Capital Efficient Entrepreneurship: Ranker CEO Clark Benson (Part 2)

Sramana Mitra: What years are we talking now?

Clark Benson: I launched the company in 1995. I started launching other businesses about a year and a half later. I opened up a record store with a friend of mine. That was somewhat of a mistake. I had that for five years. I didn’t make a lot of money. I started a separate music marketing company in the 1997 to 1998 timeframe.

In 1999, in the 1.0 era of Internet, I was reading a lot of things about the Internet. I was very interested in technology. I was using the Internet a lot. I had an idea to build an Internet company. I had some savings. I put about $75,000 into an idea that I had that became the company called eCrush. The idea was to find out if people that you had a crush on also felt the same about you where neither party would know who it was. I launched this company with somebody that I had gone to college with.

Sramana Mitra: What year was this?

Clark Benson: This was in 1999. We launched it on Valentines Day 1999.

Sramana Mitra: I remember the name of the company but I didn’t really look into it much. What happened?

Clark Benson: It was actually one of the first viral successes for Internet startups. You would essentially go to eCrush and you would put in an email address of somebody you had a crush on. We would send them an email and say, “Congratulations! Somebody has a crush on you. If you add all the people you have crushes on, we’ll tell them. If it’s mutual, we’ll match you up.” It became a viral hit with teenagers.

We got press in magazines. It started taking off. We raised a total of $900,000 from angel investors. I stayed in LA, but my partner and the rest of the office moved to San Francisco. I started the company with two people who I had known from high school and college. Since they were still in Chicago, I said, “It’s an Internet company. I don’t have to be in the same place.” I stayed in LA.

They started the company in Chicago, but when we got funding, it was all from people in the Bay Area. They moved the company into a large apartment. I would commute up there for three or four times a month for a couple days at a time. We raised money and started growing. We got all these crazy acquisition offers. Back in those days, there were a lot of public companies that had no real business. They were trying to rapidly acquire companies and pay you with stock.

To make a somewhat long story short, we got the company to break even. We had an acquisition offer on the table from match.com. It was a decent offer. When we started negotiating, the Internet bubble crashed and we found ourselves with no offer. We had these small banner ads. They were 468 x 60 ads, but we were making $30 CPMs at that time. In a span of six months, the CPMs went from $30 to $1.

Sramana Mitra: I was going to say $30 to $.30. Wow!

Clark Benson: The acquisition offer went away. We were sitting there with our business blown up. We still had a lot of traffic. Nobody wanted to buy any Internet company. Everything was on a free fall. We had $350,000 left in the bank. Honestly, I might have walked away from it at that time. I was only spending only half my time on it because I was overseeing other businesses. They were really solid cash cows. I was making a good living from the cash from my marketing company which is still going on today 23 years later.

My partner at eCrush said they wanted to stick it out. They were at a point in their lives where they were okay taking a small salary. They just wanted to be their own boss. We cut the staff down to six people and we said we’re going to turn this into a real business. We actually did. At the end of 2006, we sold the company to Hearst. We were doing about $4 million in revenue.

This segment is part 2 in the series : Capital Efficient Entrepreneurship: Ranker CEO Clark Benson
1 2 3 4 5 6