Rivals2nite, besties tomorrow: the unlikely beginnings of one of New York's hot adtech alliances
AppNexus and LocalResponse are two well-known names in New York tech, partly because of their growing stronghold on the respective RTB and social mobile markets. And partly because their founders, Brian O'Kelley and Nihal Mehta, each have their own mini-cult followings of adtech fanboys and girls.
Their companies, which act as a gateway for the buying and selling of display ads (AppNexus), and connecting advertisers with mobile customers via social media (LocalResponse) work together to make mobile and display ads more contextual. But O'Kelley and Mehta weren't always boosting each others' bottom lines. In fact, back in the late 90s, they were bitter rivals.
It didn't help that the 1999 college grads came from rival schools: O'Kelley graduated from Princeton and Mehta, Penn. After graduating, Mehta launched Philly2nite, a nightlife guide and city search. Amid the bubblicious dotcom days, he raised venture capital and tried to get the "2nite" brand trademarked so he could build a "2nite" empire. "We wanted every city plus "2nite.com," he says. "The early dot com days were all about 'Look at me, I have so many domain names, ha ha ha!'"
But in the process of trademarking and buying the domains for city after city plus "2nite," Mehta found his genius play on the word "tonight" was not so original. In LA, O'Kelley had already launched LA2nite and was quickly amassing West Coast cities to his network. Mehta tried to sue but came up fruitless because O'Kelley had already bought the domain names. So both sides resorted to idle threats, shit-talking and posturing. "We were really young -- 21, 22 years old," Mehta says. "It was funny, we were literally arch rivals."
If the Wayback Machine is correct, the two sites looked almost exactly the same, too. Apparently a black background with neon headlines connoted nightlife fun! in 1999.
Mehta ended up renaming his network to the equally as generic UrbanGroove and transitioned into a syndication model, where he partnered with local city guides and created networks around them. After the dotcom bubble burst, he'd heard O'Kelley had been fired from his own startup. "So we were pretty happy about that," he joked. That is, until he tried to raise another round of funding for his own company and found it to be impossible. UrbanGroove collapsed. Mehta and O'Kelley both found themselves attracted to different parts of the advertising word: O'Kelley to realtime bidding and Mehta to mobile.
O'Kelley learned how "the art of arbitrage" related to advertising. He eventually started RightMedia, a desktop ad exchange, which he sold to Yahoo in 2007 for $680 million.
Meanwhile Mehta founded SMS advertising company Ipsh!, which in 2006 sold to Omnicom in what he called "not a $700 million exit, but still a good exit." He realized he may have been a bit early in trying to monetize mobile experiences. The company he started next, LocalResponse, has a lot more tools to work with, namely, the smartphone.
Each with an exit under his belt, O'Kelley and Mehta's "2nite cold wars" became ancient history. They reconnected under slightly more mature and friendlier circumstances in New York. Mehta's wife, Reshma Saujani, ran for Congress two years ago and O'Kelley hosted a few fundraising events for her alongside Square and Twitter founder Jack Dorsey. O'Kelley also donated space in the AppNexus office to 20 girls participating in Saujani's philanthropic project, Girls Who Code.
O'Kelley and Mehta have also invested along side one another in several angel deals, including Tapap. But most importantly, they are business partners.
Beginning in May of this year, the companies struck a partnership that Mehta says brings "deep integration" to the two services. LocalResponse combines the "intent data" it takes from social media posts with AppNexus's powerful audience data. "They have the reach and we provide the context," Mehta says. The two don't compete, for now at least. AppNexus deals primarily in desktop ads and LocalResponse deals primarily in mobile data, but together they can present buyers a more complete picture of their target audience. It may not have the tantalizing drama of a heated rivalry between two young nightlife startups. But that's okay -- this chapter of the story will probably have a better (and more profitable) ending.
[Illustration by Hallie Bateman]