In October 2012, Ahalogy was founded with the goal to scale Pinterest marketing for brands and content creators across industries. Since then, Ahalogy has secured over $4 million in funding and was named Ohio’s fastest growing startup two years in a row.
Michael Wohlschlaeger, co-founder and CEO of Ahalogy, is the man behind all of the technology and data science that makes the company so successful. Cintrifuse had the chance to talk with Michael about his corporate careers, past startups and how to make it between your Seed and Series A funding.
Cintrifuse: To start with, what is Ahalogy and how does it work?
Michael Wohlschlaeger: We believe consumers are in control when it comes to the content they consume. So for brands to reach consumers, they need to invest in great content and distribute it in a meaningful, scalable way. Ahalogy is the marketer’s and publisher’s solution for Pinterest.
Our big, audacious vision is to create a multibillion dollar ecosystem where content creators are empowered entrepreneurs, brands are enabled to be more authentic and end users are delighted by the content we help them discover.
Creating content is the big, scary thing for brands today. In the past, big companies have been really good at creating ads, whether they were TV ads or print ads or digital banner ads. They are really good with heavy brand messages. Short, sweet, to the point and, quite often, delivered in an interruptive manner.
Content is new to them. One of the challenges of content is that prior to creation and distribution it has a known and, quite often, high cost. It also has an unknown value and you’ve got to make the bet all up front. So it’s a new habit and it’s a scary habit.
[pullquote]One of the challenges of content is that prior to creation and distribution it has a known and, quite often, high cost. It also has an unknown value and you’ve got to make the bet all up front.[/pullquote]
With Pinterest, we make it simple for brands to create content by testing licensed content, figuring out what works for them and then laddering up to own that content. We allow brands to stack the deck by creating content they know will work.
CF: You talked about how Ahalogy benefits brands but how does it benefit the content creators?
MW: Content creators are just as important to Ahalogy as the brands. The brands are our customers, the content creators are our partners. A lot of the magical stuff we do for brands wouldn’t be possible without them.
Content creators love creating content but they also have to run technology and run distribution. They have to think about ‘How will I get people to see this?’ and ‘How will I monetize all of this?’. Our vision enables content creators to be empowered entrepreneurs. We allow them to focus on what they do best and we help them perform better. With Ahalogy’s optimization technology and some network effects, we give the average content creator 2-4 times more traffic from Pinterest.
CF: Does this increase in traffic help them monetize their content creation?
MW: Traffic helps them but it’s often not directly related to monetization. It’s a proxy for them to ladder up to other things. Increased traffic gives them better status in the blogging world and they get more interactions with brands. When a brand is out looking for somebody to create content for them there’s tens of millions of bloggers so how do you filter that number? The easiest way is too look at page views. So we’ve always helped them with that.
Now we’re actually starting to connect the content creator and the brand directly to create custom content for the brand.
CF: Kind of like Contently?
MW: A little bit but for the type of content we create there’s a little bit of magic. We already know the content works and we know what audience it works with. We can tell you this piece of content works on this platform with this audience.
[pullquote]We can tell you this piece of content works on this platform with this audience.[/pullquote]
If you need a lasagna recipe, we already have it. And we know it resonates with 25 – 35 year old moms in the Midwest at this income level. It just has to be customized a little bit to make it a Kraft Cheese recipe or Barilla recipe.
We help the content creators get paid for doing what they love which is creating content as opposed to managing a website and figuring out what ad network to join. Everybody thinks bloggers make their money from ads. For the bloggers we work with, ads just cover their hosting costs. All their money comes from custom content, brand ambassadorship and doing the things they love doing.
CF: How did you get the idea for Ahalogy?
MW: I had a previous startup called StyleZEN. We focused on algorithmic fashion discovery. We had really cool technology, a really cool platform and great user engagement but 4 months after we launched, Pinterest hit their stride.
If you go look at Pinterest growth numbers, it’s one of the platforms that truly displays the magical, mystical hockey stick. Slow, slow, slow – then straight up to 10 million users. And that slow growth to 10 million happened in 4-5 months.
Back then StyleZEN was trying to solve a similar consumer need as Pinterest – content discovery. Pinterest was using the wisdom of the crowd and social 1-way follows. StyleZEN was doing it through really cool data algorithms. But Pinterest was meeting the consumer need better.
When that happens you have a few choices. One is fight. Two is give up. Three is look at it as an opportunity. We looked at it as an opportunity. We figured out what worked on Pinterest, built some tools, some processes and some relationships with content creators to make Pinterest work for us.
We launched our tools within StyleZEN and went from 300 followers to 100,000 followers in 9 weeks. We went from nobody on Pinterest to the top half a percent. We knew we were onto something.
[pullquote]We launched our tools within StyleZEN and went from 300 followers to 100,000 followers in 9 weeks. We knew we were onto something.[/pullquote]
One my investors from CincyTech, Bob Gilbreth, was a former brand manager on P&G’s leadership team. He was on my board and we started having the conversation ‘If this works for StyleZEN, what would it do for Procter and Gamble?’
Long story short, he quit CincyTech and joined me as co-founder. We let StyleZEN fade out into the sunset. We didn’t kill it – we just let it fade out into the sunset. And then we launched Ahalogy.
CF: What have been some of your challenges building Ahalogy and how did you overcome them?
MW: Growth is exciting but challenging. 2 years ago, I was sitting with Bob in a corner at Cintrifuse. That was our entire full-time team. We went from 2 people to 22 employees in a year and this year we are close to 60 employees.
So during the last 2 ½ years, I feel like I ran 4 different companies. There’s the zero to 7 people company the 7 to 20 people company, the 15 to 30 people company and the 30-60 people company. They’re all different. So that’s been a challenge because you have to keep learning what needs to be done at each level.
The other challenge is playing in someone else’s ecosystem. When you build on something as amazing as Pinterest, you are playing in their ecosystem and we always need to stay aligned with them.
At times, Pinterest moves and grows extremely, extremely fast and we have to keep pace with them. Other times, we’re growing faster because we’re smaller so we have to wait on them. That’s been a challenge but we continue to build an amazing relationship with Pinterest.
Hiring great people is always a challenge too. No matter what you do, it’s still all about people. You can’t lose sight of that. Every people decision you make has huge positive or negative impacts.
[pullquote]No matter what you do, it’s still all about people. You can’t lose sight of that.[/pullquote]
CF: What was your first job and what kind of lessons did you learn that helped you in your entrepreneurial career?
MW: My first job, and actually I’ve done this in two sections of my career, was doing high distress turnarounds for private equity owned businesses with a boutique management consulting group called New York Consulting Partners.
We got called whenever a private equity’s portfolio company was at risk of going bankrupt. Our job was to save the business.
Three things that I really took out of those two sections of my career. The first is I learned the lean startup model. It wasn’t even invented at the time and it took me 2 years in the startup world to make the connection. The way New York Consulting Partners worked was in the first two weeks we’d come up with some hypothesises and then we’d test them, learn and make it better. So it was iterative development but in a 16 – 32 week high distress environment. That’s the first thing I learned – the lean startup model.
The second thing I learned was that amazing things happen with smart people and good data. It was really the secret of NYCP. I worked with a bunch of brilliant people and the first thing we asked the companies for was their data. From that, we’d entirely rebuild the company.
The third thing I learned was how to work extremely hard. The classic right out of school baptism by fire. Pulling the 80 to 100 plus hour weeks, coming in Thursday at 8:00 AM and not leaving until Friday at 9:00 PM. The 36 hour sprints and figuring out that, at times, it can be fun. Trying to do what most people would look at as the job of three to four people as one 22 year old, you learn what your capacity is from an hours and energy standpoint.
[pullquote]Trying to do what most people would look at as the job of three to four people as one 22 year old, you learn what your capacity is from an hours and energy standpoint.[/pullquote]
Working like that also forces you to learn how to work well. You learn how to work efficiently
CF: What advice would you give to people thinking about entrepreneurship?
MW: Ahalogy is my third software based, venture backed startup. So for people thinking about that kind of startup, I would say take massive risks in bite-sized chunks. Reminiscent of the lean startup model. But the thing the lean startup model doesn’t force you to do is take massive risks.
Do something that people think is really tough like creating a new market or starting in a massive market with huge incumbents that everyone says you’ll never beat. Make sure that if you win, you win big. If you’re not swinging for the fences, I would not do a venture backed startup.
But you have to take these risks in bite sized chunks. That’s where the lean, iterative model comes in. You always need to know what your assumptions are and you need to test those assumptions constantly. Also, as a company and as a founder, be cognizant of the assumptions outside of your wheelhouse. The assumptions that scare you the most.
Attack those first and attack them at all times. Solving problems feels good and we all gravitate to the problems we know we can solve. What you need to do is figure out what problems you can’t solve. You need to figure out where you’re scared. The things outside your wheelhouse are the things that blindside you.
[pullquote]The things outside your wheelhouse are the things that blindside you.[/pullquote]
Also, it’s really a people business even though you’re building tech. With your co-founders, your executive team, your core team, and your first 10-15 employees, you need to find this magical balance – something like 30% the same but 70% different. If you’re exactly the same you won’t have the diversity of ideas or skills to be successful. If you’re 100% different, you just don’t have those common links.
Finally, your number one job as a startup founder is to get as much advice as possible but only use ten percent of it. The trick is figuring out which ten percent to use.
CF: What do you see as the benefits of entrepreneurship?
MW: It allows you to test and expand your limits. Outside of being a husband and father, I don’t think I have done anything in my life that’s scarier and simultaneously the most rewarding thing ever.
You get to figure out what you’re made of and that’s one of the big reasons I got into the entrepreneurial word. I had a really good corporate career before this but I wanted to see what I could do. It’s also a job where you learn and can choose, to some degree, what you what to be good at and what you don’t want to be good at. Especially for the founder.
CF: There’s a lot of talk about the “Series A Crunch”. How did Ahalogy navigate the territory between Seed and Series A funding and, ultimately, secure Series A funding?
MW: Really the Series A comes down to three things – the right team, solving a big problem and traction.
[pullquote]Really the Series A comes down to three things – the right team, a solving big problem and traction.[/pullquote]
We were extremely early in the Pinterest ecosystem and we had traction. We also have a great founding team and we are solving a big problem in an expanding market. When we raised our Series A, Ahalogy’s Q3 to Q4 revenue increased 4.5x because we brought Fortune 50 companies on as clients.
There’s a little engineering and strategy involved with fundraising. But that’s icing on the cake. You have to bake the cake first. If you don’t have traction solving a big problem with the right team, then don’t waste your time fundraising.