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Bootstrapping a Billion Dollar Unicorn in Online Real Estate: Auction.com CEO Jeff Frieden (Part 3)

Sramana Mitra: You bought these parcels of land and you ran this auction. What was the outcome of the auction?

Jeff Frieden: We made a million dollars in one day.

Sramana Mitra: Oh, wow! Terrific!

Jeff Frieden: There were thousands of people there betting competitively on this land. It was the 1987 to 1988 timeframe. The real estate market was good then until the recession in 1990. We actually got a second one in before the market crashed in 1990. We bought 200 more right after that. When the market crashed, they had really built a lot of new homes and condominiums in Southern California. >>>

Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford (Part 5)

Sramana Mitra: We are huge fans of bootstrapping entrepreneurs, so congratulations on doing that. What scale did you reach before you raised the private equity round?

Jamie Tedford: We were almost a hundred people. We were very profitable and had 50% EBITDA margins. When we decided that we were going to talk to the private equity market, we got a lot of raised eyebrows for our P&L. Thankfully, a lot of the private equity firms in Silicon Valley had never seen a balance sheet that had profit. A number of them asked if there was supposed to be a parenthesis around the numbers.

Sramana Mitra: What range are we talking? Are we talking about a $5 million dollar company or a $100 million company? You can give me range, but I just need to understand how far you bootstrapped. >>>

Bootstrapping a Billion Dollar Unicorn in Online Real Estate: Auction.com CEO Jeff Frieden (Part 2)

Sramana Mitra: How long did this go on? How many years did you run this?

Jeff Frieden: From 1980 to 1983. We once hired an auctioneer to come in one day for an auction of these televisions that we had in containers sitting out in the parking lot. We actually sold more merchandise in that one day than we did in a week or two. We were really fascinated by the auction business. Then in 1983, we sold that business.

Rob, my partner, went off to Auction School, which is in Billings, Montana. We had made quite a bit of money for our age. We saw an ad in the LA Times for a land auction at the LA Convention Center. We went up to LA and sat through that auction. We wrote down the prices of the 200 pieces of land that were mostly in California. We took that and went off to the county recorders. Today, all this is available online. >>>

Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford (Part 4)

Jamie Tedford: We took a step back at that moment and thought, “We’re sitting on a tremendous amount of equity value.” We had now become, not just a strategic partner of Facebook, but we had also accessed the Twitter platform as well as LinkedIn and thought about how we could become the preeminent software for helping brands on-board content across social platforms. All of a sudden, the market changed again and we were ready to switch to ad tech. Although we had gotten to that advertising side of space, we had to grow quickly. It was at that point, almost three years ago now, that we decided to go out and think about some private equity funding to spur growth.

Sramana Mitra: Let me ask you a few questions before we move on from this point. You said you had a bunch of publishing tools that Facebook did not have that you were providing like scheduling. Facebook, now, has all of that in place. Hootsuite has that available as well. Before you made the switch to ad tech, what were you doing in publishing tech to keep up with the times and those changes in the market? >>>

Bootstrapping a Billion Dollar Unicorn in Online Real Estate: Auction.com CEO Jeff Frieden (Part 1)

If you haven’t already, please study our free Bootstrapping course and the Investor Introductions page.

Jeff Frieden bootstrapped Auction.com to about $180 million in revenue and profitability. Thereafter, he raised private equity financing and growth capital and is currently running a private company that is more than qualified to be a public Unicorn. The company has a legitimate revenue and profitability model that is scaling phenomenally well. Unlike many ‘funny money Unicorns’, this one is real!

Sramana Mitra: Let’s start at the very beginning of your journey. Where were you born, raised, and in what kind of circumstances?

Jeff Frieden: I was born in Orange County, California and raised in Anaheim, California. It was right across the street from Disneyland. My mom and dad both worked at the Internal Revenue Service at Los Angeles after World War II. >>>

Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford (Part 3)

Sramana Mitra: What emerged as the positioning of Brand Networks? I understand you’re helping with word-of-mouth brand networks. What was the service that they were buying?

Jamie Tedford: In the early days, they were buying more of traditional marketing services agency roles. Eventually as I brought on my partner and CTO Mike Garsin, we determined that we weren’t looking to create an agency. If I was going to do that, I had all the resources. I needed a partner to find a way to scale this offering through technology. We all know that technology scales a lot faster than people.

We made a commitment that whenever we started to see common requests from customers, we would start the process, engage a lawyer, and make sure we had an IP that we could then resell. That was the foundation for us that set us in motion for us to be a technology company with marketing services rather than a marketing services company who can deliver technology. We began establishing that in the first year. What >>>

Bootstrapping a Highly Profitable Company in Social Media Marketing: Brand Networks CEO Jamie Tedford (Part 2)

Sramana Mitra: What year did that chapter end for you?

Jamie Tedford: Around 2002.  I got to work with an ad agency called Arnold Worldwide. I worked with a lot of really big brands. The brand that really got me excited was Volkswagen. I learned a lot of about traditional advertising at that time. I spent six years there. I had progressed in my career there. I was a little bit of an outlier in a very traditional agency that still loved to buy expensive television spots. I was always much more interested in the Internet, and ultimately, I found myself gravitating towards a burgeoning market that was then called word-of-mouth marketing.

There’s an industry now that’s forming around how to make that systematic and how to measure its impact. That really excites me. I was one of the founding board members of the Word of Mouth Marketing Association in late 2000. We were creating an industry that built the foundation of what is now the social media industry. Then, it was capturing how physical word of mouth happens. For me, that was pretty quickly followed by an obsession with how word-of-mouth happens and advocacies, specifically, happen online. Social networks piqued my interest. This is the technology required to make word-of-mouth real online. >>>

How to Manage A Successful Pivot: Bullhorn CEO Art Papas (Part 7)

Sramana Mitra: The IPO window will be fine even if the market corrects itself. Most of the problem with the market right now is with the late-stage venture capital as it pertains to private businesses. I don’t think there’s a lot of problem with the public market.

Art Papas: I’d like to be a little larger when we go public. I’d like to be over $100 million, which we will be next year. I’d also like to be in a position where I feel like my team is ready. I hired a CFO from a public company in Boston called Constant Contact. I hired a COO from Parametric Technology Corporation. I hired a Head of Services recently from Salesforce.com, which is our largest competitor. The CFO has the most work to do to get ready for an IPO. I think it’s in our future.

Sramana Mitra: Why did your venture investors want to sell to private equity? When companies are growing well, venture companies tend to not want to sell to private equities. What was the motivation? >>>