1. Business, Funding, and Leadership
Lessons from the Front Lines of
Growth at Constant Contact
Gail Goodman
CEO, Constant Contact
ggoodman@constantcontact.com
(781) 472-8150
2. Sharing the Constant Contact Story
Three Major Phases:
Finding the Customer / Market / Solution
Struggling with Go to Market / Repeatable Sales Model
Driving for Market Leadership
3. Sharing the Constant Contact Story
Each Phase Presented Very Different:
Business Challenges
Funding and Cash Flow Challenges
Leadership Challenges: Evolving Role of the CEO
4. 1999 – 2002: Finding the Customer / Market / Solution
Key Business Challenges:
Who is our target customer?
What problem are we solving for the them?
Can we make $$$ at $35 a month?
5. 1999 – 2002: Finding the Customer / Market / Solution
Funding and Cash Flow
Raised $10m in May 2000 ~ $27m post-money valuation
Hired up to 50 employees
Got a great space (ping pong, air hockey, etc.)
Spent the cash
Needed more money in 2001!
Small inside round – learned about anti-dilution
Needed an outside round in November 2002
Complete cram-down recap – UGLY!!!
Revenue run rate =$2m, pre money of $2.5m
6.
7. 1999 – 2002: Finding the Customer / Market / Solution
Role of the CEO
Eye on the customer / market / product
Need to believe in the business deep in your gut
Firm hand on the tiller – make directional changes but don’t swamp
the ship
Build the team
Find and motivate great people
Keep tight alignment – strategy to daily priorities
Manage the investors
Great communication at the right level
Do not let them drive
Do whatever is needed
8. Business Scorecard – October 2001 and 2002
October 2001 October 2002
New Customers per Month = 100 550
Cumulative Customers = 1,200 6,000
Monthly Run Rate = $42,000 $200,000
9. 2003 – 2005: Go to Market / Repeatable Sales Model
Key Business Challenges
Conversion: Turning touches into customers
Barriers to customer success
The conversion funnel
Customer touch model
Surviving the spam challenge
Getting our mail delivered = new relationships / team
Policing our customers = new technology and process
Driving the regulatory solution = bringing the industry together
10. The Customer Funnel
Channel Partners Direct Viral
-Global -PPC -Referrals
-Business -Regional -Powered By
-Affiliate -Paid programs
Trials Website Conversion
Trial to Paying
Paying Conversion
Referrers Passionate,
Satisfied Customers
11. 2003 – 2005 Go to Market / Repeatable Sales Model
Funding and Cash Flow
Living on the cash flow line: recurring revenue growing ~$30K a
month
Good news
• Very predictable revenue = confidence to hire
• Tight cash = tight prioritization
Challenges
• Valuable projects not getting funded
• Team really stretched
12. 2003 – 2005 Go to Market / Repeatable Sales Model
Role of the CEO
Team Building / Transition
Dramatically changing view of key skills – Marketing; call
center
Direction setting
Final vote on toughest trade-offs – with confidence and
empathy
Need to move quickly on spam issues
Getting out of the details
Board communication
13. Business Scorecard – 2003 - 2005
October 2003 October 2005
New Customers per Month = 1,000 3,200
Cumulative Customers = 13,000 45,000
Monthly Run Rate = $400,000 $1,450,000
14. 2006 - Today: Driving for Market Leadership
Key Business Challenges
Scaling our go-to-market formula
How to reach small businesses and get them to try email
marketing / Constant Contact
• Testing lots of new channels
• Investing in market development
Understanding the economics
Revenue per customer per month
Customer lifetime
Cost of acquisition
Cost to support / host a customer
15. 2006 - Today: Driving for Market Leadership
Funding and Cash Flow
2006 revenue plan = $27m ; cash balance = $2m
Ready to scale faster but need upfront $$
Customer Economics
$800
$600
$400
$200
$0
-$200
-$400
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10Q11Q12 Q13Q14Q15
Final venture round – May 2006; post money > $100m
17. 2006 - Today: Driving for Market Leadership
Role of the CEO
Team Building (It never ends)
Driving team culture down into the organization (no silos)
Building the next level down
Chief of Culture
Maintaining customer focus and passion at scale
Communications, communications
Change Leader
Become a multi-product company
Growth through acquisitions
Manage Board and Investors
18. Business Scorecard 2008
Monthly Revenue (2004 – Q2 2008)
2003 2004 2005 2006 2007
Revenue $4.5m $8.1m $14.7m $27.5m $50.5m
Y/Y Growth 131% 81% 82% 88% 83%
Q2 2007 Q2 2007 1H 2008 1H 2007
Revenue $20.7m $11.4m $38.9m $21.1m
Y/Y Growth 82% 84%
Note: monthly numbers unaudited
Please review the discussion on Page 2 of this presentation regarding the risks associated with forward-
looking statements. Do not rely on this presentation to make investment decisions. 18