Mr. Ryan serves on the boards of Human Rights Watch, the NYC Investment Fund and the INSEAD business school. He is also a member of the Council on Foreign Relations and the Yale International Council.
We sat down with Mr. Ryan at his Manhattan headquarters to find out about his journey to success and how he maintains balance between work and family life.
Amanda von Goetz: You are known as a pioneer in the Internet industry, first with DoubleClick, and now with Gilt Groupe. How did you first become involved with technology?
Kevin Ryan: It was somewhat accidental. I was working for a large media company, E.W. Scripps, and we owned the rights to Dilbert and a lot of comic strips, and we had a challenge, which was: how do we show our comic strips to people if the newspapers won't take them? How do we get people to see it?
We started thinking--this was very early, in '95--the Internet was a way to go directly to the consumer, to actually go around the newspaper. The newspaper actually was the roadblock. The newspapers didn't want to take them, because, for example, if you're in Kansas City, you may not know Dilbert. But, conversely, if you take a comic strip out that people have been reading for a long time, then people get upset.
So we set up a web site to broadcast our comics, but of course we realized there was a cost associated with doing that. Traffic started growing like crazy, and I started thinking, "How do we pay for this?" We began selling advertising on the site, and we started making merchandise. This grew into one of the first advertising-supported, commerce-enabled web sites.
I realized that this was going to be one of the fundamental trends I would see in my lifetime. It sounds obvious now, of course, but at the time, in 1995, there were no search engines yet.
I went to the parent company and said, "You should invest in my ideas, and I will build up a huge Internet business for the company." And they said: "No. It's risky, it'll cannibalize our business; we're not sure it's going to be really big." So I said, "Okay, but I'm so excited about this, I'm going to go start something on my own."
AvG: You speak very knowledgeably about technology; did you have a technical background?
KR: No. I had no technical background. I've worked with technology a lot. All these Internet businesses that I've launched, I have launched with Dwight Merriman. He is unbelievably technical. I think he's one of the greatest Internet engineers in the world. At Mongo, he and one other engineer are really the technical geniuses behind that. When we launch a technical company, he's very involved.
Ying Zhu: Can you talk about DoubleClick's explosive growth period?
KR: From the beginning, DoubleClick grew very quickly. It was very exciting. Summer of 1996 we had ten people, and four years later we had two thousand, in twenty-five countries. There was incredible interest and demand. It was also brutally competitive. After eighteen months, we had thirty-seven competitors doing ad serving. So what you saw was that you had to be the biggest. Being the biggest was strategically competitive, because it meant you had the lowest cost, the best product, because you had hundreds of engineers working on it, making it better, you had critical mass.
Then, when the Internet went through a really terrible period, we survived because we had the best product. It was a very difficult time for everyone, but I think the single best thing we did there was hire great people. We do that here, today. Everyone thinks they've hired great people, but you can only really see that over time.
Now, ten years later, in the industry, if you go to venture capitalists, they'll tell you that the entire ad serving space is completely dominated by ex-DoubleClick people.
YZ: What was your inspiration for Gilt?
KR: I had grown up in Europe, and had seen that this business model really worked on the Internet there. I couldn't think of a good reason that it would work in Europe, and not work here. So I changed it and adapted it here, which is unusual because most Internet companies start in the U.S. and then go abroad. But once in a while, there's a great idea, like Skype for example, that starts elsewhere. I think over time there will be more of that.
AvG: What would you say is the largest difference in Internet usage and perception between Europe and the United States?
KR: Here, in the U.S., it's just a much bigger business. It's interesting, because in Europe in particular, there are very few big successful Internet companies. Today, I don't think there is one publicly traded company in Europe that is worth over a billion dollars. There are fifteen in the United States, probably about fifteen in China. Part of the problem is that there isn't really a market when it comes to content or commerce, because of different languages, so if you start something in Germany and it takes you two years to get going, by the time you think: I'm going to go into France, there are already four French competitors; you're already at a disadvantage. So you can't quickly go across language barriers, whereas here in the U.S., you can grow really quickly.
AvG: How did you arrive at the name "Gilt"?
KR: Whenever I come up with a concept, I always go through the same process, which is that I don't finalize the name. First I say, "Okay, I'm going to launch a new company," and then before I launch--which is probably six months from now—I'll come up with a name. During that six months, you learn more about your own concept, sometimes it evolves a little bit, maybe it becomes a little more upscale, a little more this or that. Are we going to go after the women's market only? men's? both, eventually? So usually I like to wait a little while.
What I liked about the name "Gilt," was that it was short, easy to say, a play on "gilt-edged" things, and the tie-on of "guilty" [pleasure] as well. I think it was a good name. [smiles]
AvG: What was the greatest challenge Gilt had to overcome?
KR: No one I can think of in the history of business, was able to create a brand that was perceived as being luxury, but sold at a discount. "Luxury" and "discount" - it's just a contradiction in terms. Take TJMaxx for example. You may like TJMaxx, but you don't use the word "luxury." It's a discount store. It may have some nice stuff, but it's a discount store. QVC is not "luxury."
So in the early days, when I set out to do it, everyone said it couldn't be done, but we knew we had really accomplished something, when, a year and a half in, there was a survey done by an independent consulting firm and they asked consumers to list luxury websites. There were only two sites--aside from Luis Vuitton and Chanel--that came out on top as luxury sites, and they were Net-A-Porter.com, and Gilt.com.
YZ: Will we see a Gilt IPO any time soon?
KR: We will probably go public at some point, but certainly not any time soon. As I've said, we have never had one internal meeting about going public, which tells you how far along we are in the process. But I've said maybe one to three years from now; I think it's very possible. Right now, there are many alternatives to going public.
Going public is less attractive than it used to be. Most people on the outside think that somehow going public means you accomplished something. Going public is just where you sell 10% of your shares to thousands of investors. Well, I could sell 10% of my shares to private investors. Sometimes, that's more attractive, either because of valuations, or because of fees.
YZ: What are your views on the current U.S. economy?
KR: I am probably more cautious than most people, not just on the U.S. economy, but on the global economy. I think that we are still working out serious imbalances, and those imbalances have to do with amounts of debt, and commitments that various governments – on the city, state, national and international levels – have made, that I don't even think are fully accounted for correctly. We're seeing that in Greece, and we are seeing that in the United States, and those haven't been worked out. If you don't work them out, eventually it will cause problems. Right now in the United States, we are seeing too much debt on the consumer level, so the only way to de-leverage is to spend less, and that hurts the economy. So I think we are going to go through a ten-year period where economic growth is not going to be great.
YZ: Has the economic downturn affected your business directly? Do you think consumers are more likely to look for a bargain?
KR: In Gilt's case, it's more complicated, because on the one hand, if the economy does badly tomorrow, there are three things: some consumers might say: "I can't buy any more clothes, because I just lost my job." So that hurts us. On the other hand, there is more unsold merchandise in the stores, which provides more inventory for us. Third, some consumers might say: "I'm not going to buy full-price anymore, but I'm more interested in spending extra time to get discounts." So generally speaking, during a downturn, TJMaxx does a little bit better. And that's why it's a complicated answer for us.
YZ: What is your view on the high U.S. government debt?
KR: I think that it's a problem, but not threatening. The U.S. Economy is so powerful and is actually under-taxed, contrary to what some people think. We're actually not in danger of not being able to pay that debt, but it's still a huge issue, and it's something we have to change. We need to spend less on defense, we have to spend less on entitlement programs, and over time, in various forms, we're going to have to raise taxes. And when those three things happen, the U.S. Economy will be OK. I am less optimistic that the U.S. government is in a position to actually solve those problems.
AvG: Given the current economic climate in the U.S., and the uncertain outlook for recent graduates, what is your advice for today's budding young entrepreneurs?
KR: I don't think my advice would change at all. I don't think that everyone coming out of college should start a company. I think the most successful companies are started by people who get experience in the domain first. There is a lot of press about the outlier types – Bill Gates, Mark Zuckerberg – who did it when they were twenty years old. But these are the exceptions.
Most people worked in a restaurant for ten years, and then worked their way up and started a restaurant, same with car dealers--everything else. So if I were just coming out of college now, I would first figure out what industry do I want to be in, pick something I think I would be really good at.
Find something you love is your best bet. I always tell people that the best thing you can do is something professionally that you actually do on your own time, you read about on the weekends. If you read about travel, if you're obsessed with it – you'll be a better person than your competitors, because you'll know more.
YZ: What are your views on the growth in emerging markets, especially China?
KR: It's crystal clear that the growth for the next twenty-five years, for the world, is mostly going to come from outside of the U.S. and Europe, disproportionately China and India, but now we're seeing incredible growth in Brazil, Turkey, Poland, and so I think that will continue.
AvG: You've mentioned your partnership with CTO Dwight Merriman. Can you describe some of the qualities you feel make for a great partnership?
KR: I don't think there's a formula. One, you need a lot of trust. I've had partnerships with people who were really good friends, and also with people who I'm not really close friends with – but we're very complementary. You can build up trust over time. I think it's a lot like a marriage--I've been married for twenty years--and a lot of making a marriage work is making sure that it works for the other person. If you spend a lot of time and energy making your spouse happy, and vice versa, you actually will be happy.
I've had an unusual number of long-standing partnerships. At DoubleClick, Kevin O'Connor and I worked together for nine years. David Rosenblatt and I have worked together for eight years. Dwight [Merriman] and I have been together fourteen years. Our head of HR here at Gilt and our head of PR came over from DoubleClick, so we've been working together for ten years.
AvG: What is your greatest business lesson learned to date?
KR: There's only one lesson, which is: hire great people.
Everyone says they do that, but they don't really. If you ask someone if they hire great people, then you can look at it and say, "OK, let's look at your calendar this week. Did you spend more time on hiring or more time on sales?" If they say, "Well, I spent more time on sales, because that's our business," well – then, you don't really think hiring is the most important thing.
You spend the most amount of time on the most important thing. So I interview people everyday.
Hire great people; delegate accordingly.
AvG: You're obviously passionate about founding, growing and selling businesses.
KR: I'm actually not passionate about selling businesses. I'm passionate about the first two.
I do sell businesses if it makes sense, and there are really two reasons to sell a business. One is if you feel that the business needs to be much bigger, and so it would be better as part of something else. In the case of Panther Express, there were lots of competitors, we had to decide: do we think we're on the way to becoming the number one player, a big player – or, dynamics look very tough, we should sell to one of the other players. That happens. You have to be very realistic about that.
And sometimes economically there are times when your business is more valuable. There was a moment, when Google bought DoubleClick, everyone wanted to buy DoubleClick because it was the only player on the block, and so its value was very, very high.
YZ: Have you had any failures?
KR: There are all kinds of failures along the way – companies, products that you launch, people – I have a long list of things that didn't work. A lot of it comes back to personnel choices: I didn't hire the right people. Most of life is execution. There are successful businesses that launch everyday. There's someone launching an ad agency this week that will probably be very successful, even though there are already hundreds of ad agencies.
How can you do that? They have a group of great people who are focused on one market. There are lots of things that can go wrong over time. Sometimes the dynamics in the industry overwhelm you. If everyone is going to give away your product for very little money for the next three years – I mean, as a start-up, you're doomed. And there's nothing you can do about that.
Sometimes you just have to say realistically, "I don't like the dynamics here of what's happening."
YZ: How do you balance work and family life?
KR: I do balance it, actually. People are always surprised. They think I have a lot of things going on. Since the beginning of DoubleClick, I have always taken five weeks vacation, because I want to spend time with my kids and my wife. I think that's really important, and I encourage other people to do that as well. I take the kids to school two or three days a week. I try not to miss my son's piano recitals. And I try to make sure that on the weekends, I don't do a lot of travel. I think that's just a choice.
I knew when I got involved with building DoubleClick that I had to make some changes. I always tell people "You can do anything, but you cannot do everything." It means you have to make decisions and choices.
I knew I wanted to be successful with DoubleClick. I knew I wanted to come out of the experience, still happily married, and with great family relationships. And, I knew I needed to stay in shape, because if I don't stay in shape, if I don't feel good physically, if I don't feel good about life in general, I don't have the right energy level. So I knew those things were important.
What did I not do? Twenty years ago, when I was single, I spent more time watching sports, watching TV, and going out with friends. All of those things I cut back quite a bit. You just have to make choices.
YZ: What do you do to unwind when you're feeling stressed?
KR: I don't feel stressed, actually. Certainly it would be family time and working out. I do triathlons. I love skiing and really getting out there, having fun! I'm also involved with a few non-profit things, and I think it's important to have things that pull you out of your day-to-day routine and give you more perspective. And travel.
AvG: Where are your favorite places to travel?
KR: I spent a good year of my life traveling on my own. At every point when there was a break, I would take three months and go travel around. I spent about a year in Asia. We travel all the time. We just got back from Iceland the week before last; I loved it! I was in London on business, Iceland for a week with the family, two days in Paris for a wedding, and two days in Milan for the men's fashion shows on business.
We spend time in France--my wife is French--so every summer we're there for a little bit. I love that.
Recently, Christmas in Galapagos, it was really great, and the year before that, Easter Island. I love traveling!
YZ: Thank you so much for your time!
KR: Thank you as well.