How This Ad Tech Company Used $1m+ In Mezzanine Debt to Grow Profitably

Mitchell Reichgut

In Episode #786, Nathan interviews Mitchell Reichgut. He’s the CEO and co-founder of Jun Group. Prior to founding Jun Group in 2005, he led Bates Interactive, the online unit of Bates Worldwide Advertising which is now owned by WPP. As general manager and creative director, he helped grow Bates Interactive into a 70-person integrated unit with clients such as EDS, Warner-Lambert and many others. Before joining Bates, he was the creative director at Think New Ideas. He began his career as Art Director at Grey Advertising where he created print and TV ads for clients. Throughout his career, he’s worked with major brands in the industry including Procter and Gamble, Parker Brothers, Reebok and others.

Famous Five:

  • Favorite Book? – Anything written by Seth Godin
  • What CEO do you follow? – Jack Welch
  • Favorite online tool? — Google Calendar
  • How many hours of sleep do you get?— 5
  • If you could let your 20-year old self, know one thing, what would it be? – Mitchell wished he knew the kind of discipline it took to make things work

Time Stamped Show Notes:

  • 02:05 – Nathan introduces Mitchell to the show
  • 03:08 – The “Jun” in Jun Group means truth
  • 03:11 – Mitchell founded his company believing that advertising can be transparent, honest and deliver tangible results
  • 03:19 – Jun Group’s job is to get millions of people to engage with videos and visit websites of the Fortune 500 brands
  • 03:38 – Nathan reads Jun Group’s website line
  • 03:52 – Mitchell gives an example of a spaghetti sauce brand that targets Hispanic mothers who are 35 and up, in the USA
    • 04:01 – Jun Group will use the video of the brand to connect with their target market on their phone, tablets and computers
    • 04:16 – Customers can opt-in in exchange for something like rewards points
  • 04:38 – Jun Group is an in-app solution
  • 05:37 – Jun Group only charges when someone chooses to engage and the client gets the value of what they’re paying for
  • 06:06 – When you don’t interrupt people, they tend to watch to the end
    • 06:08 – Jun Group gets 90% of people to watch a 30-second ad until the very end
    • 06:13 – 3-5% of the viewers are visiting the brand’s website
  • 06:50 – From the publisher, the brand will appear in a mobile app
    • 07:29 – Each app integration creates an interaction depending on the app user’s behavior
  • 07:46 – In web environment, app developers pay CPI
  • 07:52 – Jun Group never had a pop-up and they never interrupt
  • 08:14 – Jun Group has a sophisticated tech platform that works well with app developers
  • 08:21 – “Apps are complex business”
  • 08:41 – Jun Group was bootstrapped until 2015
    • 08:47 – Then they had a private equity deal with Howard Capital
    • 08:58 – They’ve raised $28M
    • 09:09 – They’ve decided to raise because they found the right partner
  • 09:55 – Growing an adtech business is quite unusual and requires hard work
  • 10:02 – Jun Group has brands, app publishers and consumers that they need to take care of
  • 10:27 – Jun Group is an adtech platform and not really an agency
  • 10:30 – Most adtech platforms lose money and want to grow fast
  • 10:49 – Jun Group has been growing slowly, but steadily and profitably
  • 11:13 – The revenue comes from commitments from brands and media buying platforms, some are per project and some are per annual commitment
  • 12:00 – Jun Group’s pricing model varies depending on what the ad is
  • 12:34 – A CPM (cost per thousand) in the industry usually costs $8 up
  • 12:40 – Jun Group charges cost per engagement which is more than the average CPM
  • 13:22 – Mitchell left Bates and started Jun Group at home
  • 13:31 – Mitchell didn’t really plan to be an entrepreneur
  • 13:53 – Mitchell get into the adtech industry with his partner when it was just starting
  • 14:12 – By 2008 and 2009, Jun Group was earning $1-2M in revenue
    • 15:08 – Jun Group usually take a percentage from the sales they make
  • 15:39 – Most of the money goes back to the campaign
  • 16:05 – Jun Group had debt with WTI or Western Technology Investment that helped the company grow
    • 16:34 – The debt was in millions
  • 17:05 – The media spent through Jun Group’s system
  • 17:18 – Jun Group is still cash flow positive
  • 17:53 – Jun Group really had a strategic partnership with their seed round
  • 18:44 – The Famous Five

3 Key Points:

  1. Have the right partners who will not just provide the funds but help the company grow.
  2. Adtech isn’t an easy industry with fast growth; it takes time and the right model to thrive in it.
  3. It takes firm, hard discipline to make things work.

Resources Mentioned:

  • Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives