Rick Marini sold his first company to Monster for over $100 million dollars. A pioneer of online social media with over 10 years of experience, he likes to go against tradition, so long as it’s creative, fun, and sexy. Rick Marini co-founded Tickle in 1999 with James Currier. Tickle quickly became one of the largest social media sites on the Internet in the early 2000’s by leveraging viral marketing through personality tests, photo sharing, and matchmaking products. Tickle was the first site to successfully place fun, attractive personality tests online, the very same tests seen on Facebook today. In 2002, Tickle won the “Rising Star” Webby Award as the fastest growing site on the Web, and became a top 20 global Internet site with over 200 million users.

After leaving Monster at the end of 2006, and taking a year off to travel the world, Rick is back for something bigger, better and sexier: SUPERFAN. This time, Rick is building everything around the concept of the things he loves. Rick is the Founder & CEO of SUPERFAN: a social entertainment site that allows users to become a fan of ALL the things they love, including music, celebrities, TV/movies, sports, games, brands, etc. The site also incorporates social games, virtual gifts, site-wide Shout-Outs, and user-generated quizzes, blogs, battles, and more.

My conversation with Rick went on for a pretty long time (and I didn’t want to delete much!), so I have decided to divide up his interview into 3 parts: (1) Tickle, (2) SUPERFAN, and (3) Rick as a person.

In this interview, Rick talks about:
- How he started Tickle with James Currier
- How he raised his first round of funding at Harvard
- How Tickle changed from 1 million page views per month to 1 million page views per DAY
- And how Tickle was sold to Monster for over $100 million

RICK MARINI, JAMES CURRIER & MONSTER

STATS
Number of Companies Founded:
1. Tickle
2. SUPERFAN

Fundraised: $9 million
Number of Companies Sold: 1
Company Sold: Tickle
Sold To: Monster
Sold For: Over $100 million
Users: 200 million plus
Awards: The “Rising Star” Webby Award
Ranking: A Top 20 Global Internet Site in 2002

PERSONAL INFORMATION

Hometown: Merrimack, NH
Currently Resides: San Francisco, CA
Bachelor of Science: Business Administration, University of New Hampshire – 1994
Master of Business Administration: Harvard Business School – 1999

Hobbies/Interests: Music, Sports (especially Tennis), TV, and Movies
Biggest Fear: Snakes on a Plane (laughing)
Favorite Quotes:
“Learn from yesterday, live for today, hope for tomorrow.” – Albert Einstein
“Whatever you are, be a good one.” – Abraham Lincoln
Role Models: My Dad and Paul David Hewson (known as Bono)

Linkedin
Twitter
SUPERFAN

THE INTERVIEW

Kim Ngo: I’m here with Rick Marini, founder and CEO of the new hip, social entertainment site SUPERFAN.

Hi Rick. Before we start talking about your new venture, can you tell us about how Tickle, your previous company, was started? I know you were inspired by the Myers-Briggs Personality Test. How did you and James Currier take that concept and break into the dot.com industry?

Rick Marini: James and I founded Tickle (originally called Emode) in May 1999, right after graduating from Harvard Business School. At that point, neither one of us came from the Internet space. James had a background in venture capital, and my expertise was in corporate finance and M&A. At Harvard Business School, every student was given the Myers-Briggs Personality Test. The test was really boring – its pencil and paper, you fill out little bubbles, send it in, and two weeks later you finally get your results. However, we noticed that when the results came back, people started to open up and talk to each other about their similarities and differences. Based on this experience, we saw an opportunity to create a website with personality tests. And instead of waiting 2 weeks, the results would be immediate. We could make the experience fun by adding great UI (user interface) and include online tools so users could share and discuss their results with all of their friends.

THE TICKLE MARKETING TEAM

In late 1999, we had been running the site for several months and had very little traffic on the site. People were not taking our serious tests, like the Depression Test or Anxiety Test. Of course no one wanted to share their Depression Score, which seems obvious now. We needed to go in a different direction so we decided to make our quizzes more fun than serious. We knew people loved their pets so we decided to create a dog quiz. The premise was “If you were a dog, based on your personality, what kind of dog would you be?” If you’re happy-go-lucky, you might be a Chihuahua but if you’re big and tough then you’d be a German Shepherd, and so on. Before we launched the dog quiz, we had 1 million page views per month. After we launched the quiz, we had 1 million page views per DAY, just because of the success of that quiz.

After the dog quiz, we followed up with a Celebrity Matchmaker quiz. We had Howard Stern as one of the celebrities that people could be matched up with, based on their personality. I asked our test writer to include Howard Stern as a potential match, hoping that Howard would pick it up on his show. And that’s exactly what happened. A bunch of people took the quiz and called into his show saying “I’m your perfect match according to Tickle.” The show called us saying “Your users are melting our phone lines. Everyone is calling and saying they’re Howard’s perfect match.” After those 2 quizzes took off, we almost immediately raised VC funding. At that time, many of the VC’s we talked to were older and more traditional. They didn’t have an interest in online quizzes, at least until we proved the success of the concept after we experienced that huge spike in traffic. But 10 years later, online quizzes are still huge, and it’s the content for some of the biggest apps on Facebook right now.

Kim Ngo: Was Tickle the first company to do online quizzes?

Rick Marini: We were the second company of any significance to do quizzes online. There was a small company up in Canada that created quizzes, but they were focused on serious tests for PhD’s. Early on, we had a partnership with them, but we went our separate ways when we realized that most people wanted fun tests that were engaging, interactive and shareable.

Back in late 2000, Tickle was one of the first companies that built an address book importer so users easily could send invitations to all their friends. That’s one of the tools that helped us get viral early on with our first big hit – the quiz “What breed of dog are you?”  Before we built the address book importer, it was a tedious task for people to manually type every email address for a friend whom they wanted to share content with. That was an important innovation in viral marketing.

Kim Ngo: How did you and James break into the industry? And where did you get your first round of funding?

Rick Marini: In 1999, the Internet space was red hot. A lot of our classmates from Harvard were jumping into the Internet, especially when we all saw these young companies going public for billions of dollars. It felt like if you were going to take a chance, that was the time to do it, and we could always go back to consulting or investment banking later.

We approached some of our Harvard professors for our first angel round. We raised the initial $200,000 from two Harvard professors and that gave us credibility to approach other angel investors.

Kim Ngo: How do you build a dot.com company when you’re not an engineer?

JAMES, ADRIAN, STAN, RICK, & THE WEBBY AWARD

Rick Marini: When you’re a non-engineer (a business person), it’s critical to find your engineering soul mate. That is a huge deal in the Internet / technology space. We went through two VP’s of Engineering before we found our soul mate, Stan Chudnovsky, who is now working with James Currier at WonderHill.

We started Tickle in Cambridge, MA, so we were right down the street from MIT. We hired a couple of engineers from MIT, and they basically brought all their MIT classmates to work at Tickle. But when we moved the company to San Francisco in May 2000, it was really hard to hire people because it was the peak of the market. Most of the good engineers were already employed. We did bring one of our top engineers from MIT with us, Adrian Danieli, so he was able to interview and screen potential candidates. A lot of the hires we made in 2000 and 2001 were guys who just graduated from Stanford. We were looking for people who were bright, creative, fun, and team players. And we built an incredible team. One of the early Tickle engineers, Darius Contractor, is now the VP of Engineering at Bebo, which was sold to AOL for $850 million in 2008. Another one, Otis Chandler, went on to found Good Reads which is doing great. These guys came right out of Stanford and participated in the growth of Tickle and the acquisition. They received some great training at Tickle.

The same principle applies to founders who are engineers. They need to find their business soul mate as well. Most sites that are founded by engineers do require somebody on the business side to come in at some point. Bill Gates had Steve Balmer, and Sergey and Larry needed Eric Schmidt to scale Google. So in our case, James and I were both business people, and we needed Stan and Adrian to complete the team.

Kim Ngo: Did you make money from Tickle? How did you make money?

Rick Marini: Tickle had several revenue streams, and the company was profitable. When I left, Tickle was generating close to $40 million in annual revenue with about 75 employees. The revenue streams included integrated advertising campaigns with blue chip Fortune 500 brands. We were the 18th largest site in the world at one point, and we had about 200 million registered users. Tickle was a big site and that allowed us to work with all the major CPG (Consumer Packaged Goods) companies such as Proctor & Gamble, Unilever and Gillette.

We also offered a paid feature and subscription product for certain tests. Every test was free, but the PhD-certified tests had an additional benefit of having an extended report with detailed results.

Kim Ngo: People would pay for that?

Rick Marini: Yes, for example, when a user took our IQ test, they would be given an IQ score, but we would also offer a full report for purchase. The report included all of the correct answers, a certificate displaying their IQ Score, a personalized report analyzing how your brain works and a listing of their intellectual strengths and weaknesses compared to others. It was a detailed 20 page personalized report. If you were to go to a PhD and have them do a personalized analysis for you, it would cost hundred of dollars. Whereas Tickle would provide a report for $14.95. It was a good value, and we had tens of thousands of people purchase the report which generated millions of dollars of revenue.

The third revenue stream was offers. Many of our users were intellectually motivated so we targeted offers for online education. That was a good fit and that generated significant revenue.

THE GANG THAT MOVED FROM TICKLE TO SuperFan

Kim Ngo: Alright, one more question about Tickle before we move onto your new venture, SUPERFAN. How did you sell Tickle for over $100 million?

Rick Marini: It’s an interesting story, but I’ll give you some background first. When you’re a founder/entrepreneur, you have to think about positioning for a successful exit, not just for yourself, but for your employees and investors as well.

Before the acquisition by Monster, we went through the due diligence process with several other potential acquirers. As an entrepreneur you may have to kiss a lot of frogs before you find the prince. Entrepreneurs who go through the due diligence process with a potential acquirer should curb their excitement until the deal actually closes. I know countless stories of CEO friends who went through the process … and at the 11th hour, the acquisition fell through. It happens more than you may expect.

Kim Ngo: So do they approach you? How does it work?

Rick Marini: In most cases, the potential acquirer will contact the company directly to begin the discussion. As an entrepreneur, you have to be careful. You need to be ready as a company in terms of your position but also in terms of the time commitment. The due diligence process is time consuming, and when it starts, it takes you away from running the company.

The due diligence process is time consuming, and when it starts, it takes you away from running the company.

In the due diligence process, you may disclose trade secrets and your financial information. This is dangerous because you may be competing with the potential acquirer. In the process, they could learn about what you are doing and apply that knowledge to their own company. They are not supposed to use that information to their advantage but it happens. You have to be careful as an entrepreneur to judge whether the other side is serious.

Kim Ngo: How do you know if they are serious?

Rick Marini: Look at their track record in acquisitions and determine if this is a company that gets deals done. Ask yourself: is it a company that often low balls companies for a fire sale or is it an acquirer that pays up for cutting edge technology?

With Tickle, our story was very interesting and somewhat unique. We were very close to closing a big series B round of funding. We were in a position where the company was doing very well. In 2002 we won the Webby Award for the fastest growing site on the Internet, which was a pretty big deal. In 2003, the traffic and revenue really took off and people were taking notice. We had bankers courting us for a future IPO and this was back in 2003 when Google had just done a huge IPO. Companies like Tickle could follow Google’s lead because we had also real revenue. At that time, we were at $25 million in revenue, and on a path for $50 million.

Because we were so hot, we could raise money at a high valuation. The downside of a high valuation is that it puts the company in a difficult position because the VC wants to get at least 4x their investment (or more). We were going to raise money at a valuation of roughly $80 million which means VC’s would be looking for a sale of at least $300 million. To build a company that big is tough. To build a $100 million company is hard enough but to get to a $300 million valuation is difficult as it narrows the pool of acquirers who can spend that much for an acquisition.

ZACK (now at SuperFan) & RICK PLAYING FOOSBALL

Tickle was not only the largest personality testing site in the world, it was also the largest career testing site. Tickle had millions of people taking our career tests and Monster wanted access to those people. Monster wanted Tickle to create a version of our career test, specific to Monster, that would give them a competitive advantage against Hot Jobs and Career Builder, their two primary competitors. Job applicants on Monster could take the Monster career test and instead of Monster providing 50 resumes, the career test would narrow down the top 10 candidates. For a hiring manager, it’s a huge win because this career test would screen for the best fit.

Monster, a public company, was trading at a multiple of 4x revenue at the time. They offered to apply their 4x multiple to our $25 million of annual revenue or roughly $100 million. It wasn’t an easy decision, of course $100 million is a lot of money, but we were also being courted by bankers who were saying they could take us public for anywhere from $200 to $400 million in a couple of years. We thought hard about it and in the end, we made the decision to sell to Monster for $100 million instead of taking the upside with the $80 million valuation. We felt that it was going to be extremely difficult to get from a $100 million valuation today up to a $300 million valuation in the future. A lot of things had to go right to ever get to that point. Plus James and I had been running the company for 5 years and locking in that kind of money made sense, especially as first time entrepreneurs.

Kim Ngo: Good for you!

Rick Marini: Looking back, it was the right call. James and I now have the ability to start companies on our own or raise outside funding leveraging that success.

READ: Part II, Rick Marini Talks About His New Hip Social Entertainmen Site, SuperFan >>>>NEXT