The Quintessential Alley Cat - Interview with AlleyCorp's Kevin P. Ryan

In his khaki pants and wire-rim glasses, Kevin P. Ryan does not look like an average rock star. But make no mistake, in New York technology circles, he would give Keith Richards a run for his money. Ryan started his Internet career at United Media where, as senior vice president of business and finance, he helped restructure the company to focus on Internet licensing, and in 1995 launched the super successful Dilbert.com, based on the popular comic strip created by Scott Adams.

In 1996, Ryan left United Media to join DoubleClick, an Internet advertising firm, as president, and he subsequently held the title of CEO. In 1998, DoubleClick went public, and shortly thereafter, Ryan and his team changed the company’s focus from representing websites and selling advertising space to offering online ad-serving and management technology. DoubleClick was sold in 2005 for $1.1 billion to Hellman and Friedman LLC, and Ryan soon stepped down as CEO. DoubleClick was acquired by Google for $3.1 billion in March 2008.

After building a company that would eventually be worth $3 billion dollars, some people might retire and take up golf. But for Ryan, that would be like Keith Richards hanging up the guitar after Beggar’s Banquet. In 2007, after leaving DoubleClick, Ryan, along with former DoubleClick CTO and co-founder, Dwight Merriman, founded AlleyCorp.

AlleyCorp is a network of five Internet companies that consists of Business Insider, a blog network that includes Alley Insider; Gilt Groupe, an  invitation-only online community that offers members access to fashion- and luxury-lifestyle items at prices up to 70% off retail; Music Nation, an online music site that connects bands and musicians with fans; ShopWiki, a shopping search engine that provides shoppers with advanced web-crawling technology; and 10gen, a technology company that is building an open source stack for cloud computing, including an app-server and a database. NY Report editor-in-chief Robert Levin sat down with Ryan to discuss how to build a $3 billion company, and if he thinks he can do it again.

Robert Levin: How did you get your start in the Internet business?

Kevin P. Ryan: I was working for a company called United Media, and we owned the rights to Dilbert, Peanuts, and a lot of comic strips, and we had trouble selling them to newspapers. So, in 1995, we came up with the idea to put them online, that way we could go directly to the consumer and not have to go through the newspaper.

We created this website, and it became extraordinarily successful, partly through luck, because Dilbert appealed to that high-tech, first-mover audience. Because we needed revenue, I put advertising on the site and started to sell t-shirts. Step by step, and not with a grand strategy, we had an e-commerce, advertising-supported website before most people had thought of the idea.

In 1996, I launched Dilbert.com, which was probably one of the top ten sites at the time, or close. At the time, I thought that this was the most fundamental trend I was going to see in my lifetime. At the time, a very small percentage of people were on the Internet, and there were no search engines, but you could see that it was all coming, so I decided to start an Internet company. I thought, “Everyone and every business will to be on the Internet someday.” That sounds obvious today, but it wasn’t obvious at the time.

RL: How did you make the leap from Dilbert to DoubleClick?

KR: I believed that advertising was going to drive content online, not subscriptions, and I wanted to start a company that was an ad network. There were only two or three ad networks in existence at that point. One was a predecessor of 24/7 Real Media and the other was DoubleClick. I went to visit them both and came out of the DoubleClick meeting realizing that there was a huge technology component to dynamic ad-serving.

The founders of DoubleClick had created a technology that I didn’t know how to create at all. I had never created a technology product. I changed my mind and decided to join them instead of starting my own company because they had a good head start, and because the technology component is very important. I’d rather join the leader than start my own company and be number three or four.

RL: At DoubleClick you changed the business model shortly after going public. Can you tell us a little bit about that?

KR: It was a very difficult decision. We started off as an ad network, and we had a great piece of technology that did ad serving. We started unbundling that and selling the ad technology directly to customers. When we went public, the ad serving technology was 10% of our revenue, and within a year and a half after going public, we decided to get rid of the business that had been the other 90% of our revenue.