Meet Israel’s low-profile unicorn: ironSource
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Photo Credit: YouTube Screenshot/ Iron Source CEO Tomer Bar-Zeev

Founded just five years ago, ironSource has a valuation over $1 billion – which it earned one download at a time

Israel is rightly proud of its unicorns – Waze, Wix, Outbrain, Mobileye – companies valuated at $1 billion or more. But there’s another unicorn you may not have heard of: ironSource, whose valuation the Wall Street Journal pegs at $1 billion and Business Insider says is worth a cool $1.5 billion ahead of a possible 2015 exit.

“I don’t think there’s a single person in Israel who isn’t familiar with our company,” Tomer Bar-Zeev, the company’s CEO, tells Geektime. “We’ve been in all the newspapers.”

“But in principle, “ he adds, “we believe in a low profile.”

A Google search for ironSource, or its main product InstallCore, suggests a possible reason for the low profile. The search yields articles about the company’s $85 million funding round this past September, as well as its June opening of new headquarters in Beijing.

But there are also headlines like “ironSource – Should I remove it?” and “IronSource distributes artificially intelligent adware!”

Both the Wall Street Journal and Calcalist group ironSource with a cluster of Israeli companies collectively known as “Download Valley” – whose business model is to install adware or software on a user’s computer, with the user’s tacit consent, but often without their explicit knowledge.

But Bar-Zeev says that ironSource is not responsible for any spyware installed on people’s computers.

“We provide [download sites] with the platform to deliver their software. They decide if they want to bundle something during your installation process. We don’t control how they monetize what they install on your computer. “

The numbers don’t lie

Even if end users can sometimes be annoyed by potentially unwanted programs (PUPs), you don’t get to a $1.5 billion valuation without a lot of happy and willing customers. Who are those customers?

Other businesses.

“We’re not a consumer product,” says Bar-Zeev, “we’re a B2B company.”

IronSource’s main product, InstallCore and the related MobileCore, are platforms for the distribution of desktop and mobile applications. They earn a fixed fee from a developer each time a copy of software is successfully installed.

Bar-Zeev says he estimates that 30 percent of all desktop software downloads in the world are powered by InstallCore, along with 5-10 percent of mobile app downloads. Since the company was founded 5 years ago, its product has powered over 3 billion downloads.

The pain point that ironSource addresses can be summed up by the app store.

There are millions of applications out there, says Bar-Zeev, but everyone is downloading the most popular ones. What happens if you upload your app to the store and no one finds you?

Bar-Zeev says his product seeks to disrupt the way app stores work.

“People don’t need to go to an app store to search for applications. The application can come to them based on their user profile.”

Every time ironSource performs an installation, it collects data about the user, including the user’s location, what other software they have on their computer, what software is currently running, etc. Together, this information allows ironSource to generate a user profile.

Then, ironSource makes recommendations for other apps based on this profile. For instance, if ironSource is installing software on your machine and sees you are running low on disc space, they might recommend, in real-time, that you download Dropbox. If they see that you’re a gamer, they will recommend certain games to you. If they notice you don’t have an anti-virus installed, they might suggest some security products. These recommendations can be a one-time event or occur on a weekly, or daily, basis.

Fewer download errors

Another selling point of ironSource’s technology is that it addresses the problem of download failures.

“Not many people know this,” says Bar-Zeev, “but if you’re downloading a product that’s 3-4 megabytes or higher, depending on different geographies and different systems configurations, a large percentage of those installations will fail.  We developed a platform that fixes that.”

Because ironSource’s downloads succeed more often, its software recommendations and ads are seen by more users.  “For every dollar that we spend on media, we have much higher conversion rates,” says Bar-Zeev.

The data ironSource collects also help businesses optimize their media buying campaigns on sites like Facebook, Google and Bing. After all, you can tell a lot about a person based on the kind of software they install. This allows for better ad targeting.

Fast boat to China

In June of 2014, ironSource opened an office in Beijing.

“China is our third largest market. We already generate 5 million dollars of monthly revenue out of China.”

Bar-Zeev says there is a huge synergy between ironSource and Chinese Internet giants like Baidu, Alibaba, Tencent and Changyou. These companies’ number-one priority is to grow globally, and ironSource is helping them with that.

Bar-Zeev gives Baidu as an example. The company, known to many as the “Google of China,” sees South America, and Brazil specifically, as a target market.

“When someone in Brazil is looking for a security product or a translation product or other products Baidu has, we try to make sure they get the Baidu product as opposed to something from the local market.”

‘Not Download Valley’

Bar-Zeev emphatically rejects the Download Valley label.

“There is a huge difference between us and [companies like] Babylon. Maybe originally, because there was a time when we were considering buying [Babylon].”

Bar-Zeev says that Babylon, Perion, Conduit and a few others are merely monetization companies.

“They basically provide a capability to developers to monetize their product. They don’t do delivery, they don’t do discovery–they just do monetization. “

As for an impending IPO, Bar-Zeev laughs, “if I had a dollar for everyone who asked me that question…”

He does say that ironSource’s recent $85 million financing round had as its goal “to be very active on the M&A side.  You can expect some formal news around that soon.”


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Simona Weinglass

About Simona Weinglass

I’m an old-school journalist who recently decided to pivot into high-tech. I work in high-tech marketing as well as print and broadcast media covering politics, business culture and everything in between.

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