Jon Carson '84, CEO, cMarket

The Yale SOM Internship Fund auction faces the same dilemma as legion other charitable auctions around the country each year: how to take advantage of the expanding reach of online auctions – think eBay – without letting the world in and losing what makes the event special? For years, the fund resisted making the leap.

“The SOM auction has really been about the SOM community,” said Sheryl Linsky ’08, who oversees the online auction for the Internship Fund. “It’s important that we be able to control it, to use it the way we want to use it. But putting it online, leading up to the silent auction in the Hall of Mirrors and the live auction, could be a good way to build energy. As students we’re always busy, so it’s a great idea to be able to browse for items at 2:00 in the morning.”

Instead of posting items on eBay, the Internship Fund auction uses the website of a company called cMarket, whose head is Jon Carson ’84. The distinction is important, especially since cMarket is trying to position itself as the eBay for the nonprofit world and to profit from helping causes from the Bach Choir of Pittsburgh and the Illinois Amish Interpretive Center to the Nacogdoches County Chamber of Commerce and the Hadassah of Southern California.

Carson joined cMarket in 2002, after years as a strategic consultant and then the founder of the Family Education Network, which has become the leader in providing web solutions to schools. He sold the company in 2000 to media giant Pearson plc for $175 million and was looking for a new project when he was approached with the idea for cMarket. The company incorporated in 2003 and began setting up web auctions for charities.

Four years later, cMarket has grown into the largest company of its kind. The firm employs more than 50 people and to date has sponsored about 2,000 auctions. Carson was able to raise $30 million in capital and said he expects the company to become profitable in 2008. Earlier this year, cMarket launched biddingforgood.com, which pools about 10,000 items from its stable of auctions into one central location.

Carson clearly has big plans. “There is an enormous untapped marketplace here,” he said. The National Auctioneers Association estimates that live charity auctions fetched more than $15 billion last year. Most of that came from informal, off-line auctions, held by churches, schools, museums, and other nonprofits. While not all of that will migrate online, Carson believes enough will to make cMarket wildly successful.

The main advantage Carson sees for cMarket is in its data collection: “Auctions are one of the last unprofessional areas of fundraising. They’re done by volunteers, who never save the data and never analyze it. The way they’re run now can best be described as an art. We think we can turn it from art into science.”

With the help of a Harvard professor, the company has analyzed massive amounts of data from its auctions, breaking it down by category (travel, sports, and art are the biggest money makers), by demographics, even by when it’s best to send emails to constituents to let them know when an auction is about to begin and what they can buy.

“We found that for private schools, the best time to send out the emails is on Sunday nights (and that the most successful auction item is a parking space),” Carson said. “If you’re a Jewish organization, the best time is 7:45 on Thursday evening.”

Until this year, each auction website on cMarket was run like its own fiefdom. Outsiders were mostly kept out because each auction was found almost exclusively through invitations. This is a benefit for many organizations, such as the Internship Fund, which are as interested in a private experience as in maximizing revenue. But some bidders wanted to find desirable items, regardless of where they were being auctioned. So, cMarket decided to pull together items in a single space, called biddingforgood.com.

Carson said that more than 90% of cMarket auctions agreed to go on the biddingforgood.com site. One can now visit the site and find thousands of items up for sale. As it evolves, the company has come to look a bit more like its private-sector rival eBay. But Carson insists there are crucial differences. For one thing, biddingforgood.com offers features tailored to the needs of charity auctions, such as an ability to receive donated items and cash, sell gala tickets online, and advertise up to 10 sponsors on the site for free.

Carson describes eBay as the online Mall of America, where the seller sets up a little stall and consumers browse among all the competitors, potentially following their interest far away from what brought them there. “The mission of eBay is to create the perfect marketplace, which is economist speak for very, very competitive,” he said. “Customers can leak out, they can browse up another aisle. Our model allows for a walled garden. Once you’re in an auction, the only way out of it is the back button. There’s no navigation to lead the consumer somewhere else. It’s all about you.”

cMarket collects 9% of sales on the site, which is comparable to eBay. But once an auction reaches $75,000 in sales, anything above that amount goes solely to the nonprofit. There is also an annual service fee of $295. Carson believes it’s a business model that will allow his company to do very well. But he maintains that the plan is to do good, too. Through the websites and all the data gleaned from earlier auctions, he hopes to improve the performances of each auction, meaning that nonprofits will be able to raise much more money.

Throughout his career, Carson has tried to mix commerce with the social good. But this is the first company he’s run that allows people to bid online for turtles.

“I can’t explain it, but we’ve sold a lot of turtles,” he said. “We did about 50 grand in them last year. But the wildest thing we ever sold was a vasectomy for you and your cat by the Maryland ASPCA. Of course, they only did the cat. The owner had to go to a doctor.”