Web Masters Episode #19: Lex Sisney

Experienced Internet business owners understand affiliate marketing. It’s core to how companies make money online. However, when it was first tried, affiliate marketing was revolutionary, and it opened the door for all sorts of new businesses that could never have otherwise existed. The man who helped popularize affiliate marketing was Lex Sisney, founder of Commission Junction. Here his story on this episode of Web Masters.


Commission Junction

Lex Sisney:

A smaller time venture capitalist, maybe even more of a super angel in Minneapolis, a guy named Paul Crawford, Crawford Capital. And he had spent 20, 30 years doing angel investments kind of the hard way, by collecting $5,000, $10,000, $15,000 a pop from farmers, small business owners around the state. He didn’t fund my procurement business, but we exchanged cards. He reached out to me out of the blue and he said, “Hey Lex, I got these internet retail startups, you seem like a knowledgeable guy. Can you come and help me?” And I said, “Yeah, sure.” My days were free and I’m just kind of stirring things this whole time.

He had these things he wanted to sell, but he didn’t have a marketing budget. And I started to think about, “Okay, well how do you grow customers if you don’t have money to buy advertising?” And then a Wall Street Journal article came out about Jeff Bezos, and he had started something called an affiliate program. I’m reading this article and my neck hairs went up like, “This is genius.” You only pay for an ad if you get a sale from it. Guy’s brilliant, this is exactly how you can grow a business without having up front capital.

I looked around at all the different technology solutions, and from my vantage point they didn’t quite make it easy. There were a couple large competitors well-funded in the space. What happened is I took the same business model from the first company I started, the procurement company, just kind of a trusted third party that aggregated payments and transactions. And I just slid it over into a new market space, affiliate marketing, and called it Commission Junction.

Aaron Dinin:

That was Lex Sisney. And, as you just heard, he’s the founder of Commission Junction, which is one of the web’s most important third party affiliate marketing networks. Some of you, of course, already know all about affiliate marketing. However, in my experience, lots of internet users have no idea it exists, which is a bit odd, considering affiliate marketing is at the heart of how most, quote unquote, free content websites make their money. And that seems worth knowing something about, right? Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Hello and welcome to Webmasters. This is the podcast that explore entrepreneurship by speaking with some of the Internet’s most prominent and impactful early innovators. My name is Aaron Dinin, I’m a serial web entrepreneur, I teach entrepreneurship at Duke University. The first job I ever had out of college was writing web copy for an affiliate marketing company. That’s when I discovered the websites I was visiting every day for my entertainment, really weren’t there to help me talk with friends and watch silly cat videos. They existed in order to get me to click ads, which is how those websites were making money. The companies that connect web publishers with advertisers are affiliate marketing companies, just like Commission Junction, which is what we’re going to learn about today. Before I can tell you all about that advertising company, I need to, well, pause for an advertisement.

Webmasters wouldn’t be possible without the support of our incredible partner, Latona’s. Latona’s is a boutique mergers and acquisitions company that specializes in brokering deals for cashflow positive internet businesses. Those are the kinds of businesses we often explore here on the show, e-commerce stores, Amazon FBAs, domain portfolios, Sass apps, and of course content websites that monetize through affiliate marketing. If you happen to own a website like that and are interested in selling it, reach out to the team at Latona’s and they can help you get top dollar by leveraging their huge community of buyers. Or if you happen to be one of those potential buyers interested in purchasing an already profitable internet business, be sure to check out the Latona’s website to see if their latest listings look good to you. That’s Latonas.com. L-A-T-O-N-A-S.com.

Since I learned about affiliate marketing early in my web career, I tend to just assume everyone else understands it. So, I’m always a bit surprised when I discover that’s not actually the case. For example, when I explain the Amazon affiliates program to students in my entrepreneurship classes, most of them are a bit shocked. They had no idea the Amazon links they’re clicking on other websites or in the video descriptions of their favorite YouTube channels are affiliate links, and the person who put them there is making money when someone clicks and then buys from Amazon. Not only are my students genuinely surprised when I explain what’s happening, a lot of them even feel a bit deceived and cheated.

So, because people tend to either know about affiliate marketing or have no clue it exists, I’m going to kick off this episode by allowing our guest, Lex Sisney, to explain affiliate marketing and why it matters, so we can be sure everyone is on roughly the same page.

Lex Sisney:

Imagine a commission sales force. They don’t get a salary, they get paid a commission when they sell something. Right? It’s the same thing at massive scale online. A publisher or an affiliate has a website or an email list, and they can put an ad in that email or on that page that makes a referral. And if a consumer or business clicks on it and buys what’s being sold, that affiliate makes a commission. From an advertising standpoint, it’s performance marketing, you only are paying for an ad if it drives some result to you.

Aaron Dinin:

Okay, so advertisers pay web publishers a commission every time those publishers send a customer who makes a purchase. That seems pretty straightforward. Was that a hard thing to sell people on?

Lex Sisney:

The really interesting thing about that, is I actually spent a good four or five years of my life trying to communicate it to the world, that wasn’t able to understand it at the time. That was really interesting. “What should we call it? How do we communicate it?” That was a really struggle. Something I felt I knew intuitively should be easy to understand and I’d be shocked, nine out of 10 people’s eyes would glaze over.

Aaron Dinin:

But this is like the standard of the internet now, right?

Lex Sisney:

Yeah. Now, most of online advertising has shifted towards that model. There was a huge debate at that time of is the advertising medium of the web going to be called CPM or pay for impressions, like you do on television advertising or billboard advertising? Or is it going to shift towards performance, pay per action? And it’s clearly dominated now by pay per action. But at the time, there was this fierce debate, newspapers and media companies can sustain themselves on a cost per action basis, it has to be CPM. So, there was this huge fight between camps and merchants about what model works for the whole ecosystem. The fact that you can track everything online is just going to mean it’s a performance medium.

Aaron Dinin:

This right here was the big debate surrounding the ways companies would eventually monetize traffic, or in marketing parlance you’ll often hear people say eyeballs, monetize eyeballs on the web. Historically, publications could only roughly track how many people would see an advertisement. They’d base that on things like subscription numbers for magazines and newspapers, or viewers for TV programs. So, they sold advertising based on estimated number of views. You heard Lex refer to the traditional metric for that, CMP, which stands for cost per mille, mille being the Latin word for thousand. So, you were paying a certain amount based on an expected number of thousands of ad views.

In the early days of the web, CPM was the standard advertising metric as well. Web publishers would charge advertisers a few pennies for every thousand banner impressions on a website. But people quickly realized, “Hey, the web actually lets us know whether or not the person who saw an ad clicked on it and visited the advertiser’s website.” That resulted in cost per click advertising, CPC, which by the way, is the core ad unit for Google and Facebook. Additionally, marketers figured out you could take the CPC concept a step further. Instead of an advertiser paying for a click, which stay may or may not have value, what if an advertiser only paid the publisher if the person who came to their website actually bought something or signed up for a newsletter, or whatever goal the advertiser set? This is called a cost per action model, CPA, and it’s the foundation of affiliate marketing. Also, as you heard Lex mention at the beginning of this episode, it creates business opportunities for people who don’t have the capital to pay for advertising up front.

Lex Sisney:

He had these things he wanted to sell, but he didn’t have a marketing budget. I started to think about, “Okay, well how do you grow customers if you don’t have money to buy advertising?”

Aaron Dinin:

In other words, affiliate marketing is a revolutionary idea in terms of entrepreneurship. Think about it, if you need thousands of dollars to advertise your product before you can ever make a sale, then you’ve limited the number of people who can build companies. But if you only have to pay for the advertising after you make a sale, well, that dramatically expands the limits of what kinds of companies are possible. And, just as importantly, who can launch them. Now, was this Lex’s vision all along? Not exactly. And as you heard, he got the idea for the affiliate model after reading what Jeff Bezos was doing at Amazon. But from a very early age, Lex was definitely determined, he was going to build something impactful in the world, even if he didn’t quite know what that was just yet.

Lex Sisney:

I was really clear, I always wanted to be an entrepreneur. In fact, this is a little strange I admit, but do you remember the Olympic Games with Mary Lou Retton, the gymnast? For those who aren’t aware, she was the it child of that Olympic Games.

Aaron Dinin:

This would’ve been the 1984 Summer Olympics in Los Angeles.

Lex Sisney:

Beaming smile, super radiant, on the box of Wheaties. I remember watching those Olympics and just feeling totally dejected because here’s a fellow human who at a really early age knew her purpose, like right at birth. Just laser focused. And I just craved that. Had no idea what my purpose was, what I was supposed to do on this earth. And I was really depressed, this is I guess 10, 11, 12 years old. I don’t know the exact time, I was pretty young, right? So, I start thinking about that question at a really young age, like, “Well, what should I do? What’s my purpose here?” Super cute. I decided I wasn’t really good at anything, but I could outwork just about anyone.

So, I wrote a little sign that said, “If I work harder than anyone else, I can accomplish anything.” And I put it over my bedroom mirror. My plan, as dumb as it was, was just to work hard. I would go to work for someone for a few years, I’d learn how they do it, and then I’d quit and I’d go launch my own business. That was the mind of a 12-year-old. As strange as it sounds, that was kind of the impetus.

Aaron Dinin:

Wow, that’s quite the existential crisis for a 12-year-old.

Lex Sisney:

Really was, really was, yeah.

Aaron Dinin:

That would’ve been the 1984 Olympics, you’re 12-ish, which means you’re graduating college right around the time the public web is coming into existence in 1992-ish. How did you discover the web?

Lex Sisney:

The web kind of came right as I was graduating college, and I went overseas to Asia, from Saint Paul, Minnesota. I went to go live and work in Beijing for an American computer firm. For most people, it was pre-internet, right? But we had a division in Minneapolis that had flown over to China to start to talk about HTML and the early web and how we need to start to look at this and leverage these kinds of things in our own client work in Asia Pac.

The first website I saw, was actually some head shots of the marketing team in Minneapolis, Minnesota, in Beijing. But something about what they were talking about was really interesting to me. And I’ve always been an avid reader. So, at that stage in web development there’s a lot of hype, a lot of interest, a lot of people forecasting the early future, how this is going to change everything, dah, dah, dah, dah, dah. I just said, “Okay, this feels like the lake I want to jump in, to start my own company.”

Aaron Dinin:

Were you interested in computers at all before that? Were you, I guess we might call it a computer nerd or any type of computer person at this point?

Lex Sisney:

I wasn’t a computer-y person at all, just kind of could sense the opportunity. And I taught myself basic HTML, that was even easy to teach yourself then.

Aaron Dinin:

So, you didn’t really know computers or the web, but you decided you were going to start an internet business. How’d that go?

Lex Sisney:

I worked for a couple more years with the firm I was with throughout Asia. Working with large companies, helping them design internet or eCommerce services. To understand that era, you just had to pretend you knew what you were talking about and you had a lot of credibility. I mean, it was really fundamentally silly, but true. It’d be like, “I’m a bitcoin expert.” “Oh, okay.” You just get away with a lot in a Wild West setting. That was me, just pretending I knew what I was doing and working with large companies though, to help them do their initiatives. And then I decided yeah, I have an idea. It’s going to be corporate procurement network and I’m going to quit my job, I’m going to fly back to Minnesota, I’m going to move into my mom’s llama ranch in rural Minnesota to save money, and I’m going to put all my savings into this. I’m going to create a business plan, a business card, my cell phone, and I’m going to go get money.

I’m reading about all these other people just like me raising money on a napkin, I can do this. I quit, did that, and I proceeded to spend about the next nine months just passionately, but haphazardly … Maybe not haphazardly, very consistently every day trying to sell this idea, get capital, attract a technology partner. Just by myself in rural isolation in Minnesota.

Aaron Dinin:

Wait, that wasn’t an exaggeration? You were actually living on a llama farm?

Lex Sisney:

It was actually a llama farm, yeah. If you picture Minnesota in the dead of winter, my day would consist of, I’d get up at 4:30 in the morning, I’d go to the local gym, I’d come back, I’d shovel llama poop for my mom, have breakfast, and then go down in my basement bedroom in her house and just work email, make phone calls, drive down to the city about an hour, hour and a half to the city, meet with people. Just trying to hustle. Just trying to stir stuff up.

Aaron Dinin:

And you said you spend nine months there. I’m guessing that wasn’t very productive?

Lex Sisney:

I’d spent all my savings, I was definitely ready to move out of my mom’s llama farm and have a social life again. I moved downtown Minneapolis, had some old friends in the area. I found a room to rent in a house with a bunch of other people. Remember, I was in corporate America, I had a career, I left it, and it was almost like I was back in grad school, without the degree. No money, need money, was this my shot? Some of the best decisions I’ve made in my life have been when I’ve tried to take my ego out of the equation. I was at this crossroads. I said, “Okay, do I go back to corporate America? No, there’s opportunity here, I know I can be an entrepreneur. What I need to do, is I need cashflow and I need to keep my days free so I can keep pursuing my dreams.”

I said, “What can I do that keeps my days free and still generates cashflow?” I crashed a Minneapolis Bartender’s School course, got a bartender certificate after two or three weeks. I went to the hottest cigar bar in downtown Minneapolis, kind of bluffed my way in. They hired me as a bartender to work at nights and on the weekends. That’s what I did. I just kept working nights, kept my days free, kept hustling, hustling, hustling.

Aaron Dinin:

And hustling is what led Lex to meet Paul Crawford, the local investor you heard about at the beginning of this episode. Lex eventually pitched Crawford his affiliate marketing concept, Crawford agreed to invest, and Lex had his first big opportunity. There was just one problem, he didn’t have the technology to pull it off.

Lex Sisney:

I was really clear on the business model, and we lacked the technology. So, I’m running around Minneapolis, Saint Paul area pitching technology services companies, engineering people. Everyone’s going, “No, it won’t work.” “No, it won’t work.” “No, it can’t be done.” I didn’t know enough to know why they were wrong, I just knew they were wrong. What happened is, I found a company out of Los Angeles that had typos on their website, the pricing model was really off, from my vantage point. But they proported the ability to have the technology that I knew I needed, which was a software-less install on merchant servers, so we can track sales and leads without a lot of time and effort involved. Quick, scalable tracking.

Lex Sisney:

They claimed the ability to have that, and in Minnesota everyone’s saying it can’t be done. So, I called this company up and I spoke to the CEO, his name was Mark. We chatted a little bit and I started asking him questions. I said, “Well, how did you do this technology?” And he started to give me answers like I would give. I could tell he wasn’t the technologist. So, I said, “Well, who built this software for you?” And then it was silence on his end. A good minute of just no answer. Finally I heard him go, “Okay, honestly I didn’t build this software, you got to call this guy named Per Petterson at UCSB in Santa Barbara, California. He built it.

Aaron Dinin:

So, you what? Stole his developer?

Lex Sisney:

So, I said, “Thanks Mark, we’ll stay in touch.” And I called Per. Per’s a really interesting, amazing human, super brilliant. He’s out of Norway, kind of a natural leader. Very, very brilliant. He and some fellow Norwegian nationals, five or six, were all on computer science scholarship at UCSB. So, I call Per up, asked him a few questions. Said I had an idea, I wanted to talk to him about it, and I flew out and went to their little office park by the airport in Santa Barbara. I walked in and there’s six Norwegians crammed in a closet, it’s kind of surreal. One of them, really brilliant computer scientist, is about seven feet tall, and very quiet. He’s in this little closet with six other Norwegians.

Per and I go into the … They’re renting office space, so there’s a shared conference room. We’re sitting at this cheap conference room, cheap table. Per sits himself at the other end of the conference table and I’m at the other end by the whiteboard. He starts asking me questions, but they’re not information-seeking questions. They’re almost veiled attacks. He’s super brilliant, very aggressive guy. And he’s kind of throwing verbal punches about why it won’t work this way, why that won’t work, why that won’t work, why that won’t work.

Aaron Dinin:

And how’d you respond to those attacks?

Lex Sisney:

Okay, step into my shoes, I’ve been at this now in my fricking mom’s llama ranch for many dark months, okay? I have passionately pursued this for a couple years. I’m really frustrated it hasn’t gotten off, I’m on the hunt. I could smell this thing coming together. I had spent so much time, I’d thought through all these objections. I’d heard them. So, I’m taking each objection and I’m just kind of doing a little [juto 00:19:04] move. And after like 30 minutes of hammering me, and I love Per to death, his body language just kind of goes … just kind of slouches, maybe 30 seconds. Looking at the floor, kind of talking things over in his head.

Finally he looks up, he makes eye contact with me and he goes, “Okay, we’ll do it.” Now, what had happened, I learned later, is that he had just gotten back from a VC meeting in Florida. And the VC just hammered him with all these reasons the business wouldn’t work. And just by virtue of I had spent a lot more time thinking and reflecting on it out in the trenches, I was able to answer the objections that he really wasn’t able to answer. And I think just because of that, he was like, “Okay.”

Aaron Dinin:

I know you’re in Santa Barbara now, is it safe to assume you basically met your co-founder in beautiful Santa Barbara and decided that’s a gorgeous place to build a company, so you moved out there, rather than staying in Minnesota?

Lex Sisney:

What happened is, we first started just building the software on spec, we come up with some kind of revenue share. I go back to Minneapolis, we’re hiring up a small team: sales, bis dev, customer support. That goes on for a few weeks, I start trying to sell Per on the idea of really creating the company, really joining forces. But he has to stop all the other work that they’re doing. We’ll provide the capital, we’ll do an asset merger. That took several months, but then it was a question of are we going to build this in Minnesota or in Santa Barbara?

This was funny, I remember very vividly. I’m on the phone and it’s on the speaker, I go, “Well, do you guys want to move to Minneapolis?” And all the Norwegians started laughing. They’re like, “Why don’t we move to Oslo? It would be just the same.” I put the phone, I said, “Anyone want to move to Santa Barbara?” And three or four hands shot up in the Minneapolis office. So, you could’ve put me in a semi trailer. I didn’t care where I lived. I was all into this idea. I mean, Santa Barbara’s beautiful. But honestly, when you’re building a business, it’s all-consuming. At least it was for me. And I didn’t even look up from my computer until like two years living in Santa Barbara when I kind of went, “Wow, it’s really pretty here. There’s mountains and an ocean.”

Aaron Dinin:

As you heard, Lex moved the company to Santa Barbara and even convinced Per and his team to drop everything else and focus on Commission Junction with Per becoming co-founder and CTO. While they weren’t the first affiliate company to launch, they managed to climb their way to the top of the hill by rigorously focusing on publishers.

Lex Sisney:

Commission Junction grew to be the industry’s largest, but we were the third or fourth to start. What I saw was the opportunity was to focus on the needs of the affiliate, or the publishers who were hosting ads for advertisers. They’re taking all the risks, they’re not getting paid unless they actually generate a lead or a sale. But notice too, they don’t have accountability or control over how the advertiser actually converts or sells, right? They take a lot of risk, I wanted to make it easier to track all their different ads they were running and critically get paid. So, we took a publisher-centric approach, with the thinking if we can get more publishers or more affiliates, they’re synonymous, we could get more affiliates in our network, we would attract more advertisers. And that would be a virtuous cycle.

Aaron Dinin:

And if the timeline I’ve got in my head is correct, all of this is happening right as the dot com boom and bust of the late-90s and early-2000s is happening. So, how did you deal with all of that?

Lex Sisney:

It fared pretty well during the boom, it also navigated through the bust pretty powerfully. That business is still going strong, 20 years later.

Aaron Dinin:

And Commission Junction is still around, though it’s actually now called CJ Affiliate. It was purchased in 2003 by Value Click Media, which would later change its name to Conversant. But Lex is no longer involved and he was kind enough to share a bit of the story about how he transitioned out of the company. Not surprisingly, it’s a story we hear a lot on Web Masters when talking with founders who started their companies in their 20s.

Lex Sisney:

I made a lot of mistakes as a CEO, and I was getting really buffeted by how do you manage this rapidly scaling business, it’s like absolute chaos. How do I bring order and stability, without disrupting and harming the core cool culture that we’ve built? I remember very vividly when the market crashed, I had raised a bunch of money from some investors, had very different vision than I did. That’s an obvious no-brainer is be as careful as who you take money from as whom you marry. If there’s a misalignment of vision and values at the top, there’s going to be a lot of conflict, your life’s going to suck.

Anyway, the market crashed, I’m getting body punch, body punch, body punched all the time by the environment and the board. I remember, we’re sitting around, like seven, eight very experienced directors on the board. The market’s crashed and everybody is just in fear, gloom and doom and fear it’s never going to recover.

Aaron Dinin:

But Commission Junction was making money on the web back then, right? Weren’t you like a shining example of how the web could eventually support real business models?

Lex Sisney:

It’s hard to imagine that. But if you’re in it, you can’t predict or see the future easily. Some great contrarian investors can, obviously. But at least I didn’t have that capability in my late-20s, early-30s. I just remember very vividly this palpable sense of fear in the room and it just sucks. We made the decision as a board, and I didn’t stand up, that we were going to look to sell the company. I wish I had the wherewithal just to go, “Okay guys, I hear there’s a lot of fear and uncertainty and doubt. Cool. Let’s try to imagine five years from now. Is there going to be more online advertising or less?” Just that little simple question. Is this general market going to be bigger or smaller in five years?

If it’s going to be bigger, really, really question the notion to sell. Really question it. Because you can always develop capabilities, you can always get better. Ride that wave. I personally, as CEO, founder, I was already being moved up to a chairman, I got fired up. I’m as sick of them as they are of me, the whole thing wasn’t very fun. That business has been sold three or four times, always making money, and still a pretty core fundamental piece of the internet platform.

Aaron Dinin:

For me, this is where Lex’s story gets particularly interesting because I’m always fascinated by how entrepreneurs respond to difficult stages in their careers. The really good ones don’t just get knocked down and pick themselves back up. They’re really thoughtful about what knocked them down, and use that information as a springboard for their next opportunity. That’s exactly what Lex did. He went on to launch a venture called Organizational Physics, where he operates as, functionally, a teacher. He coaches other CEOs who are trying to scale their businesses, and he uses all the lessons he learned as he struggled to scale his own.

Lex Sisney:

I learned the hard way. I’m expressing my purpose and meaning in my work and my life by sharing what I found useful and true and kind of a way to think about these challenges.

Aaron Dinin:

Okay, so you’re using your experience to teach founders how to be CEOs. But isn’t it true that the skillset for being a great entrepreneur and founder is just fundamentally different from the skillset needed to be a great CEO? Isn’t that why the transition from startup founder to scaling CEO is so difficult?

Lex Sisney:

My view is that most founders can actually … If they’re committed and have some sense of self-awareness, can make the transition pretty far from entrepreneur to CEO, or from startup well into scale it. In fact, you’ll see most transcendent brands and companies, they actually are founder-led. The founder gets pulled out on a stretcher. Now, you say, “Well, that’s because they’re Elon Musk or Mark Zuckerberg or Bill Gates or Steve Jobs or whatever.” The reality is, we’re all shaped by the environments that we inhabit. If you’re running a high pressure situation year after year after year, you get smart and capable really fast.

So, don’t discount that those are just rare breeds. I mean, they obviously are rare, but most entrepreneurs can go much further than they think or than their boards think, if they have the right operating approach. They have the right philosophy to these kinds of things. So, I teach that.

Aaron Dinin:

Would you mind sharing your philosophy for teaching that?

Lex Sisney:

A true entrepreneur is bringing it. They want to give birth to this thing. They might have thoughts of success or money, but most of those businesses don’t really break through. It’s more purpose-driven than that. And then they’re just buffeted. Just buffeted, buffeted, buffeted. And they are very goal-oriented, but they want to bring this thing to life and bring it to the world. But they give so much that they’ll start to get worn out. They’ll start to get burnt out. They’re having a hard time creating an environment, organizational designs, operating principles, et cetera, where they’re no longer the central figure. It’s a hard transition to make as a human. Because you have to have super high self-awareness. Like, you’re born to do this thing and now the kids are off at college, effectively. You shouldn’t parent them like you did before.

Business is kind of similar. You got to do the right thing for the child at the right sequence. And you have to have enough awareness as a parent to know when to adapt and change and have the ability to adapt or change. For me, I was super goal-oriented, achieved a lot of what I set out to, and I realized, “Ah, this isn’t actually fulfilling me.” That’s almost a cliché now, I know. But for me, “These are the things that’ll make me successful, these will be the things that make me happy.” And I got up there and I’m like, “Whoa.”

Maybe one way to think about this is that that journey from being an entrepreneur to a well-integrated and happy successful leader, is you kind of shift from the goal to the process. I don’t mean that the goal goes away. The goal’s kind of there, “Hey, we want to grow this thing, we want to make this impact.” But how do you go about designing that environment? How do you go about recruiting people? How do you go about cascading culture and principles and things like that? It’s a different mindset. Because if you’re goal-oriented, you’re going to want to be in the center of the action. You get energy from making key decisions. You get energy from being the person at the top. And then you become a bottleneck, so you got to get your energy and satisfaction from being more of a designer.

Aaron Dinin:

Out of curiosity, what’s one strategy you’ve used successfully in your career as an entrepreneur and CEO that might help someone listening to this?

Lex Sisney:

I said no a lot, that’s an underrated skill. I had a sense of what the business could become and the right business model to make it happen. But it was a strategic bet. Right away I’d get companies showing up, “I don’t want to use your service, I want to buy your software.” I’d say, “No.” They’d go, “Well, I’ll buy you out.” “Okay, but no.” You’d get prompted to launch a new market or a new product extension early. And it’s so easy to say, “Okay, let’s try it.” And then suddenly you’re a teen pregnancy with triplets, you’ve just created chaos.

On the big things related to culture, core strategy, what was acceptable, what wasn’t, I was really fierce. But because I was highly innovative and entrepreneurial, I would say yes to a lot of other little things. Like, “Oh, let’s try that. Oh, let’s do that.” Just grabbing all these little things around me, just creating distraction. Like the shiny object syndrome. So, on some level I did really good at saying no to the bigger things. Core strategy, core culture, that kind of stuff. But I didn’t do a good job of knowing when to say no and when to say yes to the little things. Because I didn’t understand how there’s a sequence to follow.

Aaron Dinin:

Looking back at Lex’s story, this point seems critical to his success. Notice how he talks about having a clear sense of what the business could become and then sticking almost religiously to that vision. This is a valuable quality for an entrepreneur operating in an immature market, which is what Lex was doing when he first launched Commission Junction. Remember, at the time, people just thought about advertising differently.

Lex Sisney:

Picture Don Draper in brand advertising. It’s an emotional appeal and can be very expensive, but if you want to create a category, it’s brand marketing. And there’s many industries built up around that model. In the earliest ages of the internet, the performance model was much easier to track. You could track things online you could never track offline. The dollar volume though, was much, much smaller. And there was a lot of debate about how to quantify attribution to the online ad. If an online ad triggers an impression, but it closes offline, how does the publisher get attribution for that? You with me?

So, just like any new, emerging thing, it just has to go through the cycles to see what really works here and what’s really the right approach? And in the end, it kind of works itself out. But in those early days, there’s a lot of questions, a lot of debate. Big, huge conflicts of interest.

Aaron Dinin:

Like what?

Lex Sisney:

What’s good for the advertiser might because seen as bad for the publisher. What’s good for a CPM agency is seen as a loss for a performance agency. I would just say this for entrepreneurs, you always want to get on the right side of history. So, you can kind of tell generational trends, which way they’re heading, you want to be on the right side of those trends, not moving against them.

Aaron Dinin:

And if I may say, you seem to have done a good job of predicting those trends. I mean, when you see the ad industry now, which is an ad industry you really helped create and it looks a lot like what you predicted over two decades ago, what do you think about it? Are you impressed with how right you were with your original vision?

Lex Sisney:

I’ll just say from my vantage point back in the late-90s, early-2000s, I would’ve bet you a billion dollars, a billion dollars that the online advertising industry could never consolidate 90% of online ad spend under effectively two players. I mean, it was just impossible to conceive of that. I’m still kind of shocked it’s happened that way.

Aaron Dinin:

Okay, so it wasn’t a perfect prediction. But to be fair, in 1998 nobody saw Google and Facebook coming. Still, the affiliate models Lex helped pioneer with Commission Junction remain the foundation for much of the current online advertising ecosystem. And it’s pretty impressive to have seen that before just about anyone else. As for whether or not those models are a good thing, well, I’m sure that’s a topic we’ll have lots of chances to keep exploring in future episodes of Web Masters. For now, I’d like to thank Lex Sisney for taking the time to share his story, the story of Commission Junction. You can see what he’s up to now and read some of his fantastic advice on scaling businesses over at OrganizationalPhysics.com.

I’d also like to thank our sound engineer, Ryan Higgs, for his work editing this episode. And a thanks to our sponsor, Latona’s, for supporting the podcast. If you’re interested in buying or selling a cashflow positive internet business, be sure to check out Latonas.com. I don’t get any sort of affiliate referral for sending you there. But, if you feel like it, do mention you heard about them via the show, that’ll help me out. There are other ways you can help me out too. You can start by leaving us a nice review on your podcasting app of choice. And of course, please share this episode with everyone you know.

If you got questions, thoughts, comments, concerns or feedback, find us on Twitter, we’re @WebMastersPod. I’m on Twitter too, @AaronDinin. That’s A-A-R-O-N-D-I-N-I-N. I also write lots of articles about startups and business building, marketing and whatnot, over on medium.com. So, search for my name there to see everything I’ve written. And if you don’t want to miss our next episode, be sure to subscribe now because we’ve got another great story coming soon, I promise. But for now, well, it’s time for me to sign off.