If you haven’t read Part 1, start here

In The Beginning – A Brief History | 2003-2008

An Email Marketing Sinking ShipFrom 2003 to 2005 the business was running like a well-oiled machine. The printing press was humming along 24/7 and all I needed to do was sit back and do some counting. We were expanding our email marketing publishing business and decided to provide our eList Manager Email Marketing Platform as a SaaS solution to other large marketers and companies.  This, in hindsight, was one of the best decisions I ever made. We had a growing customer base of large companies and affiliate marketers who came onboard and started using our platform to manage their email marketing campaigns. Most of our eList Manager customers sent large volumes of optin email for both their own offers and other company’s offers as well. The cost of our single server, turnkey email platform started at $4850 per month – and it’s still the same price today, although we have added a lower cost – $2500 per month, tiered platform for companies who send less than 5 million emails per month. It obviously wasn’t designed for the smaller email marketers to use and expect to get a return on their investment, but the larger marketers and companies loved it. Since there were no sending limits, it was a great solution for high volume senders. We managed every aspect of the system and technical challenges, while assisting our customers in delivering their email marketing messages to the user’s inbox, which most large marketers liked. Not having to manage the technical aspects of delivering their email was a huge benefit to our customers. All they needed to do was load their email lists, plug in an email offer and hit send.

In late 2005, I was introduced to a large, almost mythical company that ran a number of high traffic co-reg paths. Although this company generated in excess of $100 million dollars a year in revenue, most people didn’t know who they were, even in the industry. They might have heard their company name in passing, but didn’t know anything about them. Although they were a huge traffic and lead generator in the affiliate space, they didn’t even have a public website. I was in the same boat and had only heard about them in passing, prior to my introduction. It turned out that this company was right around the corner from our office. I was extremely surprised when, after a few conference calls to discuss our platform, I walked into their office and saw 200+ people sitting at desks. I remember thinking to myself, “How could such a large company fly under the radar like this?” Our initial meeting lasted about 2 hours, although only scheduled for 30 minutes, and I remember walking out of their thinking this could be a great opportunity. The next day I received a call from one of the directors I met with who asked me to provide him the paperwork for a “Very Large” eList Manager, email marketing cluster for their internal use. Two days later I remember leaving their office with signed agreements, a huge ear to ear smile on my face and a check for $242,000, which covered the first three months. In 2006 alone, this company spent $1.2 million with us to use our eList Manager Platform. Although I really never got a straight forward answer from them, it was briefly mentioned in a meeting that they were making a 3.4 times return on investment with our platform. Doing some simple math, this means that there $1.2 million spend with us, generated a little more than $4 million in revenue. A pretty good ROI if you ask me.

Taking a Huge Gamble and Feeling like Edward John Smith

In 2007, I decided to take a big risk, although it didn’t feel that risky at the time. At this point, I felt like anything I touched turned to gold. I decided to branch out and build our own co-reg paths. In mid-2007, I hired a half dozen very experienced technical and management people, or so I thought, who had worked for another very large co-reg path company. We were on our way to a new part of our history. We were going to generate $50 million dollars in revenue per year from this new platform, or so I thought. I committed to an additional $500,000 in annual salaries, purchased $200,000 worth of equipment (servers, racks, data center hardware, etc.) and spent $1.1 million on a new building which would be our corporate offices and data center all in one. After spending another $200,000 building it out and furnishing it, we were ready to roll, or so I thought. After launching, in the first 6 months we lost $600,000 on my new venture. I vividly remember writing $100k checks each month, from my personal account, to cover the losses. I remember thinking to myself, all we need to do is get around the bend and we’ll be home free. As you can imagine, after 2 years of chasing the pot of gold and losses in excess of $2.5 million, I pulled the plug. In hindsight, I should have pulled the plug after a few months but chasing that dream clouded my decision making abilities beyond common sense and rational business thinking.  It was a hard learned lesson and big pill to swallow. Now you know why I felt like Edward John Smith, who if you’re unsure who he was, he was the Captain of the Titanic. This part of my life and business enabled me to write and truly understand that Mistakes & Failures are the Key to Success.

Entering the Recovery Room

What a cluster f*ck. I dug my own grave and had no one to blame but myself. This was an expensive mistake and a costly lesson I learned about business. Although I hate to admit it, it was an important lesson and I can assure you, I’ll never make this type of mistake ever again. After licking my wounds for a few months, we got back to business. Our core business was still email marketing; this is what I knew best and had a better understanding and more technical knowledge and experience than 99% of the people in the industry.

Looking at an Exploded View of Email Marketing

In early 2008 I sat down and dissected email marketing in its entirety. It was like I took a watch and disassembled it and now had 500 tiny little moving pieces to inspect and learn how they interacted and what each individual piece actually does. I looked at the biggest hurdles people try and overcome when managing their email marketing strategy and deployments. From a 1,000 foot view, the most important piece of the puzzle is delivering their email marketing messages to the user’s inbox. That’s it – period – It was black and white – end of story. So what did I learn from my endeavor? Here is what I learned – Now listen closely, because I’m only going to say it once. “Email deliverability is the single most critical factor to the success of any email marketing campaign”. To be able to deliver any email, you need to have valid and deliverable email addresses. Once again, this gave me a new idea and we were off to the races – for Round 2. This time, I had a budget and stop loss in place.

Adding Email List Cleaning and Validation Services to the Portfolio

So we started digging in to see what we needed to do to be able to make sure email addresses were valid and deliverable. This led to our service of cleaning and validating email addresses. After a few days of meetings, research and reviewing technical details, we had a blueprint. We broke it down into two separate components. The first component was cleaning the email list – comparing it to other lists of specific “bad and negative things” that needed to be removed. Once this was completed we would validate the email address without ever sending an email to the end user. This was a difficult piece of the puzzle, but we figured it out after a long period of trial and error. Now we had a clean and deliverable email list, which would be virtually “complainer free” and consist of only valid, deliverable email addresses. So we began testing and the results blew us away. Did we discover a magic pill? It worked so well, we were sending 60% less email and bringing in 5 times the revenue. We figured, if it worked so well for us internally, it should work just as well for our customers. So we added email list cleaning and validation services to our lineup. Initially, we offered this service to our eList Manager customers only. Then at the end of 2008, just prior to the holiday season, we offered it as a service to the general public. Anyone who ran email marketing for their business could benefit from this service and they did. In the first year we offered the service on our website, we cleaned and validated just over 120 million email addresses for a variety of companies, both big and small as well as marketers.

Stay Tuned for Part 3