Business Brains

Upstart | Yaron Galai, Outbrain

Upstart | Yaron Galai, Outbrain

Posting in Design

The entrepreneur's latest startup Outbrain is working on something he wants for himself, a digital content recommendation service so personalized the reader won't know what to read first.

It becomes apparent moments into our mid-October meeting near New York's Union Square that digital publishing entrepreneur Yaron Galai stares at his biggest critic in the mirror every morning.

The guy is a voracious and eclectic reader with a serious "completionist" complex: when he picks up an issue of his favorite magazines Wired or The New Yorker, it is with the intent of reading it cover-to-cover.

He browses perpetually for new articles and authors (asking me for my own recommendations), and is a huge fan of Instapaper, the app that lets you bookmark articles from anywhere for reading anywhere on the Web or an e-reader. Actually, I wasn't supposed to tell you that, because Galai doesn't want anyone to mess around with such a simple, functional service.

That doesn't even account for the books he may be reading in hard copy, on his electronic reader or in Web format – it doesn't matter where, just as long as it is synchronized to the latest page.

At the time of our conversation, two were vying for Galai's attention – the 2004 German science fiction novel "Cloud Atlas" and the non-fiction bestseller "From Animals Into Gods, A Brief History of Humankind" written by a fellow Israeli.

In essence, Galai's latest startup Outbrain is working on something the college dropout desperately wants for himself – a service that tracks reading habits across Internet media sites and uses analytics and algorithms to suggest related articles or video content that might pique your interest.

Publishers such as Atlantic, CNN, Fox, Reuters, MSNBC, US Weekly and USA Today are using Outbrain's digital content recommendations engine for two big reasons – it helps improve visitor engagement (keeping them on the site longer), plus they get a share of the revenue generated by any outbound links that are followed through. One recent count estimates the number of pageviews served by Outbrain at around 6 billion per month.

The value to the reader is more intangible, although it comes down to this: Galai wants Outbrain to make suggestions that are so relevant and compelling to a person's personal preferences, that he or she doesn't know what to read first.

"I want to know someone is putting a deliberate effort into making recommendations just for me," he says.

Two places Outbrain links will never: to advertising sites that require the visitor to give up personal information for some sort of registration form or to the home page for some sort of promotion or advertisement.

"Fundamentally the most important thing for Outbrain is that users trust our links," Galai says. "People need to feel OK to click on something. It comes down to this: are we building user trust or are we eroding it?

Outbrain is actually an idea the 42-year-old serial entrepreneur first began mulling more than two decades ago, although he started and sold three other companies before getting to this one: search-engine marketing company Quiqo, bought by AOL for $363 million;  "floating ad" technology play Ad4Ever; and NetWorks Web Design.

Co-founded by Galai and Ori Lahav, who leads the research and development in Israel as Outbrain CTO, the company now employs about 180 people. As CEO, Galai runs the U.S.-based sales and marketing division stateside. So far, it has raised about $65 million in venture capital.

Aside from three years living in Los Angeles while his father was teaching business at UCLA, Galai lived in Israel until he was 35. He moved to New York about eight years ago at the behest of an investor in one of his earlier companies – the Boston-based venture capital firm was concerned about his ongoing service as an officer in the Israeli naval reserves. Negotiating deals while simultaneously calling the shots from a base in the Gaza Strip might understandably be considered a risk factor.

All Israeli citizens are required to serve in Israel's military and to devote one month per year to reserve service thereafter when they are in residence in the country. At one time, Galai's obligation was even more intense – he was just one of three people with a unique specialty in anti-submarine warfare. "We had to coordinate so that one of us was in the country at any given movement in time," he recalls.

Even now, Outbrain has to consider this when hiring in Israel – it's not unusual for six engineers to be called up for service at the same time. But the team just manages around it.

Galai's ties to the Israel's navy run deep – he served with both his co-founder and his first investor. His training is reflected in his management style, with limited patience for unnecessary pomp and circumstance.

"The Navy is one of the only units that I know of, one of the only army units, where you and your team are totally on your own," Galai explains. "If you're in a tank and there's a situation, there are other folks that can come with munitions or medical help. In a ship, you're literally doing everything on your own. I think as a start-up you are also literally on your own. In a small-ship situation, there is not much importance to rank and titles. There is a lot of importance to trust and respect."

Galai is suspicious of the "self-inflicted and artificial insanity" of many startups – he wants the majority of Outbrain's employees to see the company through to its logical conclusion, which could take years to pull off. "I'd love for my team to run that marathon with me. You can't cultivate an insane culture with insane hours and all that, and be running a marathon at the same time," he says.

Plus, truth be told, he wants to spend as much time as possible with his three young children. "We're a pretty laid-back startup," he laughs.

During our interview, an employee pauses to challenge Galai to a match on the ping-pong table next to where we're chatting. During the interruption, my eyes are drawn to a vivid cloud-blue mural spanning one wall and to the modern paintings decorating other parts of the space – odd investments until you realize they are all rented for a modest fee on a rotating basis from another New York startup, Artsicle, in order to brighten up the work environment.

Outbrain's focus on the long term means potential partners and investors might find Galai's team kind of hard to push around for short-term results – a philosophy he learned on the job with his late mentor (also a contact from his naval days).

"He taught me first and foremost that regardless of what the admiral would say should be done, that we should do the right thing," Galai says. "In the worst case, we would get slapped for doing it, but we would hold to what we stand for. As an entrepreneur, it's one of the most important things to remember."

Galai admits he hasn't always done this in the past – even though he has made millions from his previous exits, he hasn't always been proud of the way the products and technologies morphed over time due to outside influence.

So, even though he would love to spend more time exploring another passion, sailing in places like Turkey or Greece or even just around New York Harbor, Galai plans to stick around to help perfect Outbrain's value proposition.

That includes improving the algorithms and extending the recommendation service so that it is perpetually synchronized across all points of access that someone might use to read content – even if it takes another 10 to 15 years to get it right.

"I'll know it when we get there," he says.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure