recent growth slowdown. Sean details how their new product combines ERP, DSP, and BI functionality.
Bidding Infrastructure Costs, Fundraising Philosophy, and Acquisition Valuation 5635 Sean details the staggering infrastructure scale behind real-time bidding (3 million queries per second and 7 billion hot-storage profiles), prompting Latka to admit he learned something new. Latka then presses on hypothetical acquisition offers, which Sean counters by requiring at least $500M.
The Famous Five Questions and Episode Conclusion 2134 Latka runs through the rapid-fire Famous Five format. Sean playfully refuses to disclose his age before Latka presses him into admitting he is 45.

Statements from this episode (12)

Assertion Supported
Centro reached 700 employees and acquired three companies on $50M raised
“We are, you know, like I mentioned, about 700 folks. We've managed to get there on about fifty million dollars in capital raised. We've bought three companies along the way”
Sean Riegsecker Jan 23, 2018 ▶ 3:04
Insight
Riegsecker: Managed services fund and test Centro's software development
“A service company, one, has actually allowed us to fund the development of the platform, And two because they're using it, they're kind of the first folks through the door, so we actually can build it perfect for them, make sure it works right, make sure it wo…”
Sean Riegsecker Jan 23, 2018 ▶ 3:26
Assertion Not checkable as stated
Of Centro's $500M processed ad spend, up to $175M is self-service
“The majority, you know, of our business today of the half a billion, that's going to run through us. Approximately a 150 to a hundred and seventy-five million of that is what you would refer to as self-service and the rest is all coming to our managed services…”
Sean Riegsecker Jan 23, 2018 ▶ 7:15
Disclosure
Centro charges an 8% to 20% take rate on self-service ad spend
“And depending upon how much you're going to be spending with us in the commitment, it can range anywhere from eight to nine percent if you're spending millions of dollars. Upwards of 20 percent depending upon if you're just spending, you know, a 100,000 dollar…”
Sean Riegsecker Jan 23, 2018 ▶ 8:16
Insight
Riegsecker: A $1M ad buy requires the same operational work as $1K
“In other words, if someone's spending a million dollars per line item, it's the same amount of work as if someone's spending a thousand dollars per line item.”
Sean Riegsecker Jan 23, 2018 ▶ 9:54
Disclosure
Centro pushes managed-service clients to become self-sufficient software users
“Our preference is that all of our clients are self-sufficient and self-sufficient. And so we put together a plan to help them get there because I say to them, look, at some point, you don't want to pay us a service fee. You know, you should consolidate that ma…”
Sean Riegsecker Jan 23, 2018 ▶ 10:56
Disclosure
Centro generated between $110M and $130M in revenue in 2017
“It's actually somewhere between a 110 and a 130.”
Sean Riegsecker Jan 23, 2018 ▶ 13:02
Prediction Not checkable as stated
Riegsecker expects Centro's 2017 revenue growth to remain in the single digits
“I think this year, when you look at it, I think our growth rates going to be in the single digits.”
Sean Riegsecker Jan 23, 2018 ▶ 14:05
Disclosure
Centro expects to spend up to $9M on bidding infrastructure in 2018
“I think this year we're going to spend something like eight million or nine million dollars just on infrastructure and bidding costs or, you know, bidding infrastructure.”
Sean Riegsecker Jan 23, 2018 ▶ 18:06
Assertion Not checkable as stated
Centro processes 3M queries per second and stores 7B audience profiles
“Now we're processing about three million single queries and auctions every single second of every single day. At the same point, we have to store Audience profiles. So we have, we're storing about seven billion audience profiles in what we call hot, you know, …”
Sean Riegsecker Jan 23, 2018 ▶ 18:46
Assertion Not checkable as stated
Riegsecker: Centro is currently profitable and has been almost every year
“We're profitable. We've been profitable almost every single year.”
Sean Riegsecker Jan 23, 2018 ▶ 20:27
Disclosure
Riegsecker says he would not sell Centro for $250 million
“Not for a quarter of a billion.”
Sean Riegsecker Jan 23, 2018 ▶ 20:45
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