By LAURA LOREK
Founder of Silicon Hills News
It’s not a good idea to quit a good job and launch a divorce startup while happily married, said Cotter Cunningham.
“The day you quit your job to go home and tell your wife you’re starting a divorce site is not the best day of your life,” Cunningham said.
At 46, Cunningham left his job as the COO of Bankrate in Palm Beach and wrote a $1 million check to launch Divorce360.com. He also raised $1 million from Austin Ventures. The investment was a good chunk of his net worth.
“It failed miserably,” Cunningham said.
The first year, the startup spent $400,000 and made $19, Cunningham said. The second year, it spent $1.5 million and made $300,000, he said.
“I feel like we failed because of the business model,” he said.
Cunningham recounted his entrepreneurial journey Tuesday evening during an interview with Brett Hurt, co-founder of Bazaarvoice and entrepreneur in residence at UT during a talk sponsored by the Herb Kelleher Center for Entrepreneurship at UT.
Today, Cunningham is the founder, president and CEO of RetailMeNot, the world’s largest online coupon and deals marketplace. The company, founded in 2009, has 300 employees with its headquarters in Austin and offices in the United Kingdom, Germany and France. The company has raised approximately $300 million from investors including Austin Ventures, Norwest Venture Partners, Adams Street Partners, Institutional Venture Partners, JP Morgan and Google Ventures.
Hurt asked Cunningham how he became an entrepreneur. Cunningham and his brother grew up in Helena, Arkansas and later Memphis, after his parents divorced. His dad was speaker of the house in Arkansas and liked to debate politics around the dinner table. Cunningham liked growing up in a small town where everyone knew his name and the kids had a lot of freedom.
“I was driving at 14,” he said. “My dad threw me the keys and said have fun.”
When Hurt asked Cunningham what advice he would give to students, Cunningham advised them to be confident and persistent.
“I think to succeed as an entrepreneur, you have to have a strong amount of confidence in yourself, bordering on arrogance,” Cunningham said. “Persistence has worked for me. It was not something I was born with. I had to develop it as a skill.”
Cunningham said he didn’t have a great academic record. When he graduated from Memphis State, he landed a $14,000 a year job working for Arkansas Gov. Bill Clinton. He then went on to get his MBA from Vanderbilt University.
“I have always persisted,” Cunningham said. “I didn’t give up.”
That’s where passion comes into play, Hurt said. It drives entrepreneurs to keep going in the face of adversity.
“You almost can’t be persistent if you don’t like what you do,” Cunningham said.
Cunningham joked that he was the antithesis of Hurt, who he joked grew up with an entrepreneurial pacifier from birth.
After Divorce360 failed, Cunningham moved to Austin with his family and worked with Austin Ventures to start something new. He met a guy at a cocktail party who was going through a divorce and he found out he owned an online coupon site. The site generated $3 million a year in revenue.
“It was insanely profitable,” Cunningham said.
That sparked him to start Whale Shark Media, later renamed RetailMeNot. With the backing of Austin Ventures, Cunningham cold-called 100 online coupon sites. He interviewed 60 of them. He ended up buying three of them. Together, they had $10 million in revenue. He hired 30 people. He found out that RetailMeNot, the biggest competitor, based in Melbourne, Australia, was for sale. He got on a plane a few days later and flew to Australia to meet with the founders.
“We pursued them for nine months,” he said.
Part of the courtship involved eating kangaroo meat, something that Cunningham did not enjoy. But it helped him close the deal.
The lesson for the students, said Hurt, is that to be successful, “you have to eat kangaroo meat.”
Through all of the acquisitions, RetailMeNot has been able to maintain its corporate culture by treating employees the right way, Cunningham said. It got 60 employees through the acquisitions.
“We believe people work hard for us, so we need to work hard for them,” he said.