Ok — this isn’t true. But, here are some thoughts on why this could make sense:
Intuit is focused on small businesses with a financial bent (think TurboTax, Quicken).
Constant Contact is focused on micro/small businesses but from the marketing side.
Constant Contact is dipping into the SMB payment side with their event marketing / registration product. This is a good intersecting product for the two companies.
Intuit has a history of running their acquisitions as distinct sub-brands versus rolling them into a uber-platform. This would be very important in realizing value of something like CTCT (or like competitor) given the fickle nature of their customer base. Someone one described to me that the micro-business customers that make up the bulk of CTCT’s customer base have almost a symbiotic relationship with the product. Alter it a lot, like what would happen if it were redesigned to fit into someone else’s platform, then there would be significant churn.
Here are thoughts on the valuation:
Intuit (INTU) has a market cap of $9b. Constant Contact (CTCT) has a market cap of $500mm.
I put a 40% premium on the deal from their public market cap. Omniture had a 45% premium, which is rich but not unrealistic.
The revenue multiples make sense. CTCT did about $130mm last year. They have about $50mm in cash. So, 700 – 50 is 650. Divided by 130 makes it 5. A valuation at a 5x revenue multiple would be consistent with other acquisitions.
Of course, Intuit could buy a smaller competitor like iContact or Vertical Response, but my gut tells me that they would step up to the plate with a good mix of cash and stock (Intuit has about $1b in the bank) to make a solid stake in this area versus opt for something less.
You heard it here first. If it ends up happening then the investment bankers can send me some of that multi-million dollar fee. Thanks.
On Wednesday I met with Chris Heivly to discuss his new venture Triangle Startup Factory (TSF). TSF is an interesting idea. It brings a new seed investing / incubation model to the Triangle –model that is becoming popular other high tech hubs. TechStars and Ycombinator are two of the most notable examples. I like TSF for several reasons:
Founded with an innovative funding model.
Backed by local technology serial entrepreneurs.
Focused on early stage Internet / Software startups. My forte.
Based near us on the American Tobacco Campus of Durham, North Carolina. Why? Because The ATC is the place to be.
They are holding a kick-off mixer next Thursday (February 4). You should contact Chris or visit the mixer if you are interested in learning more.
Last week the American Red Cross approached us with an innovative and creative idea — launch a promotion where our customers could send Haiti Relief requests to their lists free of charge. We loved it.
Throughout the year, we donate our time volunteering at Habitat of Humanity, Urban Ministries, and other local organizations. We donate money to causes as well, including last week matching donations for Haiti Relief. But, this was a unique opportunity to contribute with exactly what we do. Today this idea became a reality and we kicked off the “Free Emails for Haiti” campaign. See bronto.com/haiti for more information.
My hope that other email marketing service providers (ESPs) adopt these type of campaigns to help with Haiti’s relief efforts and other future humanitarian crises that inevitably and sadly will happen. It’s a great idea and one that only an ESP can do.
If you are interested in learning more about this idea, please let me know. I would be happy to share our experience with it.
Unless you have been living under a rock for the last year, you might have noticed that iContact and Vertical Response do a lot of banner advertising. For most of 2009, iContact was the main one stepping with the advertising spending but in the last few months Vertical Response has stepped their ad spend considerably and I probably see them more now than anyone. We have an ad war folks.
Here are some of my thoughts:
The email marketing business breaks into two levels — low and high — primarily based on price and sophistication. It used to be low, mid, and high but as the market has been maturing, like Shar VanBoskirk of Forrester correctly explained to me several years ago, the market would polarize around between just low-end and high-end vendors — just like every other market. I refuted it at the time but, in the end, I have to admit she was right. Folks, like in the mid market, either go down or up. We have been going up.
The king of the low-end is Constant Contact. They are publicly traded and are a fair bit bigger than both Vertical Response (VR) and iContact (iC) put together. They are doing well. I like them because they been consistent with their message around focusing on small businesses. Their fast followers, VR and IC, compete for the #2 and #3 spots but from my perspective have been less consistent on their messaging around small businesses. They have small businesses because they are cheap and simple not the other way around.
iContact was very aggressive for most of 2009 with their banner advertising and really streamlined their acquisition model, including turning their website into really just one landing page aimed around one thing — getting a free trial. I think that the model is akin to a whale swimming through the ocean trying to suck up as many small brine as possible. Smart to take advantage of the lower CPM rates in a crummy economic year. Also, they hired their CMO from Lending Tree — a firm that clearly does a lot of consumer-esque advertising and has deep an understanding of conversions. All that is good.
Vertical Response, I believe, was a bit more asleep for the last couple years and let iContact challenge their #2 position. I’m not sure what their plan was but it was not nearly as aggressive on the advertising side, as far as I could tell. Perhaps they relied on their strong SEO position on Google. Somewhere during the year, I noticed iContact bump up above them at one time so perhaps that woke them up. I think that has since reversed results. Of course, Google might personalize all search results by person these days, which make that little scientific analysis not so valuable.
Now, I see Vertical Response ads everywhere. They re-did their website / landing pages to more conversion friendly, which has to have bumped up their customer numbers. Also, I have to imagine that their pervasive advertising has upped the customer acquisition costs for both companies.
Constant Contact manages (probably smartly) to stay out of the fray and focuses on their mission of serving small businesses. I see their advertising and sponsorships as much more targeted. You won’t see them sponsor high-end email marketing conferences, but their fast followers will — dumb, dumb, dumb. Speaks to an ill focused marketing strategy. Strategies around “we’ll be everything to everybody” usually means that you’re being a lot less effective than you think you are.
Constant Contact has launched a few more products. The survey product was a no-brainer, although I do think that they would have done better stepping up some cash and buying someone with more of a presence. I wonder how much traction that really has had. I do that the event management / charging makes a lot of sense and really solves a headache for many small businesses and non-profits. I do like Constant Contacts’ strategy of focusing on small business franchises. If you start at the top, you can avoid some of the blood bath / commodity ad wars that everyone else on the low-end seems to engaged in.
A rising tide floats all boat so everyone’s growing. That’s great and I’m sure that all these players are benefiting from the adoption of email marketing by small businesses regardless on their strategy. I do think if some of these providers want to eventually go public or be acquired, it will help tremendously to have a better differentiation and strategy story than they have now.
Since I do see their ads everywhere, included my beloved TMZ, I do have a few creative advertisement requests:
For iContact — can you scrap the series with the scruffy college kid for regular iContact and the business man with glasses for iContact enterprise (another post some day on the “enterprise” label). I like the plain ones with simple messaging about roi. The create, send, track, … ones are nice too. The award logo like it was done with WordArt and puts in question the validity of that award. A little makeover would help.
For Vertical Response — Your CEO Janine seems like a really cool person, but all the ads with her picture seem a little odd. I like your “low price” & “best service” ads more. Of course, the truth really lies in the conversion rates, which I don’t know. Your landing page / website looks nice too and presents you very professionally, especially with the swooshing background graphic.
Wow. That’s more than what I planned to write on the topic. I have been in the email marketing space for a while now and it’s fascinating to see the fever pitch of advertising for small business email marketing these days. It’ll be interesting to see where it goes.
Communicating strategy is hard. As the company grows and there are more moving pieces, it becomes difficult to keep everyone on the same page. We’re over 50 people now and with this size, we have to use a good framework to describe how we look at our company, our goals, and our strategy.
We base our strategy framework on one from Jim Collins’ Beyond Entrepreneurship. It’s a great book from the same author as Good to Great. Unlike Good to Great, it is a practitioners guide. So if you are running a startup and transitioning into becoming a real business, I highly recommend it.
As for the framework, we focus on four pieces:
Purpose. Why are we in business beyond a paycheck? At Bronto, we are here “to make our customers better marketers through intuitive software and helpful people.” It’s simple. It’s true. It’s a rallying cry that inspires our day to day actions.
Values. What do we stand for? This is newer to the framework and we’re going to spend our Quo Vadimus sessions (internal mixed team who we are / where are we going sessions) in February crystallizing this. We have them. Just a matter of articulating them very clearly. Not always so easy.
Mission. This is what we are shooting for. Multi-year goal. Our mission is “to become the leading ESP around the shopping cart in 2010 with $10mm in revenue.” We’re almost there — at the least on the revenue side. The leading part is unrealistic at $10mm but we have been consistently building toward that direction so I’m happy with that.
Strategy. This is what lets you accomplish the mission. Good strategy says what you are going to do and not do. When you zig and when you zag. We determine this on an annual basis. I just finished presenting this to the company and will explain that process in some future post.
Great strategies win markets. Great strategy frameworks get everyone on the same page, rowing in the same direction at the same cadence so that’s possible. This one has worked for us.
I’m a simplifier — constantly trying to simplify things — focus more time on fewer things. As CEO and a father of 3 soon to be 4 kids, it’s helped to get fairly good at it. There are just too many moving pieces to not be.
There are endless number of books on productivity. I just read (skimmed!) “The 4-Hour Workweek”. It seems the common thread in books like this is to work less by writing a book telling others how to work less. Unfortunately I don’t see this as realistic for most people. The author seems like a bit of a huckster too so take that for what it’s worth.
Here are some of the tactics that work for me:
Understand the difference between being productive versus being busy. It’s easy to be busy. Much harder to be productive and know the difference.
Throw out / recycle most everything. Lets you focus on the few things that matter. Hard to do with kids and a pack rat of a wife … but I’m trying
Make to-do lists for the day. It helps me prioritize and stay focused.
Here are some more specific recommendations:
Quit Facebook. Major time suck. I did this at the beginning of this year and feel much better for it. We lived many a year without it so life will go on if I don’t know every detail of everyone else’s lives.
Remove all Twitter apps. Tweetdeck, Twitteriffic, etc … from your desktop or dock. Easy to confuse keeping with everyone’s tweets with being productive. Use it at select moments during the day. Life is too short to fritter it away on this.
Remove those “you received an email alert.” Again, move away from distracted oriented things.
Shred all receipts and bills (after paying them.) You can get most everything online anyway. It’s easier to focus when you have less stuff.
Concentrate certain types of meetings on particular days. I get a fair amount of meeting requests from potential investors. Instead of scattering the check-in calls throughout the month, I started scheduling them to occur on a particular day in a given month. I would much rather have one day completely booked with my investor hat on versus having to disperse my thinking across a number of days.
So try them out or call me crazy. Either way, I’m always looking for new ways to minimize distractions in my life and focus on fewer things better. If you have additional suggestions, I would love to hear them.
Earlier this week I was listed as the 58th most influential marketer of 2009. Nice distinction and appreciate everyone’s votes. Thanks. See here for a complete ranking. I’m coming after you Ms. Kimberly “I’m #57″ Krause Berg of Cre8pc.com … oh yes.
Now that I have this ranking to uphold and know that Dan “I’m #59″ Zarrella of Hubspot is hot on my tail, I feel more obligated to actually write about marketing …. pass on my wisdoms, share my insights, … So, here’s my first one …
Awards and Best-Of Lists are gold at attracting eyeballs. Everyone likes a new distinction to put on their resume or blog. Or, something simply to spark a conversation. Statistical significance and rigorous testing are less important. The math guy in my finds that sad but true. Try it out for yourself. Look at the magazine rack of your local bookstore. Scan the headlines of forbes.com. Awards and lists are sure fire winners.
So thank you Invesp for the award. I didn’t know of you before but now I and 99 other influential marketers do. Given that accomplishment, I rank you as smartest marketer of us all.
2010 should be a good year on the professional and personal front. I expect the momentum for Bronto to continue into the new year. We’re picking up some great clients and talented employees so I’m thrilled to see what 2010 holds.
On the personal front, Karalyn and I expecting another baby in April. #4. Amazing. Never thought that I would be recreating my childhood but it’s true. It’s becoming harder and harder to pretend that I’m still 22. Not that I should, I’m enjoying it all.
Like every year, I try to shake things up with some New Year’s Resolutions. Here are the ones that I have so far:
Clean Living — I’m going to exercise more and eat better. My near-term goal is to run the Raleigh Rocks Half Marathon at the end of March. I did it a couple years ago with mediocre results. I’m expecting a bit more this year and somehow I’ll find the time to train. To step up my efforts, I’m going to skip soda, alcohol, and junk food until the race. Hard core at least until April then I’m back to normal. With a new baby, I’ll need it.
Deeper Connections — I’m going to connect better with people. The rise of social networks, although fascinating from a business point of view, feels particularly unfulfilling on the personal side. I’m going to spend more time focused on fewer things and try to get distracted less by things that don’t matter. As a first step, I’m quitting Facebook. We’ll see what else follows.
That’s all for now. Any other suggestions? I’m open to them.
Recently I did a video interview with David Mullens for his blog. He grabbed me after speaking on an email marketing panel at the Internet Summit in Raleigh. The interview addresses the simple question if email is still useful. Quick answer — it is but it is all about the marketing.
Find out more from David’s blog post on Communication Catalyst or view the interview below:
Ximena now has a store on Etsy. Here’s how it came about…
Ximena is my 7-year old daughter and was born at about the same time that Bronto was founded. In fact, in many ways, her life parallels Bronto’s history. When my wife Karalyn and I became pregnant with her, I significantly stepped out my efforts to get the company off the ground and registered the domain name brontomail.com. Right before she was born, we moved the company out of my house and into an office. Wise move because as any parent will tell you, newborns and startups don’t mix well! Now their paths cross again.
Ximena is a little entrepreneur — whether it be lemonade, cookies, candles, … If she can make it, she’ll sell from of a table in the front yard. Ever since being read Misty of Chincoteague when she was 5, she has been very motivated to earn enough money to buy a horse. I don’t see a horse purchase any time soon but her motivation is still exciting to watch and encourage. This is where Etsy comes in.
She wanted to extend her reach for her homemade piggy banks beyond the front yard. I told her about Etsy — a great place to buy and sell handcrafts as well as a Bronto client! She was game.
So tonight we set up her own Etsy store. She took pictures of her crafts and wrote the descriptions. I ponied up (like the pun … couldn’t resist) the 20-cent listing fee. Now the store is open and ready for business.
You can find it at ximenacolopy.etsy.com. Check it out and maybe even buy something. The prices are right and she would be thrilled.
Ok — this isn’t true. But, here are some thoughts on why this could make sense:
I’m a simplifier — constantly trying to simplify things — focus more time on fewer things. As CEO and a father of 3 soon to be 4 kids, it’s helped to get fairly good at it. There are just too many moving pieces to not be.
Earlier this week I was listed as the 58th most influential marketer of 2009. Nice distinction and appreciate everyone’s votes. Thanks. 
Happy New Year!
Ximena is a little entrepreneur — whether it be lemonade, cookies, candles, … If she can make it, she’ll sell from of a table in the front yard. Ever since being read 
She wanted to extend her reach for her homemade piggy banks beyond the front yard. I told her about Etsy — a great place to buy and sell handcrafts as well as a Bronto client! She was game.
