The History of How I Got Here (Continued)
Instead of boring people by writing a book about this stuff, I’ve decided to document my business path here if you're brave enough to read it.
I've built and sold two lead generation companies and started a third that morphed into a data-tech marketing hybrid. My first lead company, back in 1995, was pure telemarketing. We manually dialed old leads, profiled them, and faxed the results (yes, faxed!) to clients. I scaled it to 100 work-from-home dialers before selling.
In 2001, right after the tragedy of 9/11, I started my second lead company, which I sold in April of 2007.
Before that, I was sleeping on a blow-up mattress in December 2000.
Yes, that's a blow-up mattress in Las Vegas; it was on my friend's living room floor in a small one-bedroom apartment. I had lost everything, everything. I lost at least what didn't fit in my car. The Dot-Com bubble bursting in 2000 caused me to lose all my money. After selling my first lead company, I invested in a 3D software startup. It was a garage startup, and we'd had a great two-year run—from early 1998 through 2000. We ended up listed on a popular website called Fu*ckedCompany.com even though we weren't VC-funded. The stubborn CEO turned down a $5 million investment, a decision I still scratch my head over. But hey, I got a crash course in 3D software, internet marketing, and the rollercoaster of startups.
(I'm going to sprinkle in a variety of old images and videos from back in the day as well)
Nonetheless, I had become a paper millionaire before I lost everything and learned many lessons. Before I started, I knew little about 3D software or the internet. It was a good time to be at a Dot-Com startup with some cool tech. We did very well for two years. Then, I lost everything I had invested. Let me tell you, it was a great education. I acquired a taste for internet marketing as well. That was the start of my journey to start my second lead company in late 2001. But I didn't know circumstances would force me to do it.
In December 2000, I moved from San Diego to Las Vegas. I got a job in January 2001 as a list manager for a travel list broker in Las Vegas. Then 9/11 happened, and I lost my job because Las Vegas had become a ghost town after 9/11. All my clients canceled or paused their open orders for the travel lists I was selling. I had no income, so I started my second lead company out of pure necessity to pay the bills. I called the company LeadSpring. The company changed its name to Leads to Wealth after the first year.
Right before 9/11, I had my job as a travel list broker and a side hustle as a nightclub producer. My nightclub business was starting to boom. When 9/11 happened, we also had a million-dollar nightclub deal fall apart. My friend and business partner who was the buddy letting me sleep on his living room floor. We have a long history of working together. We produced nightclubs, parties, and festivals together for years.
In September 2001, I met an email marketer in Las Vegas. This guy could create leads with email; he was an email marketer. I had another friend who worked in Pre-Paid Legal Services, and he needed leads. I worked out a deal to advertise his ad via email, sending his offer to people interested in discounted legal services.
My cost to produce a lead for legal services was $4.50. In other words, that's what I paid. I was selling the leads for $6.50-$8. The test orders started with my friend, who also had a large group of potential buyers for these leads. They loved the leads. We tested campaigns for a month, and lead orders increased weekly. I was delivering over 5,000 legal service leads per week. I was able to get rid of the blowup mattress.
How do I duplicate this success? Let's find another campaign and client, I thought.
I knew some guys who owned another lead company. It sold business opportunity leads. The company had a large demand for leads—40,000 per month. Since they were resellers, I had to sell them at a lower margin, and my cost was $2.25. I was selling the leads for $3 per lead while they were selling them for $4 or $5. I didn’t stop there. I landed clients who had an even larger demand for leads. I grew from spending tens of thousands of dollars a month on ads. To spending over $3.5 million per month on the Internet, Radio, and TV ads.
Clients started finding me at some point, and I was scaling as fast as possible. Remember, the lead tech of the early 2000s didn't have off-the-shelf SaaS solutions. It lacked real-time lead delivery and tracking. For the first 1.5 years, I cut and pasted Excel files for each client.
I worked until 2 a.m., delivering lead files every day. Around that time, I read Michael Gerber's book E-Myth Revisited. It changed my life. I knew I needed to systematize and automate my business with technology.
The daisNetwork
In 2003, I brought on business partners. We developed a real-time lead delivery and management system called DAIS. It was one of the first, giving us a unique advantage. I also learned how to buy ads and run campaigns that could grow on demand. It was much better than relying on the ups and downs of email marketing alone.
In my first year of business, I made 1.3 million dollars with 2x growth each year after. This led to an exit in 2007 when we were doing $2 million per month with over 70,000 customers.
Developing smarter lead technology was a big part of Leads to Wealth's LTW success. We licensed DAIS to several lead companies. They became a close partner network. They were like-minded groups working toward a common goal. Conversion testing technology also became a large part of our success. In 2004, we built an in-house system called the Natural Selection Engine. NSG for short (survival of the fittest). We based NSG on a color study a PhD did called ColorVoodoo. This color study found that some color combos on a website led to higher conversion rates. It started very simple. We started rotating color pallets on our landing pages. Sometimes, we would see a 10%+ higher conversion rate without changing a single word on the website. It became far more complex as we started rotating the words and images. At the time, there wasn’t a SaaS platform offering similar functionality. A multivariate system charged $50K a month about a year later. Back then, we built the functionality we wanted. Later, after I sold my interest in LTW, the company continued rocketing to over $50 million a year. Most of the in-house conversion team later joined to form a company called ConversionVoodoo.
Below is part of a chapter I wrote in 2009 for a book called The Law of Business Attraction. It is about the Secret of Cooperative Success.
Again, the success of my new business was built on spotting an opportunity to collaborate. This time, my collaborators were also my competition. The lead-generation business is highly competitive. Everyone is clamoring for customers, and also desperate to find quality leads to deliver to them. In my online research I discovered a problem that every single lead business had: either they had too many leads, or too few. It sounds like an obvious opportunity for any go-getter; however, due to the competitiveness of the lead companies, they didn’t see it.
Most people think of leads as lists of contacts, but leads are actually real-time responses to advertising. My competitors had clients who needed to buy only very specific types of leads — I knew that because I had my own clients’ orders to fill. In my research, I noted lead companies with large inventories of one type of lead, and competitors looking for similar leads. These companies could be very useful to each other, but because they were “in competition” with each other, no one even considered working together to get what they needed. Rather than jump into the vast pool of lead generators vying for leads and customers, I decided to become a wholesaler, selling leads to other lead companies who were, essentially, my competition.
It started with a simple phone call. “I have a good lead source, and I’ll give you leads at almost my cost to help fill your lead flow,” I offered. “In return, are you able to produce more of the leads you have?”
Everyone I called was suspicious at first. Why not? I was after the same clients they were after; they were right to be wary of my offer. Still, when a deal is done right, in good faith, and you perform, it works out.
Once my competitors took off their “suspicious glasses” and recognized me as someone who could help them, I began connecting all of the lead companies. I came to them and said, “Look, let me grow your company and your lead flow for you.” And so I began building relationships with my competitors. Selling them leads was easy because I was in the same boat with them.
When you embrace your competitors as collaborators, you not only solve major problems in your industry, you create tremendous income-generating opportunities for everyone involved. When we got over the initial hurdle of mistrust, I was the person they wanted to buy from. Not in spite of the fact that I was their competitor, but because I was their competitor. I understood the business, which provided me with a huge advantage. Soon I became the main hub exchange for leads, the go-to matchmaker in the industry. Because I had a consortium of lead companies, I had the buying power to purchase leads at volume prices, and to demand better contracts.
When you embrace your competitors as collaborators, you not only solve major problems in your industry, you create tremendous income-generating opportunities for everyone involved.
The matching process was about finding connections. When you are open to collaboration, you are better able to spot the key connections that will take your business to the next level. My buying power allowed me to generate enough lead flow to funnel into my own retail lead-generation business. Because I was collaborating with other businesses, I was able to significantly grow both sides of my business at a rapid rate. And because I established a minimum order, my clients began collaborating with each other, forming co-ops so that they could order from me. The co-ops were made up of related businesses, some of which were directly competing with one another. Yet in working cooperatively, they all benefited because they were able to order quality leads from my company.
When I look back on my life so far, I see a pattern, a common denominator in all of my wins: collaboration. All of my best ideas were born in that spirit.
Think Like A Lead Company
In 2008, I started LeadSchool. I had a non-compete after selling my interest in Leads to Wealth. So, I decided to teach people how to start and run a successful lead company. For the most part, I enjoyed the experience. One hundred students went through the program that year. Over the years, about a dozen students have reached out. They said they had started lead companies and done very well. A few of them created multi-million dollar lead companies. They make me feel good. Soon after creating the program, I realized I lacked the patience for teaching. I also lacked the patience to be a guru-type person. At least for the amount of money, I was being paid. I also didn't feel right charging large sums to certain people. I don't want to pre-judge. But, I feel starting a business isn't for everyone. Building a successful lead business is even harder. I still want to help people realize the awesome benefits of learning to "Think Like A Company." But, nowadays, I do that through selective projects and partnerships. Below are a few videos from the program.
Here are a few videos from LeadSchool that still hold true today.
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ABOUT GIL ORTEGA
For over 30 years, Gil has earned the esteemed moniker of "The Chief Rainmaker" due to his renowned expertise as a Customer Acquisition Specialist.
