Fast Track Interview

Adrian Bye: Today, I’m here with Ryan Allis. Ryan is the 23-year-old owner and founder of iContact, which is the software I use to run my lists. Ryan is interesting because he’s young and knows about e-mail and business building. Ryan, tell us a bit about you and your company.

Ryan Allis: I started in business with one computer and one person when I was 11, so I’ve been an entrepreneur for about 12 years now. I founded iContact in 2002. We were one of the first web-based marketing tools, and now we’re the second largest e-mail marketing company out there. One of the things we’re really good at is getting e-mail to recipients’ in-boxes with about a 99.9 in-box percentage. We are very easy to use with e-mail marketing tools that offer surveys, auto-responders and blogs, as well as RSS feeds. Generally, we have much lower costs than our competitors. We have about 17,000 clients today. The majority is small businesses, and a number of Fortune 500 companies are also using iContact. We’re very focused on building this public company over the next couple of years.

Adrian Bye: You want to build a public company? How big can an e-mail company like yours really get?

Ryan Allis: We’re number two in the space. Currently, we’re the number one competitor of Constant Contact, which focuses on the small end of the market with the SMEs. Constant Contact has 145,000 customers, and they went public on the NASDAQ about one month ago. That company is worth $400 million. Their current years revenue is $50 million. We think it’s very realistic and reasonable that we’ll continue to rapidly grow our sales to the level needed to have an offering in the next two to three years and be able to go public ourselves.

Adrian Bye: How are you different?

Ryan Allis: We have much better deliverability. The statistics publish it at 97 percent in-box delivery. We have third-party audited deliverability that had 100 percent in-box deliverability. In this past month’s, it’s 99.9 percent in-box delivery. Our prices at the entry level start at $10 a month. Other companies start at $27 a month if you include surveying and other features, which are free as a part of our product. We offer an auto-responder service. We offer list segmentation. We have more templates, and we feel that our software is easier at keeping these and has a better user interface. Those are just some of the differentiating factors.

Adrian Bye: How does that work to get your mail through?

Ryan Allis: We started five years ago with a tremendous focus on deliverability. We created a pre-emptive spam protection program, which is a number of algorithms and technical programs. At its core, when you upload a list, we’re able to track it. For every message that’s sent to more than a thousand recipients, we have a human manual review within five minutes. If your message is about a Viagra promotion, we will stop that, and it will never go to the recipients. We’re able to stop a very large majority of messages that even seem to be potentially unsolicited e-mail before they go out, which has allowed us to maintain very good relationships with the ISPs and have complete full in-box delivery.

Adrian Bye: In the beginning, how did you make sure your mail was getting delivered?

Ryan Allis: When you’re only sending a small amount of e-mail, you’re not really on the radar screen. Then you get to that two million, three million, four million a month, which obviously gets you noticed pretty quickly. Then you start to setup the feedback loops with the major ISPs. We have sophisticated systems now. Our delivery wasn’t as good in the past as it is now. We’ve evolved. We have five years of experience in getting 400 to 500 million e-mails a month through to the in-box of recipients. We’re able to provide that at relatively low cost. Our costs are very easily and cheaply distributed across the 17,000 customers that we have.

Adrian Bye: Do you have stats you watch to determine your deliverability?

Ryan Allis: We check for deliverability once a month. We have a third-party firm, and we have a full-time deliverability, vice president ISP relations person who monitors that constantly through our network operation center.

It’s the ability to tag anyone importing harvest to the list. It’s the ability to see content before it goes out and to stop it if it looks like spam and the feedback loop. If anyone does get complaints, which does happen, the complaints are reported back to us. We aggregate them, and then we’re able to say this person got this percentage of complaints. If it goes over our acceptable ratio, which we’ve internally established, then we can ask them to do such things as double opt in their list and even suggest best steps to improve their sign-up form.

Adrian Bye: At this point now, is your mail delivered by default into AOL?

Ryan Allis: Our mail is delivered into the in-box at AOL. We have a daily metric all-day complaint ratio. As long as that complaint ratio remains below the acceptable limit, we’ll continue to be on their enhanced senders list. Probably two to three years ago, we ran into trouble where we couldn’t get messages through to AOL at all. We were getting into the junk mailbox for about a week and half period. Obviously, that became a major issue for our customers. We got on the phone and tried to get to the right people. Eventually we realized we just had to get introduced by working with a company called Return Path to consult with us so we could be introduced to the right people at the ESPs. That’s what we ended up doing. Now, our volume is at such a high level, and it’s very unlikely that one customer could slip through our protective measures and cause a blip. From time to time, there might be some unacceptable ratio. As long as you’re trailing 90-day average is below the ratio, they deliver us to the inbox.

Adrian Bye: Is it hard for you to stay under this ratio?

Ryan Allis: It’s hard to get under the ratios. You have to have the right system of stopping people who send messages that are going to get complaints. We’ve been able to develop automated systems to stop people from sending those messages. It’s really important to have a system that automatically manages bounces and automatically allows people to choose to be unsubscribed.

Adrian Bye: How are you able to help people? Are you able to help people who have a little tiny list or people who have big gigantic lists?

Ryan Allis: Our specialty is being able to send lots of e-mails very quickly and get in-box deliveries. While the large majority of our customers are small businesses with less than a 10,000 person list, we have people sending 5,000,000 e-mails per blast and everything in between. We want to work with everybody by sending out permission-based e-mails. If you have a list of people who have requested to receive your content, regardless of the number of people on it, iContact is the really efficient way of managing that list.

Our published price goes up to a 100,000 subscribers. If you have a 100,000 subscribers, that would cost you $699 a month. If above that, we go on a CPM basis somewhere ranging between $2.50 and $3.50 per thousand e-mails. These are standard prices depending on the volume that you’re sending.

Adrian Bye: For someone that’s sending offers to a list or something like that, are they able to make money?

Ryan Allis: Well, if you’re not, your offers aren’t very good. If you’re spending $2.50 per thousand e-mails, hopefully, the offer is good enough that you’re making that back. E-mails tend to be the most effective way of getting return on an investment from a marketing message online if you compare the cost per click or organic search cost or any other web marketing online, interad, etc. If you’re communicating with the existing customer list or someone that has expressed interest in what you’re sending, our average customers see tremendous amount of return. They might spend $300 or $400 to send out a list of 50,000 to 60,000 people, and they can usually make $10,000, $20,000, or $30,000 of revenue.

I’m very much focused on building iContact into a big public company and in creating lots of jobs here in North Carolina in the next couple of years.