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| Silicon Alley Reporter Top 100 |
| January 01, 2001
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For old b-school pals Bill Daugherty and Jonas Steinman, their friendship has always been about meeting halfway. When they both worked in Midtown-Daugherty for the NBA and Steinman for Chase Capital Partners-they’d meet halfway between their offices for lunch. And when they went into business with iWon, they planted the office in the sleepy Silicon Alley suburb of Irvington, in Westchester County-halfway between Daugherty’s Old Greenwich Connecticut home and Steinman’s in Englewood Cliffs, New Jersey.
It was in January 1999 at one of their halfway lunches-this time at Midtown’s oh-so-stimulating Burger Heaven restaurant-where iWon was born. After discussing the uncertainties of Internet portals and one surefire promotion from McDonald’s, their business plan was hatched: marry a portal and prize site.
Yet Daugherty and Steinman knew an upstart portal could survive only if backed by a major media company. CBS, the only major network without a portal of its own, was a perfect fit, and its president, Mel Karmazin, was receptive. So on Oct 5, 1999, with $30 million in cash and $70 million worth of guaranteed advertising from CBS for four years, iWon launched. Later the company locked in another $100 million in funding from investors such as Bain Capital and Goldman Sachs.
The trove of cash and big-name backing paid off. In September, less than a year after its debut, iWon was the ninth most-visited portal. And, according to Media Metrix, 9 million unique visitors a month were spending an impressive (and enviable) 108 minutes in the portal per visit. (No doubt this statistic was bolstered by the fact that in its first year the company gave away more than $25 million in prizes.)
How does iWon survive while giving away millions? iWon stretches out its top prizes over a 25-year period, so the actual cost of giving away $25 million a year, say company directors, is just $18 million. And with CBS’s new parent, Viacom, now owning 37 percent of iWon, Daugherty and Steinman can count on deep future reserves to keep them afloat while they fight for market share.
The battle for homepage visitors may have gone to the Big Three portals – AOL, MSN.com and Yahoo- but with visitors spending more than an hour and a half at iWon, the company appears to have won the battle of stickiness. Even ûber-portal Yahoo keeps users for only 87 minutes, while the second stickiest, MSN.com, gets an average 76-minutes stay. Now all that’s left for Daugherty and Steinman is to go all the way, and turn those lingering eyeballs into substantial profits.
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