40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy (Part 6)

Sramana: Did you self-finance the company or did you raise money?

John Duffy: We self-financed the company from 2005 through early 2007. We did a small friends and family round in 2007 and another one in 2008. We became profitable in 2009, and since then we have not taken any additional capital.

Sramana: What is the total amount of capital you have raised?

John Duffy: We have raised $4.5 million from friends and family.

Sramana: That is a substantial friends and family round. What percentage of the company were you able to retain?

John Duffy: I am the controlling shareholder of the company. Management and I have approximately 55% of the equity.

Sramana: What are some of the significant milestones achieved in the process of building your company?

John Duffy: For us, acquiring ESPN as a customer was one of the most significant milestones in our development. ESPN had a lot of experience in mobile and had attempted to launch their own phone under the ESPN brand and the Disney brand. They use mobile to support their various broadcast and Web initiatives, and they were developing significant amounts of traffic.

They issued an RFP specifically for the administrative portion of their mobile process. They were looking for help with it, and we had a great RFP process. They became our first significant Fortune 100 customer. We brought the right solution to the table, and our relationship with ESPN has been rewarding to us in a lot of ways. They are an outstanding customer and an innovator in their space. They gave us credibility to do business with Disney. They also gave us credibility to work among the carriers. Carriers immediately saw us as a company that would bring high-quality, value-driven programs onto their mobile networks.

The next major milestone was achieving strong growth throughout a very down economy. We achieved profitability in 2009 even though the economy was as bad as it was. We were able to maintain our independence as a company and get to the point where we are now a leader in our space. We are in a position to do great things in the future.

Sramana: You said you were able maintain a controlling interest in your company. You have obviously managed an interesting financing process. What were your thinking and strategy? You could have turned to venture capital or other routes.

John Duffy: It comes down to personal preference. I have a group of investors who have been involved in several different deals. They have been instrumental in several deals. There is a level of trust. They know how I manage and that I am a bootstrapping type of guy. They know I am a good watchdog of their capital. They allow me to operate independently and to keep control. That would not have been the case if I had taken the institutional path. It was a personal choice that I made. I prefer to have founding partners and friends as investors than to manage the relationships that come with institutional investors. Institutional relationships require a level of effort that costs money to maintain, and I choose not to do it that way.

This segment is part 6 in the series : 40 Million Dollar Company, Paying Dividends, Growing Steadily: 3CInteractive CEO John Duffy
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