56. Tom Chavez – giving us the Rapt on Krux and data

Paleo Ad Tech

Tom co-founded the Data Management Platform (DMP) Krux in 2010, and it was acquired by Salesforce in 2016 and became part of its Marketing Cloud. Before Krux, Tom co-founded a company called Rapt in the late 1990s, a yield-management optimization platform that sold into supply chain providers before making a hard pivot into advertising, managing publisher inventory by applying the same mathematical principles used for supply chains. Rapt was acquired by Microsoft as part of its impressive ad tech acquisition binge in 2007-08, when it also swept up aQuantive, Ad:ECN, and more.

Currently, Tom is co-founder of Super{set}, a startup studio with multiple products in its portfolio, all focused in one way or another on challenges around data management. Marquee brands under the Super{set} umbrella are clean-room tech solution Habu and privacy-management tech Ketch.

As Tom tells Marty and Jill in this intriguing episode, he grew up in Albuquerque, NM as the middle child in a house “with a lot of love” and a strong bias toward academic achievement. Although Tom’s Mexican-American mom didn’t go to college, she vowed early on that she’d send all five of her kids to Harvard — and she did.

Tom enjoyed a double major in computer science and philosophy, at the intersection machines and people, and like a surprising number of comp-sci types pursued an avocation for music (which persists). He ended up at Rockwell and then Sun Microsystems as a systems architect in the late 1990s, joining just after the exit of Sun’s legendary founder Jim Clark. Clark of course co-founded Netscape, the first commercial browser, in 1994.

At Sun, Tom developed supply-chain optimization software, and its success at Sun and then Cisco led him to co-found Rapt in 1999. At first, Rapt focused exclusively on the same supply-chain challenges, building software to optimize — for example — configurations for hardware; there was not a pixelated banner ad in sight. But around 2003, he made contact with Yahoo at a time when Yahoo was looking for a yield management solution.

“This is funny,” Tom admits, “but I had no idea what CPM stood for. Literally … So we just learned, right? That’s the game, just learn fast. We started to wrap our heads around advertising and discovered that all of the math that we had developed for the pricing of high-tech components like microprocessors could be pointed directly — and much more productively — [at advertising].”

Then came a hard pivot into ad tech and a slide away from supply-chain. Yahoo became a major customer of the newly ad-tech-ified Rapt, as did AOL and Microsoft.

In 2008, Microsoft lost DoubleClick to Google, failed to acquire Yahoo, and acquired Aquantive for $6 billion, along with the much smaller AdECN and Rapt. Tom worked at Microsoft for a few years on its publisher solutions, alongside the legendary Jeff Green and under Scott Howe. (For more on Microsoft’s peregrinations in the ad space, check out Marty’s oral history here.)

In 2010, Tom and Vivek Vaidya co-founded Krux. (Vivek had been the first person hired at Rapt, as an engineer.) The vision was to focus on the ad world’s data layer, rather than its endpoints (publishers, content). There wasn’t yet a DMP category. Demdex was founded in 2008 and BlueKai even earlier, in 2007, but the latter didn’t add DMP functionality until a few years before its acquisition by Oracle in 2014.

Krux’s go-to-market focused on data sovereignty. “We used to have stickers,” says Tom, “we put them on our laptops … and the slogan was, ‘Krux — it’s your data.'” Data belonged to the principal, not third parties or partners or others who “coast behind you and take your data.” It also emphasized segmentation on useful attributes, building out audiences at vast scale, using some early and innovative AWS techniques.

Salesforce acquired Krux in 2016 for a reported $700 million, after a period of partnership.

After the acquisition, Tom says, “I was sitting on my couch saying, ‘My goodness, this company building stuff sure is fun. Please, God, could there be more than one? … Can we parallelize company building?

“Can we take lessons learned from the prior 20 plus years? Can we capture those lessons and bring them to bear so that when we are working with new teams, as I like to say, why make old mistakes? There are all of these new mistakes just crying out for attention?”