Friday’s Philadelphia Business Journal featured a story about Commerce360 and our CEO Lucinda Holt, focusing on the long term collaboration between Lucinda and one of our investors, Josh Kopelman of First Round Capital. It’s a nice piece that covers the genesis of the company and highlights some of the names behind the scenes.

The story also features a great quote from Steve Sisskind the CEO of The Franklin Mint:

They really have put together a good team of knowledgeable people,” said Steven Sisskind, the Franklin Mint’s CEO. “The problem in the online world is there are so many options and vendors and solutions coming at you that you’re not really sure where to turn. These people really seem to have crystallized what’s important and what’s not important and where to focus, and that really is an important knowledge to have.”

Full text after the jump.

Friday, September 28, 2007

Holt, Kopelman collaborate on search-marketing firm

Philadelphia Business Journal - by Peter Key Staff Writer

PLYMOUTH MEETING — Two of the area’s best-known technology entrepreneurs have teamed up again in a company that’s just starting to publicize itself.

Lucinda Duncalfe Holt is the CEO of Commerce360 Inc. and Josh Kopelman is one of its directors. First Round Capital, the West Conshohocken early-stage venture firm that Kopelman co-founded, is an investor in Commerce360.

Holt was the CEO and Kopelman was the chairman of TurnTide Inc., a Conshohocken-based developer of an anti-spam router. Founded in January 2004, TurnTide was bought six months later by Cupertino, Calif.-based Symantec Inc. for $28 million in cash.

Since Commerce360 was founded in January 2006, it’s not going to match TurnTide’s track record. But that’s all right with Holt, who thinks the company’s software, ClickEquations, will change how businesses market themselves on search engines.

“We really have a belief that the way this is done everywhere is wrong, and we want to be at the vanguard of bringing in the next generation of search marketing,” she said.

Holt met Commerce360’s founder, Craig Danuloff, through work both did for Baton Networks Inc., a Conshohocken-based provider of incentive, loyalty and reward programs for consumer Web sites.

That work introduced Holt to the world of search marketing, which deals with helping companies formulate strategies for buying ads in the sponsored sections of the results pages of search engines such as Yahoo and Google.

It also convinced her that Danuloff, then running a Bucks County-based online marketing consulting firm called the Precommerce Group, knew the world well.

With a small but undisclosed amount of money from First Round Capital and Terrapin Partners LLC of New York, Danuloff founded Commerce360 and rolled the Precommerce Group into it. At the same time, Holt joined as CEO.

Although Commerce360 helps companies tweak their online sites so links show up more frequently in the unpaid sections of search result pages, most of its business comes from helping them buy ads that appear in the sponsored sections.

Search engines use algorithms to determine what links appear in those sections. Companies that want their ads to show up must consider the keywords they want to bid on, how much they want to bid on each word, whether they want to match just those words or synonyms, and what they want their ad to say when it shows up.

The complexity of the process led Commerce360 to conclude there was a market for software that would automatically devise the best strategies for dealing with paid search algorithms.

The company took in a larger, but still undisclosed amount of venture capital from its first two funders and PA Early Stage Partners of Wayne, and developed its ClickEquations platform.

It was helped in that task by Kartik Hosanagar, an assistant professor of operations and information management at the University of Pennsylvania’s Wharton School, who has worked on the paid-search algorithms used by Yahoo and Google.

Commerce360 has increased its staff to 30, including six people who worked with Holt at TurnTide. Its customers include Comcast Corp., Edgar Online Inc., which provides Securities and Exchange Commission filings over the Web, and the Franklin Mint.

“They really have put together a good team of knowledgeable people,” said Steven Sisskind, the Franklin Mint’s CEO. “The problem in the online world is there are so many options and vendors and solutions coming at you that you’re not really sure where to turn. These people really seem to have crystallized what’s important and what’s not important and where to focus, and that really is an important knowledge to have.”

Commerce360 uses ClickEquations itself and shares the results with its customers. It’s building a user interface for the software and would like eventually to let customers use it themselves.

Although there are many firms doing search marketing, Holt said only five she knows of are building search-marketing automation technology and even they only use it to help clients figure out how much to bid on keywords.

The fact that Commerce360 is venture-backed means eventually it will have to be sold or go public, but Holt doesn’t expect either to happen soon.

“We’d like to build a big company, so I don’t think it’s going to be a TurnTide kind of a time frame,” she said.

UP CLOSE

NAME: Lucinda Duncalfe Holt
AGE: 44
TITLE: CEO, director
EMPLOYER: Commerce360 Inc.
PROFESSIONAL EXPERIENCE: Founder, chairman, Cuts Inc.; founder, president, CEO and director, TurnTide Inc.; chairman, president, treasurer, secretary, Destiny Software/Destiny WebSolutions; president, CEO, director, Destiny Software/Destiny WebSolutions.
EDUCATION: BA, psychology, University of Pennsylvania; MBA, the Wharton School.
HOMETOWN: New York
CURRENT HOME: Lafayette Hill