Thursday, September 30, 2010

Commission River 2.0

On September 1, 2010, Adam Edwards and I signed the documents that consummated our buy-out of Commission River from BayHill Capital. This would mark the first time since September 1999 that Commission River (know by the name of Cognigen at the time), has been a private entity. During the 11 years that Cognigen was a public company, the stock enjoyed 8 months of incredible success, followed by 10+ years of constant decline as the bottom fell out of the switched long distance market, and consequently, Cognigen's revenues.

As the boat was slowly leaking, many attempts were made by those in control of the company to save it. In 2002 Cognigen entered into an agreement with InTandem (made up of former switched long distance industry veterans) to convert Cognigen from a sales agency into a full-blown FCC-licensed long distance carrier. The move cost shareholders $500,000 on what was a very expensive change in accounting. It allowed Cognigen, who still brought in the same amount of customers on average, to count their customer's entire bill as revenue, as opposed to just the commissionable amount. The results were almost immediate - top line revenue increased almost overnight. But the net margin actually decreased, since it was very expensive to support, bill, and manage customers direct. When I asked a senior company official "what is more valuable? $10 in net margin on $15 in revenue, or $1 in net margin on $100 in revenue?", the answer was "$1 in net with $100 in top line - it makes it look better for investors."

But the investors didn't come.

Later, the company borrowed and spent another $300,000 trying to create a product that QSR (Quick Serve Retail) businesses could buy directly from them. The company created a business unit called CBSI (Cognigen Business Services Inc.) and created a product that included bundled internet, phone, and security that was to be sold to all of the Subway sandwich franchises in the country. In reality, they sold a few dozen accounts, after paying out hundreds of thousands of dollars on payroll, office space, and product development. To make matters worse, the $300,000 in debt was done with two banks that insisted they become secure creditors.

Still, the investors didn't come.

Lastly, faced with bankruptcy, Cognigen capitulated and was taken over by BayHill Capital - whose primary interest was the public entity - and Adam and I were brought in to "right the ship" of the affiliate marketing program. For the past three years we've been revamping the program, updating the code from perl, restructuring our advertiser roster, and drastically cutting costs through things like automation and free office space (thank you Telarus).

In the past three years, the huge book of residual that we receive declined slowly as the large group of switched long distance customers found VOIP, unlimited LD on their cellular phones, or both. Some vendors, like Unitel, completely stopped paying (and been subsequently sued), making matters worse. Over time, even though we've been blowing it out of the water on the commercial side (thanks again to Telarus), cellular phones, and residential broadband, we were barely able to backfill the loss of switched LD. This whole time BayHill needed money to pay accountants, attorneys, and other necessary professionals that are required to keep the SEC happy. Having a public company in good standing was a prerequisite to merging in to a suitor looking to go public (BayHill's main goal). Months passed. Years passed. No mergers.

Eventually, both BayHill and CR management realized that, in order for both to survive, a management buyout had to take place. BayHill would be able to clean off nearly all of their debt from the balance sheet, set up a nice receivable for the purchase price, and they would still be public - albeit without operations. CR management would be able to run the now-private affiliate marketing company with a long-term focus.

With the ink on the paper dry, Adam (the president of CR) and I have put our heads together to figure out how to take advantage of our new company, given our strengths:

1. We know how to generate telecom leads
2. We know some of the best large telecom agents in the country
3. We have a great engine for tracking sales and paying commission
4. We need to generate a LOT of money for our affiliates in a short period of time

With these four factors in mind, an obvious solution came to mind: create a marketplace where our affiliates can sell leads to Telarus' large agents. Not to be a copy of BuyerZone or 360Communications - but to raise the bar and earn more people, more money, with better leads. Miraculously, we found a domain that fit our business description and quickly snatched it up:


Just some quick numbers to consider:

- I know we can easily generate 100 scrubbed data T1 leads per day
- The lead generator will earn around $20 per lead, each and every time
- In the course of a month, we'll pay out $60,000 in commission, just for this one type of lead.
- The margin that CR will make will be anywhere from $60,000 to $150,000, depending on how many service providers our customers want to be contact by.

Add on telephone equipment, MPLS, fiber, and other high-ticket items, and CR could net $1M/month in a very short period of time. More importantly, our affiliates would also pocket in the neighborhood of $1M/month, making for some very happy and excited folks!

Which is why this post is entitled .... Commission River 2.0. The river has run its course and begun a new path to the ocean of success. To say I'm excited would be an understatement. We'll see you all at the top!

Saturday, November 29, 2008

Dawn of a New Era in Commission River

On November 20, 2008 a new door of opportunity opened. Not only did we at Commission River unveil seven new XML plug-ins, but we did it in the most user-friendly, non-techie way possible. All one needs to do to set up a new plug-in, or remotely controlled best rate calculator, is click on an 'order' button, enter in the FTP information of the user's web site, and click on a 'send files' button. In all honesty, it took just as long to program the easy auto-install setup as it did the plug-ins themselves.

It was important to me personally to bring this new technology down to a level that a web novice could easily master. In the history of Cognigen/Commission River, the high-tech agents have always had the advantage. The only problem with that is there are a very small handful of agents that have been able to earn life-changing amounts of money in the program. Even though I personally was in this minority, I knew coming into a management role a year ago that simplification was going to be the ultimate key to success as a company. Lowering the technical bar to success was our goal, and the release of the plug-ins accomplished all of our goals with interest.

Since taking charge of this company over one short year ago, we've faced nothing but challenges. Ten days into the new job InPhonic, one of our largest vendors, filed for Chapter 11 bankruptcy, causing us massive losses in revenue. A few weeks later, one of two secured creditors, Silicon Valley Bank, decided not to renew our line of credit. Imagine that - coming into a new company who is starved for revenue with an expiring line of credit! Add to that the massive loss of agent and shareholder confidence and you have a major problem.

Having been a part of the success days of the early 2000's, I knew what our company was capable of becoming. All it needed was a comparison shopping engine, delivered remotely to the agent's web site, and some search engine marketing tools to drive traffic. We have a terrific nucleus of agents who are ready and rearing to work - all they need is some type of technology advantage. In February 2008, we made a plan to create XML plug-ins for all technology - we just had to pull many rabbits out of the hat to keep the lights on until my programmers could get the XML plug-in project to the finish line.

We cleared a major hurdle when Adam and I decided to mortgage our reputation and create a "commission deferral program" wherein agents could elect not to get paid and earn 10% annual interest on all money they leave in our possession. We started with the top-earning agents, which all happen to be ShopforT1 closers, requesting that they defer as much as they could afford to forego. Although we opened up the program to ALL Commission River agents, a huge majority of the total pot came from these loyal ShopforT1-affiliated agents. Just three months of deferrals freed up enough money for us to pay off the entire line of credit with Silicon Valley Bank - a debt that we inherited from the previous administration. Just paying off that line did more that just right the balance sheet, it also eliminated a $15,000/month in interest charges not to mention the fact we could receive our commissions directly as opposed to SVB factoring our receivables! By keeping our expenses lean, and eliminating these interest expenses, we (Commission River, not BayHill Capital) became profitable and in control of our own cash flow this summer. Once we started making more than we were spending, we sounded the "all clear" and allowed agents who had be accumulating their commissions to begin withdrawing their savings.

Getting our financial house in order was the key that allowed us to turn our focus on the new XML plug-ins:
  • Domestic Long Distance Calculator (BottomLine)
  • GeoQuote T1/Ethernet Commercial Services Calculator
  • International Long Distance Calculator (LD, VoIP, Calling Card, Dial-Around)
  • VoIP Comparison Calculator (Business and Residential)
  • Cellular Phone Comparison and Availability Calculator
  • Credit Card Comparison Calculator

All seven of these works of art are currently on display on the re-designed Commission River web site. The official announcement was release to the investing public on Yahoo Finance. Now, the next step is to continue improving the plug-ins, helping more agents install and use the technology, and to focus all of our time, energy, and money on growing our business and expanding our reach. Only time will tell if our strategy to generating more wealth for agents will pan out. So far, so good.

Wednesday, August 27, 2008

Plug-ins to rule the world

I often times stress myself out. My mind is often so far ahead of my body's ability to follow through with ideas that it has become a constant source of frustration. It would be manageable if I had a few ounces of patience in my blood, but I am lacking in that department as well. Hence the source of my self-educed stress.

The Premium PLUS Remote site, a technical name for my Google-killer app for Commission River affiliates, has been in my mental whiteboard for the better part of 10 years. The premise behind the website is fairly simple, yet complex: 1) create valuable content for agents that they don't need to constantly update, and 2) electronically"bind" the agents together in a way that will help all of them achieve the highest ranking for the keywords that they want. (The rising tide floats all boats theory.)

The first tenant of my new design revolves around valuable content. But just what is valuable content? In an affiliate marketer's world,valuable content is something that helps convert web visitors into real-world customers. In my experience, this has meant just one thing: calculators and comparison shopping technology. People come to the internet to find the best deals. Although review sites and classified-type listings are great, without some sort of calculator a web site would resemble nothing more than a real-world store without any sales professionals available to assist you in the decision making progress. With such a huge array of products available for purchase on the internet, having a calculator that can show you the exact prices of services you want to use is a massive benefit. Just simply providing this type of consultative advice endears visitors to your site and creates a bond that often times results in a sale, not to mention repeat sales.

The major hurdle to calculator design is the remote delivery of the content to the affiliates own web site. Anyone can cobble together a calculator that posts the user's data to a common data processing site. The real trick is to be able to create a "plug-in" that enables the web affiliate to host both steps of the user experience on their own web site. (Without leaving).

The second, and bigger hurdle, to mass success in affiliate marketing is to help your agents channel their collective resources so that each one can enjoy the fruits of top organic search engine placement.That can only be done through very thoughtful web content and through link popularity. The Achilles' heal of most agents is their inability to attract, and/or manage the massive numbers of link partners that are required to ascend to the top. By carefully linking each agent to each other, and by helping them find links to other non-affiliated web site around the world, I am going to weave a web of Commission River sites that will dominate - to the benefit of all of the agents who chose to work with me.

The "affiliate link web" idea is a novel one, but if not done properly, can fly like a lead balloon. The reason why I know my idea will work rests in the fact that my system obeys all of Google's"rules", namely:

1) all sites will have unique, and in most cases, randomized, content
2) all sites will be registered to different owners
3) all sites will be hosted in different locations (IP Class-C blocks)
4) all sites will be further modified by agents who will be in actual possession of the source code
5) none of the sites will link to Commission River sites. All of the data collected on them will feed back to the mother ship via XML, which Google can't detect.

This all seems superficial, but in reality, it requires a ton of technical expertise. The code base is so technical, in fact,that I have expert programmers doing the work for me. I have not written a single line of code - my involvement is strictly limited to the architecture and design of the system. To date, by team has been making exceptional progress. Expect to see the final rollout in September 2008. Let the games begin!

Monday, November 5, 2007

Commission River to be Acquired by Cognigen

It's true - Commission River is joining forces with Cognigen Newtworks (CGNW) to take over the world (j/k)! No seriously, Adam and I are very happy to be part of the next generation of online affiliate marketing programs. Commission River brings the technology and leadership to the alter, while Cognigen brings 200,000+ affiliates who are in need of new products and direction. It's a great fit - both companies get what they need to survive, thrive, and grow.

Below is the official press release that just went out this afternoon:

Cognigen Networks Signs a Letter of Intent to Acquire Commission River, Inc.

Monday November 5, 4:45 pm ET

ENGLEWOOD, Colo., Nov. 5 /PRNewswire-FirstCall/ -- Cognigen Networks, Inc. (OTC Bulletin Board: CGNW - News), an Internet-enabled marketer of communications services and technology solutions, announced today the signing of a Letter of Intent to acquire Commission River, Inc. Under the Letter of Intent, Cognigen proposes to issue 16,000,000 shares of its common stock for the acquisition. Cognigen also signed a management services agreement with Commission River, Inc. to provide day-to-day management services for Cognigen's agent-based affiliate marketing business effective immediately.

Commission River operates an online affiliate marketing business that provides technology, tools, and products to affiliate marketers. Commission River also creates and manages affiliate programs for select product vendors. Commission River currently offers affiliate programs for Jingle Networks,, and AT&T Yahoo! High Speed Internet.

The acquisition is subject to standard closing conditions, including the completion of due diligence activities, drafting and execution of a definitive purchase agreement, and Board of Director approval. Upon completion of the acquisition, Cognigen intends to enter into employment agreements with Commission Rivers' founders, Adam Edwards and Patrick Oborn.

Cognigen's new CEO, Bob Bench, stated, "We are excited to expand our business with the addition of Commission River. Commission River and its management team bring the capabilities and experience in the affiliate marketing area that enhance Cognigen's existing abilities. We anticipate that this acquisition, if completed, will also add new technologies to Cognigen that will make it easier for agents and vendors to do business with us. This is the first of several initiatives to re-establish our capabilities to support our agents and re-build confidence. We believe Cognigen will greatly benefit from the wealth of Internet marketing and affiliate management experience of the Commission River management team. We also believe that Commission River will provide interim operational services while we work towards completing the acquisition. If the acquisition is completed, we anticipate that our agents will benefit from the added support resources and future product offerings."

Adam Edwards, President of Commission River, said, "We are excited about the opportunity to combine our business with Cognigen. We share their vision to become one of the leaders in the affiliate marketing space and believe that the combination of our technology, processes, and program with Cognigen's programs and agent base will create tremendous opportunities for all involved -- including agents, vendors and both companies. Under the management services agreement, we can immediately step-in and provide management support to the business."

Saturday, October 6, 2007

Commission River Set to Take Over

All good things (and good companies) start out small. Commission River, Inc., founded by Patrick Oborn (me) and Adam Edwards in 2005, will - one day - be the preeminent online affiliate marketing company in the world. I know that is a pretty bold statement given the size of the companies currently occupying top position in that space, but I believe we have the employees, the agents, and the ideas to take us to the next level.

We originally got the idea while working on Telarus, Inc. - a company focused solely on the sales of commercial broadband and voice services. Our agents would repeatedly ask us "do you have any other products I can sell and market on the internet?" From 2002 to 2005, our answer was "not yet". Not only did we not have any outlet for these agents, but we also lacked the cash sufficient to build such a massive platform. Having worked for Cognigen (an online affiliate marketing / MLM hybrid) from 1999 to 2002, I knew first hand just how difficult and involved putting together a new program from scratch would be.

As Telarus grew, both in terms of income and employee head count, Adam and I began slowly assigning programming tasks to our programming team that allowed us to build up Commission River slowly, over time. This allowed us the luxury of financing the construction of the foundation over the course of almost 3 years. (A debt that Commission River will eventually repay to Telarus). This is important because it kept us from going into debt and more importantly, kept us from having to sell stock to raise money. History and experience has taught us never to bring in outsiders when you don't have to - having decision-making capability is critical to success. When we see opportunities, we act; immediately. We don't sit down, plan to have a board meeting, prepare endless power point presentation, deliberate, and then hold a vote. If something makes good business sense, it's done.

The version of Commission River ( you see today is the culmination of three years of steady, pain-staking work by a team of people dedicated to creating the best, most lucrative affiliate marketing company in the world. Even though we are small now, expect huge growth in terms of agent count, vendor count, and commissions we pay out to our agents.