Business, Funding, and Leadership Lessons from the Front Lines of

Growth at Constant Contact

Gail GoodmanCEO, Constant Contact

ggoodman@constantcontact.com(781) 472-8150

Sharing the Constant Contact Story

Three Major Phases:

Finding the Customer / Market / Solution

Struggling with Go to Market / Repeatable Sales Model

Driving for Market Leadership

Sharing the Constant Contact Story

Each Phase Presented Very Different:

Business Challenges

Funding and Cash Flow Challenges

Leadership Challenges: Evolving Role of the CEO

1999 – 2002: Finding the Customer / Market / Solution

Key Business Challenges:

Who is our target customer?

What problem are we solving for the them?

Can we make $$$ at $35 a month?

1999 – 2002: Finding the Customer / Market / Solution

Funding and Cash Flow

Raised $10m in May 2000 ~ $27m post-money valuation

Hired up to 50 employees

Got a great space (ping pong, air hockey, etc.)

Spent the cash

Needed more money in 2001!

Small inside round – learned about anti-dilution

Needed an outside round in November 2002

Complete cram-down recap – UGLY!!!

Revenue run rate =$2m, pre money of $2.5m

1999 – 2002: Finding the Customer / Market / Solution

Role of the CEO

Eye on the customer / market / product

Need to believe in the business deep in your gut

Firm hand on the tiller – make directional changes but don’t swamp the ship

Build the team

Find and motivate great people

Keep tight alignment – strategy to daily priorities

Manage the investors

Great communication at the right level

Do not let them drive

Do whatever is needed

Business Scorecard – October 2001 and 2002

October 2001 October 2002

New Customers per Month = 100 550

Cumulative Customers = 1,200 6,000

Monthly Run Rate = $42,000 $200,000

2003 – 2005: Go to Market / Repeatable Sales Model

Key Business Challenges

Conversion: Turning touches into customers

Barriers to customer success

The conversion funnel

Customer touch model

Surviving the spam challenge

Getting our mail delivered = new relationships / team

Policing our customers = new technology and process

Driving the regulatory solution = bringing the industry together

Direct ViralChannel Partners-Global-Business-Affiliate

Trials

Paying

Referrers

Website Conversion

Trial to Paying Conversion

Passionate, Satisfied Customers

-PPC-Regional-Paid programs

-Referrals-Powered By

The Customer Funnel

2003 – 2005 Go to Market / Repeatable Sales Model

Funding and Cash Flow

Living on the cash flow line: recurring revenue growing ~$30K a month

Good news

• Very predictable revenue = confidence to hire

• Tight cash = tight prioritization

Challenges

• Valuable projects not getting funded

• Team really stretched

2003 – 2005 Go to Market / Repeatable Sales Model

Role of the CEO

Team Building / Transition

Dramatically changing view of key skills – Marketing; call center

Direction setting

Final vote on toughest trade-offs – with confidence and empathy

Need to move quickly on spam issues

Getting out of the details

Board communication

Business Scorecard – 2003 - 2005

October 2003 October 2005

New Customers per Month = 1,000 3,200

Cumulative Customers = 13,000 45,000

Monthly Run Rate = $400,000 $1,450,000

2006 - Today: Driving for Market Leadership

Key Business Challenges

Scaling our go-to-market formula

How to reach small businesses and get them to try email marketing / Constant Contact

• Testing lots of new channels

• Investing in market development

Understanding the economics

Revenue per customer per month

Customer lifetime

Cost of acquisition

Cost to support / host a customer

2006 - Today: Driving for Market Leadership

Funding and Cash Flow

2006 revenue plan = $27m ; cash balance = $2m

Ready to scale faster but need upfront $$

Final venture round – May 2006; post money > $100m

-$400

-$200

$0

$200

$400

$600

$800

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10Q11Q12Q13Q14Q15

Customer Economics

IPO – October 2007

2006 - Today: Driving for Market Leadership

Role of the CEO

Team Building (It never ends)

Driving team culture down into the organization (no silos)

Building the next level down

Chief of Culture

Maintaining customer focus and passion at scale

Communications, communications

Change Leader

Become a multi-product company

Growth through acquisitions

Manage Board and Investors

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Business Scorecard 2008

Monthly Revenue (2004 – Q2 2008)

2003 2004 2005 2006 2007

Revenue $4.5m $8.1m $14.7m $27.5m $50.5m

Y/Y Growth 131% 81% 82% 88% 83%

Note: monthly numbers unaudited

Q2 2007 Q2 2007 1H 2008 1H 2007

Revenue $20.7m $11.4m $38.9m $21.1m

Y/Y Growth 82% 84%

Please review the discussion on Page 2 of this presentation regarding the risks associated with forward-looking statements. Do not rely on this presentation to make investment decisions.

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Questions?