Company Profile: Auctionpay: A Better Way for Nonprofits
By Gerrie Power, Power Communication
Founder Jeff Jetton: entrepreneurial success and philanthropy lead to new venture
In 2000, 34-year-old entrepreneur Jeff Jetton sold the company he had founded, Card Capture Services (CCS), for just under $100 million to e*Trade. Jeff had started CCS in 1992 and helped lead the build-out of one of the nation’s largest distributors of non-bank-affiliated ATMs. In 1998, Inc. Magazine recognized CCS as the 43rd fastest growing private company in the U.S.
Once Jeff sold CCS, he became actively involved in philanthropy. He became a board member of Doernbecker Children’s Hospital and Self-Enhancement, Inc., a nonprofit serving youth and their families. Jeff also attended many auctions and benefit galas. Over time, Jeff noticed the widespread frustration with the inefficiencies of checking in and long lines checking out. Seeing volunteers and employees using “knucklebusters” – manually swiping credit cards – and manually keeping track of bidding, Jeff could see how much time this was taking. One morning he woke up and said, “There has to be a better way!”
Founding Auctionpay and developing its first product
With Jetton’s experience in credit card processing and his desire to help nonprofits maximize fundraising, Jeff founded and incorporated Auctionpay in January 2002. In developing its first product, Jeff worked with software engineer Mike Gainer. Jeff talked with Mike about his ideas for automating certain aspects of auctions. Mike went through training on how software was designed and written for one manufacturer of credit card terminals, Hypercom.
Using what he learned in this training and incorporating Jeff’s ideas, Mike customized and wrote the software that resulted in Auctionpay’s first product, Event Payments. This product looks similar to a credit card terminal, with Auctionpay’s proprietary software inside the terminal. Event Payments is the only payment-processing solution customized for nonprofit events. Whether a nonprofit is hosting a gala, an auction, a luncheon or a golf tournament, Event Payments creates a better experience for guests.
- If guests plan to use a credit card to pay for their purchases, it can be swiped at registration or check-in.
- All credit card information is securely stored in Auctionpay’s terminals.
- After the guest’s card is swiped, a bidder number is entered. From then on, the credit card data is linked to the bidder number.
- The guest signs a $0.00 balance receipt and receives a copy, eliminating the need to see the cashier at the end of the event.
Now more than 3,800 nonprofit organizations nationwide use Event Payments for their silent and live auctions – including the SAO.
Auctionpay makes its money on this product the same way credit card companies do – by charging a percentage for each transaction. However, the nonprofit pays slightly less per transaction than if it went directly through a bank. Auctionpay can negotiate a better rate with a bank than an individual nonprofit can, so along with the automation and electronic storage of information, the nonprofit pays less in fees per event.
Venture capitalist invests $7.5 million in Auctionpay
In May 2004, Maveron, a Seattle-based firm started by Starbucks founder Howard Schultz and investment bankers, invested $7.5 million in Auctionpay. Ron Graves, principle of Maveron, is one of Auctionpay’s board members.
Auctionpay was succeeding as a self-funded company. However, once Jeff realized how big the market was, he decided he wanted to grow more quickly and invest in technology and applications. In taking on a VC partner, Jeff said he gave up some equity, but not control. Within three weeks of receiving VC funding, Auctionpay landed and closed another deal.
Two more products come online for a Complete Event Suite
In 2004, Auctionpay introduced Online Payments, providing event registration and credit card payments as a cost-effective, web-based service. Online Payments is a secure way for nonprofits to raise money for events and year-round donations – all online through the nonprofit’s web site. According to Guido Persch, vice president of product and technology, “About ten other companies sell a similar product, but Auctionpay has the strongest customer base and the greatest market share.”
In 2005, Auctionpay acquired a company called Archetype and developed a partnership with a company called Kintera. This helped Auctionpay introduce its third product, Event Software. This product helps a nonprofit in planning the event, including procuring items and catalogs, coordinating seating arrangements and coordinating employee and volunteer duties. Event Software uses an intuitive interface designed to help nonprofits and schools manage every detail of a fundraising event from start to finish, year-after-year. In addition, this software includes donor management, for example, tracking donors and dollars contributed. According to Guido, a couple of other companies sell similar products, but none have the integration features and services of Event Software.
Key features include:
All three products – Event Payments, Online Payments and Event Software – can be purchased separately or as an integrated package. Auctionpay refers to these three as a Complete Event Suite. Clients sign multi-year contracts when purchasing Auctionpay’s products.
Auctionpay’s growth
The company started with five employees working out of Jeff’s house and is now in its fourth location, with about 57 employees on its payroll. In its first year, Auctionpay participated in over 100 auctions. With fall and spring the busiest seasons for auctions, the company is now involved in about 120 auctions a weekend. Since its first event in April 2002, Auctionpay’s products and services have been used in more than 5,000 auctions nationwide.
Of the approximately 57 employees currently working for Auctionpay, 21 are in sales, ten in product development, four in marketing, 12 in general administration (e.g., in finance and human resources) and ten in client services.
Auctionpay’s services and fundraising guides
The client services department provides on-call service to clients, should an issue or question arise during an event. After hours, two people in the department are on-call. The employees within the department rotate weeks, taking turns covering after-hours.
The company publishes a guide called, Best Practices Guide for Benefit Auctions, along with information on its web site such as:
Auctionpay also publishes an industry newsletter, The Funding Edge, and hosts webinars on using its products.
In addition, Auctionpay partners with companies in the event industry and individuals who provide services in support of the auction. These include auctioneers who help plan and run the event, and provide ideas to increase profits throughout the evening.
Steve Sterba and ePhilanthropy strategic direction
In August 2005, Jeff hired Steve Sterba as president to run the day-to-day operation of Auctionpay, with Jeff remaining as chief executive officer. With the company’s ongoing growth and its product strategy evolving, Jeff felt that hiring someone such as Steve would provide the necessary operational leadership to support its rapid expansion.
Along with managing all aspects of the business, Steve has been charged with helping Auctionpay achieve profitability while continuing to grow the company and gain market share. Prior to joining Auctionpay, Steve served as president, CEO and a board member of MyHealthBank. MyHealthBank, which recently merged with QCSI, sells enterprise-level software to large health insurance companies, enabling a new consumer-directed health model.
In a recent interview, Steve emphasized, “Our strategic direction is ePhilanthropy.” The numbers alone illustrate what’s happening in fundraising. Between 2003 and 2005, online giving industry-wide increased from $1.9 billion to about $5 billion. In 2010, this number is estimated to reach $10 billion. In 2004, online giving through Auctionpay was $4 million, and in 2005, just about tripled to $15 million. ePhilanthropy is the next frontier in fundraising.
As part of this strategic focus on ePhilanthropy, Auctionpay introduced a product in August 2006 called Online Auctions, operating much the same way as eBay. Instead of holding a live auction, nonprofits put items online, where donors bid on items in the same way people bid on eBay. Besides the comparison to eBay, no other company offers a similar product.
When asked what is the one thing that he would like readers to know about Auctionpay, Steve said, “We are building a company focusing on the appropriate balance between client sales and satisfaction; meeting financial obligations; and employee welfare. To build a company Portland will be proud of.”
When talking with Brian Carman, vice president of sales, about the size of his organization and its locations, he said, “This is a great place to work. What we do has such a social impact on nonprofits and their ability to raise money. Raising money for causes, I sleep like a baby at night.”
Auctionpay locations
Headquartered in Portland, the company has sales offices in Boston, Massachusetts; Chicago, Illinois; Dallas, Texas; Denver, Colorado; Los Angeles, California: and Seattle, Washington. Jeff hired Brian Carman as vice president of sales in August 2005. It was in November 2005 that Auctionpay opened the Boston and Denver offices. Brian said that he plans to hire three additional salespeople, one person each for the East and West coast territories and a national account manager.
Portland Business Journal highlights Jetton and Auctionpay
The Portland Business Journal named Jeff Jetton as one the top 40 under 40 young executives – twice, at ages 29 and 39. In its June 16, 2006 issue, the Portland Business Journal selected Auctionpay as one of Oregon’s 2006 Fastest Growing Private Companies. Candidates for this list were chosen on total revenue growth over the past three years, from 2003 to 2005. Auctionpay ranked 11th, with 347.27% revenue growth.
To illustrate this growth, by July 2003, with its first event in April 2002, Auctionpay payment processing exceeded $20 million. By August 2004, the company hit its $100 million milestone. In October 2005, it reached its next milestone of processing $250 million. By June 2006, this year, Auctionpay has processed $400 million on behalf of schools and nonprofits nationwide.
Other organizations recognize Jetton
In 2004, the Oregon Entrepreneurs Forum (OEF) named Auctionpay “Working Capital Company of the Year.” In 1997, OEF named Jetton “Oregon Service Entrepreneur of the Year.”
In December 2005, the ePhilanthropy Foundation appointed Jeff as a board member and the nonprofit designated him a Master Trainer. The ePhilanthropy Foundation is a global leader in providing educational training and advocacy for nonprofit organizations in the ethical and efficient use of the Internet for philanthropic purposes. As a board member, Jetton is part of an international group of volunteer trustees that governs the foundation. He is also one of 46 fundraising professionals from around the world to be named an ePhilanthropic Master Trainer (ePMT) by the ePhilanthropy Foundation. Master Trainers are chosen for their expertise in online philanthropy strategy and techniques and the ability to train others. To receive this designation, applicants must have at least three years experience in the use of the Internet for fundraising and five years in philanthropy.
For more information on the ePhilanthropy Foundation, go to www.ephilanthropy.org.
Auctionpay and October SAO Auction
This October 7, 2006, the Software Association of Oregon will host its 17th annual auction, using Auctionpay’s products and services. The SAO will host the event in the Heritage Ballroom at the Governor Hotel, from 6pm to10pm. Proceeds will go to the SAO Foundation, which makes essential training readily available to teachers whose curriculum includes technology. For more information on this event and the SAO Foundation, go to www.sao.org.
So along with donating to a cause – and the chance to network with old friends and meet new ones – come and see first-hand how Auctionpay has changed the world of fundraising.
For more information on Auctionpay, go to www.Auctionpay.com.
About the author
Gerrie Power worked at Intel Corporation in marketing, editing and writing and has an M.A. from Carnegie Mellon University. She is based in Portland, Oregon. For questions and comments, email gerrie@powercommunication.biz.
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