On Friday, Mount Lookout-based Ahalogy announced that it had been acquired by Quotient Technology Inc. in a deal for up to $50 million.
While the initial move was for $20 million Quotient could end up paying the additional $30 million should Ahalogy, a marketing technology platform that helps brands connect seamlessly with their consumers’ interests, achieve a host of financial goals by the end of 2019’s fiscal year.
The acquisition is being hailed as a huge win for the Cincinnati ecosystem, with many hailing the deal as already one of the year's biggest.
Ahalogy was a graduate of local accelerator The Brandery and counted public-private investment entity CincyTech and Vine Street Ventures, led by The Brandery’s co-founders, as among its many investors.
"'We think the time is now. Disruption is happening. It's a good time to leapfrog ahead by doing this.'"
The company launched in 2012 as Pingage, a nod to the fact that it initially specialized in Pinterest marketing. Since then, Ahalogy expanded into other social media platforms, launching two core products, Muse, a source of influencer trend data, and Brandables, a platform for influencer marketing campaigns.
The acquisition was a natural move for Ahalogy, said its CEO and co-founder Bob Gilbreath in an interview with Cincy Inno.
"It was kind of based on a loose long-term relationship building throughout the year," he said, adding that Quotient, a Mountain View, Calif. tech company ran in the same CPG and retail spaces as Ahalogy, and as a result, the two teams were already well known to each other.
Ahalogy was impressed with Quotient's work, and it didn't hurt that another similar company, New York-based Crisp Mobile, was also acquired by Quotient. Gilbreath knew its CEO Jason Young for a while, and he trusted his judgment.
Eventually, "discussions turned into how we could fit into what Quotient is looking [to do]," Gilbreath continued. After significant conversations, the Ahalogy team realized it "could jump 10 steps ahead in achieving [its] vision" by joining forces with Quotient.
What does that look like? The acquisition will help bolster Quotient’s performance media solutions abilities, ultimately allowing them to increase its presence in the influencer marketing space — one that’s projected to reach $10 billion by 2020. Meanwhile, Ahalogy and its 45-employee team will stay in the Queen City, led by Gilbreath.
But why move forward with an exit instead of say, working towards another round of funding?
"We definitely weren't looking to sell," Gilbreath said. "We’ve come in off our best year ever — [we] turned profitable in early 2017."
He added that there were a handful of companies interested in Ahalogy, but the company was more interested in a figuring, "how can we skip a couple steps ahead?" instead of making a quick buck.
"One of the things we thought about, living and breathing in the CPG retail space was, 'We think the time is now. Disruption is happening. It's a good time to leapfrog ahead by doing this,'" Gilbreath said.
"Raising more money certainly is the playbook," he continued. However, "you have to look at all the different options and not what everyone else does."
The move, however offbeat, is something that has investors thrilled.
"This type of outcome is exactly why The Brandery was created," said Tony Alexander, General Manager of The Brandery. "I often use Ahalogy as a good example why we look to invest in certain types of founders [over just ideas]."
He elaborated, highlighting Ahalogy's winding road to its current mission.
Initially founded by Michael and Megan Wohlschlaeger, with Gilbreath initially serving as their mentor at The Brandery, Ahalogy had its first life as a product that used machine learning to take photos of receipts and predict what users wanted to buy. While that idea didn't get traction, it eventually morphed into StyleZen. It too used machine learning, this time on Pinterest. This became the company that the duo presented at The Brandery's Demo Day in 2011.
With Gilbreath's help, however, the Wohlschlaegers realized that StyleZen's backend technology, not its current model, would be the most transformative for users. Ahalogy was born.
"These guys, we just gave them the push in 2011," Alexander said. "It's really a testament to Bob and Michael and the rest of the team there and what they've built."
In addition to the fact that it's a celebration of local entrepreneurs, Alexander added that Ahalogy's acquisition is a testament to the strength of the local innovation ecosystem.
"Exits like this, Roadtrippers' exit [illustrate that] it takes five to eight years to be an overnight success," Alexander said. "It's a long journey to get to an exit like this."
The silver lining? Cincinnati.
"You can start it here, build it here," Alexander said. "You don’t have to move to Silicon Valley or Chicago, New York. You can build a team and scale it … for the types of amounts that Roadtrippers and Ahalogy have done." (Roadtrippers, it should be added, was acquired by Elkhart, Ind. recreational vehicle manufacturer Thor Industries Inc., in a February deal valued at around $50 million.).
Alexander and Gilbreath said that the tight-knit members of the #StartupCincy ecosystem made an irrefutable difference on the company's success and eventual acquisition.
"It's a nice community where we’re all helping each other," Gilbreath said. "Nobody’s self-made and if these organizations [like Cintrifuse, CincyTech and more] didn’t exist, we wouldn’t be here."
The culture in #StartupCincy also allows the kind of teamwork that wouldn't happen anywhere else.
"We take people right out of college and throw them right into an amazing experience," Gilbreath said. "We are able to do something that would take 10 years [in another city]."
And, as aforementioned, Ahalogy will stay in the city that built it, along with the 120 members of Quotient's Cincinnati branch.
It was the tech company's devotion to the area that made the acquisition an even sweeter deal for Ahalogy.
"'Hey, this is already a company that believes in Cincy,'" Gilbreath said.
This attitude has inspired the confidence of investors and employees alike about the deal, so much so that I can hear the murmurs of revelry in the background of my phone interview with Gilbreath and Alexander. It was the day of the news went public, after all.
"It’s official and it’s Friday, and we’ve had a good week," Gilbreath said.
