Freeze.com LLC

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Freeze.com LLC

868 3rd Street South Suite 102
Waite Park, Minnesota 56387
U.S.A.
Telephone: (320) 203-7157
Fax: (320) 253-2225
Web site: http://www.freeze.com

Private Company
Founded:
2000
Employees: 40
Sales: $18 million (2004 est.)
NAIC: 454111 Electronic Shopping; 541613 Marketing Consulting Services

Freeze.com LLC is a private company that produces and provides free screensavers and graphics for personal computers. The company operates several web sites, including freeze.com, screensaver.com, my.freeze.com, ringtone.com, and wallpapers.com. Freeze also offers e-mail services. Founders Rob and Ryan Weber began the St. Cloud, Minnesota company while college students and have received growing recognition since then. Freeze.com earns its revenue by providing personal demographic information to direct marketers by way of site registrations.

1990S2001: RISING ENTREPRENEURIAL STARS

In the 1990s twins Rob and Ryan Weber were eager to buy their first home computer. The two found jobs at a local McDonald's and worked their way well beyond their minimum wage beginnings. Rob and Ryan Weber bought a computer and soon found their passion for the Internet and its ability to generate business.

The Webers began a sports card trading site on the Internet when they were only 16. The site attracted visitors through "fan pages" dedicated to information and statistics on famous athletes. The two also created page space for rent on their site that served as a want-ad page for other people selling sports cards and merchandise. It seemed as though the teens had a knack for marketing. The venture brought in roughly $500 a month, and taught the brothers a lesson in just what the Internet could do if one was enterprising and inventive.

Over the next few years the Webers attended St. Cloud State University and continued their Internet business. Rob and Ryan became computer consultants while in college but were disappointed when their consulting fees earned them less than $10,000 a year. The brothers decided to dive into an Internet business when one of their clients sold the web site they had helped him create for a million dollars.

They had been providing consultation that had helped their clients get rich and decided then that they could develop their own business and reap the benefits directly.

The Weber brothers spent time researching what people were interested in on the Internet and discovered that many searches sought free items. They developed an Internet site that directed people to other sites offering giveaway promotions. The "free stuff " site became one of the top Internet sites, with over 23,000 visitors a day. The Webers further developed their site by adding newsletters to draw in visitors looking for web sites featuring their specific interests. According to a Star Tribune interview, the Weber twins were making "between $50,000 and $90,000 a month." Most of the revenue came from advertising space the brothers sold to direct marketing companies whose sales were largely based on volume distribution of their ads. The young entrepreneurs knew they had found a business worth pursuing.

By 2000, Rob and Ryan Weber had been honored as Minnesota's Collegiate Entrepreneurs of the Year and had been chosen as the runners-up for North American Collegiate Entrepreneurs of the Year. Many young college students had always worked their way through school but few brought in figures rivaling those of the Webers.

A key break for the fledgling business came when San Jose business and tech guru Young K. Sohn met the twins. Sohn was president of Agilent Technologies' Semiconductor Products Group and helped attract needed capital investment to Freeze. Sohn served as a director for the company board, adding experience and know-how to the Internet start-up. Sohn noted in a St. Cloud State Alumni magazine interview that although he had contributed to the success of the company, he recognized the Webers' talent early on. "It was clear to me they were a lot smarter than me in web-based marketing ; they have the agility, drive and maturity it takes." Sohn brought in $300,000 of key investment money in 2000.

In the beginning success came fairly easily to the new company. The Webers decided to debut the company under the name Freeze.com but in 2000 the company found out that it had never owned the rights to the domain name. An unscrupulous person had elicited $2,600 from Freeze and had pretended to sell rights that were not actually owned. When the Webers later learned they had been conned the site was established enough that the company thought it wise to buy the name Freeze.com from the rightful owner, a lesson that cost the company $37,000.

During the height of the dotcom crash the company, like many Internet start-ups, took a hit.

Sales revenue dropped significantly and Freeze.com did what it could to survive. The Webers and nine newly hired employees earned money doing online advertising for many direct marketing companies. Freeze.com created banner ads that appeared on search engine web sites and kept a modest amount of revenue coming in to keep the company afloat.

The move to work with direct marketers came out of survival mode and the dotcom uncertainty, but it influenced the direction of the company over the next few years. In 2001 Freeze.com changed its focus to attracting Internet users through free offers, mainly screensavers, ring tones, and wallpapers for computer and cell phone users and tying the free deals to site registration. The company then sold the information to direct marketers. The information had value because it included a lot of demographics that the marketers could use to direct their sales to target specific consumers. The more hits for screensavers at Freeze.com, the wider the audience for product pitches by such advertisers as Sears, eBay, Discover Card, and T-Mobile USA.

Since 2000 the employees at Freeze had been designing some of its own screensavers, although the company still had licensing agreements with other computer graphic artists as well. The screensavers included images that were wholesome in character. Scenes ranged from underwater aquariums with exotic fish, to fireplaces with roaring fires and winter village scenes reminiscent of a Thomas Kincaid painting. Wallpapers.com featured celebrity pictures as well as typical calendaresque renderings of puppies and kittens. The sites linked to one another, which allowed for increased traffic flow.

Shortly after the business began to take off, older brother Aaron joined the company. It had become a true family affair. The Webers' mother, Deb Childers, became Freeze.com's marketing director and their father provided some of the photographic artwork that was available on company sites. The company bought its own 7,500-square-foot headquarters in Waite Park, a neighboring city to larger St. Cloud, after outgrowing its previous location.

COMPANY PERSPECTIVES

Freeze's mission is to be on every screen in the world. Customers around the world enjoy downloading a Freeze screensaver, wallpaper, clip art or other quality product to enrich their computer experience.

2003 AND BEYOND: EXPANSION AND INVESTMENT

By 2003 the company saw sales around the $12 million mark. The redirection paid off with increased revenue for the company. The Webers claimed to have as many as 85 million users registered by 2004. Rob Weber had goals he shared in a 2004 interview with Dick Youngblood of the Star Tribune. Weber stated that he would like Freeze.com to be at $100 million in revenue in the next five years.

According to a Nielsen Net Ratings publication, Freeze.com was ranked ninth among the top advertisers by company. The poll, released in June 2004, linked Freeze among web giants Net Flix, Dell Computer, and SBC Communications.

A series of acquisitions later that year helped the Webers begin to set a pace for their $100 million goal. The company bought out competitor ScreenSaver.com in August 2004. After finding success with its purchase of ScreenSaver, Freeze turned its attention to Rhode Island based Mediawave. In a deal that was touted as being a win-win for both companies, Mediawave sold its consumer software division to Freeze in December 2004.

The division, Rhode Island Soft Systems, was another screensaver and software company started by Eric Robichaud, a fellow teenage Internet developer who was 19 when he launched the company. Rhode Island Soft Systems had previously been a supplier of screensavers to Freeze.com. The Internet graphics community was a close-knit bunch. Ironically, it was Robichaud who helped develop Freeze's earlier acquisition ScreenSaver.com. The deal with Mediawave was reported to be between $750,000 and $1 million cash.

A controversy was brewing in February 2005, when the director Kyle Ohme of IT services at Freeze commented to reporters about vulnerabilities in Microsoft software. In a statement responding to the article in InformationWeek, Scott Larson from Aurora, Colorado, took aim at Ohme saying, "He was eager to slam Microsoft's vulnerabilities, while quoting an individual whose site provides a haven of downloadable adware programs. Mr. Ohme's site is responsible for hundreds of hours of spyware and antivirus cleanup at our organization. We now block access to his site and his products."

Despite the controversy Freeze.com stated on its web site that it complied with the Can-Spam Act of 2003. The company-issued privacy policy available on its web site stated, "Freeze is dedicated to following only responsible and ethical e-mail practices. Freeze takes a stance against unsolicited commercial e-mail and is continually updating its policies and procedures with the Can-Spam Act of 2003."

In March 2005, the company's founders were honored by the U.S. Small Business Administration as Young Entrepreneurs of the Year. The following June Entrepreneur Magazine ranked Freeze.com the 31st fastest growing new business in the United States.

Freeze initiated an affiliate program called Freeze Cold Cash which paid out one dollar for every U.S. install of its screensavers and $.10 for every international install. The referral system brought many new registrants to its directory worldwide.

In November 2005, Freeze.com chose BlueArc Corporation and its Titan core storage system for its server network. Kyle Ohme explained the choice in a Market Wire article: "As our business is growing quickly and stakes are higher than ever, we require a scalable, and robust platform that we can rely on day in and day out. Storage is not just about retaining assets, it's about performance, and better performance offers a better user experience. Millions of people a day will indirectly use this storageto choose any other NAS platform to power our network is not a risk I was willing to take."

The company was rewarded for its commitment to technological improvement when Network World Magazine named Freeze.com an "Enterprise All-Star."

Freeze was lauded for its ability to streamline data center operations and scale IT operations during its period of rapid growth. Ardence, Inc. was credited with supplying Freeze with its award-winning software by creating on-demand streaming capabilities. Network World praised Freeze.com for its "exceptional use of network technology to further business objectives. In particular, we like the company's new-style approach to server management, and the big performance and productivity gains it has reaped as a result. Freeze.com exemplifies the All-Star concept."

KEY DATES

1998:
Twins Rob and Ryan Weber develop online director of free products.
2000:
Webers found Freeze.com LLC.
2003:
Freeze buys ScreenSaver.com.
2004:
Freeze is ranked the 31st fastest growing new business in the United States.
2005:
Webers are named Young Entrepreneurs of the Year by the Small Business Administration.

In December 2005 Freeze.com broke ground on a new building site for its world headquarters. The new facility was needed to allow for the predicted growth of the company. In October 2005 Alta Communications, a Boston-based investment equity firm provided the financial backing to Freeze.com needed for its future development.

In January 2006 company President Robert Weber was listed in Twin Cities Business Monthly as a Minnesota Top 20 Emerging Leader. At that point, the company appeared well on its way to exponential growth over the next decade. The continued influx of investment from savvy tech millionaires and the growing Internet left Freeze.com in a particularly solid place among the very best of online marketers. Nonetheless, the public was tiring of online solicitation and it remained to be seen if more aggressive regulation and monitoring would affect the industry. Company disclaimers aside, sites such as Freeze.com met with more resistance from governmental and non-governmental sources who attempted to reign in spyware and adware that generated millions of complaints in the Internet community.

PRINCIPAL SUBSIDIARIES

Freeze Media LLC.

FURTHER READING

Foley, John, "You Call This Trustworthy Computing?" InformationWeek, February 14, 2005, p. 20.

Larsen, Scott, "Less Than Trustworthy?" InformationWeek, February 28, 2005, p. 10.

"New, Moving and Expanding, Freeze Acquires Rhode Island Soft System," St. Cloud Times, January 31, 2005.

Peterson, Erin, "College Students/CEO," Twin Cities Business Monthly, June 2005.

Stape, Andrea, "Mediawave Sells Its Consumer Software Division," Providence Journal, December 3, 2004, p. E1.

"What's Sneaking into Your Computer," Wall Street Journal, April 26, 2004.

Youngblood, Dick, "Youthful Entrepreneurs Navigated a Tangled Web," Star Tribune, September 22, 2004, p. 1D.

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