The Journey

Startup 3.0: Internet advertising is good. No, it’s bad. Oh wait… it IS good!

May 3rd, 2006   |   by fbadmin

[Startup 3.0] L90, Inc. – Premium Online Advertising Company

Age: 21 – 25
Time Period: 1997 – 2001
My Role: Chief Technology Officer, Technology Founder and Chairman, Advisory Board
High Point: $500 million market cap; 3,000+ customers; 8 billion transactions per month; 65% Internet reach

Warning, this will be a long posting. I am extremely passionate about what we accomplished at L90 in a short period of time with very little resources.

I can sum up three of the most action packed, exciting years of my life in 14 phrases:

1. Bootstrap
2. 7th Horse in a 7 Horse Race
3. All-Star Team
4. Rapid Growth and Dominance
5. Patent Lawsuit
6. IPO
7. Global Expansion
8. Acquirer
9. Leaving
10. Personal Lawsuit and Litigation
11. Acquired
12. SEC Investigation and Securities Fraud
13. Jail
14. Liquidation

After developing one of the most popular sites on the Internet and inventing a technology platform that enabled companies to grow their user base and generate revenue through online advertising, I felt it was time to take these experiences to market on a much larger scale. The next company was an Internet advertising and technology company called L90, Inc. L90 was the premier advertising network on the Internet. We had over 3,000 customers, delivered over 8 billion e-mails and online advertisements per month and reached over 65% of the Internet population through our technology (adMonitor). We focused on Global 2000, blue-chip customers such as Microsoft, Visa, Disney and Proctor and Gamble. At its peak, the company had hundreds of employees, offices around the world, and produced over $100M in total revenue. All of this was supported by the technology platform (adMonitor) that I invented at ReaXions, Inc. (Startup 2.0). We eventually took the company public, raising $112M in an IPO led by SG Cowen.

1: “Bootstrap”

A handful of desks, a handful of passionate people and the “money machine” (a.k.a. the fax machine); that’s how it all started. Our top priority was always clear: get the next order. The very first version of our ad-server software (adMonitor) was being run on my personal desktop computer and plugged into my ISDN line at home. One of the very first ads that our software delivered was promoting the launch of a brand new product from Microsoft called “Outlook” and it was placed on a very small website called eBay. A few months later, eBay called us to say that they were pulling all of the advertisements from their site because they were distracting and they didn’t want people to leave their site. I said “I don’t understand… that doesn’t make any sense… how will you make money?” I guess they found another way… Starting with companies like eBay and Microsoft, we built our business one customer at a time.

2: “7th Horse in a 7 Horse Race”

We were not the first to build an ad-serving technology platform. In fact, we probably had hundreds of competitors including seven that were either very well funded with significant venture capital or publicly held (e.g. DoubleClick, 24/7 Media, AdForce, Engage, Flycast). They had products that were already in the market, piles of cash, tons of customers and revenue, seemingly endless resources and lots of employees. We had customers and revenue. I remember meeting one of our larger competitors. They were interested in acquiring us, so I flew up to Silicon Valley with our CEO. I was 21 years old at the time. I walked into a big, flashy, modern office with tons of people running around (it seemed like they had a “money machine” on every desk). I walked past a large glass window that housed hundreds of computer servers with glowing, flashing lights; which ran their ad-serving technology software. Their server room was larger than our entire office and our entire ad network was being run on the exact same type of computer that their receptionist used as her desktop computer.

I sat in a meeting with the two guys that ran their technology teams (they were old enough to be my dad). One guy was the creator of Microsoft Excel and the other created the first network for IBM. (No, that’s not intimidating for a 21-year old on their first trip to Silicon Valley) They proceeded to tell me how they had an engineering staff of over 50 people (and rapidly growing) and millions of dollars invested into infrastructure. I had zero engineers, zero infrastructure, zero venture capital and a desktop computer running our ad-serving software on an ISDN line.

On the flight back, our CEO asked me what I thought. I said “we’ll beat them.” To be honest, I don’t know where my response came from because the truth was that I was very intimidated and had no idea how we would beat them. Either the pressurization in the plane was off or my gut was trumping logic.

Two years later, we were unstoppable, taking their customers and everyone else’s. They ended up going out of business shortly after our IPO. DoubleClick was the only one in front of us and we were stopping at nothing to beat them. And, we were very quickly chipping away at their customer base, too.

3: “All-Star Team”

We won because we had the best team. Period. Every person on my team was A-class. We didn’t hire resumes and experience, we hired smart, good people who wanted to be entrepreneurs. Everyone was a “friend of a friend of an L90 employee” and it made all the difference in the world. In fact, many people had no prior experience at all in the jobs that they were hired to do. But, every one of them rose to the challenge and ended up mastering their jobs. No one wanted to be the first person to leave the office, everyone took an enormous amount of pride in their work and no one wanted to let their “friends” (co-workers) down so they always jumped in to lend a hand.

Sometimes people tell me that this was the “dot-com days” and everyone was just trying to get rich. I refuse to believe that. I think our team was second to none and it showed in everything that we did. I think it is evidenced by the fact that many people from our team went on to be very successful; some are successful entrepreneurs, some are holding very high level executive positions at successful companies and some started non-profit/charity organizations.

A team like that is addictive, I have been in rehab, dealing with withdrawal ever since.

I’m proud of all of them. We had fun; worked hard and played hard.

4: “Rapid Growth and Dominance”

We refused to lose. We took it personally. We grew from a handful of employees to hundreds of employees worldwide in just a few years and the winning attitude was never diluted. There were a lot of growing pains, but there was no obstacle too big for us to conquer. In fact, the bigger the obstacle, the more pumped up everyone got. The interesting thing is that we never looked at our competition, we never did any kind of competitive analysis on the products — we wanted to be leaders, so we acted like leaders – we focused on our customers, not our competition.

5. “Patent Lawsuit”

We were on the IPO track and our #1 competitor (DoubleClick) filed a bogus patent-infringement lawsuit right before our IPO. They were trying to block the success of our IPO. It was ugly. We had lawyers everywhere; digging through files, reviewing all of our emails and mounds of paperwork. This was a multi-million dollar lawsuit and it could have crushed our business. But, we never let it phase us. We did what we needed to do, adjusted and moved on. In fact, we were so agile that we were able to readjust major plans, literally overnight. We thought that DoubleClick was going to file the lawsuit in Virginia because we were planning to open a new data center there. One night, we hopped on a red-eye flight to Virginia and moved millions of dollars of heavy, high-end computing equipment out of Virginia in less than 24 hours and redeployed it to Austin, Texas. In the end, we settled the bogus lawsuit in our favor.

6: “IPO”

Business as usual… While the prospect of an IPO was exciting, we never let it consume our minds or let it affect our behavior. It was just another step towards conquering our market. There were a lot challenges leading up to it (e.g. raising capital, underwriters backing out, extreme criticism, patent lawsuit from our competitor, etc.) In fact, we even had to change our name (original name was Latitude90) because Latitude Communications was going to sue us because our names were too similar. So, almost overnight, we became “L90.” To top it all off, on the day of the IPO, the market took a big dip (January 21, 2000). Even through all that, we had a very successful IPO – the offering share price went from $8 per share to $15 per share and we raised $112 million. The market capitalization eventually peaked at almost $500 million (half a billion dollars!)

The IPO came and went, we had parties, we celebrated and took a deep breath. Then, we went back to work – harder and faster than ever. I believe our entire team bought their friends and family stock. I have yet to talk to anyone who did not hang on to it well-after the IPO. That either shows extreme passion for the potential of the company or poor investment advice – I like to believe it is the former.

7: “Global Expansion”

We had offices everywhere in every major city in U.S. (Chicago, New York, Miami, Detroit, San Francisco, Los Angeles, etc.) I spent a lot of my time traveling amongst all of the offices. We were also expanding overseas which were exciting times. The most important thing that I learned as we were expanding was that it is extremely important to learn the nuances of the different cultures in different cities in order to hire the right people. New Yorkers (i.e. aggressive) are very different than people from Los Angeles (i.e. laid back) – if you hire a laid back person in New York, they’ll get run over…

8: “Acquirer”

There was a period of time where I had a stack of business plans on my desk of companies we were considering acquiring. I was 23 years old, I barely knew what a business plan was… yet, I found myself evaluating business plans put together by experts, investment bankers and lawyers. What the hell did I know? To me, it was simple, does this move our business forward? If so, buy them (at a reasonable price, of course). Funny thing, we were moving so fast that there were few companies that fit this very simple criterion.

9: “Leaving”

During our IPO process, one of the common questions was “What if Frank gets hit by a bus?” While many told me that I should have been flattered, I took this as an extreme insult. How could we be a real company if it is perceived that one individual is so critical and such a risk to its ongoing operations? I viewed that perception as personal failure. From that point forward, my #1 goal was to eliminate that perception and make it so that the company did not need me. I succeeded. I was satisfied that I achieved my goal, then, there was a period of extreme sadness. At that point, I knew that I needed to move on. My job was done.

I wanted to stay very close to the company, so L90 invested in my next venture (Startup 4.0: Zondigo) and I became Chairman of the Advisory Board, found my replacement and moved on. This was one of the most difficult things that I’ve ever had to do. My team felt like I was letting them down, they were nervous, scared and confused. During that time, some of them had very sour feelings over my leaving – I think they felt that I abandoned them. I believed that I was doing what was best for them and what was best for the company – they needed to grow and they all stepped up to the challenge. It turns out that they saw something that I didn’t. As you’ll come to learn in the next few paragraphs, everything changed after my departure. I doubt it had anything to do with my leaving, I certainly wasn’t anything special. I think it was just bad timing, but I still often wonder what would have happened if I stuck around. It is, perhaps, the only decision I’ve ever gone back and questioned.

10: “Personal Lawsuit / Litigation”

One day, everything got weird. I was planning to sell my stock in the company and I came to learn that there was a problem with my stock. After getting the run around from the CEO, I was advised to take action to remedy the situation. I ended up having to file a lawsuit against the CEO and the company. This was the first and only personal lawsuit that I had been involved in. How could I sue the company that I was so passionate about building? It didn’t make any sense to me – I was very confused, the Board was very confused… I was planning my wedding at the same time that we were in litigation. It got to the point that I was worried that a process-server would show up on my wedding day with a counter-lawsuit. It turned out that the CEO wasn’t honest with anyone, including myself and the Board. He was trying to hide something. He is now in jail (details to come in the next few paragraphs). After he was fired, I ended up settling the lawsuit with the company and now have great relationships with the people who were once “sitting on the other side of the table”. Funny how things can change so quickly…

11: “Acquired”

After my departure, L90 sold the technology platform (adMonitor) to DoubleClick. It was a dumb move and it did not make any sense. How can you run an ad-network without an ad-serving technology? Turned out that the CEO had his own agenda and he was able to convince the Board that this was the right thing to do. There were later suspicions that he pushed to sell the technology so that he could cover-up some of his wrong-doings. I brought my concerns to the Board; however, we were in litigation over my personal lawsuit, so I did not have much influence with them. The acquisition went through and that was the start of a terrible chain of events.

12: “SEC Investigation and Securities Fraud”

I met the CEO for lunch at Jerry’s Deli in Marina Del Rey, CA, across the street from L90’s headquarters. My purpose for the lunch was to confront him on the things that “didn’t seem right.” Halfway into lunch, he said “Are you wearing a wire?” I said “No, what are you talking about?” he said “lift up your shirt, I want to see that you aren’t wearing a wire.” I was so confused… The guy that I used to go surfing with on weekends, considered a friend for years and someone that I had an enormous of respect for, had turned into a completely different person right in front of my eyes. Huh?

One week later the SEC announced that they were investigating him for securities fraud. What the hell happened? Who was this guy? It all started making sense. To this day, I am not angry with him (even though everything that we had all worked hard for was being destroyed) and I don’t think he was a bad person, I think he simply made some very poor decisions. He was fired and a few others resigned from the company. I think there were some very good people that were caught in the cross-fire and now the CEO and a few others are in jail.

I helped the company’s Board to clear the company from the mess and cooperated with the SEC. Testifying at the SEC, even when you are one of the “good guys”, is not a good feeling and I hope it is something that I never have to experience again. All I can say is that walking into a dark room with gray walls and sitting in front of a bunch of government officials and a team of lawyers firing questions at you for hours is not a comforting experience.

13: “Jail”

It is sad to see good people go to jail, even though some of them made some very bad decisions. Maybe they truly are bad people and I am just the ultimate optimist, but I have trouble accepting that. I understand why it needs to happen. Many people lost a lot of money, including myself and many of the hard-working, passionate people on my team. I just simply wouldn’t wish that on anyone, and I feel especially bad for their families. I’ll probably never know the whole story on who did what, why and to whom — but I still have a lot of respect for some of the people that had to go to jail over the whole fiasco. I hope, for them, that they are able to bounce back and when they get out that they do something good for the world.

14: “Liquidation”

The SEC investigation and the acquisition of L90’s technology by DoubleClick destroyed the future growth potential of a very good company. This was the opposite of your typical “dot-com bubble bursting” story. L90 was a great company with a good business model (profitable before any venture-capital funding and the IPO), it had a lot of money in the bank and it ended up being shut down (by choice). The advertising services group was sold to AskJeeves and then the company began a liquidation process to give tens of millions of dollars in capital back to its shareholders. The story is still not over yet. The company is still technically in business, awaiting the final stage of the liquidation.

Wow. I don’t know what to say… I am not happy with the way things ended, as I don’t think it reflects what a great company we had created, but I wouldn’t trade anything for all of the positive experiences that came from it.

Today, at my current company, StrongMail Systems (Startup 5.0), I am still working with some of the superstars from L90. In fact, my co-founder (one of my greatest friends), Tim McQuillen, and I met at L90 (more on this later…).

I will never forget my experiences at L90 – I was inspired every day by the team that we had created. It was unfortunate that, for many of them, their hard work was tarnished and their dream was destroyed. Sometimes I still feel that I let them down by leaving when I did – had I not left, I could have potentially prevented the mess that was created after my departure.

Today, a company like L90 would be thriving with the success of online advertising.

To the team at L90, you were all superstars and I hope that you all go on to achieve your dreams in the future!



Venture Capital Funding: $2M angel (Initial), $12M (total)

Exit: $112M IPO, led by SG Cowen; technology acquired by DoubleClick; advertising services group acquired by AskJeeves



Think big. Be scrappy: The bigger we got, the scrappier we became. Just because a company gets big, ideas get bigger and the employee and customer count grows – it doesn’t mean that things need to become more complex. We were developing a new feature or product a week with an engineering team of less than 20.

No shortcuts!: What goes around comes around. Shortcuts always come back to bite you. In the case of L90, a select few took some short cuts and they are now paying for it with some of the best years of their lives.



reason for success: The Team

mistake: Leaving

challenge: We were the 7th horse in a 7 horse race when we started. There were a number of companies (DoubleClick, AdForce, LinkExchange, 24/7 Media) that were either public or well-funded before we even got started. We were late to the game and had a fraction of the resources that they did – beating them was one hell of a challenge.



smarter: I would have better protected my financial interest in the company.

dumber: I would not have hired a good lawyer to “right the wrong.”

to do it all over again: I would not have left when I did and could have potentially protected the company from the mess that a few people caused after my departure.


Next on deck: Startup 4.0… “Wireless is the next big thing – hurry!”