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Downie addresses March 15 meeting

March 15, 2005

Chris Downie, an entrepreneur since high school, founder of Spark People, Inc., and self-proclaimed "Indiana Jones" of the motivation world, shared an insider's view of what it's like to be hunted - and acquired - by one of the largest Internet companies in the world.

Describing his journey as one triggered by his extreme shyness, Chris describes how he learned at an early age to overcome obstacles. The "shyest kid in class," Chris hated the feeling and vowed to overcome it. This journey of self-discovery and commitment continued after college as he moved from an active college lifestyle to 60 hours a week behind a computer as an accountant at Procter and Gamble. Frustrated with his energy level and seeing his performance at work begin to suffer, he reversed the downward spiral by setting out long-term goals and short-term action steps. Long-term, he realized he wanted to be in business for himself and that family and his health were key in his life.

One short-term action step resulting from these goals was a commitment to exercise 10 minutes a day, every day. This started a 700-day workout streak, which not only helped him gain more energy and focus, but motivated a co-worker to lose 50 pounds and subsequently inspire others around her. That was the "unofficial" start of Spark People, a motivation company.

Feeling full of energy, Chris now needed to fill some of the "extra" time he had created for himself. He decided to start a business with a friend. They quickly realized they were not happy in their corporate careers, and quit to "do their own thing."

Chris and his partner brought in 2 others plus an engineering co-op student from University of Cincinnati. None of them had computer or marketing backgrounds, but going off the little they knew, and in a time when the Internet was not as integrated or powerful as it is now, they created the second largest online auction company. They did everything themselves, including the financing. With $50,000 on credit cards, less than $100,000 total investment, and no revenue, they managed to begin their business and catch the Internet world's eye.

At the time, there were over 100 online auction sites. How did they stand out? Foremost, they made sure to understand what an online auction was really about: connecting people so they can do business together. This understanding, combined with both brand management and guerilla marketing approaches, catapulted them above the two largest competitors after eBay.

Suddenly, they realized millions of dollars were funneling through the business, and the site was growing so fast they could hardly keep up with it. Chris was working over 100 hours a week, but hearing from his sellers that they were moving to Up4Sale from eBay was incredibly motivating. Then, when he saw other sites their size being acquired, he really started to have hope.

Then, in May 1997, Yahoo called. They were interested in getting into the online auction business and wanted to talk partnering. Unfortunately, they chose a competitor, OnSale, to acquire. But that was fine, since June 1997 brought a call from eBay!

Very quickly, talks started between Up4Sale and key players at eBay. After viewing the eBay facility, the Up4Sale team was brought to the conference room to discuss terms. They saw the initial offer was fair and were told eBay would be going public soon. It was in their best interest to move quickly.

And they did - the deal was done in a week. It bought eBay the rights to Up4Sale, including a piece of exclusive software that proved extremely valuable to them, and a 3-year employment contract for Chris and partners.

What did the Up4Sale team get out of this? The buyout offer was in eBay stock, $14/share. As promised, shortly after the contract was signed, eBay went public. In the next year, stock prices climbed to $900/share. The result was about $100 million to the partners - not bad! But best of all, the deal found Chris his wife, also a former eBay employee.