What do you get when you combine the opportunity to work in an exciting, emerging industry with a company culture that allows you to thrive?

Phil Schraeder

Phil Schraeder

You might get what you’ve always wanted. That’s the case for Phil Schraeder, CFO and chief operating officer of GumGum, an advertising technology startup.

On the excitement side, while advertising technology broadly is a fairly well-established industry, GumGum’s niche within it — the “in-image” advertising business — is not. Still, less than five years after settling on its business model, the company is already profitable and expects this year to crack the $100 million revenue threshold.

The company uses proprietary image-recognition technology to match up advertisers with publisher websites. The system is able to recognize images on such sites that can help GumGum’s clients, the advertisers, get their messages to their target audiences, says Schraeder.

Here’s an example of how it works:

  • A client of GumGum, Axe Body Spray, is a consumer products brand that primarily targets males aged 18 to 34.
  • Sports Illustrated’s website, SI.com, publishes an article, with photos, about the final game in the career of Los Angeles Lakers superstar Kobe Bryant.
  • GumGum’s patented image-recognition platform, which accesses billions of images per day, identifies a photo of Bryant as content of a type that is in demand among Axe Body Spray’s target audience.
  • Based on agreements between GumGum and both the publisher and the advertiser, GumGum places an interactive ad across the lower third of the image.

Much of the value the company provides to its advertising clients is based on judicious application of the ads, says Schraeder.

“Even if the client wants to get a million impressions on image content, we’re not going to just throw it on every image of Kobe Bryant that we have access to,” he says. “Our goal is to find ones within the qualified image set that make the most sense for the client’s ad to to produce the best performance for the client. It has to be the right photo for the right advertisement aimed at the right consumer at the right time.”

The advertiser pays GumGum for the ad placement, and part of that revenue is shared with the publisher.

Generally, Schraeder notes, publishers GumGum works with hadn’t previously generated revenue from their images. “Digital imagery is some of the most consumed content online,” he says. “But for most of them, this is found money.”

A Tale of Two Hats

Wearing his CFO hat, Schraeder says he provides the most value to GumGum by staying on top of the price points that are palatable to both the publishers and the advertisers, “and how we make that work within our strategy of maintaining a high margin on this product.”

The finance chief portion of his job is “more defined” than the COO role, he notes. There are specific times set aside weekly or quarterly for activities like reviewing forecasts and preparing for board meetings.

On the operational side, the role is “more fluid,” Schraeder says, “given that I’m focused on wherever I think there might be a need or a deficiency. Operationally, I think you have to have an open mind. I sit down with the operational team and see exactly how they’re doing their job every day, and also where there are opportunities for me to make their lives easier, maybe even at the expense of the most prudent financial decision.”

That’s very much in line with the company’s culture, which Schraeder says is perfect for him.

The CEO, Ophir Tanz, “just beats to his own drum,” says Schraeder, 39. “He’s a visionary, but he doesn’t really have any traditional expectations of what a CFO should be, or a COO, or anybody. He just looks at talent, and he really gave me a long leash.”

Even his less-fluid finance role, compared with his COO post, is relatively fluid. “I’m not just in my office running financial numbers,” he says. “I’m out entertaining with clients. I’m a very visible CFO to them, and to our publishers and partners. And I get involved in business dealings outside of what you might expect.”

For example, Schraeder recently completed a major deal with Time Inc. “I’m not in business development, but I led that deal, negotiated it, and got it done. Ophir just lets me run with something like that and own it, even if it’s not necessarily within the four corners of what a CFO or COO would do.”

His involvement in operations allowed him to “customize” the deal, knowing what its impact on operations would be. “I understood the financial impact for us, but I also understood exactly what additional infrastructure we needed to support such a large, robust, premium partner as Time,” Schraeder says.

Toe in the Water

GumGum was founded in 2008 but spent its first three years perfecting the technology. Schraeder came aboard in 2011, just as the company was finally getting ready to go to market.

A $7 million Series B funding round in October of that year was used to begin building the company’s sales force, but “we started very slowly,” with just a couple people on the West Coast, Schraeder says.

“I was in board meetings where they were saying we needed to do more hiring,” he says. “And I said, we’re not hiring right now because we have only one opportunity to make a first impression. We need to hear the market feedback and understand the market size.”

GumGum also learned a lot about price points and how the company was performing, he notes. With such learning in hand, “we were able to really define a known, successful business model before we started hiring a lot more people and going big out of the gate.”

That, according to Schraeder, is how the company was able to achieve profitability in short order. “When we did aggressively expand, it was with a really defined value proposition,” he says. “And that helped us be very strategic with how we spent our cash.”

Home Sweet Home

At GumGum, Schraeder says he finally has an employer that embraces who he is. “I had a passion for business,” he wrote in a May 2015 article for Adweek. “However, there were very few LGBT role models I could look up to in corporate America.”

His first job out of college was with KPMG in Chicago, but he quickly realized he didn’t enjoy that work and would not be successful there. So he quit and moved to Los Angeles without a job, with the thought of getting a finance job within the entertainment industry, which is more LGBT-friendly than most. And he did that for several years, at a few different companies.

Still, he wrote in Adweek, “It was a struggle to find a job where I could be entirely open about my life without any fear of discrimination.”

At GumGum, Schraeder finally found the right environment. The tone set by CEO Tanz permeates the organization.

“In the culture we’ve created, we always want people to be who they are,” Schraeder says. “Who they are at home, we want them to be here at work. We want them to share their interests and their stories, and to connect at a human level.

“I’ve been given the opportunity to be part of such a great team that lets me be myself, be goofy and silly, and talk about my personal life and my interests. That just makes me want to work that much harder and makes me that much more passionate about making sure we’re ultimately successful for everybody that’s a part of this.”

He says his motivation for writing the Adweek article, as well as part of his reason for speaking with CFO, was to help “change the way millennials and those in the LGBT community think about executive positions, because not all of them are necessarily what you’d expect.”

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