Sramana: When you first started your PPC campaign, what was the lay of the land? What was your assessment of available keywords that were affordable for you to advertise with?
Clate Mask: This was before the days of Google AdWords. Overture had a search term suggestion tool, and it was fascinating to see the number of people searching on keywords. I would use that tool every day and harvest terms that were interesting to us. The terms that were most valuable for us were ‘custom database,’ ‘database marketing,’ and ‘customer relationship management.’ Some of those terms were super expensive, especially ‘CRM.’
I had hundreds of terms that I used. We spent $5,000 a month, so I was able to spend only $300 to $400 a day on search terms. If I was not careful and I put too much emphasis on ‘custom database,’ my entire advertising budget could be sapped in a few days. I had to get the right mix of leads from various terms as well. There were a few terms that did not generate very much traffic, but whenever they generated leads they turned out to be great leads.
Sramana: Is it fair to say that your entire customer acquisition strategy was pay-per-click advertising?
Clate Mask: For the first year it was. We gained a customer from our advertising campaign who needed help with his databases. We helped him in late 2002, and by early 2003 we had done a lot of stuff to help him. He then asked us to create a custom database for him in late 2003, and he was the person who influenced us to enter the mortgage industry. He introduced us to a world of Internet marketers and mortgage marketers who in turn because our primary customer pool until the product launch in late 2004.
Sramana: What kind of revenue levels did you do through 2004?
Clate Mask: In 2002, we did $160,000 in revenue. In 2003, we did $365,000 in revenue, in 2004 we did $650,000 in revenue, and in 2005 we did $1.6 million in revenue.
Sramana: In 2005, as ManagePro CRM was released, what changed?
Clate Mask: At the end of 2004 when we launched it, I was still the head of marketing and sales. I hired one sales person to sell the mortgage product. We launched ManagePro at a direct response marketers event. It just took off from there. By December, I felt that I could not handle the calls coming in, so I convinced my partners that we needed to hire a VP of sales and marketing.
We brought someone on board in February 2005 whom I had gone to business school with and who had been with me at About.com. He made sales take off. He did a great job and I was able to move into the role of president of the company. I began focusing on ways to scale and grow the business.
Sramana: Did you decide to raise capital at that point?
Clate Mask: We made that decision in the summer of 2005. We felt the opportunity was much bigger and we needed to hire people, invest in product development, and expand sales and marketing. We did not feel we could expand fast enough based solely on the cash we were generating.
We did a friends and family round of capital, and we raised $250,000 from a handful of friends and family. That capital helped us grow the business. In 2006, we did over $3 million of revenue. Towards the end of 2006 we received a million-dollar line of credit from Silicon Valley Bank.