Web Masters Episode #37: John Danner

Unless you’re an Internet history buff, you’ve probably never heard of NetGravity. However, NetGravity is, in some ways, one of the most important startups in Internet history. It was the first Internet advertising company. Hear the full story of how NetGravity got started on the latest Web Masters Podcast:


NetGravity - Home | Facebook

John Danner:

I guess my thought was we were going to enter a time where content wanted to be free, because it was so ubiquitous, and easily accessible. If content was free, how was that going to support people making content? I played with a lot of things, subscriptions and stuff like that, but ultimately decided that I thought that advertising might be the thing. I went through 10 or 12 business plans to get to that point. One of my first meetings was with Yahoo, and Yahoo was six people in the back of a commercial park in Mountain View with the founders and a couple other guys.

It was one of those meetings that you dream of as a founder, where I walked in, and I said, “I think the Internet’s going to be based on advertising,” and so I built this ad server that puts ads on pages. Tim Brady, who’s still a friend today, was one of the Yahoo guys, and he said, “Well, we had a board meeting last night, and we decided that Yahoo is going to be advertising base. We’re going to go public in three months. Can you put your ad server in today?” I said, “Well, you can’t do it today, but let me go talk to my co-founders, and we’ll shoot for tomorrow.”

Aaron Dinin:

Wait a second, not only did you promise Yahoo an ad server platform you hadn’t built yet, you told them you could have it ready the next day. That worked out.

John Danner:

I went back to my co-founders. We literally had no code. It was just a demo. My co-founders, Tom Shields and Paul Nakada, more or less wrote the first ad server in a night, and we installed it the next day at Yahoo. It was pretty terrible, but it worked well enough. We were just doing basically actual HTML text insertion of ads on their pages, and they had a lot of traffic, so that worked fine.

Aaron Dinin:

I’m honestly a little surprised Yahoo would use a third party ad vendor. I would have thought they’d roll their own.

John Danner:

We only lasted with Yahoo, probably, nine months or a year. All the search engines ended up building their own ad servers, because it was so specific to their services, but it was enough that I could walk into basically anybody else’s office and say, “We do the ads for Yahoo,” and absolutely, everyone was just like, “Great. Do one for me.” I think our second customer was Netscape. Our third was Time Warner, just all the big websites ended up on our servers. That was how we got going.

Aaron Dinin:

Having Yahoo, Netscape and Time Warner as your first three customers, that’s not too bad a way to launch a tech startup in the mid ’90s. That startup was called NetGravity, and it was the web’s first ad server company. The man you just heard talking about it was John Danner, NetGravity’s founding CEO. Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Welcome to Web Masters, the podcast that teaches about entrepreneurship by talking with some of the Internet’s earliest and most impactful innovators. I’m your host, Aaron Dinin. I teach innovation and entrepreneurship at Duke University. Before that, I built a lot of companies and before that, I worked in internet advertising. We’re going back to my professional roots on this episode by talking with the man who ran the company that provided the first online ad servers. That would be John Danner, founding CEO of NetGravity. But before we talk to him, give me a minute to put advertising to work here in this podcast by thanking our sponsor.

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If you’ve browsed our full catalog of episodes here on Web Masters, you’ll notice we’ve covered a decent amount of internet advertising pioneers, companies like DoubleClick and Commission Junction and Blog Ads to name a few. Hopefully, that’s not too surprising. After all, advertising is a critical part of the commercial internet. Without it, lots of the founders we meet on this show wouldn’t have had successful businesses. As we’re going to hear on this episode, part of the reason advertising plays such an important role in the history of the internet is because advertising was an inevitability, at least that’s what this episode’s guest John Danner thought.

It’s a conclusion he came to. Thanks to an early start tinkering with computers as a child and eventually into college.

John Danner:

When I was 12 years old, my father brought home a computer. It was a Commodore PET, which was a pretty terrible little computer, but it totally hooked me. It was so interesting. For whatever reason, he took that computer back, but then a couple months later bought an Apple II, one of the first Apple II pluses. I was hooked from that point forward, so I taught myself programs, spent most of my time trying to crack copy protection in games, built a large group of friends that were cracking software code and software production and things like that.

Eventually, that led me to becoming a CS major. I went to Stanford, and just always very interested in the future of technology and what would happen with it.

Aaron Dinin:

Fresh out of college in Silicon Valley with a degree in computer science, and a passion for digital technologies, John did pretty much what you’d expect. He started working for the up and coming tech firms of the day. But while most of the people in those companies had their attention on things like software and hardware, John was interested in an emerging technology called, well, the internet.

John Danner:

I left Stanford. I started working for companies that you’ve heard of like Oracle and Silicon Graphics. This is back in the early ’90s era when the most basic pre-internet infrastructure was being laid, Oracle with database, SGI with workstations, but I was very interested in the internet. I had been on DARPANet and things like that. Early on at Stanford, we had early DARPA stuff, and so pretty involved. As it started to get created, I had been interested… At Oracle, I created one of the first HTML browsers called Oracle Book back when HTML came out that Oracle used to do all their documentation.

Aaron Dinin:

Here, we’ve got John working out of Oracle in the early ’90s, building his own web browser, which is pretty intense work. Then he moves over to work for a company called Silicon Graphics, SGI for short, an important software and hardware producer of the ’80s and ’90s founded by legendary tech entrepreneur, Jim Clark.

John Danner:

At SGI, what was interesting is that Jim Clark had been pushed out a bit. I think he was chairman at the time, but he’s very interested in how Silicon Graphics could be relevant beyond workstations. His two main things were, “How do you get the graphics chipsets to be as compact and affordable as possible?” The project I joined at Silicon Graphics was the Nintendo 64 project. Silicon Graphics built the Nintendo 64. The other side of the project was the Time Warner Full Service Network, which was fiber to the curb project, where everybody would get video on demand and things like that.

He had built these teams to do that, and then midway through that project, I think in 1994, he more or less got kicked out or quit from SGI. I don’t know. He probably has the real story, but he’s an entrepreneur. By late ’94, he had found Marc Andreessen, who wrote the first commercial web browser, and they had formed Netscape, and they had released their first version. I think it was September, October of 94. I would say everybody on our project who knew Jim Clark, and were pretty up to speed on what was going on with the internet, when I first saw that browser, I knew that there was going to be a very major change in the world, because it was good, and it was usable, and it just connected everyone.

I, along with almost everybody else in that group, ended up starting companies. I think there were about two dozen companies started, companies like VMware and TiVo and all kinds of things out of our group.

Aaron Dinin:

One of those things, of course, was, well, John’s NetGravity. By this point, John saw the writing on the wall. The web was going to be huge, and John knew that where there’s content, there’s got to be advertising supporting at least some of it, or as you heard John say at the beginning of this episode…

John Danner:

In starting NetGravity, I guess my thought was we were going to enter a time where content wanted to be free, because it was so ubiquitous and easily accessible. If content was free, how is that going to support people making content?

Aaron Dinin:

From an entrepreneurial perspective, what we got here is John seeing where the world was heading. I like to call this seeing the future and deciding to get there first. In fact, that’s exactly what he did. Before any other companies that launched successful ad solutions for the web, heck, before he’d even build his own functioning ad solution, he sold his platform to Yahoo, and that led to a cascade of high profile customers for his fledgling startup. For John, as a first time founder, well, he was just trying to hold on for what would be a rapid ascent to the top.

John Danner:

I was a first time founder. It obviously was going extraordinarily quickly, our growth. We went from nowhere to 100 customers in the first year, big customers, so something was happening that was good, but I had no idea if that was normal or abnormal.

Aaron Dinin:

How are you getting those customers?

John Danner:

Probably the first 10 were me, and then we got a VP of sales, and was probably he and one or two other people, and literally just anytime a website would get enough traffic, they’d call him and say, “So what are you going to do about advertising?”

Aaron Dinin:

Was it really that easy? People just said, “Sure, we’ll use you.” Was there anything unique about what NetGravity was offering?

John Danner:

Well, we were first, so there was nothing unique. We just said, “Look, you’re going to do advertising. You don’t want to write this stuff yourself. You want something that puts ads on the page, reports back to advertisers, and we can do that.” The first 100 customers when we had no competition, that’s why they bought it. Then after that, it was because the first 100 bought it, so first market.

Aaron Dinin:

Doesn’t being first market usually have its own set of problems, like having to educate your customers about why they need your product in the first place? How much did you have to worry about that kind of stuff?

John Danner:

I mean, I’d have to say there are times as a founder, where your timing is perfect. This was a perfect timing incident, where really within six months of us founding and deciding advertising was the thing, and selling to those first few customers, everybody else who’s building a website had either decided that advertising was their main thing, or at least they needed to do some of it. For example, eBay was a very early customer. They knew that their main business was commerce, but they also knew they could make a ton of money basically advertising and promoting on the site, so they did too.

It was more or less like, “You’re not smart if you don’t do it.”

Aaron Dinin:

It sounds like you’re saying timing was really the key to NetGravity success, which seems a bit modest. What about you? How were you directing the company as its first CEO?

John Danner:

Well, I certainly was horrible. I really almost never managed before maybe five people, and we were at 25 people in three or four months. I was completely out of my depth almost immediately. I had no idea what leadership was. I thought maybe my job was to just tell people what to do, so really horrible, but it didn’t matter. I’m shocked in retrospect, we grew very quickly to 40 million or so in revenue over three and a half years back when 40 million in revenue was a reasonable number, and a couple hundred employees. I didn’t know what I was doing, but nobody left.

It was surreal in hindsight that when you get extraordinary product market fit like that, you can almost do anything wrong. I think Mark Zuckerberg says that sometimes if the market is just pulling your stuff hard enough, you can do everything wrong, and it doesn’t matter. They forgive you. That’s certainly what happened with us.

Aaron Dinin:

Well, I appreciate your honesty. It sounds like you’re saying your best quality as CEO was having a sense of really good timing. Is that what I’m hearing?

John Danner:

Yeah. I mean, I would say my job now is to help founders find product market fit. We work pretty hard at that. Looking back on that gravity in that era, I don’t think the timing could have been more perfect. I think there are plenty of founders who walk into the right place at the right time, but there are also pretty good number of founders that work really hard to find product market fit, and my hats are always off to them because it’s hard work if you don’t happen to have perfect timing.

Aaron Dinin:

This seems like a good moment to pause and underscore the important point John is making about timing in relation to product market fit. Great timing is a force multiplier in entrepreneurship, so even though john is being humble about his skills as an executive, having a keen eye for timing is itself an immensely important skill. Simply put, when you have great timing, it can cover up a lot of mistakes. For his part, John seem to have a keen ability to be able to recognize what mattered before everyone else, and it actually wound up saving the company as the fledgling ad industry evolved.

You see, NetGravity was originally operating using an old client server software model, and it was a model that was about to get swallowed up by SaaS, but not everyone saw it coming.

John Danner:

We were literally the end of client server software, so we would download our software to their servers on their website, and they’d run it themselves. All of the problems around installation and getting it working like that era had, we had that problem. We also had a business model where we’d sell something once, and then we’d sell annual maintenance contracts that was totally bogus stuff. When the software as a service folks came along, and they said, “Well, we’ll just charge you three cents per 1,000 users,” or whatever they were doing. I can’t remember what the model was, but it was a recurring model that grew bigger and bigger as the traffic of their customers grow. It’s like, that’s a business.

Unfortunately, at least initially, I was the only one that felt that way. My board did not feel that way. They were all software people, so they kept saying, “No. No. No, John. The software is great. This other business, that’s crazy. You gotta have your own servers, and that’s going to cost a lot of money, and it’s terrible. Don’t do it. Don’t do it.” I literally spent two years from the time I saw DoubleClick, and there was another company focal length that was doing the software as a service.

Aaron Dinin:

Quick note here that we actually got to hear from DoubleClick CEO and founder Kevin O’Connor in Web Masters episode number 28. Spoiler alert, we’re about to hear a good bit more about DoubleClick and its relation to NetGravity, so maybe make sure you have that other episode queued up if you haven’t listened to it already.

John Danner:

I spent two years basically trying to convince my board that software as a service was going to be a thing and a way better thing. They just wouldn’t let me do it. Literally tried to buy a company, all kinds of things, they wouldn’t let me do it.

Aaron Dinin:

What did you do? Did you ever convince them?

John Danner:

About mid 1997, I just took a team from the company, six, eight people, and said, “All right, we’re just going to build a SaaS version of our stuff, and we’re not going to tell the board, so don’t tell anyone.” For about six months, they worked on it. We went out. We got a bunch of customers, primarily, ad agencies and client side as opposed to publisher side just so we didn’t have any conflict. They started to use it, and the NPS, the net promoter score, for the people on SaaS was like, “So much higher.”

I mean, it was just like, “Yeah, I can use it. It’s easy. No problem. Let’s…” It was growing so much faster, because it was based on the volume of business they were doing as opposed to a one sale after another, and so when it got to be like, I don’t know, a million in revenue or something like that, we were only a six-million in revenue company at that point. I went to the board, and I said, “By the way, we just built this,” and now it’s at a million in revenue, and it’s profitable, and it’s growing 10 times faster than our other business. The board said, “That’s great.”

Literally, that was their response. Thank you. I guess that was a good lesson for a first time founder. Don’t ask permission from your board. Just do what the right thing is.

Aaron Dinin:

Is that a good lesson? Aren’t you a VC now? That’s not something I ever thought I’d hear a VC say.

John Danner:

Anyway, we built that, and almost immediately, we realized that that was going to be a better business for us, and that we were going to have all kinds of channel conflicts and things like that. We spent the next year trying to figure out like, “Who do we sell the software to? Who do we sell SaaS to?” We tried to keep it divided, but it was difficult to divide those two things. DoubleClick, I’d give a huge amount of credit to because not only were they SaaS, but they did what a lot of more modern companies have done, which is to vertically integrate.

Instead of being a software company, they said, “Well, no, we’ll actually sell your advertising for you.” You can imagine if somebody shows up and says, “Okay, why don’t you use our stuff? By the way, you can just use the ad server stuff for free. That’s fine, but we want to sell your advertising as well.” You’re showing up at a customer, and saying, “We’re going to give you money basically. We’d like to give you money,” versus us who we’re like, “We want to charge you money, so you can do your own advertising.”

The way the market fell out was the top guys, probably the top couple hundred websites were like, “No, we don’t want you to sell our ad inventory. We want to sell that ourselves,” and so they would go with NetGravity, and everybody else would end up going with DoubleClick eventually, because even if they bought software and wanted to do it themselves, initially, over time, they’re like, “okay, we suck at this. Somebody should do this for us, et cetera.” That’s how the market settled out over time is either you were going to do it yourself, and you’d use us, or you were going to rely on somebody else to sell it, and DoubleClick ended up eating a lot of that market up.

Aaron Dinin:

It sounds like the choice between NetGravity and DoubleClick was basically a choice between selling your own ads or having someone else create the inventory for you. Do you think one was better than the other? If so, which was better?

John Danner:

I think in that era where it was super high product market fit for both companies, and a lot of demand on the customer side to just make their businesses work, I would say that probably the DoubleClick approach was just a better approach, but they had a problem. That sales business was not a great business. It was a pretty low margin, awful business, and so it became obvious probably by ’97 that there were two very distinct businesses here, one of which might be a very high gross business, and the other would be very profitable.

We happen to be on the profitable but small side. They were on the big but not profitable, and no chance of being profitable side. That’s how it was up to the time when they went public, and we went public. I think they went public first. I can’t remember, but that’s how the world evolved.

Aaron Dinin:

DoubleClick went public in, I believe, February of ’98, and you went public when?

John Danner:

I think it was somewhere like June ’98 maybe.

Aaron Dinin:

That’s roughly the same time. Can you talk a bit about why you decided to go public, and what it was like?

John Danner:

For sure. The good thing for us… I mean, there was a negative and a positive to my board. My board had a whole bunch of software people on it, so they were actually pretty conservative about business models. They like things that made money. They weren’t as aggressive about growth as really I probably wish now that they would have been. When we went public, I think we were teeny. It was back in the year where you could go public when you were small. I think we went public at six million or 12 million in revenue, something like that.

I think we weren’t quite profitable yet, but it was super obvious that we would get profitable. It was just a good business. I remember talking to my CFO, Steve Recht. I think DoubleClick was getting ready to go public, and our board had just messed with us on something around the SaaS stuff. We were hitting golf balls at a driving range. He or I said, “You know, we should just go public, because all of this stuff is going to sort itself out over time.” It’s a huge market, and we have a business that’s going to be profitable and going to work, so let’s just do it.”

That’s what we did, and it worked.

Aaron Dinin:

That’s certainly an interesting take. I’ve not heard many founders embrace becoming a public company like that.

John Danner:

I will say the founders… Founders today are very nervous about being public companies, and Sarbanes-Oxley has made it a lot harder to be a public company.

Aaron Dinin:

FYI, the Sarbanes-Oxley Act was a law passed by the U.S. Congress in 2002 in response to the enormous financial reporting fraud scandals of companies like Enron, Tyco and WorldCom. Basically, in order to better protect public investors, Sarbanes-Oxley made the reporting regulations for public companies much more strict, and it dramatically increased penalties on law breakers.

John Danner:

Being a public company really helps you grow up quickly as a founder. It’s not like, “Oh, I screwed up. Sorry, board,” and the board says, “Oh, well, don’t do that again, John.” It’s like, you screw up and then the market drops your stock by 50%. Very quickly, you’re like, “Oh, crap. I’m running a business. I need to figure out what to do,” so really was helpful to us, I think, certainly to me in maturing and also to the company in maturing.

Aaron Dinin:

What’s interesting to me, for as much as you describe yourself as a bad CEO, it was unusual back then for a first time founder to take a company public, right?

John Danner:

That was definitely the era when you are getting ready to go public, you need to go hire a CEO. We just couldn’t find anyone we liked, frankly. I don’t know why we’re dysfunctional. I’m not sure what the problem was, but we didn’t find anybody we really liked, and so I took the company public, but I always wanted a CEO. That was also an era where as a founder, it’s like, “Okay, well, that’s what you do. You start a company. You build it, and then you find somebody that’s going to run it.”

That was fine. We actually finally a year after our IPO did a CEO, Eric’s Spivey. He’s still a good friend of mine. He took over, and that was awesome for me and for the company, because for the first time, we had somebody that actually understood what managing people was about.

Aaron Dinin:

You do eventually stepped aside as CEO. Ultimately, of course, you end up selling NetGravity to your biggest competitor, DoubleClick. Can you talk about how you eventually ended up stepping away from the company?

John Danner:

What really happened is that SaaS business just kicked into overdrive right around the time that we went public. This is probably why I don’t have a bitter taste about being a public company CEO is that we were at, whatever, 6 million in revenue, and it was clanking along a little bit, went to 12 million, and then the SaaS thing just kicked in. By the time DoubleClick bought us, we were at 40 million ARR 12 months later. I mean, it just went crazy. At that point, it became a lot more clear, I think, what was going to happen.

It’s like, “Okay, well, everything’s going to be SaaS based, because nobody wants to put software on their servers anymore, but there’s going to be a large tech platform business, and there’s going to be a large advertising network, advertising sales opportunity.” I can’t speak for Kevin in the way he was thinking, but I think the appeal was we basically had all the big customers. I mean, every once in a while, they’d get a big customer, but it was very unusual, because the big customers were like, “Heck, no, we’re not going to work with those guys. We want to do this ourselves and own it, own all the data, blah, blah, blah. We had a very clean story around that.”

But frankly, I wanted all of them to get to SaaS because SaaS was a way better business, and DoubleClick was SaaS base. I felt like if you put the two things together, over time, for sure, a lot of our customers would just sit on software. I don’t know if any of them still do today. You’d have to ask the Google guys. There may still be some people running software on site. I saw on CNN, a year ago, that they had the right tags that would have been on site tags, so they could still be on site. But more or less, it was inevitable it would be SaaS based, and that if you combine these two things, while somebody like CNN probably wouldn’t just say, “Okay, DoubleClick, sell all our inventory,” they might let DoubleClick pick off pieces of their inventory, and that would be potentially a very, very large business.

The other thing that was becoming clear, this was ’99 at this point, was that the type of targeting that we could do was going to get vastly better. DoubleClick had bought this company. Abacus, that had a whole bunch of user data. We were collecting a huge amount of user data. It became clear you could segment users that way, and then ultimately, you could sell them off to the highest bidder. I’d give DoubleClick, by the way, huge credit long after Kevin was gone, but they built the first real time bidding system for advertising.

That was all like you could tell it was going to happen, and so you combine these two entities. You, more or less, control almost all the inventory on the internet for advertising. The idea would be basically this big conglomeration of inventory versus some of the big search engines, and that would account for almost all the advertising on the internet.

Aaron Dinin:

It makes sense that the two companies combined would be stronger than one company by itself, but why did DoubleClick end up buying NetGravity rather than NetGravity buying DoubleClick? I mean, you were a much more profitable company, right?

John Danner:

I think that was an era, and we’re going through an era like this now, where your top line revenue mattered massively more than your profitability. Even though NetGravity was already profitable and growing 300% a year… I can’t remember DoubleClick’s growth rate at the time, but it was even higher. It wasn’t at all profitable, and would be hard for them to be profitable, but I think the market was valuing top line revenue, and as long as that was true, DoubleClick was going to be huge.

Aaron Dinin:

Fair enough. That makes sense. Any regrets about that sale?

John Danner:

I mean, I would say this to first time founders, we sold the company for a billion dollars. I mean, it was a great outcome for everyone. For a first time founder, it’s a life-changing outcome. The only thing that I’m sad about is if that had not been my first company, I think we could have won the space just because we had such a beautiful business model. That versus selling a company for a billion dollars, that was 25 times forward revenue, something. It was crazy. I’m not regretful, although I would love to know what would have happened in that alternative universe.

I often think… I’ve had several of my guys start companies, gone public, et cetera. I often think about, “If I had been a little bit more mature, would I have run it for longer?” We had 200 million in cash when we sold the company. I mean, we weren’t going anywhere anytime soon. What would have happened then? That’s probably my greatest regret. It’s not a real regret, because I’m happy we did it, but I would love to know what the alternative universe would look like.

Aaron Dinin:

Seems hard to be too upset about a billion dollar exit, even if it could have been bigger. Oddly enough, in my conversation with Kevin O’Connor, DoubleClick’s CEO, he had a similarly sized exit, and alluded to some of the same things about how it might have been bigger if he’d made some other decisions, which is maybe a good reminder of a trap entrepreneurs need to watch out for. Specifically, they need to remember that there’s really no way to win the game they’re playing.

No matter how successful you are, there’s always more success to be had, because entrepreneurs are inherently self-motivated to keep pushing for more. Even great outcomes can feel unfulfilling. I guess that’s why so many of the successful entrepreneurs I’ve spoken with here on Web Masters are deep into working on new projects. Sure, they’ve already had successful exits, and sure, many of them have generational wealth as a result, and don’t really need to keep working, but you know what, they’re not satisfied. Still, few of my Web Masters guests seem to have taken it’s hard to pivot from their original work as John, following his DoubleClick acquisition.

John Danner:

Both Kevins at DoubleClick were like, “We don’t want you to be there,” so that made that easy. I didn’t blame them. I mean, I’m not sure what I would have done in a combined company, and all of my friends who had sold their company said, “Absolutely, whatever you do, do not go to the acquiring company, because they are going to kill your baby, and they’re going to do terrible things to it, and you are going to be miserable.” It was actually very clean both ways. They didn’t want me. I didn’t want them, so I walked away. I also by that point, I didn’t like ecommerce and advertising at all, really.

That original mission of keep things free, I guess it was okay, but by the end, it was like, “No, this is bogus. We’re annoying people with advertising. I don’t want to do that for a living.” When I left, the only thing I was super clear on is I’m not going to do that again. I’m not going to do anymore of that, which, of course, is what every single venture capitalists in Silicon Valley came to me to have me do. They’re like, “Okay, John, what are you doing in your next company? Can I give you $10 million, blah, blah, blah?”

I’m happy that I didn’t take anybody up on that, and I made this huge right turn. I basically just decided that I’m not going to do that anymore, and I want to do something more meaningful, and I ended up getting involved in education. Helped a friend start a school. I didn’t know anything about schools, but I helped him build the building, and hire the principal and all that stuff, and ended up being a school teacher, and did that, and then started a network of schools called Rocketship, so picked out this completely new path, and now, combined them again. Now, I’m doing both tech and education.

Aaron Dinin:

That’s right, John went from a billion dollar exit to spending three years as a public school teacher in Nashville, Tennessee, an unusual career change to say the least. After getting experience in the school systems, he moved into the edtech space as a founder, and now he’s a prominent edtech investor through his VC firm.

John Danner:

I mean, you have to be exposed to the fact that you can do something extraordinarily lucrative that has almost… well, not almost, that has a negative effect on society. I think by year three or year four, somewhere in there, I was like, “This is growing amazingly well.” I got above the survival. It’s like, “Okay, this is going to be a big company,” and just realized, “Yeah, but that sucks, because nobody wants this stuff.” I still feel that it’s better for things to be free than paid.

I don’t like the new newspaper models that try to charge me every time I look at an article and stuff like that, but I guess just for me, personally, I wanted to find something that was more meaningful after that, and so really went the opposite direction, not scalable at all and very meaningful.

Aaron Dinin:

Just to maybe put a bow on that thought, what is it about edtech that excites you?

John Danner:

Well, the reason I got interested in education was random. It was really a friend starting a school, but I realized pretty quickly that it was a great leveler. It just created equity and fairness and society when everybody could get good schools. His goal was for very low income kids in San Jose. I was like, “If everybody could go to a great school like this, the world would be a much better place.” Then the engineer in me kicked in, and I thought, “Well, how would you do that at scale?”

Rocketship, my second company, was that idea, which was literally, could you spin up schools quickly, and grow at large? The answer was no. It wasn’t because you couldn’t do it financially or operationally or with people. It was that politically, nobody wanted us to do that. Basically, the school district said, “No, we’d rather you didn’t exist.” It’s great that you’re doing a good job for the kids, but please go away, and over and over with a lot of political force. I think what I learned was if you’re going to be in the existing system, it’s hard to be a change agent, hard to do something completely new and innovative.

What I like about edtech, which I think has similar properties to FinTech or whatever, is you have these extremely old industries that haven’t changed for hundreds of years, desks and rows in K-12 classrooms. You say, “We’re not going to do that at all.” A couple of my investments are companies Outschool and Lambda School. Outschool is all live learning in small groups from teachers in a marketplace, so a teacher posts a class, kids sign up, and they teach it on Zoom. It’s on really cool stuff like, complete works of Harry Potter or whatever.

It’s not these mind numbing like, “Okay, let’s learn our vowel sounds today crap.” The aspect of tech I like is the same thing that got me excited about the internet, which is when the world moves, when education moves online, you can rewrite the rules, and the new rules can be what’s actually good for kids as opposed to what’s good for the adults in the last system. I think that’s just huge.

Aaron Dinin:

Well, from the very beginning, it was clear John is good at seeing where the future is headed, and getting there before everyone else. I suspect that’s what he’s doing in the edtech space, too. As an educator, especially an educator who’s part of one of the legacy systems, I actually have to agree with John, education is going to evolve a lot in the 21st century. You know what, I hope this podcast is an example of how people like me can bring our classrooms to more people like all of you. I mean, it’s not exactly a class covering the complete works of Harry Potter, like John was excited about, but hopefully it wasn’t too dull.

If you learned something useful during this episode, and might want to learn something useful again in the future, be sure to subscribe to Web Masters on your podcasting app of choice, and maybe even share it with a few friends, so they can also be learning cool things about entrepreneurship and the history of digital innovation. I’d like to thank this episode’s guest, John Danner, for spending the time today to share his story. To see the latest projects he’s working on and investing in, you can follow him on Twitter. He’s @JWDanner.

This podcast is also on Twitter at @WebMastersPod. Write to us and let us know what you thought about the episode, or you can write to me directly. I’m @AaronDinin. That’s A-A-R-O-N-D-I-N-I-N. You can also find me on medium.com by searching my name. When you do that, you’ll see I write lots of articles about entrepreneurship and startups. A huge thanks to our audio engineer, Ryan Higgs, for producing this episode, and thanks to our sponsor, Latona’s, for their amazing support. If you’re in the market to either buy or sell an internet business, don’t forget to check out latonas.com.

If you’re in the market for more podcasts about incredible entrepreneurs and the things they built, and you’re in luck, because we’ve got another episode coming soon in just a few days. Until then, well, it’s time for me to sign off.

[OUTRO]

Aaron Dinin:

Would you mind explaining how you decided on the name NetGravity? It seems like an odd name for an advertising startup.

John Danner:

All right, this is a little off color. Since he’s retired, I think I’ll use his name. Our attorneys at that time are Wilson Sonsini. Larry Sonsini was, whatever, the head of the firm, and helpful to us, and so I went to see him when we were thinking about naming the company. I don’t know why I went to see our lawyers, but I said, “I think I want to name this company net something.” He said something like this… It was right at the time Netscape was about to go public. He’s like, “John, you should name it Net Something. It doesn’t matter. Netdogs— that’s fine.”

We ended with NetGravity, and I guess it was not so awful that nobody would buy our products, but it was pretty bad. It was a bad name. DoubleClick is a way better name.