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Announcing the BigDoor Declaration of Independence

Posted in: BigDoor news, Blog, Our Thesis, Public beta on October 13, 2009

It was October of 1517 when a man named Martin Luther steeled his courage and defiantly marched up the walkway to the Castle Church and nailed his 95 theses of reformation to a large, imposing, red door. No matter your political or religious views, one must admit that this act took guts. Luther was fighting a battle against an entrenched way of life and a well established line of thinking, and he was declaring independence from the establishment. He believed that there was a better and more efficient way to do things and he was determined to get the word out. While I fully recognize that launching a public beta of an Internet technology platform pales in comparison to the actions of Luther that changed the very course of western civilization, I tend to relish in the imagery and I draw inspiration from bold actions. So it is in that spirit that I write this inaugural post for our BigDoor blog and declare our independence from the established way of thinking in the online media world.

Here we are 492 years later, in October of 2009, and I’d like to kick off the public beta of our offer platform with my own version of a defiant posting of new thinking and our very own declaration of independence. Today this blog will serve as our Wittenberg Door where we will begin to post and discuss our theses, why we think there is an inflection point (aka reformation) taking place in the online media world and how our technology platform fits into this extremely important shift.

A Brief History

In order to understand our thinking it is helpful to get a bit of history on Jeff and Keith, the founders of BigDoor. In 1999 we started an online advertising company with the simple goal of building an online technology platform that delivered the right ad to the right user at the right time. We decided early on that in order to carry out that mission it made sense to have a piece of software – rather than a website – deliver ads because then we could be much more intelligent about what ads to deliver and when. So we set about building an intelligent and scalable system that would deliver ads to users from their computer and at the same time began working on what our value proposition should be. The big question was; What kind of value could we give to a consumer to convince them to install our software on their computer and give us permission to deliver targeted ads? After a lot of trial and error we came to realize that entertainment content was everywhere online and it was relatively cheap to come by. That same content was often highly valued by consumers and yet they were typically unwilling to pull out their credit card and pay for it. We began offering entertainment content (games, videos, emoticons, etc.) to consumers in exchange for them opting into and installing our software that would then deliver relevant and targeted ads. We aren’t often credited with its invention, but we are often credited with making it ubiquitous…we are the fathers of adware. Keep reading to see why we think adware is a flawed business model and why we’ll never go back to it.

This trade-off with consumers began well and our little business began to grow, albeit slowly. We then stumbled into our next big revelation. There were (and still are) thousands of websites that have a ton of entertainment related content and a ton of users – but they are having a very hard time monetizing those users. The problem is quite simple; when users are online they are either in commerce mode or entertainment mode. When they go to Google they are generally in commerce mode and are specifically looking for something commerce related. Google asks them what they are looking for and does a stellar job of pointing them in the right direction and collects a few pennies for its trouble. But when a consumer is sitting on a game website playing the latest version of Diner Dash, they aren’t likely to stop playing that game and go book their next vacation simply because an annoying banner ad for travel showed up next to their game window. Thus commercially relevant sites (like Google) are raking in immense dollars per user, and the rest of the world is stuck using monetization methods that quite simply…suck. To drive my point home just compare Google versus YouTube. Both sites get about the same amount of page views per month, but www.google.com generates roughly 100x the revenues that www.youtube.com does. That’s the difference between a consumer being in commerce mode versus entertainment mode.

We saw this problem present itself time and time again and decided that we held the solution to this problem. Because our users were opting into and installing our adware, we had per user revenues similar to Google. So we set about building a platform that would allow other website publishers to utilize our system and in so doing to distribute our adware themselves. This was both brilliant and incredibly stupid all in one. Publishers came in droves to us and began distributing our adware and in our frenzy for growth and cash and just generally trying to keep up – we lost control over how our software was distributed. The power of the publisher network we had built amazed us and created an unreal amount of revenue, yet at the same time the lack of control on those distributing this software in our name ultimately killed us.

The summary of those ten years works out like this:

Three years of toiling in obscurity, doing anything we could to survive through and after the bursting of the Internet bubble.

Three years of unreal growth while our publisher platform exploded.

Three years of trying to wipe the crap off of our proverbial fan after not controlling our publisher network and then borrowing lots of money to go on an acquisition spree.

One year of fending off our lenders during the credit crisis of 2008, and ultimately losing that battle.

During that time we built the leading website monetization platform for entertainment focused website publishers, generated over $300 million in revenues and paid out over $150 million to website publishers and content providers. We were aggressive, moved quickly, made a ton of mistakes and learned almost as many lessons.

Lessons Learned

We are very big on identifying our mistakes, because there’s no better way to learn. We view the long list of stuff we got wrong over the past ten years as one of our biggest assets, and if you think that sounds idiotic then I congratulate you on either being perfect or too dumb to realize the gravity of your own humanity. Here’s our top 10 list of lessons learned that have become guiding principles for BigDoor:

• Be good to consumers. Monetization of users and content by its very nature is not going to be directly welcomed by consumers, but it absolutely has to be consumer friendly. The most classic example of this is with network television. Nobody likes to have their TV show interrupted by ads, but doing so was a model that worked for years for the industry. But there is a balance. 22 minutes of show and 8 minutes of ads can be stomached by users. 8 minutes of show and 22 minutes of ads would have resulted in TV sets all over America being turned off and audiences would have dried up. The world has now shifted and this model is showing its age, but the underlying consumer behaviors still remain.
• Don’t be adware. It doesn’t matter that our move into adware was based on logic that was sound and motives that were pure. Adware became known as a public scourge and trying to fight a broadly based perception is like spitting in the wind. We don’t ever want to write broadly distributed client-side software again.
• Monetization is critical. A few companies these days view monetization as an unnecessary evil. Have you ever noticed that those companies are usually fresh off a huge new round of venture financing? For the rest of us, we need to pay for our websites, our content and our user acquisition – and the only way to do that is to have some form of monetization. And for those companies who are too good for monetization because it would “just get in the way of the user experience”, please give me a call when your VC money dries up and your investors realize you have a super cool product but that you don’t actually run a business.
• Monetize at the point of intention. Some sites just spit out content and others lead users through a process to a point of destination and in so doing create a point of intention for their users.  All other things being equal, those sites that lead a user to some sort of goal or outcome have a much higher potential for good monetization.  Great examples of this include; ecard sites, online games or just about anything with virtual currency. In each of those three specific examples we’ve seen our offer platform outperforms traditional display ads (and even AdSense) by around 25 to 1.  And that’s not a typo.
• Only do business with the good guys. The vast majority of online publishers and content developers are wonderful, upstanding citizens who are trying to make the Internet a better place for everyone. We love those guys. But there are also some very unscrupulous publishers out there that are smarter and more conniving than you can imagine. Differentiating between the good and the bad publishers and making sure we only do business with the good guys is critical in order to build a sustainable platform and business.
• Be long-term greedy. Real value needs to be delivered to get people to part with their money, so revenue is a great way to measure the value you are adding to the world. Short-term greed and measurement will almost always lead to ruin, but if a business thinks long-term and makes intelligent decisions about what will generate the most amount of revenue over a three to five year period of time (an eternity online) – in most cases that will be a fantastic guide to doing good and adding tremendous value.
• Avis syndrome can be a good thing. Not being in the lead drives us crazy, which is why we’d rather start in the back of the pack. It makes us work harder, be better to our customers and generally be more competitive and passionate. Most of our publisher partners are in the exact same spot, so it allows us to share the perspective required to reach down deep for more than the other guy and eventually come out on top.
• Be crazy passionate about customers. I would stand on my head to do a deal with a publisher. No, seriously – I would. In our minds the most important contingent in the online world is the publisher – the folks who do the heavy lifting to bring users together and give them the content they are looking for. Webmasters, social-media developers, iPhone developers – as far as we are concerned, these people are the salt of the earth. They are diverse, interesting and challenging – and our business exists to help them make money.
• Work with rock stars. The people who come together to build a startup create an amazing bond with each other and at the same time build the foundation upon which the company will rely for years to come.  Pick a great team, be extremely good to them, set very high expectations and the result is often a good one.
• Don’t take ourselves too seriously. We learned at an early age that people will laugh at us, so we should always try to beat them to the punch. We take our business and our responsibilities very seriously, but ourselves…not so much. We like to have fun and laugh. We spend the vast majority of our waking hours doing this thing that some people call “work” so we figure we should have a good time doing it.

The Future

We are now taking those lessons and are focusing on building an even more powerful online monetization platform. Every day we talk to online publishers who have done an absolutely masterful job of aggregating huge audiences but we consistently hear the stories about how difficult it is to generate significant revenue from those users. Subscription models work to a point but are limited because only a very small percentage of users will subscribe. Advertising models work to a point but are limited because their users are not in a commerce mode and are therefore reluctant to click on ads. So we have developed an offer platform that bridges the gap between these two models and we are hard at work building out an automated publisher platform so that thousands of online publishers can use our offer platform to do a better job of generating online revenues.

Our Thesis

So back to nailing on our large red door. Our founding thesis is that current online monetization sucks. Google and the other commercially focused sites shouldn’t be the only ones that have great per-user economics. If online entertainment content is going to thrive, there needs to be an underlying business model that consumers enjoy and that sustains the publishers who are bringing it to market. It is time for the rest of us to get access to the necessary monetization tools that will create real and sustainable business models so that all of us as online consumers can continue to have amazing content, entertaining games, bucket-loads of virtual currency, cool iPhone apps, and great social networks.

So there it is. That’s our thesis and the explanation for our very being. We apologize for being so long winded, but our deep passion isn’t explained in just a line or two (but we promise to value brevity in the future). Now please tell us what you think. Do you struggle with online monetization? What would you like to see in a publisher platform that is focused on helping solve that problem? Do you hate us already because we are trying to help webmasters make a profit, or do you love us because of it and see us as helping to build a foundation that will create a sustainable content economy? Comment and give us your thoughts.