2020 was a good year to be in the tech and digital business, and a tough year to be in the traditional agency world.
That’s according to You & Mr Jones founder David Jones, who announced Tuesday his company raised $260 million in a series B round completed by U.K. investment firm Merian Chrysalis, bringing its valuation to $1.36 billion.
“The old category of marketing services firms lost $60 billion in market cap over the past few years. The new category has companies doing well from a revenue and valuation perspective,” he said, pointing to companies including S4 Capital and The Trade Desk.
To manage this growth from a people perspective, You & Mr Jones has hired Paulette Forte, formerly senior director of human services at the NBA, as its first-ever chief people officer. The firm has grown from two employees at launch in 2015 to more than 3,000 employees around the globe.
You & Mr Jones, which shuns the word “agency” in favor of being called a “brand tech group,” announced the news on the back of a strong Q3 with 27% year-on-year organic growth to “several hundred million dollars.” Jones said. That compares to the sagging fortunes of the major holding companies, which have all experienced declining organic growth in light of COVID-19.
“What people get wrong is that they think we're building a new-model agency,” Jones said. “We will never own an ad agency.”
Instead, You & Mr Jones focuses on content creation at scale, powered by technology, as well as data strategy and analytics for global brands, including Unilever, Facebook, Adidas, Target and Nissan Renault.
The group owns companies that use tech platforms to scale access to talent, including production company Mofilm, which connects brands to more than 10,000 global content creators, data company 55 and Oliver, which helps brands in-house content studios.
You & Mr Jones also takes minority investments in tech companies, including a $20 million investment in Pinterest four years ago, as well as a stake in ad tech firm Beeswax, which recently sold to Comcast’s FreeWheel for undisclosed terms.
“All of our revenue is in digital or mobile,” Jones explained. “All of the [holding companies] were built during or after the TV revolution. We were built after the mobile revolution.”
You & Mr Jones will use the new funds to continue to expand the business globally. The company operates in North America, Europe, Asia and Latin America, but sees opportunities to bolster its capabilities in the latter two markets.
Having a global presence is crucial in order to work with global brands as they shift their business away from the traditional holding company model, Jones said. “If you can only operate in one country or city, you are part of the problem.”
You & Mr Jones will also invest in growth areas including e-commerce, influencer marketing, data and digital media. The company is currently hiring for 300 open positions, half of which are in e-commerce.
As You & Mr Jones continues to scale, Forte will formalize its approach to talent. “When you have that scale of growth in a compressed time period, a lot of the systems, processes and procedures in place around talent aren't there,” Jones said.
In her role, Forte will also focus on diversity, equity and inclusion, on which, like most companies in the industry, You & Mr Jones has a renewed focus after a tumultuous year. Half of the company’s board is represented by females, but “we can and should be doing more in terms of racial diversity,” Jones said.
You & Mr Jones recently invested in Blacktag, a Black-owned content creation platform for Black creators. Jones also pointed to companies like MoFilm that are able to tap into a wide bench of global, distributed talent to ensure directors, talent and filmmakers represent BIPOC audiences.
“Part of the advantage of a people-powered market like that is you can tap into talent that is as diverse as the people who buy their products,” he said.
As for a safe return to the office, which many major agencies are grappling with, Jones said most of his people don’t come into the office anyway as they either work remote or on site with a client.
A ‘structural decline’
While a $1.36 billion valuation might seem high for a services firm, Jones argues it’s because the company is not in the same category as the holding companies.
You & Mr Jones has people to interact with clients, but the execution piece can be done entirely by technology, allowing the firm to employ fewer people and charge for some elements of its work on a SaaS-like recurring revenue basis.
“We're hybrid,” Jones said. “There is a reason the valuation is very different from a traditional advertising company. Investors understand it's a different category.”
Like many ex-holding company executives, Jones, who ran Havas from 2009 to 2014, sees the industry as facing a structural decline, and likens the traditional holding companies to Kodak during the mobile phone camera revolution.
“What you're living through is the structural decline of an industry and the creation of a new category,” he said. “Most major global brands have been saying ‘We need to accelerate our digital transformation,’ but 2020 pushed them over the edge.”