How BackBoard Became a Successful Company | Twitter's Jeff Seibert

So my entrepreneurship journey started, I was a freshman at Stanford in 2004, and I found about— I found out about Entrepreneurial Thought Leaders, which is a lecture series the school puts on every single Wednesday. They bring in a CEO or investor or founder or lawyer, someone in the startup sphere of influence to come speak to the students and tell their story. The better news for you guys is this is available online at etl.stanford. It's podcast on iTunes. You can watch it. They've been watched millions of times by people around the world. And this is literally how I learned about startups. And what's even crazier is that the full name of this lecture series is called the DFJ, Draper Fisher Jurvetson Entrepreneurial Thought Leaders Lecture Series. So Tim gets a ton of credit for sponsoring this and bringing it to Stanford. So that's where I was, basically sitting there every single Wednesday listening to these amazing speakers. This happens to be Carly Fiorina right after she left Hewlett-Packard. And 2 years into this, started getting a little bit frustrated with it. There were all these people with such incredible stories, And here I was sort of stuck in this lecture series every day watching these. And so I put together a group of 5 friends from school and we decided, okay, well let's meet and let's just discuss things. Like, what would happen— oh, sorry, before I get there, what we'll talk about today is sort of 5 very practical tips that I've learned in going through this. And so we put this group of friends together and we're talking about, so what if? What if this existed? Like, would this be a cool business? And our goal with these discussions wasn't to start a company, but to train ourselves to evaluate what we thought would be good companies to start. And so we ended up meeting twice a week for like 2 hours. And every single time we'd come up with these ideas that we thought were amazing, that like, this is going to kill Google, because that was the stated goal in '06. And so we're like, yes, this is the greatest idea ever. And so, all right, we brainstorm, we come up with this great idea. We'd go back home to our dorm rooms and do a little more research, look at the competition, look at the space more, and come back at the next meeting and realize that that was perhaps the stupidest idea that had ever been described. And either it was not technically feasible, there were already way too many people doing it, we weren't the team for it, whatever the reason was, this was absolutely terrible. And so 2 months into this process, we got a little bit more frustrated. Okay, now we had just all these brilliantly terrible ideas. And nothing really to show for it. And so we decided, all right, well, let's take a step back and just build something. And so we ended up building an idea sharing site to share all of these bad ideas. Because we figured out, well, that— all we have is ideas at the end of this process. Let's do something with those. And so we did this as part of actually our senior project computer science class. A few of us were CS majors. And built it as part of the class. You were supposed to come into the class with a team and an idea. So that worked. And then at the end there was a competition. And much to our surprise, we built this basically idea-sharing website. It's a super simple forum. You post an idea, people can respond and give their feedback. And there was a way to star ideas, and then our technically complex portion was, all right, well, let's do some natural language processing, let's do some clustering, so then we could intelligently pick out related ideas and maybe have a network of ideas in the system. Much to our surprise, we actually ended up winning the class competition. And so that started us thinking, like, well, is this a business? How could we do something with this? And this now, fast-forwarding, this was the spring of 2007. And so we started working on the project through that summer. And as things progressed, we started realizing you could sort of see the US housing market teetering. Like, the economy was not doing great at that time. And as we looked at the idea sharing space, which To our surprise, there was actually an idea sharing space. Companies like Intel and HP and Hewlett-Packard and IBM pay massive amounts of money for innovation idea sharing software, which we had no idea. As we looked at that space, we got worried that if the economy tipped over, well, maybe the first budget they'd cut is this sort of fluffy innovation budget that's not really directly aligned with their business. And so we started thinking, OK, how could we make this— how could we stay true to our vision, but how could we make this a little bit more concrete, a little bit more likely to succeed as a company? And so we shifted gears and tweaked the idea slightly and decided, okay, well, in enterprise, in these big companies that are paying for this software, every idea eventually takes the form of a document. It has to become a presentation that you're going to present to some sort of exec at some point. And so what if we sort of ignored the idea side and focused on the document side? What if we sort of pivoted a little bit and created a product to let you easily get feedback on documents? And so that's what we decided to go off and build. This is the first screenshot of the first prototype. Feedbackr was our real code name because this was in '07 when Flickr was hot and it was cool to put an R as the last letter of everything. And so it was super simple. You upload your image, you write sort of what you wanted feedback on, and then people could talk about it on the other side of the page. And that was it. It was like the most minimum of MVPs ever. Ever. And all right, well, this is interesting. How can we go forward on this? And so we actually ended up, fast-forwarding a little bit, pitching DFJ on it and raising money from Tim. He got very excited about the concept of helping innovation within companies on the idea side and later on the document side. And so started working with DFJ. And we made it. We kept going a little bit and got the prototype working, got it up live online. And the spring of our senior year, we ended up launching on TechCrunch. And we thought like, oh, this is amazing, we've succeeded, right? Like all you want to do is ever launch on TechCrunch, this is fantastic. And what's great looking back at it is, wasn't TechCrunch like easy to read and free of ads in 2008? Yeah. It's so simple. And so we were like, yes, okay, we've totally succeeded, we've won. Not really. So we launched on May 14th, you can see the spike. And 2 weeks later, our traffic was back down to zero. And we were like, oh no, what happened? But the product was so easy to use, it was so simple, it was so powerful, it was great. And it turned out that we really, yes, we had created a product that was usable. We hadn't thought about how people would actually find out about it. And so yes, a bunch of people found out about it from TechCrunch, but as soon as that article went off the front page, No more traffic really came. And so this was our first big lesson learned, is we had failed to balance our team. We were a bunch of CS majors who coded a product that looked somewhat attractive, that we thought was very easy to use, and yet we didn't understand, or we didn't overestimate enough the importance of the skills we lacked. We totally lacked anyone on the team who knew anything about marketing. Yeah. And not only that, we lacked anyone on the team who cared in the slightest about marketing. Because even if we didn't know anything, then we could at least have gone and learned it, but we weren't interested. We would much rather code. And so that was our big mistake early on. And following on to that, distribution, you might have heard this saying already, distribution is truly king. If you do not figure out how someone's going to find out about your product, it's going to fail. How did you do that? It's no longer the case that, oh, build it and they will come. Definitely not true. There's too many websites, there's too much going on, people don't have enough time to just sort of stumble upon and find your thing. Don't build a distribution strategy based on stumble upon either. So any questions about that before I move on? Alright, so we thought, as a team, we thought marketing was black magic. We thought we had to go out and hire somebody that had this marketing brilliance that we could bring in and help us. And so the second sort of mistake we made was we spent months trying to find this marketing person, interviewing a bunch of people, trying to find someone who would work well with the team. And what we really came to realize is, as Rand Fishkin has written, there is no black magic to successfully attracting customers via the web. All it takes is a lot of work and a lot of thought and a lot of discipline and a lot of strategy. And think very carefully about why someone is going to find your product, how they are going to find it, who is going to tell them, and once they are using your product, how do they spread the word about it? Because otherwise I feel your marketing costs are just going to be absurd. And so we did push through this, we ended up spending a lot of time ourselves on forums talking with people, doing research, interviewing customers, and the traffic did slowly start to pick up and climb. And so let's fast forward a little bit, another 6 months, and we had made the product a lot better, gotten a lot of feedback. We converted it into a fully real-time document collaboration tool. So now just instead of images, we actually supported 100 different file formats in the web browser, anything from Word docs and PDFs to native Photoshop files and native Illustrator files. We displayed them in Flash because this was 2008. And what was actually pretty cool for the time was it was all real-time. So if you had multiple people typing and adding comments to the document, they could all see it wherever they were in the world. And so started working on this, started getting interesting traction among the freelancer community, and we started thinking, well, how else could we support the business? How could we become profitable? And one of the ideas we had was, well, what if we ended up powering document display in another big company? What if— so let's imagine Box had a lot of files. They do. What if they needed to display them? What if we could take our player, and if you notice, despite the light gray coloring instead So the dark gray, this is exactly the— oops, didn't work. This is exactly the same document viewer. What if we were able to just sort of offer this as a product to other companies and they would pay us a very low amount per document to power this capability? And so we started looking at that. We engaged 4 different big document startups in the Valley, Box being one of them, and they were all universally interested. That was fascinating to us. And so we started going down the road of, well, okay, how would these partnership deals look like? What would the revenue share be? And so on. And they all were interested except for 2 caveats. They wanted it to be exclusive because they didn't want their competitor to have the same thing. And they wanted to host the technology so they didn't have to change their end-user license agreements and their terms to allow them to share the private documents with a third party, us. in order to view them. And so both make perfect sense. The problem was we really needed more than one partner to be profitable, and we really needed to own our technology, otherwise what did we have left as a company? And so what ended up happening is we said, well, that sounds far more like an acquisition than a partnership. And so we quickly turned the discussions around, and in September 2009, we ended up being acquired by Box, as that screenshot probably gave away. And so what happened after that? And have been powering their document preview ever since, which has been a lot of fun. And it actually stayed the same, it stayed identical until 2 months ago when Box rolled out another solution that they had bought from a company called Crocodoc. So for 4 years, Increo's tech was exactly how people in Box viewed their files, which was a lot of fun. So, Tim, I'm curious,