Wheeling & Dealing: Mark Bonfigli and Dealer.com

Tucked away in a renovated old factory in Burlington is a fast-growing and aggressive software company that fosters, with Silicon Valley style, the Internet presence of car buyers, car dealers and car manufacturers across the USA and Canada.

The company, Dealer.com, designs and hosts Web sites for auto retailers and creates for them online marketing software including search-engine marketing, inventory management and buyer tracking. If you are selling cars, buying cars or making cars, chances are you are a customer of Dealer.com.

"We have about 12,000 auto dealers in North America using our solutions, and 25 million buyers a month using those Web sites to help find their vehicles," explained Dealer.com founder and CEO Mark Bonfigli.

Because of the company's fast growth and aggressive promotion, over the past few years it has collected a notable number of accolades. This year it is the second fastest-growing company on Vermont Business Magazine's list of 5-year sales growth. It is Number 28 on VBM's Vermont 100.

It is ranked Number 150 in Deloitte's 2010 list of the 500 fastest growing company in North America. It is Number 1056 on Inc. Magazine's list of the 5,000 fastest-growing private American companies. Inc. also named it a Top Small Company Workplace for 2010--one of just 20 companies it recognized.

Bonfigli, too, attracts attention. He was US Small Business Administration's Small Business Person of the Year for Vermont in 2009. He was also Ernst & Young's Entrepreneur of the Year in 2009 in the technology category in New England.

But he says Dealer.com's success is a team effort.

"What a lot of people don't realize is that we have people who have been here from the beginning and they have never let up," Bonfigli said. "Not from day one. They still treat this as the first year."

Dealer.com was incorporated in March of 1998 with five cofounders: Bonfigli, 41, who was running a retail car company in Burlington called EarthCars with his brother, Andy Bonfigli; COO Mike Lane, who walked into EarthCars one day and struck up a conversation about Internet marketing; and three of Lane's friends from Clarkson University, who moved from Boston to Burlington to start the company: Rick Gibbs, Ryan Dunn and Jamie LaScolea. Gibbs is the company's president and chief technology officer. Dunn is its creative director. LaScolea is its chief interface architect.

The company is privately owned and has many investors, including its board chairman, Canadian businessman Jason Chapnik, and the Canadian company Trader Corp--the media arm of Yellow Pages Group--which bought a 20 percent equity interest in Dealer.com for $35 million in 2009, with an option to increase ownership over time.

"That negotiation went really well," Bonfigli said. "We got not only investment but a good partner. Now we have the majority of the business in the US and Canada. And we're testing in other places, but we can't talk about it. It's covert--top secret. But in Canada we're the market leader. We have 90 percent of all the dealers there."

According to Bonfigli, Dealer.com's revenues last year were $85 million and might be higher when the numbers are finalized. The company now employs about 425 people and is hiring at the rate of 10 new employees a month to

keep up with its growth--a remarkable amount of hiring in a down national economy with close-to-stagnant Vermont employment figures.

"Last year, we hired 182 people, and 91 percent of them were from Vermont," Bonfigli said.

Even in the severe economic downturn of 2008-2009, when car sales plummeted and automobile makers were going out of business, Dealer.com thrived.

"The more problems the auto industry had, the more our sales went up," Bonfigli said. "Any time the dealers are hurting, they cancel newspaper ads, direct mail and radio. These are costly. And they move some of that money onto the Internet. So we did extremely well. We landed the Subaru account during that bad economy. Subaru was one of only two profitable auto companies in the downturn. We were having a blast. We're all wondering what was going on. It was utopia. Our own little utopia."

Dealer.com started, like so many companies, in someone's living room. But by early 2010 it had outgrown its half of the industrial building in Burlington that it shared with Lake Champlain Chocolate's shipping warehouse. So it announced that it was looking for a new home--and not necessarily in Vermont.

Naturally, the possibility of losing the company--and all those jobs--to another state, pushed Vermont's economic development community into overdrive. Eventually, enough incentives were created to keep the company here.

So the company bought out the chocolate warehouse and is in the process of adding 25,000-square-feet of space to its current, 46,000-square feet of blue and orange open office, which also houses Silicon Valley-style perks like a health food cafe, a full gym and an indoor tennis court. The new addition will have a 160-seat theater and a retractable roof.

Tennis keeps coming up because his family is well known beyond cars. Dan Bonfigli was Vermont's most famous tennis teacher. The tennis center at The Edge in Essex is named after him. Dan lost a long battle with cancer in 2008. Mark eulogized his big brother at a memorial service at the Saint Michael's College chapel in front of a large gathering of friends, family, colleagues and students.

Expansion

But the company has also started expanding its satellite operations in Manhattan Beach, CA.

So what did Dealer.com do to attract all this energy and growth? It created a proprietary Web "platform" that offers the auto industry a multitude of services and went from there.

From a buyer's perspective, it helps them research new and used cars. Since statistics say that between 80 and 90 percent of auto customers do some research on-line before they buy a car, that alone is a substantial market.

"Say you want a specific car, say a Subaru," Bonfigli said. "You can drive somewhere and look around. And what if you don't find what you're looking for? The Internet can search hundreds of car dealers in an instant."

But the real action is not the buyers but the sellers. They, according to Dealer.com, are on the front lines of the automotive industry.

"We realized the opportunity was not in selling the cars, it was in helping dealers sell the cars and customers find the cars," Bonfigli said. "Dealer.com provides on-line marketing services for auto dealers, auto manufacturers, and media companies. We have everything they need to do business online. They can manage their inventory pages and offer their specials. One dealer may be using us for a Web site while another is using our management tools. They don't have to subscribe to everything. It's almost like a big menu."

Dealer.com can handle dealer e-mail and telephone calls, as well as manage their marketing--including their Facebook pages.

"We have all kinds of different tools to help dealers be more efficient and help them save money instead of using traditional advertising," Bonfigli said. "We have video products that allow dealers to market their vehicles, not only on Internet but to mobile phone users. That video technology is patent-pending. It's almost as is if a person is talking about the car. It's an amazing technology we invented."

Dealer.com also offers its technology to auto manufacturers.

"With Chrysler, every dealer in the US and Canada uses us," Bonfigli said. "Subaru. Many other brands. We're now doing marketing to manufacturers."

Take on-line inventory management, for example. Automaster is a dealership in Shelburne that has been owned by the Debrul family since 1968. It sells Honda, BMW, Mercedes-Benz, Land Rover and Porsche vehicles. Its Web site is designed, hosted and managed by Dealer.com.

"I grew up with Mark Bonfigli," said Steele Debrul. "We went on-line with them as our Web site provider in the beginning stages of when they were just getting going. We've always had a great relationship with them. They make sure our Web site is easy to use from the consumer standpoint. They update it every day. We provide them with access to our inventory online, and every night they go into our system, see what we've sold, what new inventory we have, and they automatically update us. They also do maintenance and service on the site. It's a very good service."

With the Web site, Automaster can sell used cars all over the country.

"Say you have a specific preowned car," Debrul said. "Last month, for example, we had a BMW 5-series station wagon. A man from California found it on line and negotiated a deal with us. He flew here from California and drove home in the car. While that's not necessarily common, we sell cars out-of-state every month."

Debrul said he has used Dealer.com's competitors.

"We used one before we switched over," Debrul said. "And Dealer.com has been much, much better. I would have to say we've always been extremely

happy with the service they provide."

Dealer.com is in an "incredibly competitive market," according to board chairman Chapnik. Several things give it an edge.

"Many of our competitors do a fantastic job with certain aspects of their solutions," Chapnik said. "But no competitor has put all of the pieces together into a single integrated platform like Dealer.com. There are four reasons for our leadership position: our great people and culture; our single integrated platform; our technology superiority; and we really care about our clients and their success."

Sonic Automotive agrees. A Fortune 300 company based in Charlotte, NC, it is one of the largest automotive retailers in the United States; it operates more than 100 dealerships spread across 15 states and 26 major metropolitan markets. According to Rachel Richards, Sonic's vice president of retail strategy, Dealer.com makes a great partner.

"We have a national relationship with them," Richards said. "They are our digital marketing partners. They build and support over 120 Web sites for all of our dealerships. In addition, they support us with various digital marketing services such as search engine marketing and search engine optimization. We work as one team--they have our backs and we have theirs."

Early development of its proprietary software gave Dealer.com the edge. Aggressive marketing--including a New York PR firm that can whip out a press release at the drop of a new award--has helped it gain recognition. Now it is putting a lot of effort into training employees to use its on-line tools and take them further.

"Dealer.com is a training machine," Bonfigli said. "We're constantly training. But a lot of our tools are easy to use. There's a quick learning curve. Employees use the company's online learning system for tasks as varied as mastering software basics and deepening the expertise needed to further their careers. Dealer.com also offers its top performers 52 weeks of MBA-level course work, designed specifically for the company and taught by business professors from a local college."

Chapnik credits Bonfigli with Dealer.com's success.

"Mark is a remarkable person, friend and businessman," Chapnik said. "He has incredible product vision and insights into people. He can envision the products his customers really need and want and understands the real needs and wants of the people that create, sell and support those products. Mark really cares about people. He has a tremendous capacity to understand and inspire those around him. Employees, customers, and partners all benefit from his positive energy and vision. As CEO, Mark deserves credit for building a world class team, culture, and product vision."

And with a world of cars to choose from, what does Bonfigli drive?

"I have a classic Mini Cooper," Bonfigli said. "It's gorgeous. I actually love it. It's fast and zippy. And it's so small that sometimes it scares me; I'm afraid someone might squash me."

Early Years

Bonfigli is a native Vermonter, which goes a long way in explaining why Dealer.com is in Burlington. His father was an engineer at IBM who transferred from New Jersey before Bonfigli was born. His mother was an Avon Lady. He is the youngest of five boys.

His mother was his first business teacher.

"She took me to all her appointments," Bonfigli said. "I watched all of her sales presentations at an early age."

By the time he was six, Bonfigli was selling extra vegetables from his father's garden in a stand in front of the house.

"That was the beginning of doing some kind of business," he said. "I never got into the lawn mowing thing, but I definitely did a paper route for a couple of years. Probably the most meaningful adventure was teaching tennis and running tennis clinics, and realizing it could be profitable as well as fun. I learned about working with people and managing. I did that from the time I was 13 until college."

Cars, however, occupied the largest part of his attention.

"My brother Andy and I started collecting cars and restoring vehicles from about the time I was 16," Bonfigli said. "I did it all through college."

He graduated from Jacksonville University in Florida, where he studied marketing. When he came home, he brought with him his love of cars.

"I still had a passion for older sports cars--buying, restoring and selling them," Bonfigli said. "That led to an unofficial business of restoring cars and selling them for profit. One thing led to another, and before we realized it, we had too many vehicles. We were way too popular."

The Car Business

When you have too many cars, the law says that you need a dealer's license. Mark and Andy Bonfigli got one in 1994 and opened up EarthCars, a salesman-free, "environmentally friendly auto dealership" in Williston (earthycars.com). It became so popular that its first year it was named "favorite dealership in Vermont."

"After that, we kept getting busier," Bonfigli said. "In 1996 we launched a version of our Web site that helped our business dramatically. Business took off in a big way."

Bonfigli's use of the Internet was way ahead of its time.

"At some point, we were selling 90 vehicles on a lot that could only fit 30 cars," Bonfigli said.

Using the Internet to sell cars revolutionized the industry.

"People would go to the Web site and request vehicles," Bonfigli said.

"They would put in their wish lists. We would go out and find the vehicles and the Web site would automatically let customers know. So we could sell more cars than what were on the lot. We'd keep reselling the lot. It's a dream come true if you're a car dealer. And it's a customer's dream come true to get the cars they wanted. Everybody was happy."

Dealer.com

By this time, Bonfigli had realized that the opportunity was less in selling cars than in helping dealers utilize the Web.

"I started pursuing building a team to start a company," Bonfigli said. In 1998, Mike Lane came into the dealership. By the end of 1998, we were working with a bunch of his friends on creating a company. That's the company that became Dealer.com."

The five founders started with their own money and used credit cards plus whatever cash was at hand.

"We started it with nothing," Bonfigli said. "We had enough money to buy some laptops. We started in a living room, and when we had enough money, we rented a small office. Technically, our first employee is someone who is now my wife, but she was my girlfriend back then. Her name is Marisa Mora. We hired her to actually sell the product."

The partners knew that developing a Web platform to automate the sales process would be the key to success.

"We worked pretty intensely for many months trying to create something," Bonfigli said. "That tool we created ended up becoming the basis of Dealer.Com."

Finding funding for startups is always challenging. One mistake the founders made was going after Silicon Valley venture capital.

"The mistake was not believing in ourselves," Bonfigli said. "We were hoping someone would create the promised land for us. It was definitely the stupidest thing. We raised millions and millions of dollars and ended up failing. A year or so later, we parted ways with those investors and

ended up doing really well. We should have trusted our instincts and trusted our team."

Working Environment

Dealer.com's environment is one of its most notable features. Workplace culture is important to Bonfigli and the other founders, and they have created a kind of workers' paradise, although less the kind envisioned by Karl Marx and more like early Google, Apple or Microsoft.

The in-house Dot Calm Cafe offers locally-raised and organic food and coffee drinks that it delivers to an employee's desk. The company subsidizes shares for its employees in summer community gardens. It has movie nights. The comprehensive fitness facility includes free weights, Nautilus and cardio equipment and offers Pilates, tennis and yoga classes. There is an indoor tennis court and locker rooms with showers. The company fields three hockey teams with full uniforms which play in competitive leagues. It even has a curling team.

"People at Dealer.com live the good life--at work and play," boasts the company's Web site.

"It's our inherent culture and in the people we bring in," Bonfigli said. "We're always searching for people who believe in this culture and this lifestyle. For example, I was playing tennis with one of the Web site development directors who heads up a team of 50 people. While we were playing, a Pilates class was going on besides the court. People can pick and choose the times when it makes sense for them to do these kinds of things. We're very casual, very happy-go-lucky and high energy. You name it, it's being pioneered here. I wouldn't be surprised if the company gets an award for having the best wellness program in the country."

While Dealer.com was still sharing its building with Lake Champlain Chocolates, its architect, Tyler Scott of Scott and Partners Architects in Essex Junction, had to-work hard to separate the two companies' images.

"They wanted to have their own identity," Scott said. "We put in a lot more windows. Lake Champlain was chocolate and gold, so we did Dealer.com with blue and silver for the exterior."

The interiors Scott created are wide open and circled by balconies. Bright blue and orange are the dominating colors. Huge beanbag chairs dot the area.

"They wanted a fairly open office space with a very innovative feel to it because it was a very young company," Scott said. "They wanted a vibrant and accommodating workspace that would foster a lot of interaction between employees, one that would excite them. Lots of light. Lots of meeting rooms and training rooms. They train their employees in their own software, so employee training is a big part of their work."

For the expansion, Dealer.com bought out Lake Champlain Chocolates.

"Now we're taking all the old brown and gold colors off the chocolate company's part and replacing that with blue and silver," Scott said. "We're adding 25,000 square feet of second floor. They'll have a total of 75,000 square feet when we're done. They'll have a new fitness room with a retractable roof, open and enclosed office space, a conference room, a new cafe, new bathrooms and a new executive board room. It's a fairly straightforward renovation. We're proposing a rooftop solarium and gardens. That's in the design phase. They're a great client. They're very aggressive in their thinking. I admire the way they consider the welfare of their employees in the design of the building. It's great to see."

The building where all this is happening is already LEED-certified environmentally. The new addition will put it on track to have a LEED Gold certification.

Staying In Vermont

Dealer.com has always had a satellite presence in Manhattan Beach, because California "is one of our largest markets," Bonfigli said. "We have a lot of very important clients there."

It just leased new offices there and is currently adding another 20 people, Bonfigli said.

But company headquarters will remain in Burlington.

"We did the major growth here because we feel strongly about keeping the culture in Vermont," Bonfigli said. "We're Vermonters, so it's no surprise?

When it started looking to expand, Dealer.com entertained some very attractive incentive offers from other states. Rhode Island was aggressive in its pursuit of the company, and it was hard to say no," Bonfigli said. "After all, we're taking a risk. We're putting a let of our money in this."

But according to Fred Kenney, the executive director of the Vermont Economic Progress Council, which administers the state's business incentive program, Vermont economic leaders recognized the importance of keeping Dealer.com in Vermont.

"Personally, I think it's a wonderful company," Kenney said. "They treat their employees very well. They offer good pay and an incredible benefit system and perks. They've got good managers. They're looking at growing, but doing it incrementally in a smart way. I was involved several years ago when they applied to our old incentive program. We got them to do their growth in Burlington. This newest project,-this large expansion, was one of several cases in which local, regional and state officials came together to

make sure this company was going to stay in Vermont."

The Burlington Economic Development Corporation worked with Dealer.com on the property. VEPC and the Vermont Department of Labor helped with workforce development.

"Everybody worked together to do their part," Kenney said. "The company got the message that we wanted to see them stay in Vermont.

Eventually, we were able to authorize $3.5 million in incentives for over five years if the growth happened here. It's a program that pays incentives after they create the payroll, the jobs and the capital investments here. These generate new tax revenues to the state things like employee taxes, the things they buy, construction costs. All the new economic activity generates tax revenues, and a small portion gets paid back to the company. So they haven't got anything yet except the authorization to earn the incentives."

Kenney said he believed it was everyone pulling together that made the state the successful bidder.

"We can't match California dollar for dollar, but when you've got every-body from the Vermont Congressional delegation to the mayor of Burlington working on all their issues for them--it allowed this project to happen in Vermont," Kenney said.

The state "stepped up," Bonfigli agreed. "They gave us strong incentives. It's probably the smartest thing they ever did. So we're not going anywhere."

Be Cool. Drive Green.

While Bonfigli was building Dealer.com, brother Andy Bonfigli kept the auto dealership in Williston.

Now EarthCars has changed its name to Earthycar.com, and has positioned itself at the cutting edge of a new "green car" movement--driven by Dealer.com.

To do it, Dealer.com has started a new Web site, EarthCars.com with the intention of being "a part of a socially responsible mission to help bring environmentally sound vehicles to market while assisting auto dealers in their sales efforts. The EarthCars mission is simple, make it easy and 'cool' to drive earth-friendly transportation while proving to the auto industry that it is a viable business model to sell these vehicles to our people."

The trademarked mantra is "Be Cool. Drive Green."

And Earthycars.com, on its Dealer.com run Web site, has announced that it is "proud to have played a role in helping this mission become a reality and is the first and original certified 'Be Cool, Drive Green' dealership in the country!"

The Future

The future is growth and more growth, Bonfigli said.

"We're going to keep improving," he said. "We'll keep working internally on our culture to make sure it applies to everyone. We're looking at expanding into social marketing. Twitter and Facebook offer us one of our biggest opportunities to bring auto dealers into that area in a more social way instead of an advertising way. So we'd like to help auto dealers maximize social marketing. We'd like to help our clients understand that space. Not everyone lives in the real world. They live on Web sites. We're going to grow all those opportunities. It's a global virtual world."

The partnership with Trader Corp/Yellow Pages Group in Canada brought Dealer.com new capital and an expanded reach across Canada.

Dealer.com is looking to expand further afield, although Bonfigli would not discuss it further than saying, "We're going to keep expanding outside the US."

The possibility of going public is always a consideration, and Bonfigli said the company is "keeping our eyes focused on every available option."

According to board chairman Chapnik, the future looks extremely bright.

"We are excited about Dealer.com's future," Chapnik said. "We will continue to launch new, industry-leading products and services. We expect the company to double in size over the next couple of years. And we are having a great time."