40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy (Part 2)

Sramana: How did you move from MCI to join your mentor’s company? What was the sequence of events?

John Duffy: In 1993, when I was at MCI, I had a customer call me and tell me that he had developed a bulletin board system for Star Trek fans. It was a computer program that people would dial into and interact with each other through. I asked if it was like Prodigy [an early consumer online service that sold dial-up subscriptions], and he said it was similar to it, but very specific. He had a lot of users, and it was becoming expensive for him to operate this Star Trek bulletin board. He wanted to charge people to use it every month. He wanted to have that access billed to people’s monthly telephone bills. I was able to set him up with an account to charge people $10 a month to access the website.

About 60 days later, I received his billing activity for the first month. He had more than $100,000 in bills, and my first reaction was that the system had been hacked. I started looking through the records and could not find any details to support anything other than legitimate business.

I called him and told him that it looked like he was generating a lot of transactions. He told me that he was, and that he could see every time somebody logged in and opened an account. I told him that his business was unbelievable. He told me, “Yes, it is good. I knew people loved my service and would pay for it. Next month I am going to start advertising it.”

I remember that moment because it was almost like vertigo. My world compressed around me. At that time, most of my customers spent millions of dollars in marketing acquiring customers. They had detailed algorithms to know how much customer traffic a dollar of advertising would bring them. When he said that he was going to begin advertising because he was successful, my world changed.

Over the course of the next several months, he continued to develop his program, and it continued to get bigger. He called me one day and told me that he was going to sell the company to pursue his lifelong dream. He held the world record for the longest flight of a paper airplane. He wanted to write a book that would teach kids how to build a better paper airplane.

He told me how much he thought he would sell the business for and the types of people he could sell it to. I told him not to do a thing, and I called my good customer, who was becoming a mentor for me. I told him what was happening, so he went in and bought the business. He paid $300,000 for the entire company. That is the business that I became a part of later on. We sold that business in 2002 for over $100 million.

Sramana: What role did you play in the business?

John Duffy: I was simply an investor. I put up $10,000, and through the course of the company I received a very good return.

This segment is part 2 in the series : 40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy
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