Vinod Gupta, founder of Database101.com, a provider of consumer and business mailing lists, discusses his newest venture, as well as his past where SEC allegations forced him to leave the company he started with a $100 bank loan in 1972.
Direct Marketing News (DMN): The (SEC) accused you of using $9.5 million of Infogroup funds to ‘support your lavish lifestyle,’ including personal jet travel and expenses related to your yacht. What is your response to these allegations?
Vinod Gupta (Database101.com): I built the business based on relationships and we entered a lot of new markets [as a result of those relationships]. We created a lot of large customers. You don’t sell them by telemarketing. Those relationships cost money. That’s how you create a brand. Anybody can accuse someone of wasting money, but that’s how I built the company. It was all built on relationships. To build those relationships you need a network of potential clients. We licensed to Google, Microsoft, Apple — I got to know all those leaders by building contacts and that all costs money. You have to build an image of success. You don’t build it by flying Southwest. You don’t build it by showing up in a beatup Volkswagen.
(Editor’s Note: Gupta agreed to pay $7.4 million to settle these charges in March)
DMN: How is the database industry evolving? Where do you think it’s headed?
Gupta: The industry in my opinion is going to get better and better. As more information is available from different sources, it will allow marketers to have more finite segmentation and make marketing more cost effective. With new technology, the industry is headed for handsome growth. At one time data was proprietary and valuable. Today, it’s no longer proprietary. It’s more and more ubiquitous. If you’re selling data to make a living, you can’t anymore. You’ve got to make it more productive, add more applications, add more solutions. At one time grain was important, but now people buy corn products.
DMN: Do you think it’s more important for clients to gather large volumes of information or small chunks of clean information?
Gupta: It’s more important to get cleaner information and not waste your time sifting through bad information. That’s why we’ve seen in the past, if a customer bought 2 million records, today they’re only buying 1,000 records and that information has to be productive. The average customer is buying 100 names or 200 names. In the old days you bought enough names for three months. But because of minimum order requirements today you don’t have that. You don’t want to buy a ton of candy, you just want enough to last for three or four days.
DMN: Your new company, Database101.com, is focused on selling to small business marketers. Why was that a market you thought needed to be targeted?
Gupta: The small business market was always under-served because it’s a tough market to sell to, but it’s a sizable market. Larger customers are more sophisticated, more complicated, and require a lot more investment. Small businesses, [however], they’re picky, they need the right service and not many companies want to play there. Our first few months have gone well.