A few months ago over coffee, a source was bemoaning the lack of big exits (and billion dollar ideas) to emerge from the New York tech scene. Who’s headed in the right direction? we asked. The source pointed us to an ad-tech startup called Moat.
“When you get the demo, it’s like magic!” said the source, referring to a heatmap Moat produces that shows what part of an online ad viewers have been scrolling over. The alchemy lies in Moat’s ability to go beyond the rudimentary “click” as a measurement tool for display ads.
Investors seem similarly smitten with the concept. The startup recently closed a Series B investment round for $12 million led by the Mayfield Fund, along with previous investors like SV Angel, Founders Fund, Lerer Ventures, Founder Collective, and First Round Capital.
Moat’s founders also know a little something about gonzo exits. Cofounders (and brothers) Noah and Jonah Goodhart, along with Moat chairman Michael Walrath, were all part of the team behind Right Media, the New York City-based advertising marketplace which was acquired by Yahoo in 2007 for $850 million. (April, 2007 was a good month for Silicon Alley. A few weeks earlier Google bought DoubleClick for $3.1 billion.)
This time around, CEO Jonah Goodhart is trying to figure out how to get big name brands to invest in digital advertising. “If the Internet is going to be a successful place for premium publishers way into the future, we have to figure out how to make brand advertising work,” he told Betabeat by phone. ”It’s effectively what pays the bill in every other medium and in digital it’s mostly been direct response,” he added, referring to ads for Netflix, Zappos, or University of Phoenix, where the goal is to elicit a direct response.
In other words, you’re not clicking on a Jaguar ad and buying a luxury car, but it may be able to influence your purchase all the same. “People are starting to whole-heartedly believe that clicks are the wrong metric,” he said, “So we’re solving for what should the right metric be.”
The founding team is so committed to the mission that neither Mr. Goodhart, his brother, nor Mr. Walrath is taking a dime of salary, even after this latest funding round.
“We tried to make the products to feel very consumer-focused,” he said. “Even though they’re business products, we tried to make them easy to use, right to the point.” Forbes is currently using Moat to measure premium ads. AOL’s Pictela group is also a client.
What if you’re only mousing over the ad to close it? “Knowing that everybody comes to your ad and tries to find the close button is actually something we’d want to measure,” said Mr. Goodhart. “To brand advertisers, that’s good feedback,” that can help them create a better ad.
But that’s only the half of it. Moat also has a separate team devoted to intelligence in the form of a search engine for display ads. “It’s basically like Google, except Google basically skips the ads and just grabs the content. We skip the content, and just grab the ads,” Mr. Goodhart explained. There’s a free version available on the site, and a paid version for advertisers boning up on their competition or publishers’s sales team prepping for a pitch.
The same source who was wowed by the demo also spilled the beans on Moat’s secret weapon: 25-year-old president Aniq Rahman. “Yeah Aniq is incredible,” Mr. Goodhart said later by email. “Low-key guy who has already sold two companies. Truly brilliant. CS background. Everyone knows and likes him. Definitely one to watch in technology!” Hmm, we’ll try not to put him on our next poachables list, but we can’t promise anything.
After Right Media’s boffo exit, the brothers Goodhart and their partner Mr. Walrath launched an early stage investment firm called WGI Group that has since made about 45 investments, including launching Moat with a $3 million seed round. At the time, it was hard to even get a Silicon Valley VC to fly out to New York.
There was one upside of not having an established ecosystem for financing. “The bar, the standard of how good the company had to be to be successful was higher,” Mr. Goodhart noted. “Whereas now, you have one guy, you build some kind of consumer app and all of a sudden he has angel funding and it’s not from even traditional angels, it’s from hedge fund people. Is it a net positive thing? Maybe yes, maybe no. But as an entrepreneur, I prefer to be around now than then.”