JJ and Jeremy Allaire started Allaire Corp to develop great tools, and later a platform, for web application development. Allaire Corp was a huge success, but they didn't stop there. JJ has an exciting new company called Onfolio which provides a set of tools for web researchers and bloggers to easily collect, organize, and share web content. Jeremy's new company, Brightcove, is a revolutionary approach to empower small and large video producers to build broadband businesses while giving viewers more choices and control over their use of video and television.
Allaire Corp was the early innovation leader in web application development and held on to their lead to build a very successful company. Allaire, now part of Macromedia, was generating over $100M in annual revenue and reached a market cap of $2.5B. Allaire is most famous for Cold Fusion, the first application development platform for dynamic data driven applications.
JJ and Jeremy were the featured guests of the MITX Fireside Chat Series at Harvard last night. I had the opportunity to listen to them there and extend our discussion over dinner last night with my colleague, Mark Barry. The story of Allaire is interesting. Dan Bricklin, of Visicalc fame, graciously recorded the Fireside Chat which can be found on his web site DanBricklin.com.
Lessons for entrepreneurs from listening to the Allaires;
- Be the technical leader, but not too far out front
- Lead the market, don't create the market
- It is all about a GREAT user experience
- Pace your growth and capital consumption to match the market
- Hire a great management team, give up control if necessary
- Continue to innovate. The rules and competitors are constantly changing
The History
JJ and Jeremy were students at Macalester College in Minnesota. JJ was interested in software programming and Jeremy was interested in the social aspects of the web. This was back in the early days, circa 1992, before Netscape and other web tools existed. JJ decided to build some web development tools for his own use, while Jeremy decided to build a web threaded discussion application. Jeremy was JJ's first customer. This synergy, and constant feedback loop, is what propelled Allaire in the early days.
They grew to 12 people in Minnesota and were generating positive cash flow right away. The web was taking off and they knew they needed to get big fast to compete with the big players. They connected with Polaris Ventures in Boston and raised their first round of $2.5M. Polaris suggested that they need to move to Silicon Valley, Seattle, or Boston to get the best people and grow the company. They went to Silicon Valley and put down a deposit on some office space. The landlord turned them down...they were too small. So, they turned their sights to Boston. The rest is history. They raised a second, and last, round of $15M to fund growth. They hired over 100 people in 5 months and ramped up revenues from $70K to over $100M in less than 5 years.
Allaire went public in January of 1999 and by March 2000, the peak of the NASDAQ market, their market cap reached $2.5B. As we all know the tech stock market crashed losing over 80% of its value in 18 months. Allaire decided to join a bigger player to weather the storm and merged with Macromedia in January of 2001 in a transaction valued at $400M, a 20% premium over their stock price. JJ left the company while Jeremy stayed on as CTO of Macromedia.
JJ took some time off and then decided that he couldn't shake the entrepreneurial bug. He started Onfolio to help users search, filter, and find useful content on the web. Onfolio also tapped into the emerging blog market. The tool is just brilliant and an absolute necessity for anyone who does extensive web browsing and research. You can see for yourself, download a free 30 day trial here. JJ tells me he has some new products in the wings for bloggers. Stay tuned.
Jeremy left Macromedia two years after the merger. He spent the next year as an EIR at General Catalyst, a major Boston VC firm. Jeremy saw broadband video heading the same way as web site development ten years earlier. Brightcove provides an environment for independent video producers to deliver their content directly to consumers, bypassing the traditional TV networks and channels. Video content owners are no longer beholden to the networks for distribution. Consumers can search and find the video content that interests them and build a relationship directly with the content producers. Brightcove is almost like eBay for video content, providing a market and infrastructure for producers and consumers.
Comparing the business models of Onfolio and Brightcove is interesting. Onfolio is a productivity tool for serious web researchers and bloggers, and is sold over the web directly to users. Brightcove is building a broadband video market and infrastructure to compete with the major networks, and needs to build partnerships with significant content producers.
JJ decided to self fund his company, start small, and grow along with the emerging market. Jeremy decided to get VC funding immediately and grow big fast. Both took the right approach for their respective companies. Both, I think, will be very successful in the long run.
Keep a close watch on Brightcove and Onfolio. They are going to be "The Next Big Thing".
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