Barely a year after Gurbaksh Chahal was forced out of his CEO post at RadiumOne over domestic assault allegations, he’s back at the head of a new ad tech company, Gravity4, which aims to compete on an even playing field with enterprise marketing platforms like Adobe Marketing Cloud and Salesforce. Gravity4 announced last week that it has expanded to Canada and Australia, but it will likely face the same questions about its founder and its growth strategy that it has in the U.S.
After just 10 months in operation, Gravity4 doesn’t yet have the market presence of Adobe or its competitors, but it has amassed many of the capabilities that marketers are looking for in an all-around planning and buying platform, largely through acquiring smaller startups. So far it’s picked up nine technology companies specializing in cross-device data management, e-mail automation, paid search, CRM, and social retargeting, among other things. Last month it launched the first version of its “high-frequency marketing OS,” bringing together much of that technology in a single sign-on cloud platform.
Markus Templer, a former senior account executive at Rocket Fuel and Gravity4’s new Canadian sales lead, said the platform’s pricing model will be a big differentiator in the marketing tech category. He said it doesn’t charge any software-as-a-service fees for access to its platform, but earns 100% of its revenue from the percentage it takes on media that buyers purchase. That means many of the tools it offers are free.
Co-founder clouded by controversy
Gravity4 has gained a reputation for being disruptive, though not in the way that investors usually look for. Shortly before launching the company, its soon-to-be-CEO Gurbaksh Chahal was brought up on 47 criminal charges for allegedly beating, kicking and nearly suffocating his girlfriend, in what became one of Silicon Valley’s most sensational dramas to date.
According to multiple accounts in the press, the court eventually dropped all but two of the charges against Chahal after ruling that the prosecution had obtained security footage of the incident without a warrant. He pled guilty to two misdemeanour charges of domestic violence and battery, and was sentenced to three months’ probation, as well as community service and a domestic violence intervention program.
At the time Chahal was CEO of RadiumOne, the ad tech company he founded in 2009. But his tenure ended abruptly when, facing growing public backlash and client pressure over the allegations, the board broke off its relationship with him.
Chahal then co-founded Gravity4 — his fourth startup — less than three months later. But the controversy continued. A former Gravity4 executive launched a lawsuit against the company, alleging she was discriminated against by Chahal and the company’s leadership based on her age and gender, and illegally spied on during her interview. The San Francisco Business Times then reported last month that Chahal faces a second set of charges relating to the alleged assault of a second woman.
In the press and social media, Chahal has repeatedly called the allegations against him frivolous, and has said he only agreed to plead guilty to the two misdemeanours to appease RadiumOne’s board.
About the recent gender discrimination lawsuit, he said in a statement that the claims are “simply baseless, false, and cannot be supported by facts. We are very clear on knowing what the motives were on having this case filed, and look forward to defending it and clearing the name of Gravity4 based on actual facts.”
Speaking to Marketing, Templer also called the controversy around Chahal’s personal life frivolous, and said that he doesn’t expect it to have much bearing on the company’s business success in Canada. “For the most part, [clients] understand that we don’t really comment too much on rumours or frivolous claims of any sort,” he said. “That’s not necessarily the conversation I’m having with my clients, nor is it a conversation that’s important to have with the client.”
Chilly reception
Gravity4 faces more challenges on the business front. Although it’s successfully exploited the ongoing consolidation of the ad tech sector by buying up distressed firms like Triggit, attempts to acquire larger platforms have been met with chilly and even scornful receptions.
The most widely publicized attempt was a $350 million unsolicited takeover bid for Rocket Fuel, which Rocket Fuel rebuffed. After evaluating the proposal, Rocket Fuel’s board wrote in a public statement that Gravity4’s “highly conditional and non-customary” all-cash offer was “not credible.”
Shortly afterward, Gravity4 withdrew another unsolicited bid for Swedish performance network TradeDoubler. Gravity4 initially offered $34 million, then doubled its bid to $68 million, but failed to file the proper paperwork with NASDAQ Sweden to make the bid official, according to an investor statement from TradeDoubler. After TradeDoubler’s board sent a tersely-worded letter asking Gravity4 to respect proper channels, it backed off.
Gravity4 says the money to fund its acquisitions has come entirely from the two founders, Chahal and Dan Grigorovici, and that it does not plan to raise venture capital. Both entrepreneurs have amassed fortunes in the hundreds of millions thanks to companies they’ve founded and sold: Chahal sold ClickAgents in 2000, and BlueLithium in 2004, for a total of $340 million, while Grigorovici sold AdMobius to Lotame in March last year for an undisclosed sum.
In a May press release, Gravity4 claimed it is profitable and on track to earn $100 million in annual revenue for 2015. That would put it in the same ballpark as martech platform Marketo or midmarket DSPs like DataXu. According to end-of-year financials, Rocket Fuel recorded $408 million in revenue last year.
