Web Masters Episode #14: Chris Evans

It might surprise you to learn that sophisticated advertising technologies were developed relatively late after websites like AltaVista and GeoCities were already becoming hugely popular. The man who — for better or worse — helped change all that was Chris Evans, founder of Accipiter, one of the Web’s first ad serving platforms. Hear his story on the Web Masters podcast.



Accipiter - Frontier Growth

Chris Evans:

To go to that conference. It was right before Hurricane Fran hit Raleigh where I live. And so I had to drive to Atlanta with my family in the middle of the night, before the floods blocked off all the rivers so that my wife and our two babies could stay with my parents so that I could catch a plane out of Atlanta to get to San Francisco, to show up the software. Everything was crazy at the time, but immediately we got a lot of response from a number of big websites within the first year of operation, seven of the 20 largest ad supported sites were using our software. That included Lycos, AltaVista, GeoCities, all the Microsoft properties, Sina, Broadcast.com, the BBC in England had picked it up. So we had a large number of customers who were using the software across that setup because what they needed was this ad management solution and they needed it urgently.

Aaron Dinin:

That’s right. Ad management software. We can’t have a podcast about the early days of the worldwide web without discussing advertising, because as you surely already know, advertising is a critical part of the web. That’s how a lot of the websites we use everyday make their money. In fact, the biggest companies online, Google and Facebook are both basically just giant advertising companies, masquerading as a search engine and social network respectively. However, even though advertising is a core part of the modern web, the ad tech industry was surprisingly slow to get started, which we can tell from the story you just heard because it references Hurricane Fran. Hurricane Fran slammed into the North Carolina Coast around the beginning of September, 1996. By that point, as the story mentions websites like AltaVista and GeoCities were already getting huge amounts of traffic and urgently needed a way to monetize. So someone came to their rescue and that’s someone who was a man named Chris Evans. Now hold on, don’t get your hopes up. The hero of the story isn’t that Chris Evans of Captain America fame but that’s okay. It turns out the Chris Evans you’re about to hear from is a pretty interesting character too. He’s the founder of a company called Accipiter, which was one of the first online ad management softwares. Are you ready to hear the story? Great. Let’s get dialed in.

[INTRO]

Aaron Dinin:

Welcome to Web Masters. This is the podcast that explores the history of the internet by speaking with the webs earliest innovators and entrepreneurs, and I’m the host Aaron Dinin. I teach innovation and entrepreneurship at Duke University. Before that I built a few of my own tech startups. In fact, my first startup experiences were with web marketing companies. So I’m excited to jump into another episode that takes a closer look at the history of internet advertising. And since we’re going to be talking about internet advertising, I think it’s only appropriate that I jump straight into an advertisement for this podcast.

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All right, now that you’ve spent 60 seconds listening to an advertisement, you’ve just earned 30 minutes worth of great content. That seems like a fair trade, right? And I promise it’s going to seem like an even better deal once you’ve heard my conversation with this episode’s guest, Chris Evans, founder of Accipiter, one of the earliest ad management platforms on the web. Of course, I’ve already told you he’s a pioneer of the web advertising industry, but we’re actually not going to talk much about the details of web advertising.

While it’s certainly an interesting topic, it’s not a huge part of what Chris and I discussed because, well, honestly of course the web has ads on it. For centuries media platforms have been using advertising to generate revenue, think about television and radio and newspapers and magazines and so on. Why would we expect the web to be any different? So the interesting thing about Chris’s story isn’t that he built an ad management platform for the web, or even how that ad management platform works. Someone was going to build something like that eventually it was just a matter of time. Instead, the most interesting thing about Chris’s story was his ability to recognize and capitalize on the market opportunity before just about everyone else. That’s a skill He began cultivating years before launching Accipiter.

Chris Evans:

That was the fifth of six kids. And my parents used their 1977 tax refund to buy an Apple two computer. And since all of my older brothers and sisters had already taken sports and entertainment and other things, I needed some niche to find myself in. And so I grabbed onto this computer and started playing with it. I was the only one I knew that had a computer up until I moved to North Carolina. I was a part of the first magnet school in North Carolina. And so everyone on the school bus with me were also the only people they knew that had computers. And we had about an hour on the bus each way to argue about the merits of the Apple two versus the TRS-80 in different shapes and all kinds of nerdy things. I’d found my tribe.

Aaron Dinin:

So all the way back in 1977, as a young child in a large family, Chris was trying to find a way to stand out from his brothers and sisters. And with computers, he identified what was essentially in his family, a market opportunity. Personal computers were so new at the time that none of his siblings had built their identities around them. And that left a gap for him to fill. Now, this might not seem like a big deal, but as we listened to Chris’s story, we’re actually going to see this pattern repeat itself over and over again. It turns out to be an important part of what’s made Chris so successful starting with his very first company, which was DaVinci systems. He built it while he was a college student at North Carolina State University. DaVinci launched the very first email software for the windows operating system.

Chris Evans:

We created the first email product for Microsoft windows. And at the time this was pre-internet.

Aaron Dinin:

You mean pre-web right? Because the internet would have existed at that point.

Chris Evans:

Well, both. The internet was available within the government universities, but as a company or as a person, you didn’t have internet access. There was no SMTP to deliver email that anyone could get. You had to be a university to connect to the internet. If you had email the only people that you were generally talking to were other people in your office on email. It wasn’t like you would send an email to somebody in another company. People didn’t even know that was a thing from 85 to really, it was 92 was the point where people wanted to start using the internet to send email to each other, except for there were people very, very out in the leading edge, but you probably wouldn’t have known any people and for 92 we’re emailing each other over the internet that weren’t working in a university or a government office.

Aaron Dinin:

Okay. Got you. Pre-public internet. That makes a little more sense.

Chris Evans:

Right. So at the time email meant that you were sending email to the person next to you in your office that was also on your same land. And occasionally if you wanted to get fancy, you could talk to another office where it would call it up on a modem every hour and exchange emails between each other and then hang up. And that was state-of-the-art email at the time, but still it was a different way of communicating right, up until then you could call somebody on the phone and you could meet with them texting really wasn’t a thing at the time, either. So some medium where you could communicate with somebody faster than writing them a letter and in a way that they can collaborate, reply, send all, everything else, sort of sat between the immediacy of a phone call, where they had to be free at the same time you were, and the delay of writing out a memo that you would then circulate around on paper. So it kind of fit in between broadly these two forms of communication that had big drawbacks. So even within an office, it had a lot of interesting productivity.

Aaron Dinin:

The last bit of what Chris just said is the really important part here. Notice how he focused on office productivity. And that’s another example of Chris identifying a niche before other people, because remember this is the late eighties and computers haven’t really made their way into businesses just yet, but that’s where they were headed. And Chris saw an opportunity to get there before everyone else.

Chris Evans:

It Would have been ’87 I think that we were releasing it. Microsoft at the time was desperately trying to convince people that windows was a real program that people would use in real offices. Because up until then computers showed everything in monochrome on a tech screen. And so having a graphic user interface, Microsoft has tried to push this Apple really was an education they had gained ground, but in corporate, they hadn’t. And so Microsoft had this windows platform and then most of the programs written for it were like painting programs and coloring and other things that were just not impressive to business. So as soon as we gave them the suggestion that we had something that might eventually become a commercial program, they were already trying to put us on the stage in front of other apps to say, see, we have all these business programs like DaVinci email.

Aaron Dinin:

By anticipating the market Chris and his team at DaVinci were able to position themselves as the market leader. Because of this, the big enterprise customers that usually are so expensive to chase we’re instead, actively reaching out and asking for the product.

Chris Evans:

We basically started by having all these fortune 500 companies call us and wanting to try and integrate it in their product suites. And, military contractors wanting to add us into bids for the army and the air force and all this other stuff way before we were actually ready to handle those customers. As it turns out, fortunately, they weren’t that serious either. They needed a couple of copies to put in a demo suite that they could show to their boss to say, this is where we would go. If anyone had actually bought thousands of users, we would have been overwhelmed because we couldn’t have done the tech support on it. But as it was, we just got a lot of great press. And we were up on the front page of different magazines, talking about what it was that we were doing, but having enough time to actually go back and write the program we needed to write once we were talking to real customers.

Aaron Dinin:

And just to clarify, you were what only 19 when you’re basically starting to sell software to some of the biggest companies in the world?

Chris Evans:

So in ’86 I was 20. Yeah. So 20, 21. I was working on my electrical engineering degree at NC State. And it got to the point in my junior year where I couldn’t work out a way to be in town during midterms or finals, which makes it difficult to actually get credit for those classes. Outside of the classes, I could watch on video when I was around, but there was a big conference and there was a big customer demo and some other things and it’s like, well, I guess one of these have to go. I wound up leaving NC State with about 27 credit hours hanging. I spent three days in various dean’s offices having my semester on hold and realizing I could probably spend a lot less than my parents’ money if I’m going to be honest for that kind of frustration. And I broke it to them.

But at the same time I was leaving that we were taking an investment from Novell, which at that point was the 800 pound gorilla in networking software. I was negotiating directly with Ray Noorda who’s an internet and technology legend at Novell over them taking a percent of the company. And so the education I was getting was not at the university, learning how to negotiate investment contracts, work with large companies on marketing deals. We were going to different countries in the world because windows was also the first platform where you could easily translate a product.

We were one of the first programs ever to be translated into Katakana, Italian, Spanish, Hebrew, Arabic. There were all these versions of DaVinci email that came out in these different countries. And we wound up having to work deals with distributors and travel to these different places to establish relationships. So I was doing all of those things as well. It was difficult not being able to rent a car at first, for example, until you were 21, they really frowned on it. And then they charge you extra until you’re 25, but we just kind of worked it through and nobody really made a big deal out of our age, at least to our faces. So it kind of worked out.

Aaron Dinin:

What we’re seeing here is that when you’re really good at predicting markets like Chris, and when you’re moving before everyone else, you wind up with a lot more leeway in terms of what you can get away with as a company, while still being successful like for example, being 20 year old college kids and not having a finished product. Of course, there’s a lot more that could be said about DaVinci since, as I mentioned, it was the first email client for windows. Maybe we’ll have a chance to get back to that story in a future Web Masters episode. But for now I want to keep moving forward with Chris’s story and his knack for identifying market opportunities before everyone else. Chris would ultimately sell DaVinci in 1992 when he was 28. So we’re still super early in the web era. I mean the worldwide web is basically just getting released at this point.

Chris has young children. He wanted to be able to spend more time with them. So rather than starting a big new company, he launched a small company called Hotlinks, which was a niche print based buying guide for client server software products. I’m sure it was very exciting content. The project was what we might today describe as maybe a side hustle. It wasn’t his main focus and it was never going to grow into a huge company, but it was successful. And more importantly, it helped Chris learn about the publishing industry and its traditional print form. However, as someone with a digital background and as someone who’s super power seems to be an uncanny ability to see the future. Chris began predicting the pending transition of physical media into digital publishing. With this view about where the publishing industry was headed, he started building an online version of his print based buying guide.

Chris Evans:

I was realizing that the commercial internet was coming out so big companies, everyone had to have a website, at least, right. You needed to lock down your dot com name, mcdonald’s.com, nissan.com or whatever. You had to have that, and you had to have some website that would at least say what you were doing to begin with. And so corporations were going that way. And I expected that the kind of side money, the leftover advertising money I was getting out of my customers was probably going to be reallocated to some web project or other. And so I needed to make that web project so I could continue to harvest that money. And so what I thought I would do is I would create this internet site that would be a crossroads for all the database products. So I started to build that and I was surprised at the crap that was available to build websites.

It was like I’d gone back 10 years in terms of the technology tools to actually build a product. Everything was hacked together. There weren’t really a lot of tools to be able to work on. There was certainly nothing terribly sophisticated. Eventually I thought, okay, somebody has to be making tools. And so I started reaching out to friends of mine who are now running big websites and saying, “So what are you using to manage your advertising or to track who’s coming to your site, And if they’re coming back or to make sense of all the content you’re putting up so you’re not making all these static pages, but you have some kind of system where you’re putting your graphics in and it’s making the page for you.” And the consistent answer I got was that, “No, man, we’re having to write all that for ourselves, but hey, listen, if you find anything you do like, will you call me back and tell me what you’re using?” Well, you hear that a few times and you think maybe I’m on the wrong side of this question.

Aaron Dinin:

If you’ve ever thought about starting your own business, then this is the part of Chris’s story you should be paying close attention to. It’s where Chris’s entrepreneurial skillset seems to manifest in an almost supernatural way. Notice how everyone else is asking the same question as him, which is what’s a good online publishing tool, but rather than just accepting the lack of good options like everyone else, Chris springs into action.

Chris Evans:

I put together a business model around really a suite of products that would manage the advertising, the content and circulation, which is the three legs of the magazine. And so you have three different systems. And so I figured anyone who wanted to bring a publication online would manage those. If I put a suite together where those things worked, I could pick up a lot of customers in a hurry, because it was certainly there was an urgent need.

Aaron Dinin:

And so you just what, built up publishing platform from scratch because nobody you knew could find a good one?

Chris Evans:

So we built a business plan around that. I raised some money. I started writing the software, put the deck together. And then when I started going out visiting people with what would now be PowerPoint, but I think it then was some pre PowerPoint presentation software that’s been lost to history, but I could never get past the advertising management part of my deck. I was going to tell them about the content management and the circulation and everything, but they stopped me on the advertising and it became clear that they got a really urgent needs.

Aaron Dinin:

So you never even built the publishing platform? The ad management piece was basically the thing that mattered so you Just focused on that? How the heck were you so sure that was the opportunity?

Chris Evans:

Take like sportsillustrated.com. They have to have a website business, they get some money, they start building out their website. They hire some ad execs who go out and go to the regular customers, take them out for drinks and sign them up for contracts. These ad execs have no idea what a website is, how advertising will work or anything else. Their job is to get a half million dollar advertising contract out of the big customers. So they bring the advertising contract back and the websites have no ability to fulfill that contract because the contract has to deliver certain numbers of ads at certain times, and delivered a certain targets and everything else and the salesman is like, “Yeah, we can do that side of the thing.” Right? And now they’re back. And they can’t actually recognize any of the revenue they booked because they can’t run the ads the way the contracts are written.

So they desperately need some software that can run targeted ads, meter them the right way and everything else. And so I came back from the second or third of those meetings and told everyone who is developing, “Okay, everyone, who’s not on advertising, you’re now on advertising.” We are going to take a position in internet advertising. And if it turns out that we do that well enough and lead, then we can go back and write the other things that we plan on doing later because we’ll have all these customers will buy them from us. And that turned out to be a very good guess.

Aaron Dinin:

There’s an understatement if I’ve ever heard one, it was more than just a very good guess. This was Chris seeing the future and getting there before just about everyone else. And he was able to do it because he listened carefully to what his customers were saying, figured out what they wanted and then focused on building that thing rather than what he thought they should want. This is how successful entrepreneurs operate. Despite the ways they’re depicted in popular culture, great entrepreneurs aren’t unyielding visionaries who impose their visions onto the world. It’s actually the exact opposite. Great entrepreneurs are people like Chris. They recognize that the purpose of entrepreneurship is to serve the needs of other people. So they spend most of their time trying to figure out what people need and then figure out how to build it. And here by the way, is where the entrepreneurial process on the web is unique. In other industries, once you’ve built and launched your product, you’re kind of stuck with it. But as Chris explained, that’s not the case with web software.

Chris Evans:

One of the great things about software as an industry is that it’s a lot more flexible. It’s not like you can redesign a car after you’ve had the first cop holder coming off the line, because you realize you didn’t have a cup holder where it needed to be. Software you can make a change within a day if you needed to. In an early stage where customers understand that they’re working very early in a process, I think there was a certain tolerance for that malleability. The key though, is that strategically, when you’re working with your first few people, they actually want to be technical pioneers. Right? So seeing that, for example, as a reputation, they want it to be the ones who were the first ones doing something. And so if they’re working with you and they find that you’re in the garage, or you look really young or you look really new on the that’s reassuring to them because they feel like they’ve seen you first, really with someone like CNet we were whatever they needed.

They figured out some of the workflow and ad just doesn’t get written on a site. There’s three or four people that have to look at the ad, figure out how to fit it, figure out where it’s going to go, approve it, have the customer approve it. There’s a whole workflow in there that they were sophisticated enough to see and help us develop for us to be able to make the product that they needed, and they were happy to be that. The trap is that if you do that with too many customers, you never look like a market leader. You look like somebody who sloshing around trying to be whatever you want them to be.

After those first few people like CNet everyone else wants to just buy the safe product. Especially internet advertising, the person who makes the decision, who recommends to their company to use our product is making a career decision. If we stop working, they stop making money. And there’s nowhere for the person who said you ought to use Accipiter to hide. And they know that it’s a really high trust decision they have to make. And so you have to talk about all your successful customers, how stable you are, everything else once you get past that point. But very early on, the way that you get there in the first place is to have a few customers to point to and say, “Look, if CNet happy with us, you’re going to be happy with us.

Aaron Dinin:

And CNet was indeed very happy with them as were a handful of the largest and most popular publishers in the world. At that point with the opportunity clearly established Chris and his team raced against their competitors to capture as much of the newly emerging market as possible.

Chris Evans:

There are a couple of products that came out at about the same time. NetGravity proceeded us. DoubleClick came in around the same time. I think we were second on the block, but it may have been third, but all of them tried to offer some targeted advertising. There were a handful of companies like Yahoo that were going to make their own internal product. And they just decided that was the best way to go. Most people wanted to buy something off the shelf.

Aaron Dinin:

And How’d you get your customers? What was your strategy for competing with the other companies in the space?

Chris Evans:

If you find an industry that’s really, really young, then if you’re a quick learner, you can become an expert in that industry pretty quickly. So I was one of ad agencies, 10 digital media masters, I think within less than a year of the time, I decided to go into digital media at all. If you can explain clearly how technology is working to the people on the business side, who were trying to understand it and essentially explain the potential of different technologies and also be thoughtful about the business rules and the behaviors that are going to drive it and what trends are coming on. Then people want to quote you. They want their stories. I mean, reporters writing an internet advertising at the time came out of journalism school, maybe just discovered the internet. And all of a sudden they have this beat where they’ve got to write on technology. They need some people to explain to them what it is that they just heard and what to do with it. And so if you’re that person, then they’re also writing about you and they’re covering different stories.

Aaron Dinin:

Okay, So even though you didn’t know much about advertising, you positioned yourself as an early web advertising thought leader. Why do you think that was such a successful strategy?

Chris Evans:

The customer need was so much, you had somebody whose job was to go out and find some internet advertising product. NetGravity had come out a little bit before us. And so everyone was looking at that, but they weren’t going to go to their boss and say, “well, we looked at one product, so we recommend you buy this.” That would be dumb. So they needed at least something else. So being the second to market was great. NetGravity, you had to spend a lot of money, explaining it to people they ought to want one of these things, all we had to do is say we’re here too. And anyone who was assigned to look at some products and report back, had to look at us because they were searching everywhere for at least another one.

Aaron Dinin:

Again, it’s worth highlighting that Chris is never talking about the technology. He’s not talking about features or how much better Accipiter was compared with his competitors. Instead he’s rigorously focused on identifying customer needs and then positioning himself within the market so that has potential customers know his company serves those needs. That’s what successful entrepreneurs do. And Chris is no exception. In fact, he’s especially gifted at it. One story he told me demonstrates this talent particularly well. Chris was pitching his software to the CEO of a large search engine, but he was struggling to make the sale.

Chris Evans:

We’d gone in to do our sales presentation. And we were explaining what the features were and everything else. And we want to take a break I’m in the bathroom, I’m with my VP of sales and he tells me this decision’s already been made. I said, “What do you mean?” I mean, the CEO was barely paying attention. He clearly already knows what he’s doing and it’s not going to be us. He’s not that interested in what we have to tell him. And he was right. I kind of thought back, It was like, yes. And so I come back in and I say, “So we’ve shown you a lot of what we can do, is there something that you wished our product or some product would do that it’s not.” And his posture changed? And he says, “Yes, what we need is this reservation system that allows our people to not be stepping on each other when selling keywords.”

I said, “Okay, I think I understand what you’re talking about.” Talk with the engineers on the flight home from the visit. And there’s a guy where I lay out for the system. This is the reservation system that we need to have in mind, can you create this? And he, over the weekend builds this thing out. So we have a follow-up call to answer a few last questions with the customer. And before we end the call, after we answered the questions, I want to take you to one more thing, can you go to this webpage? And he does. And I said, “Okay. So this is a reservation system that I think you described, and so type in a keyword and then go to this page and you’ll see how many reservations were made against that keyword.” And he did it like a couple of times and tried it.

So it was actually working, not just sort of a rig smoke and mirrors thing. And afterwards he told me that it was like, I dropped a bomb in his office. He was not at all thinking about working with us. And he saw it and it was like, “This team has hustle and they understand what we want and they know how to be able to make it.” And we wound up getting that business from him. It was kind of an understanding of both what these urgent needs are and how do you make technology fit what a customer is looking for.

Aaron Dinin:

So you’re clearly good at selling things, but at some point technology matters too, right? And you’re closing deals with some of the most popular websites in the world. So how are you supporting all that traffic?

Chris Evans:

There’s a tricky technical issue, which is, let’s say that you have one advertiser who wants to run 20,000 ads a month, but only on the golf page. And only two people who are using max. And somebody else who wants to run 500,000 ads a day and we’re willing to run them anywhere. So now a Mac user comes to your golf page, which ad do you run? And the answer is whichever ad is most behind schedule. I mean, there’s lots of ways you can attack it, but that turns out to be the right way to do it because customers get cranky when they’re supposed to have 20,000 ads this week and they only had 10,000. And so even if you have those opportunities, you can’t get to them. And part of the reason that that insight works is that when we first started, we wanted to do, I think 20 ads a second, every month, that doubled within a year, we had to be doing like 1400 ads a second.

We were outstripping Moore’s law. We had customers who are literally getting pre-released beta microprocessors from Intel to keep their system running because of the speed that we had to operate at was that tricky. But the fastest way that we could process those ads, this is going to get a little technical, the fastest thing a processor can do as a comparison. So if we had sort of a stack of that opportunities and the top was the one most behind schedule, if it met the criteria, the first one, it ran it. If it didn’t, it goes to the next one and then it runs it. And it just moves down that stack until it finds the first ad that matches the criteria of the situation and runs that ad. And then every five minutes we look at what’s ahead and behind schedule reshuffle that stack to keep running. The guys I had working with, they were just geniuses in terms of performance computing, but that was how we were able to run that many different kinds of comparisons with a system that was growing that quickly and be able to keep up with customers.

Aaron Dinin:

So if I can editorialize here just for a little, most entrepreneurs, start by building a technology and then trying to sell it. But it sounds like what the Accipiter story is teaching us is that you want to do the opposite. You want to find a market opportunity by listening to customer needs. And once you’ve figured out that need, then you go out and you find people who can build a technology that supports it, whatever the need was. Is that kind of a fair way of describing Accipiter?

Chris Evans:

A lot of that, it wasn’t that the technology was politically hard. It was understanding how do you render it in a way where it makes sense to and becomes a natural tool for the person who is using it. You really have to be able to kind of think in both frames of mind to recognize when you see something going on in the market and what markets want to exist. And so there’s some people who look at that and say, “Wow, these people, he wished it was a product that would do this, but they don’t have enough engineering background to figure out how to render what they’re actually doing.”

And there’s other people that have a technology and they say, “Wow, this is really powerful technology, what do you do with it?” And they don’t know where the other side is. And there’s a lot of things I’ve gone through three 3D printers. I think I’m on my fourth virtual reality helmet. I mean, there’s a lot of things that are still technologies in search of a big enough market habit to sort of put them on a map in different ways. They’re interesting at the moment. And so some of it is just lots of exploring around the fringes of what exists and trying to get a feel for what would a lot of people do with this?

Aaron Dinin:

Do you have any advice for how to identify market needs as opposed to just building some sort of cool technology and then trying to find it a market?

Chris Evans:

It feels to me like an urgent itch. When I was bringing Accipiter out the main business plan of all the three different products in the big suite and everything, when they were interrupting me and just wanting to keep the focus on the ad management part. What I could tell was that there was something they were desperate to solve and frustrated the technology had not already done it. And if you see that several times, right, you have this urgent itch there is a market there. There’s people who… they’re frustrated the product that they expected to be out in there already is not out there. There ought to be somebody who’s doing this. Why isn’t anybody doing this?

Aaron Dinin:

And of course, that’s exactly what Chris did so well with Accipiter. He identified a huge market need, and that led to rapid growth when he launched toward the end of 1996, all through ’97 and into 1998. In fact, Chris had done such a good job picking out a valuable market. And the growth was so fast that less than 20 months after the launch of the company, he and his team were considering options for an exit.

Chris Evans:

So in January ’98, two of my competitors, DoubleClick and Netgravity have gone public. Another two companies had merged. And my board was saying, we really want to look at this from a trend and figure out what your opportunity is. So I looked at opportunities to say, “okay, maybe I could acquire something, do we buy somebody else, do we sell to somebody else, what are our best options?” And when I looked at it at that point, Accipiter was, we had market presence like anybody needed, right? We had seven of the big customers. We had everyone’s logos. These are all the people using us. We had all of that trust capital sitting out there, but we are still enterprise software. We were never going to sell a billion dollars worth of Accipiter software because you had a few companies who were paying you for it.

The people who are going public on the internet were pets.com. Everyone was going to buy their dog food through pets.com. And so it was easy for them to chart. This is where we make a jillion dollars. All these things were things where if everyone in the world can buy it, you’re going to make all this money. So what I needed to do is to figure out how to add the market size to my market presence in a business plan. And it turned out that the best pairing with us was a company that Dave Weatherall at CMGI had also founded called Engage. So Engage was one of the first companies making this behavioral profile and they put about $25 million into developing the software. It was pretty well along, but he was having a time getting traction because until somebody was using his software, he didn’t actually have any behavioral profiles.

So I fly up to visit with Dave and I explained to him, I said, “Look, we have an opportunity where we have big market presence but we need this bigger market size to be able to sell to them. You have Engage, which is a great story, but you don’t have the customer base to be able to sell to. I think if we put these two things together, we can start filing to go public within a quarter or so.”

And I didn’t tell him why I was coming up there. I actually had made friends with his assistant enough to get her to schedule me in his meeting without telling what it was. And he looks at me and he says, “You’re right. I’m disappointed I didn’t think of that myself. Let’s do it.” And so we sold the company in April to CMGI and CMGI was the fastest growing stock on NASDAQ for the next year or two as the internet really sort of blossomed exploded between ’98 and 2000. It was a great exit. The investors made good money. Everyone in the company had options and made good money, the receptionist center daughter to school and a deal. So there was a lot of great things that came out.

Aaron Dinin:

We’ve got ourselves yet another understatement from Chris CMGI is a bit of a forgotten company now, but back in the late nineties and early two thousands, it was on a trajectory toward being the Google of the East Coast that got derailed by the big.com crash. Lucky for Chris, he managed to exit to CMGI at the perfect time. Originally the purchase price for Accipiter had been set at $35 million in cash. However, a week before closing, it got switched to $35 million in stock. CMGI would then go on to be one of the best performing NASDAQ stocks in history over the next couple of years, splitting four times and increasing the overall value of the transaction to more than $500 million. So, yeah, that was definitely a good outcome. Chris went on to spend a few years with CMGI before, I guess you could say he decided the world of public companies wasn’t really a good fit for him.

Chris Evans:

We took the company public and I served on the board of a public company. Does the special committee stuff up until 2000. The morning of 9/11, I had a conference call with Bear Stearns for an investment banking part. And these guys were in Midtown, but their colleagues were in a building that was on fire and collapsing at the tip of Manhattan on Wall Street. And they were trying to figure out whether we should reschedule the meeting or not. And I was like, “Okay, this is… I spent enough time in this world. You guys go take care of your business. We’ll revisit when things are better, but I’m going to get off the phone now.” And I felt like I had done what I could within CMGI and everything else, but that was the right time to sort of step back from there.

Aaron Dinin:

As you heard for obvious and unfortunate reasons, Chris decided it was best for him to step away from his role with CMGI. Now he spends his time angel investing in advising startups, meaning he is focused on helping young entrepreneurs apply the same strategies that led to his success. Since he seems to know what he’s doing, I figured I’d ask him to share one thing he believes most entrepreneurs overlook. Here’s what he told me.

Chris Evans:

The thing I miss a lot is that it’s actually defensive strategy is more important than offensive strategy. If you come up with an idea, that’s a billion dollar idea, then there’s no hiding it, right? Everyone else who’s better equipped, better connected, and more experienced than you will see it and have an opportunity to duplicate it. Particularly in tech where the patent stuff is kind of squishy. Now, if you have a horrible idea, you get to keep that all to yourself, right. But nobody thinks they have a horrible idea, right? You kind of assume that if you’re going to spend a bunch of your life on this and maybe some money to, that it has to be something that’s worthwhile. And so you have to ask yourself if I actually have a really good idea, how do I get to be the one who makes the money off of my good idea?

Because particularly now, if you are in Raleigh, North Carolina, let’s say, and you realize, Oh my Gosh, there’s this whole gap where people are dying to do this thing, that the internet won’t let them, I can build a product to do that. And you go out and do it. So you start building on that and it turns out people are adopting it. If it turns out that it’s really viral, then somebody in Silicon Valley reads about it and says, “You know gee, that is a good idea,” except that their father-in-law’s friends plays tennis with somebody who’s on the board of Google and they can invite 10 venture capitalists Who are going to put $10 million into the company overnight and they reach out on LinkedIn and they’ve got six people who’ve done this three times before.

And so within six months you can read the press congratulating them on your great idea. Well, you sort of fade into the background, right? If you work hard enough, maybe they acquire you, but it’s tough to get up over that edge if you’re not in Silicon Valley on something like this, because so many ideas are interdependent on existing relationships with other companies. So you sort of have to look at it and say, how do I get to keep this. To me that’s kind of the ad.

Aaron Dinin:

And could you maybe explain how you applied that advice in your own startup career?

Chris Evans:

When I started Accipiter, it was on the heels of an experience where we started DaVinci. And we had this email program and it was the top reviewed email program, PC Magazine and InfoWorld and PC Week and Network Magazine all reviewed all the email programs and said we were the best, right? So we were sort of market leader top of our class. And that was in 1989. By 1991, we were competing with Microsoft, Lotus and WordPerfect. Three companies whose coffee budgets were probably bigger than our revenues.

And so Microsoft was essentially giving away their email for free if you would buy Excel and Word, while we were still trying to sell it. We had no leverage to compete against somebody with the likes of Microsoft, with whatever resources we had as a small startup. We founded them off. We found a way to create a reseller channel, but I still realized how exposed I was. When I started Accipiter part of the attraction was the Microsoft weakness in my opinion, was that they couldn’t sell any product, they were not going to sell a million copies of. They were so essentially mammoth and the way that they were set up.

So an enterprise program like Accipiter was not going to be something that the big software companies were going to compete in because it was a large enterprise software program that you’d sell for a hundred thousand dollars to a thousand customers or a couple of thousand customers, not something that you’d sell for 50 bucks to millions of customers. And it turned out to be right. But that meant that I was only going to be competing with other startups of my size. I wasn’t competing with big mammoth companies who were going to use their leverage. And so I think that you wind up having to look at what is the thing that you have access to that gives you the high ground that allows you to fight downhill. That allows you to fend off companies that you have to assume are going to be better resourced, wanting to take your good idea. And that’s the harder problem. It’s actually easier to figure out. What’s the thing that you could do that people would pay you money for. It’s how do you get to be the one who makes that money?

Aaron Dinin:

It’s easy to figure out. What’s the thing that you do that people would pay you money for, bigger issue is how do you get to be the one who makes that money. That according to Chris Evans is what most entrepreneurs overlook. Are you? I’d like to thank Chris Evans for taking the time to talk with us. If you want to see more of what he’s up to, you can find him on Twitter. His handle is @TheChrisEvans, though again, I feel compelled to remind everyone, unfortunately, he’s not that Chris Evans, but if he were, I suppose this episode would probably get a lot more listeners say, you know what? Let’s pretend he is that Chris Evans, Captain America secretly moonlights as a tech entrepreneur. You heard it here first on the Web Masters podcast, but in case that doesn’t actually work to get us more listeners, do me a favor and share this episode with your friends, subscribe and give us a great review on your podcasting app of choice.

If you’ve got any thoughts, feedback, or comments about the episode, send us a message. We’re on Twitter @WebMastersPod, and I’m on Twitter @AaronDinin. That’s A-A-R-O-N D-I-N-I-N. I also write lots of articles about startups and entrepreneurship that you can read on medium.com. Just search for my name over there. Before we wrap up and the spirit of this episode, I’m going to take one more quick ad break to plug our sponsor Latona’s. If you’re interested in buying or selling an internet business, be sure to check out Latonas.com. And then as always, I’m going to thank all of you for listening, and I’m going to remind you that we’ll be back again soon with another episode in just a few days, but for now, well, it’s time for me to sign off.

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