Three Four years ago, Maria Alegre landed her first job in Silicon Valley, as the first person in the business department of iPhone gaming startup Tapulous. Today, the 27-year-old is the cofounder and CEO of 14-month-old Chartboost, a San Francisco-based company she believes will fundamentally change the way that mobile game developers operate.
Ambitious as it sounds, Alegre already has an impressive number of adherents, starting with Sequoia Capital, which led a $19 million round of funding for her company in January. (Chartboost has raised $21 million altogether, including from SK Telecom, TransLink Capital, and former Tapulous investors XG Ventures.) The company has also attracted as its chief revenue officer Clay Kellogg, most recently the head of Google’s mobile advertising platform.
And more than 12,000 games publishers – up from 800 at the beginning of 2012 – have demonstrated some faith by using Chartboost in several ways: by using the company’s technology to cross-promote each others’ apps; using Chartboost to directly buy and sell ads against each others’ traffic; or a third way – and the only way that Chartboost currently makes money — by opting in to Chartboost’s network, which allows the developers to more broadly buy and sell ad inventory. (When a customer discovers a new game through the network and downloads it, Chartboost takes 30 percent of the price paid by the advertiser for the new user.)
Yet Alegre says what the company offers today is “just the beginning” – that not only is Chartboost already planning its second office in Amsterdam, but that later this year, it will roll out a new product that’s “not just incremental” but “completely new.”
I sat down with Alegre at Chartboost’s expansive office yesterday to learn more. Our conversation has been edited for length and clarity.
There are three ways that developers use Chartboost to drive traffic to their games, two of which are free. What percentage of them are opting in to your platform and paying, versus using the free offerings?
Normally, we see about one third of our traffic on each, though some companies use all at the same time. I’d say that 60 percent of [our games publishers] use all of [our offerings] and 40 percent use just the first two.
Developers’ priorities are always different depending on the life cycle of a game. They start with a big hit, then [traffic] slows down. And while [they’re] preparing their next game, they just want to turn on [our] network and forget about it.
I’ve read that you’ve been profitable in the past. Is that still the case?
I’d rather say that we’re growing. We had 36 employees in January; now we have 50 and we’re still very understaffed.
You don’t like being characterized as an ad network. Why?
In the end, what makes us different that [our customers] don’t have to sell [their souls] to the devil. If you’re playing a game and you get another game promoted to you, it’s relevant; it doesn’t feel like an ad. Also, we [help our customers to] make [ads] look and feel like the game behind [it]. So it’s not going to be annoying.
Versus showing them an ad for toothpaste, right? But aren’t game developers afraid of sending their users to another game publisher by letting them advertise in the background?
We call these [game makers] frenemies because they’re competing but at the same time, they respect each others’ games. Each is also aware that they aren’t going to be able to launch three new games in a weekend. And users want three new games every weekend; they’re always looking for new content; It’s part of the freemium experience. But when a user feels spammed [with an incongruous toothpaste ad], they get annoyed. It creates a bad relationship with that game; you feel violated in your game experience.
If you’re selling through the network, we show you exactly what games are being promoted, what the click-through rate is, how many downloads you receive after a click, and who is paying more from which countries, among other things, so you can see performance. So we help you do the math so you can use that data to negotiate.
What are these developers paying each other for their traffic?
The minimum is 50 cents, but the average is probably $1.50 per install, and it can go up to $5 an install.
By install you mean someone sees an ad at a gamer’s site and downloads the new game. What’s the install rate?
It’s five percent.
So when a developer pays another developer $2 per download, you don’t make any money. If it’s through your network versus a direct deal, you take 30 percent. Given the information you’re providing developers, is there any concern that they’ll begin operating around you?
Well, using our network, they get data on who is buying and who is performing well, which changes constantly. Also, in the end, the game developers’ business is to create games. They don’t want to be negotiating deals every weekend and optimizing and ensuring their users aren’t tired of a particular game, and we make those jobs easy for them. They just turn [us] on and start collecting money, while always having that control and transparency and freedom to decide when to turn things off.
Well, this office is five times bigger than where we were in December [and we plan to fill it with staff]. We’re also building a new product…around in-app commerce and analytics, [something that will help] developers be smarter about [virtual currency, for example]. And we want to build more things for games. In the end, our vision is to become the business engine for game makers.
In a gaming company, you have a studio where you have all the creative people thinking about game mechanics and characters and creating fun. Then you have the platform team that’s building the back-end infrastructure to power all these games. But the priority is always on the creative side, while the platform team is always under-resourced and slow and hacky. So we decided to take that platform team outside the company and start building the tools that, as developers, we wanted in order to build more powerful businesses.
So you’re really not an ad network.
If you talk to any of our competitors and Audi or Ford offers them $5 million to advertise a car, they’ll take it; we won’t.
Photo: Image of Alegre, courtesy of Shutterstock. Images of Chartboost offices, courtesy of Connie Loizos.