According to Calcalist,Pudding Media, an Israeli mobile advertising startup, faces imminent shut down. Pudding Media let go 25 employees this morning and announced it will cease its operations in Israel. The company’s assets will be put on sale as the company only retained five employees for maintenance reasons.
Pudding Media was founded in 2006 by brothers Ariel and Ruben Maislos. Pudding managed to raise $10 million from BRM and Opus Capital, as well as investments from known Israeli angels including Eyal Waldman, Udi Weinstein, Yariv Gilat and Ariel Maislos himself, who previously sold Passave to PMC for $305 million in stock in 2006.
In its early days, the company offered free VOIP calls to landlines, with a plan to monetize those calls by contextually matching ads to the content of the conversation. For obvious privacy reasons, that path did not immediately succeed and Pudding took a radical turn towards mobile advertising focused on enabling and selling premium carrier-based inventory.
Pudding Media’s platform targeted mobile carriers, offering them a turn-key solution to manage the entire campaign lifecycle, across all mobile channels: SMS, MMS, USSD, Mobile Web, voice calls and video. It also offered direct response campaigns on the mobile for brands and agencies. The new strategy gained Pudding some momentum in South East Asia and the company managed to secure agreements with mobile carriers in Thailand, Malaysia, Singapore and others, however, they did not translate into revenue.
So what went wrong?
According to Ariel, Pudding Media’s CEO, the company was ahead of its time. The partnerships enabled reach to over 100 million mobile users, but the local advertisers were not technology-inclined which made sales cycles longer and more complicated. The right partner from the advertising industry in Asia, should be able to extract more value.
It is always a bit sad to report of a startup closing. A friend of mine who worked with Pudding had only nice things to say about the team and their ability to adapt the business models to the market conditions, long after he left. I think that should serve as reminder that statistics don’t lie: no matter how good the team is, how sophisticated the technology or how big the market, the chances of success of a startup are less than 10%, on a good day.
As for next steps, Ariel is focused on its role as board member in Israeli startup Anobit, a fabless semiconductor company that improves flash memory chips for storage in mobile phones. Anobit was founded by Pudding’s backer Udi Weinstein and have kept a vail of secrecy since it raised $17 million in 2007.