Accelerators and incubators such as MassChallenge and TechStars garner loads of attention (deservedly so) by creating environments where small startups can blossom with the help of business resources, mentor networks, and the advice of experienced entrepreneurs. The model, in which companies apply, pitch, get accepted, borrow space, etc., is not the only method for helping startups move from an idea to a revenue-generating business.
Cogo Labs, the Cambridge-based ‘incubator’, uses a replicable business model to build successful companies that can either be spun off as independent entities or acquired by other businesses like CourseAdvisor and Autotegrity.
Cogo Labs tries to mimic the growth of the previously successful startups by applying the frameworks of their business models to an idea that is generated in-house. The original model for Cogo Labs’ incubator process is the success that founder David Blundin observed with TripAdvisor. Blundin, who has an almost legendary career as a founder and investor, started Adverplex (as Cogo Labs was formerly known) to apply the same methodology that succeeded for travel to other sectors.
After examining search engine traffic data, the Adverplex team pinpointed the college decision process as an opportunity to try the TripAdvisor business model. They were hugely successful; CourseAdvisor was a hit for Cogo Labs and was acquired by the Washington Post Co. in 2007.
As Jonathan Shapiro, Cogo Labs’ CTO said of the application of the previous model to CourseAdvisor, “A lot of the science that enabled TripAdvisor was very good bid optimization for search engine marketing campaigns.” He added, “A lot of that science was quite reusable and could be used to launch other verticals in other markets.”
With the success of CourseAdvisor, Cogo turned its attention to automobiles, creating Autotegrity, which helped customers connect with car dealers. Autotegrity sold in 2011 to ADP.
Cogo Labs is constantly shifting and re-molding the model to make it fit a specific idea or vertical. “Over time,” Shapiro said, “we came to see our role as not limited to the front of the funnel only, not limited to the search only, but part of the whole value chain.” He added, “We built some tools that are general purpose enough to be built across businesses and we started seeding ideas. If we saw something cool happening in the market, we would build version one and two of a product [for that sector].”
Currently, there are a few companies in the Cogo incubator, some still in stealth mode. One that has been very successful is AdHarmonics, which applies mathematics and technology to the customer acquisition process. Cognius, a staffing and hiring tool, and HubAnalytics, a financial services curation and customer acquisition company.
Inside of Cogo Labs
Chuck Johnson, a co-founder of HubAnalytics and serial partner of Blundin’s, explained the entire process, “If you look at Cogo Labs as an incubator of other companies, you have CourseAdvisor which is in the education space, doing lead generation in education. The same business model was used to launch a new company, Autotegrity, which is in the auto space, doing lead generation for automobiles, a the second vertical. Both of those companies have been acquired at nice figures, successful acquisitions.”
Johnson added, “There are more companies under the roof in this incubation. One of the things I think is unique about Cogo, is that there is a very focused business model, a very focused traffic driven business model.” “We don’t think of an idea and go search for traffic,” he said, “We identify what traffic is available and then build a company to support that traffic.”
“The same business model is used over and over again and that is what is leading to a high success rate overall for the verticals that come out of this incubator,” Johnson explained, “versus having a random portfolio of companies.”
Another benefit of Cogo’s model is that everyone involved is invested in the success of all the companies in the portfolio.
As HubAnalytics co-founder Andrew Ressler explained, “On any given day, Cogo has a wealth of experts that I can walk over to at any time, and they want to help me, they want to make me a success.”
“I think of my engineering team right now, which is three people [under HubAnalytics] as about fourteen [in Cogo Labs],” Ressler said. “Any one of them is an expert in their space that we can chat with, that we can get ideas from, that we can borrow code from, and that we can share with. It is a very fluid, helpful environment.”
“Everything about our company is magnified by the Cogo Labs experience,” he added.
David Blundin's Influence
The keystone for the entire Cogo project is Dave Blundin.
Blundin has had a long successful career. First, as an entrepreneur, and later, as an advisor and investor.
An MIT grad, Blundin was one of the first ten employees at MicroStrategy and later served on the company’s board of directors. He next became the CEO of Cirrus Recognition Systems, and then founded DataSage Inc., which was bought by Vignette Corporation in 2000 for about $500 million. Blundin joined Vignette as a Chief Technologist and also co-founded Vestmark, the wealth management platform, along with Chuck Johnson, among others. He currently sits on the boards of a number of companies, including those incubated at Cogo, and founded and manages Link Ventures, a venture capital firm.
Impressive doesn’t even begin to explain Blundin’s career; amazing, legendary, and even epic may serve the purpose better.
The aforementioned career arc doesn’t even cover some of the stealth projects, advisor roles, or specific investments that Blundin has been involved with over the years.
“The backstory of all this is Dave Blundin’s success,” said Chuck Johnson. “He started DataSage out of MIT as an undergrad, he started Vestmark, which is still running strong, and, in parallel, he started Adverplex/Cogo Labs.”
He added, “That’s the backstory of success that, if you analyze Dave’s track record, is up there with the best in the country.”
Johnson also explained the level of involvement Blundin has in all of his ventures, especially Cogo Labs. “Take all that success,” he said, “and then you’ll find him running SQL queries to bring you a nugget of information that will take your business from one level to the next.”
Shapiro said of Bludin, “He’s extremely hands on, I’ve never worked with a CEO who was as deep into the data and is as conversant in the technology.”
With Blundin’s leadership; key players like Shapiro, Johnson, and Ressler; and an urge to grow it leadership teams; Cogo Labs-which has a few stealth projects underway-should continue to churn out highly successful, lucrative companies.
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Dennis Keohane is a staff writer for VentureFizz. You can follow Dennis on Twitter (@DBKeohane) by clicking here.