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Reflecting on those and other state regulatory hassles sends Palmer into a Lenny Bruce-like rant. "These regulators were engaging in illegal activities," he fumes. "They were breaking their own laws. How is a company supposed to put together a disinterested board? Is that an oxymoron, or what?" He churned out a press release accusing one Minnesota regulator of imposing several illegal requirements on SolarAttic. And he ended up dropping most of the rule-mongering states from his offering. Palmer claims the battles with Minnesota regulators cost him in excess of $90,000 in legal fees and his time, and set the company back years. "The SCOR rules were supposed to make it easy for small businesses to go public," he says. "It's supposed to be uniform, but each state lobs its own preposterous things at you. They say it's to protect the public from crooks, but crooks don't care about the rules. It may seem strange to hear this from a small-business owner, but I wish the federal government would take over the regulation of these things."

When the regulatory hassles were finally behind him, Palmer started to focus on driving potential investors to his Web site. He started by analyzing statistics that told him where visitors were coming from and what they were doing when they got to his site. For example, 9% of visitors came to the site from a Yahoo search, and of those, 38% had included the word solar in their search, versus only 3% who had used accredited. Only 2.5% of visitors were examining the offering "tombstone," and eight times as many visitors were downloading technical manuals as were downloading prospectuses. Conclusion: Yahoo searches were a great potential source of referrals, but they were sending over mostly potential customers, not investors.

In light of that information, Palmer decided to sign up for a $4,500 banner ad with Yahoo. The ad would be displayed at the top of the search-results page whenever someone asked for such investment keywords as IPO, DPO, SCOR, and so on. But after studying stats revealing that after 20,000 showings the banner had enticed only 200 people to click to the SolarAttic site, Palmer discontinued the ad. Next, he contracted for 50,000 page views of an ad for his offering with the Wall Street Journal Interactive Edition--ads that, he says, would be shown only to the site's 18,000 subscribers in New Jersey, Connecticut, and Rhode Island. But again, the results were disappointing: 200 hits, after subscribers had been exposed an average of three times each to the ad. "I realized that people don't want to be distracted by banner ads when they're on-line looking for information," says Palmer. "It doesn't make sense to pay thousands of dollars for 200 hits when I can generate 300 hits from a $90 Business Wire press release."

Palmer also tried talking up his offering in various newsgroups, on bulletin boards, and in chat rooms, posting nearly 7,000 messages. But most of the forums quickly erased his messages, presumably for the same reason cited by the Motley Fool when it erased the message Palmer had placed in the "Minnesota" section of that site: the site is for publicly traded companies only. The sites that didn't erase his message generated mostly "nastygrams," as Palmer puts it. By that point, he knew better than to try a mass E-mailing, a.k.a. spamming. "People don't want unsolicited E-mail, period," he says, noting that it's difficult to limit such mailings to particular states. Instead, Palmer limited his mailings to "opt-ins"--Web surfers who indicated their interest in receiving them.

Finally, Palmer says he spent $750 to place his offering on DSM. DSM has since turned over some 40 leads to him, but most turned out to be from states in which the offering wasn't registered. Palmer says DSM and other sites like it can be useful; for one thing, such sites often offer mechanisms for investors to trade stocks originally offered in a DPO, providing much-needed liquidity to the investment. Other lessons: few people are interested in downloading an 82-page prospectus (a process that takes about 10 minutes via a standard modem connection), judging by the fact that only a small number of people ever bothered to download his; no matter how interested investors become in the stock, they're more likely to call up to buy rather than plug in their credit-card number; and $500 is the largest acceptable minimum investment for most Web surfers, something Palmer figured out after starting off with a $3,000 minimum before dropping it to the lower figure.

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David H. Freedman

A Boston-based contributing editor, Freedman is the co-author of A Perfect Mess, which examines the useful role of disorder in daily life, business, and science. His other books include Corps Business: The 30 Management Principles of the U.S. Marines; At Large: The Strange Case of the World's Biggest Internet Invasion (co-authored with Charles C. Mann); and Brainmakers: How Scientists are Moving Beyond Computers to Create a Rival to the Human Brain.

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