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Fireside chat with Ori Lahav, co-founder of Outbrain

On Wednesday, January 21st, GrowthUp welcomed Outbrain co-founder Ori Lahav as a special guest. During a fireside chat, Mr. Lahav told the audience about his life and experiences in entrepreneurship, as well as offered some secrets for successfully managing content.

Mr. Lahav, who is a Major (reserve) officer in Israeli Navy, told the audience that his time in the military marked the beginning of his career. After leaving the armed forces at the age of 25, Mr. Lahav  went to work in the tech sector.  His professional experience includes working at Shopping.com, a comparison shopping service that was later sold to eBay. One of the most important beliefs that Mr. Lahav developed as a result of his time at the company, which employed 400 people and owned a few thousand servers, is that anyone, regardless of background, possesses the ability to create a major company.

The idea to create Outbrain, currently the world’s largest content discovery platform, came in 2006 when Mr. Lahav was contacted by Yaron Galai, an old friend from the Naval Academy. Together, they started the company, considered now to be the largest content marketplace on the web.

Outbrain initially focused on personalizing news, but they later introduced an add-on for Mozilla Firefoxdesigned to personalize RSS-feeds. In order to consistently improve their algorithms, they realized that they needed to go to where people read content, so they pivoted towards developing  partnerships with publishers. There are few problems that Outbrain aimed to solve. First, the digital world lacks a certain kind of magic found in paper magazines. When reading magazines, readers go through them, page after page, to read stories that have been carefully selected and strategically placed by the editor. In the digital version, however, you are presented with a list of links, which offer a choice of what to read or see. Outbrain attempts to recapture the magic of print magazines by urging readers to read article after article, in order to make them interested in the content.  Secondly, ads these days leave much to be desired. People have lost trust by clicking banners once or twice and realizing that there is nothing to see. It is important to earn back that confidence and to understand that people come to an individual web page to read content, not to be pitched or sold something. Mr. Lahav describes this as the ‘lean-back’ mode and states that marketing should take the form of content and not be too pushy about selling something. On the contrary, the ‘lean-forward’ mode – in which a user wants to buy an individual item – calls for quality and detailed ads.

When asked how the Outbrain managed to grow to its current size, Mr.Lahav explained that it happened over time. They started by offering a free service to bloggers, who happened to be the perfect early users/early adopters for the product because they have nothing to lose by trying it out. If bloggers are happy with the sleek design and superb customer support, they write about it and recommend it to their readers, who also happen to be bloggers, and help spread the word, setting in motion the flywheel of marketing. Having become established, Outbrain shifted to professional bloggers and blogging networks. They struck their first deal with Chicago Tribune and then moved on to even bigger publishers, such as CNN. Today, their partners are the “big players” in the content-producing market, as well as small businesses interested in doing content marketing. Outbrain offers both individual and corporate solutions, as well as self-service and account managers.

Outbrain’s business model can be described as simple, yet sustainable. They distribute the personalized links for content, aimed not only at enticing users to click once, but to make a second click attractive. The reader checks out the article, enjoys it and wants to discover more content, so he clicks to read another article. What the Outbrain team tries to create is a trust in their module, making it so that users can trust that the articles behind it will be interesting and relevant. Mr. Lahav believes that maintaining this trust is very sustainable and says that there are sometimes myths behind the term “content marketing”, such as beliefs that it is too pushy or perceived as scam, or that behind the content there is advertising in disguise. Outbrain tries to eliminate this and, by keeping  to very strict content guidelines, they keep their index clean of “bad” links, as well as educate customers on how to write good content for marketing, build strategy, and engage users with your content without receiving the “I was trapped again” feeling.  A newspaper widget promising to take readers to an interesting article, but instead leading them to irrelevant web pages was suggested as an example of the content which erodes trust that users have in the resource.

Mr. Lahav mentioned a few examples of great content marketing, as well. Examples included the Flugtag, which is a Red Bull-sponsored event, and Felix Baumgartner’s jump from space, both of which are aimed at the energy drink’s target audience and offered content relevant to them.  Another classic example of content marketing is soap operas, which broadcast advertising to people who made the purchasing decisions in the family. Mr.Lahav said that most big companies do content marketing nowadays, but it is very important to constantly ask “Why did we create the company?” and “What are the needs that we have to satisfy?”

In order for these efforts to make sense, there must always be competitive advantages. Outbrain stands apart from many companies in the field by choosing to prioritize the needs of readers, who, along with advertisers and publishers, make up the ‘three pillars” of content marketing ecosystems. Readers, by a click of a mouse of by a sweep of the finger, decide if the company adequately fulfilled their goal. Outbrain’s mission is to make their readership happy, even more so than generating revenue. The company believes that this client-oriented strategy actually works to the benefit of the business by generating even more revenue. Mr. Lahav assures that trusted content will be found wherever the Outbrain logo is shown.

One of the secrets to successful entrepreneurship is to see the long-term perspective. As examples, Mr. Lahav mentioned a few companies which he saw maturing over the years. None of them, he said, aimed to generate significant revenue in the short-term and leaving the market. Managing 450 people may seem like a terrifying responsibility for some people, but Outbrain currently employs that many and Lahav believes that regular people can do it. Further, Lahav believes that, if you want to run a significant and innovative company, it is important to remember the value of analytics and big data. Finally, companies should not shy away from sharing with one another. In Israel, as members of the ecosystem began talking and sharing more knowledge, it became easier to do things. In particular, the ecosystem benefits from participation from larger companies within it.

While companies aim to succeed and grow, that does not mean that they should ignore the value of failure. Lahav admitted that their current business model was a result of searching and experimenting. Outbrain initially aimed to write content and deliver it to audiences. When they tried to pitch this idea to brands, brand representatives did not know what to do with it. Thus, they decided that their business model needed to be revised to take its present form.

Lahav also made a few interesting remarks on the topic of fundraising and profitability, stating that people invest in people, not in ideas, so the appearance and the drive of an individual presenting a business plan are very important. Another advantage of your presentation may be some graphs with upward tendencies, which indicate the ability of the team to execute the idea. Lahav also argues that profits are not always a priority, as there are times when the entrepreneur chooses to invest back in his company, and the business subsequently falls below the profitability line.

Outbrain’s stance on globalization is “Go global, stay local”, i.e. instead of having centralized management, a company needs to find a local representative who is aware of local customs and business culture, but who also shares the company’s mission and spirit. Lahav says that Outbrain’s offices maintain the same atmosphere, regardless of the location, which provides the same feeling to him when he visits. Lahav further believes that company culture should be based on principles you care about and that, when it is small, it is easy to show it by your own example. When the company starts to grow, you will not interact with everyone and may lose a personal connection. Thus, there is a need for lectures on corporate culture and strict employment guidelines. Mr.Lahav added that having the sense of asking the right questions and driving people to make right decisions, instead of doing it yourself, is quite a useful skill for an entrepreneur.

At the end of the chat, Mr. Lahav answered the questions from the audience. He encouraged the young entrepreneurs and asked them always to remember why they started their company and to direct their corporate “ship” to the “lighthouse” of their dreams.

Pictures of the event can be found here.

The next meeting within the project Tech Bridge Israel-Ukraine will be held on March, 20th, 2015. Check the social network pages for updates.

Alexander Yemets

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