Today Commission Junction operates the first open marketplace for pay-for-performance advertising with thousands of advertisers and publishers. But just three years ago, Commission Junction was nothing but an idea sketched on a cocktail napkin. That's how Commission Junction founder Lex Sisney presented his vision for a better model of affiliate marketing as he chatted with Minneapolis venture capitalist Paul Crawford over a couple of beers.

Sisney didn't have much experience in founding companies. But the Minnesota native did know what was wrong with affiliate marketing after running an affiliate marketing program for his previous employer. Multiple paychecks, poor customer service and no accountability made advertiser/publisher relationships unwieldy and costly.

So as Sisney drew up his idea on a napkin - a network of advertisers and publishers with a single intermediary to manage relationships - Crawford saw the potential. He provided funding on the spot, with the caveat that Sisney go out and find the technology to make his idea work.

The Perfect Match

Sisney found that technology in a Norwegian computer engineering whiz at the University of California-Santa Barbara, Per Pettersen. While finishing his master's degree, Pettersen created the technology for a Web-based affiliate marketing program. With Sisney's business model and Pettersen's technology, the perfect match was made, and Commission Junction was founded in November 1998 with a staff of five in Santa Barbara and Sisney in Minneapolis.

By January 1999, Commission Junction was running affiliate marketing programs for eight online advertisers when Sisney received a phone call from another Crawford. This time it was Todd, Paul's sales consultant nephew, asking for the opportunity to develop a sales program for the nascent company. The answer was yes, with one condition. Sisney asked, "What's the least amount of money you can live on?" Despite the offer, Commission Junction's Minneapolis office had its second employee.

Crawford soon proved his worth to the company. One of his first sales calls landed global retailing giant Fingerhut, who contracted with Commission Junction to run affiliate marketing programs for four of its online retailers. Within a few months Commission Junction was running a total of seven affiliate marketing programs for Fingerhut, all of which were a smashing success.

Go West, Young Man

With Fingerhut came more big name advertisers, and as Commission Junction started to build the publisher side of its network with content sites, Sisney realized the company was quickly growing too big to be run from two offices. So in June 1999 he made the tough decision to trade in his snow shovel for a surfboard and move the company headquarters to the sunny beaches of Santa Barbara.

With a new office located in Santa Barbara's scenic downtown business district, and a bulked-up employee base thanks to the rich high-tech talent pool of the Central Coast, Commission Junction headed into the new millennium full of business momentum. The network swelled to 400 advertisers and 72,000 publisher sites. And as the company gained critical mass with $7 million in first-round funding from CyberCash, executives from blue chip companies such as Disney, Andersen Consulting and BMC joined Commission Junction's management team.

Along with success, surf, sun and fun became part of the Commission Junction landscape, with the crew hitting the beach for team-building efforts like the CJ Summer Olympiad. But even in paradise, there was always work to be done.

"Sometimes you don't realize what you've unleashed until you stop and look back," explained Sisney. "The decision to bring the entire company together in Santa Barbara provided the people, the place and the launching pad for the task at hand - creating a world-class company from scratch. We've come a long way, but we're really just getting started."

Year 2000 saw Lex's cocktail napkin business model receive industry validation, along with $40 million, in a funding deal that included Internet guru Bill Gross and his company idealab!

In 2001, Commission Junction continues riding a wave of success, adding leading online and offline companies to its client roster. Internet auction giant eBay joined the network, along with brick-and-mortar retailer Liz Clairborne properties Elisabeth.com and LuckyBrandJeans.com, and The New York Times.

With the launch of the open marketplace in July 2001, advertisers and publishers are now able to view payment and conversion statistics on advertisers, publishers and ads in real time within the network - establishing a visible benchmark of every ad's performance and effectiveness in converting visitors into revenue.

Pay-for-performance advertising has become a "must-have" for marketers worldwide, transitioning into a mainstream tactic in marketing plans and becoming the only part of an advertising budget that derives quantifiable results.

Currently, the corporate headquarters in Santa Barbara has grown to house a staff of 100. With offices in San Francisco, New York and London, Commission Junction is actively building a global affiliate marketing network and has the ability to handle transactions in multiple currencies.

Today, Commission Junction's network boasts leading online advertisers Verizon, Excite@Home, and Capital One, and major publisher sites NetFlip and eUniverse.

The Path Ahead

With a global network now a reality, Sisney heads the only affiliate marketing company that serves as a true intermediary between advertisers and publishers. Sisney's original vision has put the company in a strong position.

Looking forward, Sisney plans to find ways to encourage, align and maximize his customers' revenue-sharing relationships across the entire network.

How? The answer just might be found on another cocktail napkin. But rest assured, Sisney, Pettersen and the Commission Junction team are working on it.