NextMark is 12 years old today. We opened our doors here in Hanover, NH on March 28, 2000. I’m thinking back on the good and bad times and want to share some of the highlights.
Six of us built and launched our first product, a multi-channel media planning system. Meg Houston Maker, Jim Ford, Mark Moales, Mike Yacavone, Wei Shen, and I were NextMark’s founding team. We lived on the bleeding edge by developing our software for the web, which is known today as “Software as a Service” or “Cloud Computing.” Back then there were no good software development frameworks and we had to roll our own security system, caching, persistence, etc. It was not easy, but we persevered. Although those home-grown components have since all been replaced, sticking to the SaaS vision was one of our best product decisions we’ve ever made.
Merit Direct was our first customer in May 2001. A dozen others soon followed. They liked the system because it made their lives a lot easier. The system gave them an internet-style search engine that media it easy to find media programs (back then we embedded Alta Vista’s search engine), a shopping cart-style method of creating media plans, and the ability to download an information-packed Excel media plan with a single button click. This product is now the standard for direct marketing media planning and is used by virtually everyone in the business. The “faster, better, easier, and cheaper” theme set the stage for all our future products.
The years 2001-2003 were lean and painful.
I only raised enough money at the start to prove the concept. Although we had good products and great customers, the subscription model we chose didn’t grow revenue quickly. Our sales in 2001 were a meager $112,000 and our expenses were $862,000. We soon ran out of money and I had to go back to “tin cupping” (asking investors for money when you don’t have any). I found a hostile environment: investors were nervous because those were the dot com bust years and technology companies were going out of business left and right. I ended up patching together a series of bridge loans, some from MerchantBanc Venture Partners (thank you!) and some from my own savings, to keep the business afloat. We were on our last payroll five times during that period. I remember having $5,000 in the bank on a Wednesday and needing $30,000 to cover payroll on that Friday and being flat broke myself. This was not fun, but we always got through it somehow. I aged considerably during that time.
On 9/11, I was in a car with a director on our way to a meeting with a competitor on lower Broadway in Manhattan. Despite only a few months in the market, our product got their attention when we started winning customers away from them. The purpose of this meeting was to explore licensing our technology to them as the high-end product in their suite – they had the sales force and we had the technology. We were driving through Manchester, CT when we heard the news the first plane crashed into the World Trade Center. We knew immediately our trip to NYC was cancelled and pulled over and watched the surreal events unfold from a bar in the Marriott. 9/11 threw everything into disarray. That meeting with the competitor was never rescheduled, the discussion lost momentum, and we never seriously talked about licensing again. Besides affecting this particular deal, 9/11 hurt us in many other ways because it disrupted the entire media industry when advertising spending stalled. It was hard for everyone.
To make our situation worse, a key data supplier pulled the rug out from under us in 2002. While in negotiations and without warning or reason, they sent a termination notice that would effectively shut us down because our software relied on their data. I was was thinking we’d have to close the business and I immediately notified each of our customers that our product would soon be shut down. Although it was painful for me to deliver this news, it was the right thing to do because it would affect their businesses. To my surprise, our customers revolted against this data supplier and forced them to extend the data license. And the new agreement was on much better terms.
This was a turning point in the business. This revolt demonstrated our value in the marketplace. It also made it easier to raise the money we needed. Venture Capital Fund of New England led a round that helped to “cross the chasm” and we’ve been profitable since 2003. No more tin cupping!
In 2005, we launched our second major product – an order entry system for direct marketing. Merkle, InfoGroup, and Carney Direct were among the first customers. They liked this system because it saved lots of time and eliminated tons of errors. In one example, we reduced the amount of time to send invoices from 30 hours per campaign to 10 minutes per campaign and in the error rate from above 50% to zero. This system was a complete nightmare to build because it has a million moving parts to support all the crazy deals that salespeople come up with. It’s a complicated business and this system had to create accurate purchase orders, invoices, receipts, etc. Everything has to be exactly right and give management a real-time view of their business. This has grown to become the #1 solution and processes more than 20,000 orders a month today.
We initially missed the boat on digital.
I distinctly remember a meeting in October 2005 with Randy Blasch of Response Media at his office near Atlanta. He was encouraging us to build an operating system (orders, invoices, etc.) to integrate Atlas, which was their ad server at the time, and Great Plains, which was their accounting system. He thought we could do the same for digital media as we did for traditional media. Although I liked his proposal, shame on me for narrow-mindedly telling Randy basically “we’re too busy with other work and nobody else is asking us for this.” So, we kept our focus on traditional media for the time being.
In 2008, we acquired competitor Marketing Information Network or MIN. This doubled our business overnight. As we integrated the operations, we accelerated improvements to products and services. By combining the two operations, we eliminated the duplication, improved our own workflow, and shifted resources to the things that our customers valued the most: the software, the data, and the service.
We finally came around to digital in 2010. It became increasingly clear we needed to focus our resources and make big bets on digital. Although still only a relatively small part of media spending, digital media was growing quickly and represented the future. But the board was divided on making these bets. In February 2010, we hired outside advice from Winterberry Group. Among all the alternatives considered (and there were many), their recommendation was to focus our resources on digital. Based on this recommendation, the board reached consensus and we’ve never looked back.
Although we continue to fully maintain and support our traditional offerings, our new development is focused on digital media – particularly online display, mobile display, and online video. Fortunately, we’re not too late to the party and there are still plenty of big problems to be solved particularly in match-making, collaboration, and workflow – our strong suits.
Our initial approach for digital media was wrong. We started to extend our existing systems to support digital media. After all, we already supported 12 media channels… how hard can it be to support 3 more channels? We quickly learned this approach was like trying to fit a square peg into a round hole. Cramming digital media capabilities into our legacy system would confuse existing users and new users would be confused by all the legacy features. So, we abandoned that approach and instead decided to create brand new apps for digital media from the ground up. We upgraded our platform so it would be easy for users to switch between the old and the new apps.
In February 2012, we launched our first digital media-specific products: Media Magnet and Compass which implement the new RFC process. And a new digital media planning system is in the works slated for release later this year. Although the digital media products are only a month in the market, 25 leading digital agencies and 300+ publishers are already on board. They like our mission, our approach, and the value these new tools bring to them. As with our initial products, these new products make their life easier and help them to operate more efficiently and effectively.
So here we are on our 12th birthday and NextMark is still feeling like a start-up. I’m proud of what we’ve accomplished and where we are now. The company is stronger than ever. The team is better than ever. The customers are better than ever. The work is as challenging as ever. And I’m having more fun than ever!