Peter Blacklow,
WorldWinner:
www.worldwinner.com
Daren Cotter,
CotterWeb Enterprises Inc.
651.289.0720
dcotter@cotterweb.net
www.cotterweb.net
Jack Johnson,
CotterWeb Enterprises Inc.:
651.289.0720
www.cotterweb.net
Judy Lysne,
Lifeworks:
651.454.2732
jlysne@lifeworks.org
www.lifeworks.org
When CotterWeb’s CEO
focused on his expertise
and hired the rest, business zoomed
DAREN COTTER was a freshman in college participating in online surveys and other activities himself when he began to envision a business. He was tiring of taking part in these activities without ever really knowing what prizes or compensation he would receive.
So out of his dormitory room at Minnesota State University-Mankato, he created InboxDollars.com, a business where advertisers would only pay if his company produced results and where users – those who play the games or answer the surveys – would be rewarded in cold, hard cash.
“I was participating in some similar programs,” he says. “It wasn’t clear what you were getting for the actions you were participating in. So I set out to change that. I wanted to make sure our system was completely transparent.”
Throughout his college years he tinkered with the business, not sure if it would stay a hobby or become a career. There was little growth while he was focusing on school.
The inflection point came in 2004 as graduation neared. “I was asking myself, ‘Was this business going to become a career?’ What kind of growth opportunities does it have,'” he recalls.
So he began reinvesting into the business and for every dollar he put in he received multiple dollars in return – a result that clued him in he was onto something big.
Mendota Heights-based CotterWeb Enterprises Inc., which now consists of both InboxDollars.com and SendEarnings.com, an almost identical company acquired in 2005, hit $12.4 million in sales in 2007, up from $4.5 million in 2005. The company has 30 employees, more than 5 million users and around 100 advertisers. Cotter predicts revenue of $16 million in 2008. For those growth numbers, and for Cotter’s philosophy toward sustainable growth, CotterWeb
Enterprises is the 2008 Upsize Business Builder of the Year.
Over the years the company has gone from offering rewards primarily for e-mail-based projects to an expanded cadre of opportunities, a move that he says has been important to the company’s growth.
“What we’ve added over time is more and more opportunities for members to be rewarded for their online activities,” he says. “That’s been important, because when a member wants to join InboxDollars or SendEarnings to be rewarded they want access to a variety of activities they can be rewarded for.”
In addition to rewarding members, it provides performance-based marketing for its advertisers and gets paid based only on achieving agreed upon metrics.
When the growth began, he admits to having been somewhat overwhelmed.
“Now what?” he says was his reaction. “Now what do I do? Because I couldn’t run the organization by myself and keep up with the day-to-day.”
So he brought on board some long-term friends to help handle theeveryday operations. And then, focusing more on the big picture, hebegan mapping out a plan for further expansion. He met Jack Johnson andKeith Olson, both veterans with experience growing companies, whohelped with planning.
“We needed to build an infrastructure,” he says. “To do that I needed to find some great people.”
So, 2006 was spent hiring additional employees to handle day-to-dayoperations and moving into new office space for the first time. Cotteradded a sales team, which helped take some indirect relationships andturn them into direct advertiser relationships.
At the end of 2006 came another turning point when he brought everycompany employee together for a team building and strategic planningsession that has helped shape the last two years. He likesincorporating everyone into the process to hear their input and keepthem engaged.
“What we asked ourselves is
where are we going and what do we needto do as a company,” he says. “That was one of the big turning points.”
While Cotter, 27, is young for the position that he is in, he has along history of entrepreneurial activities. He was in first grade whenhe began using his mother’s
Sam’s Club card to purchase Jolly Ranchers in bulk, then he’d turnand sell them individually to classmates a business he acknowledgeswas not scalable but had enviable margins.
“It was recognizing that an opportunity existed and going after it,” he says of the experience.
He did that until his empire grew large enough where the schoolprincipal “politely requested” that he take his sales off schoolgrounds. While the principal’s request put the kibosh on that business,it didn’t dampen Cotter’s spirit. At 15, he was given the choice ofgetting either a car or a computer for his birthday. He chose thecomputer.
“It was one of the better decisions I’ve made,” he says.
He took a keen interest in computer hardware and software and taughthimself how to program, eventually publishing several educationalsoftware programs over the Internet. He made less than $10,000 sellingthose programs but the experience “certainly cemented for me my futureplans of attending school and going after a computer science degree andlearning more about technology,” Cotter says.
When Cotter first graduated from college and began making plans for the company’s growth he realized he needed some help.
Through a third party, he was introduced to Johnson, a former U.S.Naval Academy graduate with three decades in the computer servicesindustry at companies such as IBM and General Electric.
Johnson was starting his own company when he met Cotter. He agreed to help
Cotter out at first as an unpaid mentor and then as a part-timeemployee. While his own career started with big firms, he’s been movingto more entrepreneurial businesses throughout his career, one of theappeals of CotterWeb.
It was a good fit. Johnson has leadership andmanagement backgrounds that complement Cotter’s entrepreneurship skillsand he admits to being impressed when he first met Cotter.
“The one thing I’ve never been was THE entrepreneur,” Johnson says.”It was a little bit of awe how could you come up with this and getit going, wow, that’s amazing.”
He decided working with someone “three years younger than myyoungest son” wasn’t an issue, as his past accomplishments put his ownego at ease. And he realized that while he could probably teach Cotterabout some strategic planning ideas, Cotter could in turn teach himabout the Internet.
Johnson says Cotter has great technical skills but is also a goodlistener and business-savvy. “He has the ability to take in informationjust like a computer and process it,” he says.
Cotter, Johnson, Vice President Keith Olson and the staff have beenrecognized for the company’s fast growth. In addition to receivingUpsize’s top honor at an October awards event, CotterWeb is a finalistin Ernst & Young Entrepreneur of the Year competition and has alsobeen named to Inc. magazine’s Annual List of 5000 Fastest GrowingPrivate Companies.
Citing the desire many buyers and advertisers have to remainanonymous, Cotter declined to provide any names to Upsize. However,World Winner, a provider of online game competitions, released astatement in March after extending its multi-year deal with CotterWeb.
WorldWinner provides its cash competitions through InboxDollars andSendEarnings and the CotterWeb sites reward members for entering WorldWinner’s tournaments.
“Our partnership with CotterWeb has been extremely lucrative inhelping us grow our base of loyal players, which is critical toWorldWinner’s business goals,” says Peter Blacklow, president, in theMarch statement. “CotterWeb has millions of loyalty members and many ofthem are a perfect match to our target audience. The results we’vealready seen working with CotterWeb demonstrate that its members arevery interested in the casual game competitions we offer.”
Inaddition to having a growing and seemingly satisfied customer base,CotterWeb attempts to be a good neighbor in the community. When thecompany’s explosive growth created a situation where several employeeshad to acted LifeWorks Services Inc., a nonprofit organization thathelps people with disabilities integrate in the community throughemployment opportunities.
For about two years, LifeWorks has sent one person weekly and a teamof five to 10 workers monthly to the CotterWeb offices to help processand mail the checks.
The CotterWeb employees have welcomed the LifeWorks team openly asthough they were full-time staff, says Judy Lysne, president and CEO ofLifeWorks.
“They’ve included us as part of the workforce,” she says. “Everyoneknows their names and greets them. It’s a very warm place to be.”
While her first contact with CotterWeb was through Johnson, who hadserved on the organization’s business advisory group, she eventuallymet Cotter and was immediately impressed. “It’s so amazing that he wasable to start this business so young when he was still in college andhow it has grown,” she says, adding that she found him sharp andenthusiastic.
She’s impressed how despite the fast growth the culture has remained the same.
“They’re still one of those companies that incorporates some fun,” Lysne says.
“Being able to be part of an entrepreneurial, enthusiastic place like CotterWeb has been great for the people we serve.”
Cotter considers himself a laid back manager, though he is firm whenit comes to getting results. He believes in hiring good people,compensating them fairly and providing benefits that motivate them tostay.
For example, upon becoming eligible for the company’s 401K program, employees automatically vest completely right away.
He also likes having fun and the office proves it. There’s a gameroom with a Nintendo Wii, a Ping-Pong table and a mini-golf setup. Thecompany also regularly schedules fun events, such as golf scrambleevents and paintball matches.
When Cotter gets away from the office he enjoys playing golf andhe’s a big hockey fan, both of the Minnesota Wild and his college team,Minnesota State University, Mankato’s Mavericks. He acknowledges thatthe business is never far from his mind.
“There’s never a time I’m not dreaming about what tomorrow is going to bring CotterWeb,” he says.
