40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy (Part 5)

Sramana: Of your technology and administrative offerings, what is your core value proposition?

John Duffy: The technology enables us to deliver our administrative offering which is our core value proposition. Our sweet spot is ensuring that compliance is handled properly. Carriers are always up to date with what our clients are doing and that they approve of it. That means managing opt-in and opt-out processes and managing requirements for content. Each carrier has different standards and procedures for ensuring compliance.

Sramana: What does your business model look like? When a brand buys your service, what does a deal look like?

John Duffy: We follow a transaction model. They pay for the transactions processed on our platform.

Sramana: Is each deal a multimillion dollar deal?

John Duffy: We have significant deals of that nature, but the industry is evolving quickly. We just signed the largest contract in our history, which is for 10 years and a minimum of $50 million. We have quite a few customers like that.

Our sales cycle is very long. The integration processes that we run with our clients are also very long. It is important for us to make sure there is real value for both sides. Our transactions need to be meaningful. We are not a marketing company trying to create volume with billing and advertising on top of that. In our case, it is similar to traditional data communications. Our clients use us as a gateway. It is a utility model.

Sramana: Do you charge for the integration as well?

John Duffy: It depends on the application. We do not want to be considered a professional services business. Our revenue is driven through transactions. We will absorb upfront integration costs in order to gain access to the long-term revenue that we want.

Sramana: Who was your very first customer, and how did you reach them?

John Duffy: Our very first customer was JM Family Enterprises, a $14 billion company that is responsible for distributing Toyotas in the southeastern part of the United States. They hired us to provide a disaster recovery notification system for their employees. We got into JM because I had a relationship with their chief information officer that went back to my MCI days.

Sramana: In 2005, what was the state of your company and product?

John Duffy: We had a product. We had spent time developing the process to get short codes connected to the carrier networks. The very first short code that we got installed for them is still working today. We had a rudimentary beta platform that we had developed that allowed for the broadcast mechanism that they wanted. They would send a single message to us, and we would send that message to all of their employees.

Sramana: How did the CIO at JM Family know that you had something to offer?

John Duffy: I had told him early in the development of my mobile initiative what I was attempting to do. JM Family Enterprises is a very innovative company, and he asked me to give him a call when we had something ready. I called him up and that happened to coincide with a group of hurricanes that had come through Florida. We demonstrated how it would be a good addition to their disaster recovery plan, and he agreed to buy it from us.

This segment is part 5 in the series : 40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy
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