With fresh $750K, Bixy is helping make online ads ‘not suck’

Kyle Johnson could see that his company had a problem. And there was nothing he could do to remedy it.

Back in 2011, Pandora released its financial records for the first time ever for everybody to see. Johnson, now the founder of Bixy, was working at his own startup company in the music streaming business at the time.

What he saw was that even a successful company — such as Pandora — was struggling to make any money. Despite operating around for a decade at the time, it hadn’t even had a profitable year. Johnson knew that if established companies were struggling in the music industry, there was little to no chance for his startup to succeed.

“We realized that the problem is that because consumers want media for free, which means ad-supported,” Johnson said. “And because online ads suck, the monetization of digital media sucks.”

So Johnson abandoned trying to change the way people consume music and began a quest to redefine the world of online advertising. Even by startup standards, the shift was considered a massive pivot.

But it hasn’t been an overnight transition.

It actually has taken several years for Bixy, a startup company located in Lawrence, Kan., to even remotely make an impact. During that span, Johnson has devoted most of his time and energy developing a better grasp of the online advertising landscape.

The company just announced the official launch of its iPhone and Android apps on April 11. They will go through a trial period over the next 12 months, to see if the app will popular enough to garner national attention. It also recently raised $750,000 from regional angel investors to accelerate its business.

“It’s going to be a very new kind of ad tech company — a consumer-controlled ad tech company,” Johnson said. “Something that is very unlike all of the crap that is out there today.”

Johnson understands that transforming online advertising is a tall task. However, he believes there is a need for it, and his app is the thing the consumers need to fully adapt.

With the app, a user lists an email, Facebook or Google account to get started. It then prompts the user for a few personal things, such as name, gender and location.

Johnson makes it clear the personal information doesn’t go much further than that.

“The reason I make that distinction is because I don’t give a damn what websites you go to, or who your friends are,” Johnson said. “I would argue that all that information just contributes to noisy, bad data.”

Bixy will then provide an introductory coupon, such as a free entree or appetizer to a restaurant. This is especially important to Johnson, who would like to see this app benefit everyone, from consumers to local brands to his own company.

Then the app will ask for the user to select a few interest categories, such as entertainment, automotive, or food and drink.

For example, if a user selects food and drink and entertainment, her feed on the app will be filled with coupons that fall under both categories. Any coupons selected will file under the “My Rewards” section on the app. The ads that users view across the web and within mobile apps outside of Bixy will begin to match their preferences from the app.

“There is a massive problem because nobody engages with the online ads even though it’s a billion-dollar business,” said Evan Hodges, who is in charge of sales for Bixy. “Bixy’s model seems like common sense. Don’t try to guess what people want. Just ask them what they want.”

The company has taken massive strides since its early days.

Back then Johnson and Matt Hagerty, who is in charge of Bixy’s Product, were actually the only employees the company had. Starting as a two-person team — Johnson and product director Matt Hagerty — the firm didn’t even have an office — they did all their work from a local Starbucks.

Even as a duo without an established office, it was clear that they were onto something.

Johnson won the Innovator of the Year Award in 2012 from Pipeline, an entrepreneurial fellowship program backed by the Ewing Marion Kauffman Foundation. Johnson won the award in January, despite not having a name for his company or a full understanding of online advertisement.

It wasn’t long before others took notice of Johnson’s work ethic and determination. The company started to raise enough capital from the local level, which began to bring his idea to fruition.

Just a couple months after Hagerty joined the ranks, the company moved into the Cider Gallery in Lawrence and has continued to attract more investors.  

Bixy now has six full-time staffers and as many part-timers. Johnson hopes to prove Midwest startup companies can be successful and it’s not necessary to relocate to the Silicon Valley.

“It’s been better for us to basically grind it out in the Midwest,” Johnson said. “Then, if we win, maybe we can demonstrate to others. Say, ‘See you can build transformative things in the Midwest.’”

The company’s recent capital raise will allow it to beta test its app in Kansas City, as well as possibly expand into additional markets. Johnson said he’s thrilled to personalize digital advertising while remained headquartered in the heartland.

“We’re proud to make Kansas City the first major case study,” he said. “We want to provide proof that radical innovation — even in very large markets — can come from Middle America.”