CEO of You and Mr. Jones, valued at $1.3 billion, explains how he chooses where to invest - and how his strategy differs from Sir Martin Sorrell's

• Former Havas global CEO David Jones left the ad agency world behind to launch "brandtech" firm You and Mr. Jones in 2015.
• This week, his company announced a $200 million series B funding round at a valuation of $1.3 billion.
• Jones told Business Insider he won over investors by telling them the holding company era was over.
• Now, his company invests in tech startups. They start by asking which up-and-coming companies will excite clients like Unilever.
• Jones says his biggest flop was investing in digital publishers Mic and Mashable.
• Jones and former WPP CEO Martin Sorrell are both looking to lead the next wave of advertising networks. But while Sorrell's S4 focuses on digital marketing, Jones sees a future in AI, healthcare and ad tech.
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David Jones saw the writing on the wall more than five years ago while serving as global CEO of ad agency holding company Havas. To him, such companies' decades-long dominance of the ad industry was coming to an end due to the unstoppable power of smartphones.

At the time, the top five holding companies WPP, Omnicom, Publicis, IPG, and Dentsu had record profit margins - but they've lost about $20 billion in market capitalization since Jones left the agency world in 2015 to launch You and Mr. Jones, a network he describes as "brandtech" to reflect its dual focus on technology and more traditional brand marketing work.

The company was valued at $1.3 billion this week after receiving $200 million in a series B funding round from four investors including Baillie Gifford, which previously placed major bets on Amazon, Alibaba, and Tesla. The new round brings the total raised to $550 million.

You and Mr. Jones's investor pitch was all about long-term thinking

"Four and a half years ago, there were just two of us and a checkbook," Jones told Business Insider.

Jones said he got investors to give him his initial $350 million in funding by saying he was building a global organization to take advantage of the shift to mobile. Playing on the challenges he experienced managing Havas, Jones told investors that holding companies couldn't handle such a dramatic shift.

He found investors like Baillie Gifford who weren't looking for rapid returns.

"We are long-term believers in the power of technology and we invest in businesses that offer outsize opportunities," said James Anderson, head of global equities at Baillie Gifford.

Jones said his company now employs 3,000 in 40 countries and plans to use the new funding to expand in Asia, which only accounts for 8% of its revenue but grew 89% last year. "If you're only in New York, you're part of the problem," he added.

The company's biggest misstep was investing in digital media companies like Mic

You and Mr. Jones has also invested in 21 tech companies since its launch. Jones calls that portfolio the most important part of his business.

The CEO said he and his team ask four questions before each investment decision: Is the company in a vertical that You and Mr. Jones wants to be in? Is it a good cultural fit? Will clients get excited about it? Do its financials make sense?

Jones said that the vast majority of his investments have been profitable; the largest is Oliver, an agency that helps companies take their marketing work in-house and is now consumer goods giant Unilever's largest digital ad agency. He also defended his investment in Pokémon Go maker Niantic, which analysts have said was overvalued.

You and Mr. Jones also invests in platforms like Pinterest, whose co-founder and CEO Ben Silberman said in a statement that Jones' company has helped "introduce us to leading global brands."

Jones said his biggest misstep lay in digital media investments, which is perhaps unsurprising given the industry's brutal 2019. You and Mr. Jones invested in Mic and Mashable (both of which sold at fire-sale prices) but lost money on both. Jones blamed the drop on Facebook's algorithmic shift away from news.

Both Jones and S4 CEO Martin Sorrell want things "better, faster, and cheaper" - with a key difference

Jones believes that in the next five to six years, "new disruptor" companies like You and Mr. Jones and Sir Martin Sorrell's S4 Capital will take some of the holding companies' lost market share.

Both executives use the phrase "better, faster, and cheaper" to describe their offerings.

Jones said the key difference between their approaches is that he's investing in tech companies like the AI Foundation and healthcare-focused financial platform Amino, while Sorrell, former CEO of WPP, is focusing on digital marketing, acquiring production company Media Monks and programmatic in-housing firm MightyHive.

Sorrell did not respond to a request for comment.

Despite Jones's bearish outlook on ad agencies, he insisted his goal isn't to replace them because he has no interest in buying traditional media placements or making TV ads.

"It's a commodified, low-margin, low-growth business," he said. "Any business not growing by 20% organically has a problem."