Home > Notes > Ryan Allis – iContact

Ryan Allis – iContact

Ryan Allis is the Co-Founder and CEO of iContact, the leading global provider of email marketing services to small and mid-sized businesses. At age 11, he built his first SUCCESSFUL business. Launched another one at 16. Netted over $1 million in revenue by age 21. He’s now posting 40x that, at 25.

Learn from him.


Background

  • Ryan is a 25 year old, life-long entrepreneur
  • at age 11, Ryan launched his first venture, Allis Computer Consulting

Allis Computer Consulting

  • a consulting company aimed at senior citizens to help them with their computers
  • he charged them $5/hour
  • he was able to enter the 7th grade with $450

Support System

  • Ryan had a big support system early in life
  • his parents encouraged early and frequent reading
  • they traveled with him, internationally to show him the possibilities of the world
  • he had helpful school teachers and business mentors; plus, his uncle was a tech entrepreneur

Age 16

  • at age 16, Ryan launched an online retail marketing consulting firm
  • the company started off as tech help and then branched off into web design
  • he got his initial customers by posting fliers everywhere around his town, laundry-mats, markets, parking lots, mail boxes, etc.
  • he road his bike to see his first customer, then that customer bragged about him at the bingo hall, and the company grew
  • at 17, his company saw significant growth after he sent out a press release and got into the local paper
  • an arthritis doctor called him and hired him for contract work to sell his arthritis medicine online
  • Ryan and his company increased the doctor’s sales from $1,000/month to $200,000/month
  • once he saw the potential for selling products online, he wanted his own success

iContact

  • iContact is the leading private company providing email marketing services to small and mid-sized businesses
  • their product allows businesses to send out emails and manage contact lists
  • based in Durham, NC

Starting iContact

  • Ryan and his co-founder saw need and opportunity in the business email market, and even if they didn’t have the best product, he knew he had experience with online marketing
  • his co-founder’s job was the technical stuff and Ryan’s job was online marketing, getting customers to sign up for a free trial
  • they launched in October 2002
  • they got customers, listened to feedback, improved their product and started hiring
  • they gave their product away for free, and was able to charge after customers found value in it
  • they thought they could get to the first million in sales within 1 year, but it took 3

Struggles

  • a little over a year after their launch they only brought in $12,000 in revenue, but did $17,000 in expenses
  • Ryan was living month to month off of consulting money
  • even worse, their server went down for a week, the site was down for a WHOLE week
  • by that time they only had 56 customers, and after that week of downtime they lost 30%
  • they were too unprofitable and inexperienced to raise the capital to get a new server

Triumphant

  • a friend gave them a $5,000 loan in return for equity to replace the server
  • they hired a lead developer (who is now the chief architect)
  • then did $300,000 the following year

Marketing In Beginning

  • organic SEO
  • aggressive promotion w/ affiliate programs; iContact gave them 25% of the sales they brought
  • they subscribed to their competitor’s lists, had their competitor’s customers email them, and then they would email their competitor’s list details about iContact; this doubled their customer base

Promotion Today

  • iContact spends about $1.5 million/month on advertising, mainly online
  • organic SEO
  • network of 7,000 affiliates

iContact Today

  • iContact is the largest private company for email marketing for small and mid-sized businesses
  • projecting $38 million in revenue this year; had $29 million last year
  • 190 employees
  • adding 20,000 new users each month
  • has 600,000 users and 60,000 paying customers

Growth Vs. Profits

  • iContact focuses on growth rather than netting profits
  • they purposely burn their capital every month; unit economics
  • they spend up to $400 to get a customer that will spend $2,000 over their lifetime’s usage; 130% rate on return of investment

Funding

  • $17.8 million total
  • $5.8 million in equity
  • $12 million in venture debt

High-Growth Venture Backed Business Model

  • high-growth venture backed businesses purposefully don’t make a profit
  • you have to make sure every customer you acquire is profitable in the mid/long term, then rapidly invest in the next set of customers, then on to the next
  • this builds up and allows you to gain operational scale and efficiency, to be able to dominate your industry

Customer Acquisition Math

  • how much does it cost, on average to acquire a customer
  • how much money, on average, do the customers spend per month
  • how many months do they stay (lifetime value)
  • then calculate how much you can afford to spend on acquiring the customer, in online marketing
  • this mathematical model will allow you to get VC funding all day long

Goal Setting

  • Ryan writes down his goals on an annual basis
  • he transparently holds himself accountable by tracking his progress to see if he hits his goal or not
  • at age 16, his #1 goal was to build a company to $1 million in sales by age 21, and he only missed it by 18 days
  • he feels it would have been 18 years had he not wrote it down

Advice

  • Act first and ask for permission last.”
  • Be willing to break some rules (not laws), in order to get launched.”
  • Take chances, take risks when you have little to lose in the beginning.”
  • Word of mouth marketing is the best type of marketing, because it’s free and it’s trusted.”
  • If your company is not making money while you’re sleeping, it’s not a real company. It’s a job.”
  • Ideas are worthless. Revenue numbers are worthless. It’s execution, hiring the right people and doing what will raise revenue growth.”
  • Always have less than 1:1 ratio of dollars raised to annual revenue, in order to maintain control.”
  • Scale yourself. Hire people smarter than you and trust them to do a better job than you.”
  • You create in your life what you think about and who you surround yourself with.”

Side Notes

  • iContact achieved so much because Ryan was naive and didn’t know what he couldn’t do
  • they bootstrapped iContact to the point where they were dumpster diving for $50 rebates they threw away
  • iContact got a cease & desist letter from Bill Gate’s dad, for using the contacts in their email lists
  • nobody at iContact took a salary for the first 3 years of the business
  • Ryan makes equity investments in startup companies in developing countries
  • his book “Zero To One Million,” reached the Wall Street Journal Bestseller list
  • has an upcoming book, “Dare Mighty Things”

Connect With Ryan

Click Here For Bonus Notes

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  1. Bill Shaefer
    March 12, 2010 at 5:08 am

    Wow! You guys really have a new, growing site on your hands. I’m going to tweet about you to all of my friends. We need more inspirational sites like this.

    I appreciate it.

  2. Bill Shaefer
    March 12, 2010 at 5:09 am

    And WOW! Ryan got a cease & desist from Bill Gates! Thats when you know that you are doing something right!

    • March 12, 2010 at 12:15 pm

      Ha! Thanks for the support Bill! And I replied to your email also. Thanks again!

  3. The Natural Born Leader
    March 12, 2010 at 3:14 pm

    Man, you guys have great content. Ill be rich in no time lol

  4. April 25, 2010 at 7:37 am

    Ha! Thanks for the support Bill! And I replied to your email also. Thanks again!

  1. March 16, 2010 at 7:48 pm

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