ClickEquations’ CEO: Fueled By Persistent Confidence

You won’t want to miss the last part of this interview because I know you’ll be inspired by the discussion of what kept Lucinda Holt going through the tough times in her career. And what a career its been. She playfully calls herself a “Cereal CEO,” based on her experience leading multiple companies.

At the start of this interview I talk about TurnTide, the startup that went from launch to a $28 million sale within 6 months, because I want to feature one of her big triumphs. But if you listen to the full program, you’ll also hear about the days that felt “like being on a muddy 45 degree incline” and how she got through them.

Today, Lucinda heads ClickEquations, which manages pay per click ads for companies that spend over $500,000 per month. Be sure to hear how she discovered the opportunity that led to that company.

Lucinda Holt

Lucinda Holt

ClickEquations

Lucinda Holt is the CEO of ClickEquations, an intelligent paid search platform for large advertisers and agencies.

 

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Full Interview Transcript

Andrew Warner: Three messages before we get started. I have a brand new sponsor, Scott Walker, the entrepreneur’s lawyer. Frankly, I’m not even sure why he’s paying to sponsor Mixergy, since Scott Walker is a pretty well-known lawyer in the start up community.

You probably already know him from his Ask the Attorney posts on VentureBeat or from Venture Hacks or from Quick Sprout. Scott is the guy you turn to when you’re raising money from VCs or selling your business. But if you’re launching, he’ll also help you get your company structured properly. So check out WalkerCorporateLaw.com.

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Here’s the program.

Andrew Warner: Hey everyone. It’s Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Coming at you even though it’s summer up in the U.S. and in Europe. It is freezing here in South America, where I’m going to be for another few weeks. You know what we do here. [coughs] What we do here is we suffer breathing, and we do interviews with entrepreneurs who build incredible companies.

I have them come on here to talk about how they built their companies, talk about the suffering, talk about the hardships along the way, the challenges along the way, and how they overcame them.

Joining me today, since I’m having such a hard time talking, it’s a good thing that I’ve got somebody else who will be doing most of the talking. Lucinda Holt. She is a cereal CEO. One of her big hits is co-founding TurnTide and selling it six months later for $28 million.

She also has run Destiny Software and Cuts.com. Currently, she is the CEO of ClickEquations, which helps companies with big pay per click campaigns manage their ads. I am so much better when it’s all scripted. Lucinda, welcome to Mixergy.

Lucinda: Thank you. Pleasure to be here.

Andrew: So, first question for you is this. Before we get into how you built your businesses, I noticed that you recently got an Eisenhower Fellowship. Can you tell us what that is?

Lucinda: I did. Sure. It’s a little off center from this conversation, but it’s interesting. The Eisenhower Fellowship was founded in 1953 by a set of Eisenhower donors. There’s some money left over. That used to happen in campaigns, as opposed to now, when you’re millions and millions of dollars in debt.

The broad reaching goal of the program is actually world peace. The concept behind it is that if people know each other, they trade with each other. And, if they trade with each other, they don’t fight with each other. So, for many years, the program was just taking folks from across the world and bringing them to the U.S., and they’d come for six weeks and meet with lots of people, meet with each other, learn about how we did things here.

And I don’t know how long ago, maybe ten years ago, they started the USA fellows, which is the reciprocal program. So, about 15 of us, I think there’s 9 this year, go to various countries. I’m going to China twice, in August and then in November, to meet with folks there to talk about, in my case, entrepreneurship and the Internet.

Now, the Internet is developing there. And you form bonds and there’s a very large alumni group. There are four heads of state who have been Eisenhower Fellows. So, it’s a pretty prestigious group, particularly the international fellows coming here, and a great opportunity to get a little bit out of my day-to-day and think bigger thoughts. It should be fun.

Andrew: Can you give us an example of one of the meetings that you’ve had as a result of this? Or one of the interesting people that you’ve met?

Lucinda: Well, yeah. The most interesting so far. So, I haven’t traveled yet. I’ll be traveling in about a month. But, my most interesting is I got to have dinner with President Vicente Fox of Mexico. So, that was pretty cool. My first head of state dinner.

Andrew: What was that like?

Lucinda: It was really interesting. It was really, really interesting on a number of levels. The most fun part of it was President Fox was telling stories about his dealings with Castro and with the Pope. So, it’s quite (________) to have somebody actually describe, tell a story about a guy he works with who just happens to be Fidel Castro. It’s fun.

Andrew: Now, is this now the kind of meeting that would eventually help you in business where you can call up the president of Mexico and, I don’t know, get to take over Mexican Internet or something?

Lucinda: Yeah, right. Yes. I don’t know that that one has any very specific application. But, in general, yeah. It’s just this huge broad network that allows you to get to people. I went to a pretty good business school as well, and there is a strong network there. You can pick up the phone. But, it’s not a guaranteed phone call back in the way that the Eisenhower network is. And we’re really lucky. Frankly, the caliber of the U.S. fellows does not yet reach the caliber of the international fellows. So, we’re pretty darn lucky that when we go there, we get access to just extraordinary people.

Originally, I was going to go to Korea as well as China. And, to give you a sense, the first meeting that I got there was with the CEO of the largest search engine in Korea. That was literally the first meeting I got. So, it definitely has very strong use for business. I think the biggest thing for me, though, is more that I hope it will expand my horizons. Right?

I have done this, as we are going to talk about, a whole number of times now. And I’m looking forward to a completely different kind of experience with really different kind of people and a really different kind of culture. Because, I think one of the things about entrepreneurship and leadership in general, so both, in different ways, it helps refresh you and get you thinking about things in a way that’s different than others are and than you have been. And I think there’s a huge advantage to that in business.

So, certainly the network will be enormous. But it’s also, I think, just a life experience.

Andrew: Speaking of networks, it seems like Infonautics built up a great network for you. Is that where you met Josh Kopelman?

Lucinda: It is. So, I worked for Josh when he was . . . for people who don’t know, Josh is, I would say, unarguably the best seed investor, seed fund in the world. And, yeah, so I worked for Josh when he was right out of college. I was employed, I think I was 32. Something in the early 30’s at Infonautics. We went public in the summer of ’96. We were one of the earliest Internet IPOs. And that company did indeed spawn Internet folks, just all over the place.

They were acquired by EBay . . . no, we went public. And then he went on to found Half.com, which was then acquired by EBay. So, there’s a generational thing that results in lots and lots of folks who are related to Infonautics in some way.

Andrew: As I was doing research into your background, I just kept seeing his name and First Round, his company, over and over.

Lucinda: Yeah.

Andrew: After Infonautics, it seems that you went on to Destiny Software, which was also called WebSolutions.

Lucinda: Yes, we renamed it Destiny WebSolutions about halfway through.

Andrew: I see. So, what was that when you started there?

Lucinda: Well, when I started there, there were two guys, who were working in a basement in the middle of nowhere in rural Pennsylvania. But they had the Bank of America as a first customer to do their online banking system on AOL. So, this was ’96. So pretty early in the Internet and the whole online game. And they had managed to do a contract or they were paid for the development of the system, but maintained the intellectual property rights to it.

And so I ended up joining them. So, I was the third person. And we raised venture money and turned it into a real company. We grew it to about $25 million in sales and went through a series of venture financing and then made the corner and were really, very highly profitable. So, it was a great experience.

It’s a funny thing. I sort of described my experience there and at TurnTide as together a complete story, because we didn’t ultimately sell that company. So, we grew a really terrific company that we didn’t manage to make money out of. And then, in this very short period of time, TurnTide had tremendous momentum and was growing extremely well. It was a little baby company, and we sold for a pretty good number. So, you put those experiences together, and I think you get what really the iconic startup experience is.

Andrew: Why did you guys change names? How did the business evolve?

Lucinda: Destiny? Destiny was an interesting case. We started in this online banking world, and it was extremely competitive. We were a little bit behind. We were about a half step behind from a technology perspective.

So, for any [09:19] application server that was optimized for financial services. And our business model, which was a pretty typical business model in those days of enterprise software, was to build a system on top of that technology that was customized for large clients.

And we were very successful, because 15 of the top 20 banks in the US were customers of ours. But the reality was that application servers in and of themselves became a market. People surpassed us in it, and it just didn’t make sense anymore. So, the reality was we had two pieces of business. We had this core technology, and we had, essentially, this consulting business. We were beaten in the core technology business, so we just jettisoned it and focused on the services side of the equation.

Andrew: And I read in a “New York Times” article that you guys liquidated and ended up giving the capital back to investors at the end?

Lucinda: We did. It was sort of a funny thing. So, we got, sort of, the roundhouse followed by the upper cut of the bubble bursting and 9/11, which really, really hit the financial services industry hard. And, all of a sudden, it didn’t really matter for these large banks whether they were on the Internet or not. It just wasn’t a priority.

And, so we slid, the business slid from about $25 million in sales down to about $15 million in sales. It stabilized and we were still very profitable. But the reality was the company wasn’t worth anything. All right? So, valuations had dropped from 10 times revenue to .9 times revenue. And you looked at it, and it was going to be, basically, really a long haul to make the company worth something. Building up the revenue would have happened.

And we had amassed this cash balance. So, my thinking as an entrepreneur was, “Cash is life.” So, as we saw this happening, and it was pretty clear it was going to happen, it happened to us much later. Almost everybody in our industry went bankrupt. So, it was sort of amazing we didn’t do that.

And as they were imploding, we knew that something was going to happen. So, we just turned down the screws and started hoarding our cash. And we got into a position where we had about a $7 million cash balance, and we had a very tired investor, our earliest investor, who was really in desperate need of some liquidation event. So, we ended up just liquidating the company and giving the cash back to the investors.

Andrew: In retrospect, would you have been able to wait out the downturn and done well afterwards?

Lucinda: I think, as I just said, the company could have recovered really nicely. Whether the valuation would have ever been there, that was another question.

Andrew: To make it worth the slog, you mean?

Lucinda: Yeah. I think it wasn’t going to be worth the time and effort. There were other options that we looked at, which I think actually would have been the right thing to do. We looked at taking . . . our set of investors had a lot of confidence in the management team. So, we looked at taking the management team and the cash and buying something.

There was a lot to buy in those days. Lots of companies had exploded. And putting those pieces together and doing that. And I think that actually would have happened. We brought a couple of those deals to the table, except that this earlier investor was done. And once an investor is done, they’re done.

Andrew: I see.

Lucinda: It wasn’t a time of history where there were a lot of options.

Andrew: Right. Was there a battle internally?

Lucinda: I wouldn’t say there was a battle internally. There were a couple board meetings about it. It was very tough for the common shareholders, because we weren’t going to get anything out of it. The commons, the founder, and I didn’t have exactly identical goals. And that’s one of the things that happens in the complexity of these kind of companies I run, is you get every investor typically has its own agenda. Some wanted a great big exit. Some were happy with a smaller exit sooner, you’ve got that. And then you’ve got the inside folks who have their own things. Some want to go home and some want to do another thing and some want to keep doing this. So, it was complicated in that there were a variety of interests, but it wasn’t as contentious as it could be.

Andrew: What about you? What’s your motivation? Why go through all these companies and build them and sell them?

Lucinda: I just love doing this.

Andrew: What part?

Lucinda: I love the whole thing. I think it’s really the way all the parts come together. Before I got here, before I did this, I was a product manager at Infonautics. And before that, I worked at an investment management company. I was a product manager and I did sales and I did service and a whole variety of things. And then before that, again, I was at a startup in a whole variety of sort of operational roles and close to client management and things.

And so, I get to this point where I really describe myself as a jack of all trades and a master of none. Every single one of my managers is way better at what they do than I do. The thing that I can do is get enough of it to put the pieces together. So, the thing that I love about this is growing something. I love the people side of it. I like the financing side of it and sort of the whole puzzle aspect of that.

I love the sales aspect—to clients to prospects to partners to investors. It’s really the totality of the thing. I love all the pieces individually. I love them together. And it’s about building something. I’m one of those people. Entrepreneurs are all like this. We build stuff.

Andrew: Were you like that before you were officially an entrepreneur? I mean, were you the person who in high school was coming up with all kinds of businesses? College you were? No?

Lucinda: Totally not. So, I’ve got a blog Cereal CEO, and I call myself that as opposed to a cereal entrepreneur, which is the more typical term, because the story I told about Destiny is really the typical one. So, here at ClickEquations, the guy who started the company is a guy named Craig Danuloff, who is that guy who sold pots out of his trunk when he was in high school.

That’s not me. I think what I’m good at, I do think my unique gift is the ability to take something an entrepreneur sees and appreciate that vision and sort of separate the wheat from the chaff there. What’s just a bad idea and what really has something to it. And then turn in into something.

And I think most CEOs can’t do that bridge. They’ve got to have something there already. Give them $2 million or $5 million in revenue, and they can figure out how to grow that. So, I think I am sort of a funny, unusual in-between. I’m not the idea person, but I can take it from literally nothing. I’ll be the one that incorporates. I’ll be the one that actually makes the company and all the rest. It just isn’t initially my idea.

Andrew: Why not take the idea and go incorporate your own business? And cut out these guys?

Lucinda: I think for a few reasons. Most of my ideas aren’t that great. At least, I don’t think they’re that great. I think maybe I’m harder on my own ideas than I am on other people’s ideas. I’m a big believer that it takes a lot more than one person to do this.

So, if you have a look at successful startups, the overwhelming majority of them are done by teams, not by one guy. It is absolutely true that sometimes that works. I’m not that. I need the collaboration of the group. And I’m not technical. I think my one regret, if I look back professionally, is I wish I had a technical undergrad degree. So, my thing is technology. My thing is the Internet. I need the guy who knows that stuff.

Andrew: OK. TurnTide is the next big business.

Lucinda: Yeah.

Andrew: How did you end up at TurnTide, which was spun off of ePrivacy Group?

Lucinda: Yeah. So, the guy who founded ePrivacy Group, a guy named Vince Schiavone, who’s another extremely accomplished entrepreneur, he had founded the company. We knew each other because we had a common investor in our prior companies. He had had a company that imploded in the Internet era called Foranything.com, and we had the same investor.

And so, he was looking to take that company, it was called the ePrivacy Group, to the next level. And the concept there was paid priority e-mail. Essentially get paid, like a CPC for pay per click, for reading e-mail, which I thought was really a horrible idea.

But, while they were doing the intellectual property work around that idea, they had patented this concept for anti-spam solution that was at the network layer, the router layer. Whereas most anti-spam solutions are filter. The e-mail comes in. Is it spam? Is it not? Quarantine it? Send it along?

What we did is literally controlled the traffic flow from given senders depending on how likely it was that they were sending spam. So, if it looked like a lot of your e-mail was spam, we literally just gave you a tiny pipe.

And I fell in love with the technology. So, they had basically started to shift the company. They were sort of doing both things. They were early in the development of the product, which was then called Spam Squelcher. And Vince was talking to me about coming to run that company. I really felt strongly that the paid priority e-mails were the wrong thing. And I felt strongly that the company needed a fresh start, that it wasn’t going to be fundable and it was going to have marketing issues if it wasn’t a new entity.

So, we worked for a long time. I worked with Vince for a long time to figure out a structure. What ended up happening was, David Brussin, who is my co-founder at TurnTide and had invented this technology inside the ePrivacy Group, we created a new company. Josh funded that new company. We then bought the technology and the people from ePrivacy Group and put it in the new company. And Vince came over and worked with us as a director of the firm. So, that really gave us this clean start that we were able to then take the thing. So, it was a deal.

To your earlier question, I think there’s lots of ways to approach entrepreneurship, and the way I do it is a little atypical. But, I think it’s important for people to hear that you don’t have to have the idea. So, it’s the ability to see that that’s a good thing, and then bring all those various pieces together.

It was an extremely complex deal. So, the legal aspects and the funding and the team. Sales, you needed all the other functions to bring it out to market. So, that’s how it happened. Vince basically gave it birth, and then I raised it.

Andrew: Was this your idea, though? The way that you structured it? Did it come from you?

Lucinda: Yeah.

Andrew: That’s the part that you bring to a deal. That’s the part that you bring to the business.

Lucinda: Yeah, exactly, the structure stuff and how the money works and all that.

Andrew: Now, this was eight years after you left Infonautics. You and Josh Kopelman, how did you stay in touch?

Lucinda: Well, Josh’s grandfather, actually, was a key investor in Destiny.

Andrew: I see.

Lucinda: So, there was always a bridge. And, Josh and I, you know, I had talked with him about Half before it was even incorporated. Philadelphia’s a small town. I had endless respect for Josh. I think he liked the work that I had done. So we’d always stayed in touch.

And actually, the way he ended up doing that investment in TurnTide was I called him for personal advice. I was in a situation where I hadn’t made any money yet at that point. I mean, other than salaries. So, I had been about a year without a job, without any income. And I reached a point where that was over and I was going to have to do something.

So, I called him to say I’ve got this funky thing I’m trying to do with ePrivacy. I had a job offer on the table from a very hot local startup, and I forget what the third was. I had a third opportunity. And I called him just as a friend, to say, “What do you think I should do here?”

At which point he literally said to me, and the direct quote was, “I’m sitting here kicking myself, saying, ‘Don’t tell her you’ll invest. Don’t tell her you’ll invest.'” And, I said, “Josh. Invest?” And that was how it happened. So, we had that kind of relationship. He really is and was a mentor to me as well as a friend through that time period.

Andrew: Why? What do you think . . .

Lucinda: And then after TurnTide, I went and hung out with him as First Round was just being born. So then we got deeper in.

Andrew: Why do you think that he believed that much?

Lucinda: Well, I think we’d worked together. So, he knew . . .

Andrew: For less than a year, though, right?

Lucinda: Yeah, but it was a pretty intense less than a year. First of all, going from, it was like 35 to 250 people or something in eight months when we went public. It was pretty intense. And I think one of my strengths is I’m just sort of good at doing things. I’m competent. I can move through.

So, I think that the idea was, first of all, the TurnTide concept was incredibly powerful. Spam was a burning issue at that point. He had another private investment in another very, very successful anti-spam company, IronPort, and so he knew the space pretty well. He knew me. He was doing angel investing. It was sort of a natural thing to happen.

Andrew: I think he put a million dollars into the business?

Lucinda: It wasn’t all his, but we put $700,000 into the business.

Andrew: OK. And you said that you hadn’t made any money. What was the deal at Destiny?

Lucinda: Well, because we just closed it down at the end. So, when you close it down and you liquidate, liquidation preferences in a deal like that, it will all go to the investors. Common shareholders don’t get anything.

Andrew: I see. And you couldn’t fight for any piece of that at the end? To say, “Look. If I’m going to give you what you guys are looking for?” I want to understand what position a CEO and an entrepreneur are in.

Lucinda: Yeah. That would have been shortsighted, I think. I certainly could have. I mean, I got a severance package, although, that was a little dicey. I was about six months pregnant when we closed that company, which put me in a precarious position. First of all, just from basics like health insurance. You certainly want health insurance when you’re pregnant. And my husband doesn’t work. He stays home with our kids. So, we didn’t have any from him. And you can’t look for a job while you’re six months pregnant, particularly a CEO job. No one is hiring you. So, I was concerned about my runway more than that I was going to get anything major out of it.

But, I was more concerned . . . we have one of our key investors at ClickEquations was one of the investors there. I was more concerned about doing the right thing. When you take money from somebody, that’s a really serious thing, I think. And I really think the honorable thing to do is that you put them first, and that’s what we did. And I think it’s paid dividends later, although that’s not why I did it that way. I just thought it was the right thing to do.

Andrew: All right. Six months to go from spinoff to sale is a very short period of time.

Lucinda: Yeah.

Andrew: When that timer hit, when you guys started, what did you have?

Lucinda: So, when the timer started, we had Drexel University as a pilot, and we had a product that was mostly, not entirely working. And we had me and David and two other developers. And we very quickly put together a team. A guy named Mike Smalls, who was just awesome who had worked as my head of sales at Destiny and then was head of sales here for a while and now has his own start-up called Hoopla Software. So we brought Mike in right away. Josh brought an old finance guy in right away. I hired a guy who had been a junior marketing guy to run marketing. We hired a couple of sales kids pretty quickly.

Andrew: How long did it take you to convert all that in . . . I’m sorry.

Lucinda: Well, we sort of knew it was coming. So, Mike, for example, had been knowledgeable and working the sales guy on this for about six months with me, very much in the background but working. And so we were pretty ready when that buzzer hit. So, it was probably, you know, six weeks that we were really working on it hard in terms of making people contingent job offers and that sort of stuff.

And then it was instantly off to the races. I would say that execution in that instance was really close to flawless. We closed almost immediately, Edward Jones brokerage, Merck. We were very close to MessageLabs, which was at the time and they may still be the largest e-mail processor in the world. That did close after Symantec acquired us.

So, the sales side, we just zoomed. And on the product side, we did everything we had to to make it work. So the first few were frankly extremely rocky. But the product, you would drop it in, and literally the first day, the network would clear 90 percent of the traffic. It was a miraculous thing.

Andrew: Even though when you launched, it wasn’t entirely working, as you said?

Lucinda: Yeah, well, not working. It broke a lot. We were fixing them a lot. We had to put people on site. It was a box. It was an installed thing that you plugged into. And so it was a little bit on the hairy side, growing like that.

So, we probably had a couple hundred thousand in revenue, but some big names. And we had term sheets from, I don’t even remember, five or six major VCs. So, we were really working these two paths. When we sold the company, we had about $700 dollars in the bank.

Andrew: Wow.

Lucinda: Left in the bank, with however many it was, 30-ish people. No, it was smaller than that. I guess we were about 17 people. So, we played it right down to the wire.

Andrew: That’s like wanting to die poor. To just spend it all.

Lucinda: Yeah. [27:02] We did. My marketing team, unbeknownst to me, I had a run-in with my marketing guy, in a fun way, about the logo. And we had this great logo. I still think it’s the best logo I’ve ever had. And we were at the agency looking at logos, and he said, “You can’t do that. It looks like a skateboard logo.” And I said, “Exactly. That’s exactly what I want. It’s an anti-spam company. You want something that’s got that edge to it.” So, they did it. So, one of the ways we got down to $700 dollars is they ordered skateboards for everybody with our logo on them at the end.

That’s exactly what you try to do. You basically try to get rid of all the money at the end.

Andrew: [laughs] Symantec must also be a quick acquirer. I think three out of five entrepreneurs who I’ve had here on Mixergy have sold their companies to Symantec. It feels like that.

Lucinda: Oh, really? Well, yeah. I don’t know if it’s that big. But, actually I should have said, when we first founded the company, we were in pilot with Symantec as a customer, which is how that acquisition happened. We weren’t looking to be sold. They were actively looking for anti-spam companies at that point and actually bought one right before they bought us. They bought Brightmail, and we thought there was not going to be a deal because of that.

So, we weren’t looking there. Literally, their IT group had bought it for their own internal corporate network. What happened was, as the M&A group was going through their diligence on the other companies they were looking to buy, they kept asking the IT group to install it to see how it worked. And so, after the third or fourth of these, the guy who ran the networking there, literally said to them, “I am not taking TurnTide out again. Every time you guys do this to me, I take TurnTide out and my network fails.”

And, of course, we are this little nothing company in Pennsylvania. They’ve never heard of us. So, the corp dev guy said, “TurnTide? What’s TurnTide?” And that guy said, “Well, it’s this awesome anti-spam thing we use. You didn’t notice?” And, so that’s how we ended up in that whole process.

Andrew: So what did you do afterwards? I don’t mean professionally. I mean, personally.

Lucinda: When we sold it, my younger daughter was just over a year old, and my older daughter was three. So, I thought, this is the greatest thing ever. This is like perfect. I’ll take five years off and spend some time with my family, and blah, blah, blah.

And we had about a week. We sold it and I had about a week. And then we’d do an extended family vacation in Cape Cod every year. We went off to vacation, we came back. And it was five days after we came back. And I was in my home office and I walked into our kitchen. My husband was there working. I just said, “I can’t do this. I got to go. I can’t do this.” I literally that next week had an office in, actually I didn’t start at Josh, I started in another one of our investors’, and just didn’t look back.

Fundamentally it was a great concept. And it was wonderful to have that opportunity to learn quickly. That’s just not my thing. I love doing this. So, let’s do this.

Andrew: Was there something that you got to do to celebrate?

Lucinda: What did I do? I bought a car. That’s what I did.

Andrew: I see. OK.

Lucinda: I bought a MINI Cooper convertible, which was recently totaled. But, yeah.

Andrew: How?

Lucinda: Oh, I was just going straight and a guy turned left in front, into me. I’m fine. It was fine. It was unfortunate. Loved my little car.

Andrew: All right. So you were ready to get right back into it. How did life change? Before we go into the next business, how did life change after that sale? I mean, you were working so hard to get here. You had Destiny, you had Infonautics, you had TurnTide and a few projects in between.

Lucinda: Yeah. I don’t actually think life, the biggest thing that changed was, as Josh says, one of Josh’s sayings is, “It’s a lot easier on the right hand on the side of the curve.” And, my right, you get here, and man it’s a lot easier.

So, it’s easier to raise money. It’s easier to get access that you want. There’s a degree of respect that you get from people. And I’m not sure this is actually warranted, but you get it and it’s just easier.

Andrew: I see.

Lucinda: You’ve been through it, so it’s not so mysterious anymore. But it didn’t really change much other than that.

Andrew: Cuts.com, I saw it recently. Can you describe what Cuts.com is for people who don’t know?

Lucinda: Yeah. So, Cuts.com is a company we sold to RiffTrax It’s basically an online editing platform for video. So you can slice and dice video online and add commentary tracks and funny sound effects and things like that.

Andrew: I saw it, even when it launched, it was beautiful. I mean, it was pretty much, I guess like an earlier version of iMovie, but online, and you can use all those tools that iMovie gives you online and on YouTube videos. And you don’t have to install anything.

Lucinda: That was exactly the concept. And, basically, boy, it was not technically easy to do in those days. Probably a little easier now, though. I haven’t kept up candidly with the video stuff. We just couldn’t get it going. So, I co-founded that company somewhat with my husband. He was not full time, but he was involved with it.

And Sunny Balijepalli, who has now founded a company called ZoomIn, which is kind of a ShutterFly in India, who was Josh’s co-founder at Half. And, Josh was the founding investor in it. And we thought it really had to be a West Coast company. And none of us was moving west. So, we hired a guy on the West Coast to run it. And we moved a team out there and hired out there.

And the product actually was good and started to get a little momentum, but we just couldn’t raise money. So, we ended up in what you think as sort of a save sale, selling it to Mystery Science Theater.

Andrew: Why do you think? Why couldn’t you guys raise money?

Lucinda: Boy, I’ve asked that question a thousand times. I think it was hard to defend why, well, they didn’t, why YouTube wasn’t going to do it. It was, I think, candidly the guy just wasn’t that great at fundraising. There’s real skill just in fundraising.

I think entrepreneurs often overlook that. They think, “I have this great thing. How can it be that everybody doesn’t want to give me money?” You have to know how to get them to want to give you money.

We were very, very close. We actually abandoned, and I still feel badly about this. We were very close to a deal with MySpace, which was still at that time the pre-eminent social network, which we literally had to walk from. And I think if we had that timing a little bit earlier, we could have done it. We didn’t have enough core business momentum, and I think a deal like that would have said, “Yes, it’s real.” And then we would have been able to do it.

So, I really am not sure why we couldn’t.

Andrew: And still, to this day, I don’t see anyone who makes that available. Who gives you that kind of editing power online.

Lucinda: And that’s the thing. It’s a killer thing. It’s totally a killer thing. We even had it hacked. We never released it, because we were always worried about the terms of service. But it worked on iTunes.

Andrew: Oh, wow.

Lucinda: You literally could do it to your iTunes video.

Andrew: Because you weren’t going to cut up the video. You were just going to send the signal to the player that said, “Show this, now skip the user over to this part.” And Hollywood apparently loves that.

Lucinda: You got it exactly. Hollywood really hates that. But, that’s what we thought was so cool about it. That was the whole hook, was exactly what you said, is we didn’t actually touch the video. We never touched it. We didn’t do anything to it. We didn’t copy it. We didn’t do anything. We just affected how it . . . it was almost like an automated remote control.

Andrew: Yeah.

Lucinda: We were just fast forwarding or whatever. But, yeah. That part was funny. I happened to be at a party, a small party that M. Night Shyamalan was at. Right when we were in the middle of this. And, boy, did he hate that. Did he hate that idea. He basically, not basically, he literally said, “I hope you fail.”

Andrew: Oh, wow.

Lucinda: “It is sure to fail. I hope you fail. You know, there’s a reason that I have that slow part before that fast part.” I fell like, you know, every now and then, I think his latest atrocity of a movie, like, one of us did.

Andrew: [laughs]

Lucinda: Maybe your . . . we could have improved your experience. Anyway.

Andrew: I see.

Lucinda: I still think it’s cool. I still think the space is real, that people want to do it. It doesn’t exist, you’re right. But we didn’t make it work.

Andrew: OK. All right. I thought that they did like it, but I guess they just didn’t have any way to go after it is what I read. Not that they liked it, but they had to tolerate it. So, I also saw on LinkedIn, same year that Cuts.com launched, is the year that Commerce 360 launched.

Lucinda: That’s right. Yeah, a month later in that year.

Andrew: OK. And Commerce 360 is what became known as ClickEquations, which is the company you’re with right now.

Lucinda: Yeah.

Andrew: What was it when it launched?

Lucinda: So Commerce 360 was sort of a funny thing. So, our founder Craig Danuloff had an existing business that was essentially doing outsourced VP of online marketing. So, lots of these companies, and particularly Internet companies, most of them were, was the clients, who just had these marketing people who didn’t really know online.

So, he would come in and do that. And say, “Here’s what you should do online.” And then he had a series of consultants who would work with him to do the actual execution of the online marketing programs.

And he and I met through investors. Internet Capital Group, which one of the guys, not the firm, had been involved in TurnTide, and I’ve known him forever. And Craig had had a company that was funded by them, and then he worked for them for a while.

So, we met through another company where I had been interim CEO, and, started working together just because I fell in love with the online marketing space. I think that the dynamics of it, it’s sort of the perfect storm right now. It’s a great place to be.

But I couldn’t find the deal. So, after about a year of this, I was at Josh’s and looking at companies. Doug Alexander, who’s on our board now, from Internet Capital Group, said, “Look. Why don’t you just do a services company? Take Craig’s company. Put it in a new code. Do services with the explicit goal of finding a product opportunity.”

So, that’s what we did. Commerce 360 was originally kind of a clone, but more formalized, of what Craig did. Craig and I would go and do these strategic assessments and things for clients. Big clients, with Comcast and people like White Fence and OfficeMax and Liz Claiborne, Nautica. I mean, it was a good client list.

And then, we would do the execution search for the paid in, organic e-mail affiliate, and web analytics. And through 2007, 2006, the search business went crazy, because search was going crazy then. And we were on a platform by a competitor, a competitor’s platform. And it was just terrible. It was a terrible platform.

And so we went to the market and were pretty candid with people. And said, “We’re making a build versus buy decision.” We looked at all the platforms. Didn’t like any of them. [38:23] venture money and went about building a platform. And, when we launched the platform last spring in beta, we renamed the company ClickEquations to reflect really the new incarnation of the business. And we’ve been doing that since then.

So, we released the first feature complete version of the product last October, and the first version of the product that really instantiates our vision just in March. And now, we’ve just recently were in the shift that happens in SAS companies in particular—software and services companies—from a development company to a sales company.

So, we’ve hired a new head of sales, and we’re really now ramping customers.

Andrew: So, you got into consulting just so you could find the product that you would develop based on what the consulting work showed you?

Lucinda: Exactly.

Andrew: Were there any false hits? Were there any ideas that you started to pursue and realized, “No, this isn’t right?”

Lucinda: No. Not on the product side. There were lots of things we were doing where there were pretty good alternatives. So, we were doing a lot of web analytics based on Omniture. We were doing a lot of Affiliate based in LinkShare. Those were good products, good services. This was the first one where really the infrastructure is just bad.

Andrew: I see. And so companies like OfficeMax would use the Affiliate software and everything worked out. What would you do for them? Couldn’t they just manage their Affiliate software themselves?

Lucinda: No. Companies do. Especially marketing companies tend to be either outsourcers or insourcers. And we were just a company that helped people who were outsourcers. So, they didn’t want to have the staff. They wanted somebody else to do it. It wasn’t their area of expertise. Blah, blah, blah.

Andrew: OK. So, I’m seeing a great story here, without very many setbacks. What was the big one? What was the time when you just . . . I guess, in retrospect, they all seem like progress forward. But was there one that really made you question the direction you were going in life?

Lucinda: Well, the Destiny thing was huge. So, five years in, you grow a company successfully. It was the kind of place where people loved to work. Our clients loved us to death. And yet it blows up and you don’t get anything out of it. Sure. That was a huge thing there.

Andrew: Was it afterwards that you felt that or during?

Lucinda: No, it was during. The period that was most difficult there was as that business slid, I mentioned, we maintained profitability. In other words, we fired people. Dozens of people, I personally fired, let go, not fired. Laid off dozens of people. It was horrible. It was absolutely horrible. There was no sense of where we were going. Because how could you know where you were going? It was sliding down a hill.

Just to describe it at that point, it was like being on a muddy 45 degree incline. And the second you thought you were standing up, you were on your face again. It was incredibly difficult. Absolutely brutal.

Andrew: I actually saw that. I would see articles that said, “Everything’s going great. We actually are able to survive this.” And then, boom. Articles that said, “No, that’s it. We’re liquidating.” And then the “New York Times” evaluating what went wrong.

Lucinda: Yup. Exactly.

Andrew: How did you survive that? How did you keep going?

Lucinda: How do you survive that? Well, if you talk to anybody who knows me really well, they will tell you my one outstanding trait is persistence to the point of ridiculousness. Way beyond where it’s a good thing. And paired with that and probably behind that is utterly unrealistic optimism.

So somebody along that road there gave me a button that said, “Optimistic even in the face of reality.” And I think that’s what it is, is I get up every day, whether it was then or now, and I think everything’s going to be good.

I just believe it. It’s not a thing I manage. I just genetically believe it. And so that let’s you get up another day. And by the end of the day, you’re tired and beaten up and whatever. And I wake up the next day and I am ready to go again.

So, I think that it’s a trait that serves entrepreneurs well. In that case, I lost ultimately. I didn’t get up again. But most times you do. Most times. And that’s one of the things about this game, you get real highs and you get real lows. And you can’t get that low when you are low. You just can’t let yourself, because you are going to miss the next high. And you’ve got to be able to just keep pushing through it.

Andrew: You can’t let yourself. But how do you stop it? Or how do you recover from that? Because when you’re in that low period, it feels like that’s all there is. And anything else feels artificial. How do you do it?

Lucinda: I think it can’t be artificial. I think it’s a personality trait. It’s not in any way generated. I don’t do it on purpose. I just really, honestly wake up and feel that way. I’ll even in the middle of something horrible sometimes, you know, something will be really terrible. One of my key people will quit. I’ve only had that happen once before, but I’ll literally be in that conversation, while I’m still talking to that guy, I’m already thinking about all the good things and all the opportunities and all the cool people I’ve met that maybe I can hire now. And how that person who never got along with him, this is going to go better. It’s going to let me solve that. It’s absolutely natural and instantaneous.

Andrew: Wow.

Lucinda: My grandmother was like this. My mother’s like this. I really, literally think it’s genetic.

Andrew: How do you keep it from making you stubborn? A lot of other people with those kind of genes would have said at Destiny, “Hey. You know what? No matter what, even if I have to fight my investor and the whole world, I’m going to stick with this until the year 2010.” And they would have made a mistake as you can see in retrospect.

Lucinda: Yeah.

Andrew: How do you still see the world rationally?

Lucinda: Well, that’s a harder question. I don’t know if you’ve ever heard of the Stockdale paradox. It’s one that I live by. James Stockdale was a POW. He’s written a couple of interesting books about it.

The core principle he talks about is the guys who were POWs with him who came in and thought, “Oh, this is terrible. I’m never going to get out.” They died. Really soon.

The guys who came in and said, “Tomorrow. I’m going to get out tomorrow.” And every day, they get up. They died, too. They last a little longer than the first guys, but they die, too.

The guys who make it are the guys who say, “Wow. This is really, really bad. This is really horrible. Some day it’s going to be better. But, right now it’s really horrible.” And that’s I think how you get around that.

You’ve got to be able to look at it and go, “Wow. This is the reality of this. This sucks.” But, that doesn’t mean it’s always going to be that way. So, you have to have a very realistic assessment of where you are.

Again, other things I hear from entrepreneurs which doesn’t work well is, they’ll go into VC meetings, for example, and a VC will give them some feedback on something and they will fight with them. Well, that’s sort of dumb, because the VCs have got their perspective. It’s not your perspective, but why fight with them about it? It’s not going to get you anywhere, and it’s preventing you from hearing.

So, instead, hear what they say. Internalize the criticism. Make your own decision about it once you take it and really understand it, and then do something with it. You may do nothing. The doing may be that you decide they are wrong. But, you can’t push up against other people’s opinions or the market.

You have to be able to look at it dispassionately and then turn it to your benefit. So, I don’t think being optimistic means that you are not able to look at something coldly. It just means, “OK. Now how am I going to feel about that? I’m not going to feel bad about that. It just is what it is.” So, take what it is and turn it into something else. If that’s possible.

Andrew: How formal are your mentors? This can’t just come from your genetics. It seems like you also are surrounded by good people.

Lucinda: Right.

Andrew: I’m going to get into Steve Welch who nominated you for the Eisenhower Fellowship who is a great guy.

Lucinda: Yeah, I just had breakfast with Steve last week. So, I really would say I have a pretty short list of people who I would call real mentors. And, I had none for a long time.

One’s a guy named Carl Guarino. He’s now CEO of a company called GSI Commerce. He was on my board at Destiny. I worked for him at SEI Investments. And he is just so sage, so unbelievable scary, scary, scary smart. Incredibly generous with his time.

And then I would say Josh is a mentor to me. Although, Josh, not in that close, personal way. He’s more of a guy I can ask any question, and I know he is going to be honest with me and be on my side.

I think fundamentally, I’m pretty damn independent. Is the truth. I think, especially when I was younger, I watched really carefully what people did. And I think I’m outrageously self critical. So, I literally walk out of many interactions, I’ll walk out of this, after we’re finished with this, and I’ll have 12 things that I’ll think to myself, “Man. I should have done that better. I shouldn’t have said this. If I said it that way,” you know.

And so if you are paying attention to people who are really good, and you are lucky enough to be, or smart enough to put yourself in an environment where you are with really good people, and you watch them carefully and then you monitor yourself carefully, I think that does it more than anything.

So, I wouldn’t say I have mentors so much. But, I’ve been so lucky, I’ve had extraordinary people I’ve worked with. Just extraordinary people.

Andrew: Looking back, it’s been about 48 minutes we’ve been on the phone together, do you have one or two things that you wish you had done differently?

Lucinda: Oh, on this?

Andrew: Yeah.

Lucinda: Sure. Well, I can’t get used to . . . I should have tested before to see how I look on the other side, because I can’t figure out where I should look.

Andrew: [laughs]

Lucinda: That’s a little distracting. So, now I’ve got another thread going. I probably should have prepped more, like asked you what questions you were going to do so I could have thought about things. But, that’s all right. I wouldn’t worry about that too much, because I am pretty confident in my ability to be able to be off the cuff.

What else would come right to mind? I can’t get the hand talking thing. So, I talk with my hands and then I’m very distracting. I see my hands, and they are big.

Andrew: [laughs]

Lucinda: The headline is, I would have done more prep.

Andrew: [laughs] Actually, no, you ended up looking great.

Lucinda: Thank you.

Andrew: A lot of people have bad lighting as you can see from me. Everything is really dark on me but light around me. You’ve got the exact opposite. I’m not seeing your hands so much. And you are staying on camera with me. Any advice for somebody else who wants to follow? To do what you’re doing. Who wants to be a cereal CEO? Cereal, by the way, for the transcribers, C-E.

Lucinda: Yes. Cereal. Isn’t that cute? Yeah. So, what I see over and over again, I get calls and e-mails and things pretty constantly with people who are in that position. And, I’ve actually gotten to the point now, as generous as I’d like to be with my time, I don’t take those meetings unless the person’s taken the jump yet. Because, over the years, I’ve had hundreds, probably literally hundreds, of these meetings. And the people never do it. And so I get to the point now where I can’t help you if you are not going to do it. That’s up to you.

And that’s really the biggest advice, is if you want to do it, just go do it. The one question I’ll say, it’s related to the optimism thing before, the thing that I do very consciously is ask myself in bad situations, or in situations I’m making a choice, “What’s the worst thing that can happen?”

And you are in some job somewhere, and you want to be doing this other thing, go do it. What’s the worst thing that can happen? When I went to Destiny, from a nice, great job at Infonautics, I took a 50 percent pay cut. And I went through it. And I had no idea whether they were going to be successful or not.

I didn’t really understand the market well. I didn’t understand the technology yet, etc. I said, “You know, what’s the worst thing that can happen?” The worst thing that can happen is I’m a failed CEO. And a failed CEO is a hell of a lot better than a successful product manager.

So, go do that. People get paralyzed by a thing that isn’t actually bad. It’s just not that bad. Go take the flyer. So, that’s my advice is to take the flyer and that is maybe one way to get people to do it.

Andrew: Wow. What a great place to leave it. I was going to say something after that, but I’m going to leave it right there. The only thing I’ll say is thank you. Lucinda, thanks for doing this interview.

Lucinda: Thank you. It was great.

Andrew: Thank you all for watching. Bye.

This transcript brought to you by www.SpeechPad.com.

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