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Sep 20, 2017 · 18m · top-founders

788: Ad Tech Agency Does $17m Gross Profit 2016, $30m VC Raised

Patrik Fagerlund · 8m spoken Nathan Latka · 8m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode, Nathan Latka interviews Patrik Fagerlund, CEO of WideSpace, detailing how the mobile ad tech platform evolved from a 2009 startup into a business processing $36 million in ad spend with $17 million in gross profit across 1,000 enterprise clients.

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 49.9% of the talking time here. How this is scored →

Nathan as informed peer 5.3 Guest teaching 3.3 Guest disagreement 1.0 Nathan pushing back 3.0
05100:0010:002:26–4:32 · Nathan as informed peer 5/10 WideSpace's Origins and the 2009 Business Model Nathan probes into the early 2009 business model, immediately doing mental math to clarify the difference between ad volume processed and WideSpace's take rate.4:33–6:34 · Nathan as informed peer 5/10 Evolution to Tech Licensing and Enterprise Client Roster Nathan tries to categorize the transition as a shift to SaaS, but Patrik clarifies that media technology remains usage- and volume-based rather than a traditional recurring subscription.6:35–8:58 · Nathan as informed peer 6/10 Machine Learning Algorithm, Mobile Focus, and Pricing Structure Nathan tests hypothetical ad spend scenarios to figure out the fee floor, and starts calculating bottom-line revenue from the $40M gross spend figure.9:00–12:04 · Nathan as informed peer 7/10 Supply-Side Monetization and 2016 Gross Profit Nathan drills deep into revenue versus gross profit, isolating the blended 50% margin structure and extracting their $17M gross profit and $30M venture funding details.12:04–14:59 · Nathan as informed peer 5/10 Publisher Supply Management, Anti-Fraud, and Bidding Dynamics When Nathan asks whether publishers grant exclusive supply because WideSpace beats Google's payouts, Patrik schools him on modern programmatic mechanics like header bidding and waterfall auctions.15:01–17:56 · Nathan as informed peer 4/10 The Famous Five Rapid-Fire Questions A friendly and conversational wrap-up through the Famous Five questions covering books, sleep, family life in Sweden, and competitive veteran tennis.2:26–4:32 · Guest teaching 2/10 WideSpace's Origins and the 2009 Business Model Nathan probes into the early 2009 business model, immediately doing mental math to clarify the difference between ad volume processed and WideSpace's take rate.4:33–6:34 · Guest teaching 4/10 Evolution to Tech Licensing and Enterprise Client Roster Nathan tries to categorize the transition as a shift to SaaS, but Patrik clarifies that media technology remains usage- and volume-based rather than a traditional recurring subscription.6:35–8:58 · Guest teaching 4/10 Machine Learning Algorithm, Mobile Focus, and Pricing Structure Nathan tests hypothetical ad spend scenarios to figure out the fee floor, and starts calculating bottom-line revenue from the $40M gross spend figure.9:00–12:04 · Guest teaching 3/10 Supply-Side Monetization and 2016 Gross Profit Nathan drills deep into revenue versus gross profit, isolating the blended 50% margin structure and extracting their $17M gross profit and $30M venture funding details.12:04–14:59 · Guest teaching 6/10 Publisher Supply Management, Anti-Fraud, and Bidding Dynamics When Nathan asks whether publishers grant exclusive supply because WideSpace beats Google's payouts, Patrik schools him on modern programmatic mechanics like header bidding and waterfall auctions.15:01–17:56 · Guest teaching 1/10 The Famous Five Rapid-Fire Questions A friendly and conversational wrap-up through the Famous Five questions covering books, sleep, family life in Sweden, and competitive veteran tennis.2:26–4:32 · Guest disagreement 1/10 WideSpace's Origins and the 2009 Business Model Nathan probes into the early 2009 business model, immediately doing mental math to clarify the difference between ad volume processed and WideSpace's take rate.4:33–6:34 · Guest disagreement 1/10 Evolution to Tech Licensing and Enterprise Client Roster Nathan tries to categorize the transition as a shift to SaaS, but Patrik clarifies that media technology remains usage- and volume-based rather than a traditional recurring subscription.6:35–8:58 · Guest disagreement 1/10 Machine Learning Algorithm, Mobile Focus, and Pricing Structure Nathan tests hypothetical ad spend scenarios to figure out the fee floor, and starts calculating bottom-line revenue from the $40M gross spend figure.9:00–12:04 · Guest disagreement 1/10 Supply-Side Monetization and 2016 Gross Profit Nathan drills deep into revenue versus gross profit, isolating the blended 50% margin structure and extracting their $17M gross profit and $30M venture funding details.12:04–14:59 · Guest disagreement 2/10 Publisher Supply Management, Anti-Fraud, and Bidding Dynamics When Nathan asks whether publishers grant exclusive supply because WideSpace beats Google's payouts, Patrik schools him on modern programmatic mechanics like header bidding and waterfall auctions.15:01–17:56 · Guest disagreement 0/10 The Famous Five Rapid-Fire Questions A friendly and conversational wrap-up through the Famous Five questions covering books, sleep, family life in Sweden, and competitive veteran tennis.2:26–4:32 · Nathan pushing back 3/10 WideSpace's Origins and the 2009 Business Model Nathan probes into the early 2009 business model, immediately doing mental math to clarify the difference between ad volume processed and WideSpace's take rate.4:33–6:34 · Nathan pushing back 3/10 Evolution to Tech Licensing and Enterprise Client Roster Nathan tries to categorize the transition as a shift to SaaS, but Patrik clarifies that media technology remains usage- and volume-based rather than a traditional recurring subscription.6:35–8:58 · Nathan pushing back 4/10 Machine Learning Algorithm, Mobile Focus, and Pricing Structure Nathan tests hypothetical ad spend scenarios to figure out the fee floor, and starts calculating bottom-line revenue from the $40M gross spend figure.9:00–12:04 · Nathan pushing back 4/10 Supply-Side Monetization and 2016 Gross Profit Nathan drills deep into revenue versus gross profit, isolating the blended 50% margin structure and extracting their $17M gross profit and $30M venture funding details.12:04–14:59 · Nathan pushing back 3/10 Publisher Supply Management, Anti-Fraud, and Bidding Dynamics When Nathan asks whether publishers grant exclusive supply because WideSpace beats Google's payouts, Patrik schools him on modern programmatic mechanics like header bidding and waterfall auctions.15:01–17:56 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions A friendly and conversational wrap-up through the Famous Five questions covering books, sleep, family life in Sweden, and competitive veteran tennis.

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

0:00 · Nathan 85.6% · guest 14.4%0:00 · Nathan 85.6% · guest 14.4%3:00 · Nathan 31.1% · guest 68.9%3:00 · Nathan 31.1% · guest 68.9%6:00 · Nathan 35.8% · guest 64.2%6:00 · Nathan 35.8% · guest 64.2%9:00 · Nathan 27.8% · guest 72.2%9:00 · Nathan 27.8% · guest 72.2%12:00 · Nathan 54.9% · guest 45.1%12:00 · Nathan 54.9% · guest 45.1%15:00 · Nathan 62.6% · guest 37.4%15:00 · Nathan 62.6% · guest 37.4%18:00 · Nathan 0% · guest 0%18:00 · Nathan 0% · guest 0%
Sharpest disagreement ▶ 13:04 Patrik dismisses exclusivity assumptions

Patrik rejects Nathan's premise that publishers offer exclusive inventory locks, explaining that programmatic header bidding has replaced exclusivity across the modern industry.

 Hardest push from Nathan ▶ 10:21 Nathan demands true gross profit

Nathan cuts through the top-line $36M processed ad spend figure to force Patrik to disclose their real gross margin and net company earnings.

 Biggest teaching moment ▶ 13:04 Patrik outlines waterfall and header bidding mechanics

Patrik educates Nathan on why modern publishers do not rely on single-partner exclusivity, walking through how real-time CPM bidding and waterfall tiers operate.

 Nathan holds their own ▶ 10:21 Nathan calculates blended margin and gross profit

Nathan demonstrates financial acumen by parsing out WideSpace's mix of legacy cut and tech fees to accurately identify their $17M gross profit.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
WideSpace's Origins and the 2009 Business Model 5213 Nathan probes into the early 2009 business model, immediately doing mental math to clarify the difference between ad volume processed and WideSpace's take rate.
Evolution to Tech Licensing and Enterprise Client Roster 5413 Nathan tries to categorize the transition as a shift to SaaS, but Patrik clarifies that media technology remains usage- and volume-based rather than a traditional recurring subscription.
Machine Learning Algorithm, Mobile Focus, and Pricing Structure 6414 Nathan tests hypothetical ad spend scenarios to figure out the fee floor, and starts calculating bottom-line revenue from the $40M gross spend figure.
Supply-Side Monetization and 2016 Gross Profit 7314 Nathan drills deep into revenue versus gross profit, isolating the blended 50% margin structure and extracting their $17M gross profit and $30M venture funding details.
Publisher Supply Management, Anti-Fraud, and Bidding Dynamics 5623 When Nathan asks whether publishers grant exclusive supply because WideSpace beats Google's payouts, Patrik schools him on modern programmatic mechanics like header bidding and waterfall auctions.
The Famous Five Rapid-Fire Questions 4101 A friendly and conversational wrap-up through the Famous Five questions covering books, sleep, family life in Sweden, and competitive veteran tennis.

Statements from this episode (14)

Assertion Not checkable as stated
Fagerlund: Media industry in 2009 refused mobile ad tech and placements
“First couple of years, we tried to sell the technology, but in the media industry at that time, nobody wanted really to be seen in the mobile and nobody wanted to buy technology.”
Patrik Fagerlund Sep 20, 2017 ▶ 3:31
Disclosure
Fagerlund: WideSpace took a 40% cut on ad spend in 2009
“No, that was our, that was the spend, and then our cut was roughly, well, it was basically an ad network, so at that time, it was 40%.”
Patrik Fagerlund Sep 20, 2017 ▶ 4:08
Disclosure
Fagerlund: WideSpace processes $30M-$40M in volume with 130 employees
“So today we're in the area of above thirty million dollars, or close to forty million dollars 130 people”
Patrik Fagerlund Sep 20, 2017 ▶ 4:34
Disclosure
Fagerlund: WideSpace has close to 1,000 active paying customers
“It's close to a thousand.”
Patrik Fagerlund Sep 20, 2017 ▶ 5:58
Assertion Not checkable as stated
Fagerlund: WideSpace services 75% of top 50 global advertisers
“So I think of the top 50, top 50 global advertisers, we service 75% of them.”
Patrik Fagerlund Sep 20, 2017 ▶ 6:07
Disclosure
Fagerlund: WideSpace Takes a 50% Fee on $100K Annual Ad Spend
“So if you're a customer, you typically pay 50% of that spend to make use of the technology. If you go then of course it's a volume game. The more you pay the less we charge basically.”
Patrik Fagerlund Sep 20, 2017 ▶ 7:45
Disclosure
Fagerlund: WideSpace Has a 5% to 10% Pricing Floor for Large Volume
“Floor, floor in that sense, if you, massive amounts of volume will be above five, but below 10.”
Patrik Fagerlund Sep 20, 2017 ▶ 8:28
Assertion Not checkable as stated
Fagerlund: WideSpace processed roughly $36M to $37M in 2016
“So last year, I think we did we didn't do 40. We did just shy of that. So it was like a 36, thirty seven million, million dollars.”
Patrik Fagerlund Sep 20, 2017 ▶ 10:11
Assertion Not checkable as stated
Fagerlund: WideSpace retains roughly 50% gross margin on ad spend
“And now we're in just about 50%. So yeah, Half of that, roughly, is our money.”
Patrik Fagerlund Sep 20, 2017 ▶ 10:43
Disclosure
Fagerlund: WideSpace Has Raised Close to $30M in Capital
“We pulled in in the area of 25, 30, yeah, in the, yeah, close to thirty million dollars, I think.”
Patrik Fagerlund Sep 20, 2017 ▶ 11:14
Disclosure
Fagerlund: WideSpace Rejected Strategic Investors to Maintain Market Neutrality
“No, it's non-strategics, and we, over the years, we had sort of propositions from strategics, but we actually turned them down so this is more VC, VC fund, and because it's, as soon as you move in that direction, a strategic player might be that you can't work…”
Patrik Fagerlund Sep 20, 2017 ▶ 11:28
Assertion Not checkable as stated
Fagerlund: WideSpace Has Zero Ad Fraud and Offers a Fraud Guarantee
“We have deeper integration, so we can actually control what, where we service ads, and there is very little fraud, which you will see, and we actually have a fraud guarantee, so fraud you will see a lot in the ad tech business. We have zero.”
Patrik Fagerlund Sep 20, 2017 ▶ 12:20
Assertion Not checkable as stated
Fagerlund: WideSpace Provides a 100% Ad Viewability Service
“We do a lot of viewability, where we can basically have a service, a hundred percent viewability, and, That is sort of not very often you see that in the industry either.”
Patrik Fagerlund Sep 20, 2017 ▶ 12:38
Insight
Fagerlund: Publisher Exclusivity in Ad Tech Has Largely Disappeared
“Today it's a lot more open, so you will be, basically, either you do header bidding, where everybody bid for a certain inventory, or you have the old model, which is a waterfall, where we might come in with a really high CPM prices, and then we will be very hi…”
Patrik Fagerlund Sep 20, 2017 ▶ 13:05
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