hot_seat_kapurGravity sponsored our PandoMonthly with Chris Dixon last night, and it was appropriate timing for them. This month we’re focused on two trends that are central to the company’s very existence: Software remaking surprising corners of the business world and LA’s potential to build real tech companies.

Gravity is trying to save the world of content by creating software that knows what you want and surfacing it whenever you go to your favorite news sites, and it’s seeking to monetize that technology via a modern type of ad network filled with sponsored content, not simply dumb links. The company’s pitch deck must be a buzzword mashup of big data!, machine learning!, native ads! and sponsored content! – and it’s all being built out of LA.

It’s easy to get the promise of something like Gravity — we all want more relevant content, and journalists all want to be able to write for a smart audience, rather than pander to the lowest common denominator.

But personalization has been tried throughout the history of the Web with little success. Has Gravity really hit on something sustainable? Does the world really need another ad network? And is being a member of the MySpace mafia really something to brag about?

Below, we ask our PandoMonthly sponsor’s CEO Amit Kapur the hard questions.

Why did you start Gravity?

Part of it goes way back to my career at MySpace. I had been with the company for a long time, since it was a startup and after the acquisition. Towards the end, the culture had changed so much. It was not very entrepreneurial, not doing a lot of innovation. I had this sense that it was the right time to go and do something on my own. We had been kicking around a lot of ideas for a while and wanted to find the next thing beyond social.

We looked at how information and content discovery works online, and at first it was very much professionally curated and that gave rise to Yahoo and AOL and Google and companies that organized content through links. Then the second phase was social, and over the past 10 years, one of the primary mechanisms for discovering and organizing content was through friends. To us, where things are going to move next is where information is organized for you. It leverages things like semantic analysis and machine learning to enable us to process massive amounts of data to make every experience personalized and adapted to you.

Particularly in mobile, where the screens are smaller, and it needs to be highly personal. So many content companies are seeing 20-50 percent of their activity on mobile and they need to be presenting the right information. We should be preempting your need to search.

I remember talking to Dave Morin when he left Facebook and I left MySpace, and we both got what each other was trying to do, because we were both building mechanisms to make huge feeds of information more personal.

Are you totally focused on content?

Mostly. We’re working on a test for Gilt, but as a startup it’s important to be focused on one opportunity and expand from there.

Rather than selling your software to publishers, you basically work like an ad network serving up a new kind of ad unit — sort of a modern day ad sense for native and sponsored content. But aren’t publishers pretty burned by ad networks?

Well, one thing we’re focused on is delivering quality experiences in terms of both organic customization results and sponsored content. The folks we’re working with on the ad side are premium names like AOL, the Gap, and McDonalds. And for the most part what we’re offering isn’t competitive with the type of advertising publishing partners are selling. We only make money if we are showing stuff they want to read, so we have to make it a good experience. If we don’t produce valuable pieces of sponsored content it won’t be sustainable.

If you go back to the early days of display or social ads, there was a bunch of crap in there early on, all the “punch the monkey” ads and then all those Zynga ads all over Facebook. If there’s any merit to the model, we’ll figure out as an industry how to focus on quality. We think readers would like a cool video about a new car, or if you’re selling detergent, putting out tips for the eco-friendly home.

Back when everyone was freaked out about TiVo and DVRs people talked about how if ads were more entertaining people wouldn’t fast-forward and would want to watch them. I’m still fast-forwarding ads. Is it even possible to have an ad that is also compelling content when it comes to most brands? I mean maybe for a cool car, but what about other products or services that are less sexy? 

Sometimes those implementations tend to be forced, and forced creativity doesn’t usually work. One of the things we do is go around the Web looking for interesting content someone has already created that brands can sponsor. If you go to YouTube, there are reviews for any consumer package good content out there. My sense is there is content that is compelling around whatever you are trying to advertise, it’s just not going to be interesting to everyone. Absent a technology like Gravity, where we know what people are interested in, this definitely wouldn’t work.

As a journalist, the reason I like what Gravity is doing is that I hate how blogs have forced media to appeal to everyone, because then we get SEO and articles on Lady Gaga pantsless in Paris. It seems one of a few potential approaches to making quality content that not everyone needs to read a viable business again. 

Exactly. When personalization is done right, it will help all these publishers and all these traditional media do their jobs better. They can keep creating content, and we’ll make sure the right audience sees it. There’s also a library of archived content that people never see because of way things are organized today — where it’s all chronologically organized. Most publishing companies don’t even have a memory attached to their users. In time, we want to use that kind of memory to add more personality to the experience like, “Welcome back! Here’s what you missed.”

There’s a lot to like about the thesis, but personalization has always been easier promised than done. What worries you about your business now?

At this point scaling out the implementation and the ad network. This is the first year we’ve hire sales people. We’re focused on getting more publishers in the system and building an ad sales team.

You’re based in LA, how hard was it to raise money initially? 

I was fortunate to have a strong network in the Valley after going to Stanford and working on MySpace early, so we had a bunch of options. That said, people were very interested in trying to get us to do something social. What you think might be next can be a tough sell. People were dubious, because companies had already tried to do personalization in the past.

Why’d you decide to stay in LA?

So when we left MySpace, it was at its peak, making $800 million in revenue and profitable with 130 million users worldwide. We debated about whether we should stay in LA or move north to the Valley. I really like the Valley, but my other partners were from LA, and we knew a bunch of smart people down here, so we decided to stay.

But the whole Silicon Beach thing can be annoying. Some people want to talk up this beach-startup lifestyle and it’s like, “Fuck you. I work my ass off, and we’re trying to change the world.”

Gravity is actually a real technology company. How much does the media obsession with LA’s subscription commerce and celebrity endorsements bother you?

It does bother me. I know there is real technology being developed in LA. I get that those companies are higher profile because of the celebrity aspect, but there is very much real technology being developed here. My sense is that some of these companies are in a stage where we’re starting to grow and in the long run people will identify us with the LA market as well.

Can we talk about the MySpace mafia? People in LA list MySpace chops as if it’s a bonus, but to people outside LA, MySpace doesn’t exactly seem like it’d be the best line on a resume. Are we too hard on MySpace?

Well, it depends on what era of MySpace you are talking about. There are people who were at Yahoo early on when Yahoo was a badass company, and those people were really talented. But if you talk about the Yahoo of a few years ago, most people would probably say it wasn’t the most talented crew.

When talking about the MySpace mafia, I’m usually thinking about the early guys who were there when it was a startup and when it sold. Chris created this culture of entrepreneurialism and risk-taking, and that’s what lead to the growth of MySpace. He was great at hiring smart people and empowering them, even if they didn’t know how to do that particular job. They’d let them run with it and do their thing. Tom was a copy-editor before Chris hired him. He just saw that potential. I had one year of experience outside of school, and I came in to run business development. I had no idea what I was doing. That crew was really strong.

The company grew so fast that the quality level went down a lot. That gets worse when you become part of a bigger entity.

[Image via businessweek]