Web Masters Episode #84: Jesse Lipson


Citrix ShareFile : File versioning | Blog KissLabs

Jesse Lipson:

We were very measured because I was committed to just growing within our means, and so we actually had 1,000 customers before I hired our first full-time employee. Our first full-time employee was a customer support rep, and so that made for like a very busy first 18 months for me, which I don’t think I would go through that again. This was also pre-cloud, and so I pretty much had to carry my laptop around with me everywhere I went, including if I went to dinner with my wife or whatever because if the system went down, then it was going to be down until I brought it back up, and so I had to always be close to an internet connection, always be close to a computer if I got that call from our automated monitoring to deal with it. We hired slow at the beginning, but I think the discipline that we had back then, I still have a lot of respect for that. Now being a venture-funded company, we would not spend money on things that we could not demonstrate a direct ROI, and we left some opportunities on the table like we never really did PR, we never did certain other things that are probably good to do.

Being a bootstrapped company, being so data-focused, when it came to hiring and everything, we wait until we absolutely need the hire in order to make the hire. We do not spend money on anything where we can’t measure near ROI. We just had a very clear philosophy in the business, and when we were acquired, we were growing like 70% and we had almost a 20% profit margin. We were running a very, very tight ship, and that was great.

Aaron Dinin:

Just out of curiosity, who was the we of those early days?

Jesse Lipson:

It was just me. The early days was more like the royal we. It was just me until we hired Leah, our first support rep, and then Nate and Peter, and grew from there.

Aaron Dinin:

Imagine that 1,000 paying customers before hiring a first employee, which by the way, is going to seem even more impressive when I tell you the entrepreneur you just heard from was running a business-to-business startup, not a consumer-facing startup, meaning those 1,000 customers were all businesses who required the additional time and effort of business sales cycles and customer support. That leads to one of the themes we’re going to explore in this episode, which is bootstrapping, when, how and why to do it in a conversation with Jesse Lipson, founder of ShareFile, the company he bootstrapped to a multimillion dollar acquisition by Citrix. I bet lugging around his laptop for all those years suddenly felt worthwhile once that happened. Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Welcome to Web Masters. This is the podcast that tries to teach about entrepreneurship and internet history by talking with some of the Internet’s most impactful and successful innovators. I’m Aaron Dinin. I’m your host. I teach entrepreneurship at Duke University.

Before that, I was building venture-backed B2B SaaS companies. In fact, I can’t imagine trying to build a B2B SaaS company without venture-backing, at least not the kinds that get big acquisitions, but that’s exactly what our guest on this episode of Web Masters did, and well, I’m curious to hear how the heck he managed to pull it off. We’re going to find out right after I take a minute to tell you about our sponsor. Web Masters is being brought to you with help and support from our partner and sponsor, Latona’s. Latona’s is a boutique mergers and acquisitions broker that helps people buy and sell cash flow-positive internet businesses and digital assets.

That includes profitable SaaS apps like the one we’re going to hear about in this episode, and it also includes eCommerce stores, Amazon FBAs, content websites, domain portfolios, or any other type of online work from anywhere internet business. Basically, if it’s an online-based business and it’s making more money than it’s costing, Latona’s can help you sell it. Latona’s can also help you buy a profitable internet business. If that’s something that you’re more interested in, to find out how, you can start by visiting the Latona’s website, where you’ll see listings for all the profitable internet businesses they’re currently helping to sell. Also, you can subscribe to the Latona’s newsletter and get notifications of new businesses being sold delivered straight to your inbox.

Do all of those things right now by heading on over to the Latona’s website. It’s latonas.com. That’s L-A-T-O-N-A-S.com. As I mentioned earlier, I’m someone who spent most of his entrepreneurial career chasing venture capital. As a result, I’m wildly jealous of bootstrapped businesses that managed to pull off successful venture style exits.

I mean, wow, it’s pretty impressive, and not just for the money, I mean, sure, not having to split any payouts with investors seems nice, but more so, I’m impressed by founders who figure out how to scale a business based purely on revenues. That’s not easy especially in the software industry where product features are, for the most part, easily replicated, and that was, of course, a big part of the challenge for this episode guest, Jesse Lipson, and his company, ShareFile, which found itself in a crowded market, but in case you’re not too familiar with ShareFile, let’s start by letting Jesse explain what it is.

Jesse Lipson:

ShareFile is a software tool for helping businesses exchange either large or confidential files securely with clients and partners, and so it’s really focused on externally collaborating on files that are either confidential or big, which seems pretty obvious right now, but at the time, this was like 2005, the way to do that was either use an FTP server, which is pretty technical for a lot of folks, and also, it doesn’t have the nice tools like if you forget your password, being able to reset it and it’s just, it’s a really kind of clunky system, or for non-technical people like if you are an accountant and you’re asking somebody to give a bunch of tax files, they would just end up saying, “All right, burn it to a CD and mail it or courier it over,” because your clients are definitely not going to figure out FTP and it’s not secure to email. Also, even today actually, email attachment limits are not that high. Back then, they were even smaller, and so if you actually had like a 50 megabyte file to send somebody, you have to like break it up into multiple pieces or just … It was a huge pain. That was the problem that we were trying to solve and we were trying to do it in a way that for our clients would feel like they paid a website company.

It was all their branding, not our branding, not Dropbox’s branding, not Box’s branding, not YouSendIt’s branding, so it feels like, “Wow, this is a professional company. They’ve got a login area with their logo where I can upload those files securely and they can put files for me to download.”

Aaron Dinin:

Yeah, as the ShareFile name implies, it’s a software for sharing, storing, and otherwise managing files in the cloud. It’s not a particularly unique service. You heard Jesse even mentioned some familiar competitors, companies like Dropbox and Box and YouSendIt. Though, to be fair, in 2005, when the company launched these types of services weren’t so common. Still, cloud file management isn’t exactly an obscure niche. Meaning, there are a decent number of companies playing in the space, which makes for a challenging, competitive environment.

However, despite that challenging environment, Jesse managed to bootstrap his company to a nice exit over the course of six-ish years. We’re going to hear how we did it, and I’m going to begin right now by telling you that the part of his story I was most surprised about was the fact that unlike most of the people we hear from here on Web Masters, Jesse wasn’t/isn’t much of a tech person. Based on what he shared with me, it sounds like he’s much more of an entrepreneur who just happened to come of age in a world that increasingly was interested in digital technologies.

Jesse Lipson:

I graduated from college in 2000, and so I kind of graduated into the era of tech, internet, dot-com bubble, 1999 when I was in college, but I think if I had lived in a different era, I probably still would’ve been an entrepreneur and it would’ve just been in something other than technology versus being in technology, even though there may not have been an entrepreneur kind of opportunity, so the biggest things I’ve done have been in technology, but I definitely have done some things with co-working, and I come up with a lot of ideas and they’re not always technology ideas.

Aaron Dinin:

So when and how did you first discover computers and the internet?

Jesse Lipson:

I was definitely not a computer person. I was probably one of the earlier people to get a computer. I remember like in seventh, eighth grade, which would’ve been like 1990 kind of area, having a computer and using like AOL and things like that, but coming into college, I was actually pretty far behind. The high school I went to didn’t really have a computer program. It was a Jesuit school that was kind of traditional back then, and so you took like Latin, religion, science, history.

The only computer class I took was typing, and so actually, when I got to Duke as a freshman, I felt way behind. I didn’t even know how to minimize a window on Windows, and then throughout college, I never became a computer expert. I was a philosophy major, so it was really, as I exited college, that I started to dabble and get into building websites and realize I really liked it and got better and better, so I was really definitely a late bloomer when it came to programming and technology.

Aaron Dinin:

If you were late to computers and weren’t particularly into them, for lack of a better phrase, how did you decide digital technology represented an interesting entrepreneurial opportunity?

Jesse Lipson:

In college, kind of during the dot-com boom, it seemed like everybody was coming up with an idea back then. This was like fall of 1999. It was just insane. You had companies that were going from idea to IPO in like a year, the idea in the dot-com boom, and some companies were IPOing with like no revenue, a couple million dollars in revenue, which is just really unthinkable today, so it felt like in the college campus that fall, everybody was kind of catching the dot-com fever and everybody had an idea, so I had an idea. The kind of initial version of the idea was actually related to at college, this is not really the case as much anymore, but we used computer labs, and one user would jump around to multiple computers, and so dealing with being able to log into a computer and have your web browser remember you across computers with remembering passwords and kind of a customized portal, that was my idea.

I recruited a couple of friends, my roommates who were computer science majors, and we kind of just made a go of it, almost like a project. Tried to raise a little bit of money, which didn’t really fully work out. We actually raised $10,000 from a fellow student who was doing a bunch of other ideas as well, and came around to March of 2000, dot-com crash. Of course, we weren’t successful raising venture capital, but it gave me enough of a taste. The company was called EasyCentral. It gave me enough of a taste of technology and entrepreneurship to know that it was something that I was interested in doing.

Aaron Dinin:

Did you go straight from that project to ShareFile or, I guess I should ask, how did you get from that first attempt and failed tech startup to ShareFile, which now that I’m asking the question, I realize is probably a big story, but yeah, let’s hear it?

Jesse Lipson:

I was interested in tech entrepreneurship. I actually, at the time, I was running EasyCentral, I was doing the standard interview process with some consulting firms because that seemed like that’s what you’re supposed to do. While I was trying to see if I could get funding for EasyCentral, I didn’t end up getting any consulting jobs, which is probably for the best, but I did look at a couple of internet companies as well, so I just started calling, cold calling some different startups, and one of them … There were three employees, I think. One was full-time, one or two. The co-founders were full-time with the company and one was still with their main company, so super early stage, and they gave me a entry-level job just doing kind of whatever needed to be done.

One of the first projects they gave me was learning how to update their website, and so I got Dreamweaver and Flash and learned how to do it. I was like, “This is really not that hard. I could totally do this,” and we paid a vendor five or $6,000 to build the site, and I was like, “Wow, I could do that. For five or $6,000, I could probably live for six months on five or $6,000 at my current burn rate,” and so I started to just dabble more in learning on my own how to do websites, and it was kind of fun. We had a client at my company. My company was doing email signature management essentially, so you kind of have a central place where you could manage email signatures and to replicate people’s signatures, I would be like replicating their business card and opening up a graphics program and trying to do it, and so one of the clients was an accounting firm and they were like, “Hey, we needed some updates on our website.”

“Do you freelance at all? If so, what’s your rate?” I had no idea that I could totally do what they needed me to do, but I just threw out a rate of, I think 50 bucks an hour or something and they took me up on it, and so I started to do freelance work and picked up a couple website projects, and then decided to go full=time a little bit less than a year after I started with this company, FullSeven, starting a website company called novelProjects, and I did that with Brooks, my wife. She was still in college at the time, so we just started building small business websites. That was my first real business, and that was great because it gave me an opportunity to become an entrepreneur, learn the basics of doing payroll, eventually hiring a couple employees, and then getting better and better at programming because I was getting literally paid to do that for my job, and so I essentially became a professional-level programmer by doing that 50 or 60 hours a week for the next six or 12 months. It’s probably the equivalent of a four-year computer science degree when you’re doing it that intensely.

A lot of service businesses like website companies are not great businesses, usually as a standalone, but they’re really good businesses to figure out a good product idea, so that’s really where ShareFile came from, is I saw pain points around FTP and dealing with that with clients. I saw multiple clients asking us to build them a custom portal where their own clients could log in, and so I figured, “Hey, we can turn this into a product,” and decided to spin out of the website company and create ShareFile.

Aaron Dinin:

Anytime a founder’s story includes something like this, I pretty much have to stop and highlight it. Notice how Jesse didn’t say he was sitting around, staring off into space, just trying to imagine some sort of good business idea. That’s not how great ideas are developed. Instead, Jesse was actively working with customers. That work allowed him to see a common pain point in the market, so he built a business around solving that pain point.

This is because successful entrepreneurship is about solving real problems, not the kinds of problems you just make up in your head. In order to figure out what those problems are, you need some way of being in contact with people who have the problem so you can solve it. Maybe that’s by working for another company, maybe it’s by having clients like Jesse, maybe it’s by doing market research and interviewing people. Whatever the case, just make sure you’re not trying to think yourself to a good startup idea. It won’t work.

Find startup ideas by paying close attention to people in order to see what kinds of things they’re struggling with. That is, of course, exactly how Jesse got his idea for ShareFile.

Jesse Lipson:

The catalyst for the idea was what are my customers in the website business paying me thousands of dollars to build for them, and could I take that common request and productize it? That was really the lens I was coming from, is like, “Hey, I know people are willing to pay for us to create a custom portal for them to do this, and so given my small sample size that we’ve only worked with 20 clients and two or three have asked for this, I imagine if I built the product, maybe I could get several hundred people that want it,” and so I was going at it more from that versus having a vision of, “Wow, files need to be in the cloud,” or anything like that. It was more, “Clients keep asking me to do this. Maybe I should build a product to do that,” so it’s just easier and I can charge 50 bucks a month instead of charging them $3,000 to build a bespoke software every time.

Aaron Dinin:

Okay. You roll out this product based on what you’re seeing from your own consulting work, and then how do you get your initial customers for it?

Jesse Lipson:

Literally, the first couple customers came from the website business where we had two or three that said they wanted it. We were charging at that time like as little as $20 a month for the service, and so that doesn’t add up too fast, so my initial approach was to use Google AdWords. Being in the website business, I was pretty familiar with all kinds of online marketing technology, and that was kind of the early days of Google AdWords, 2005. One thing I like to say about that era was that I probably could have built any piece of software, project management, email marketing and been successful in that era just by knowing Google AdWords and being really good at it. Knowing how to do sophisticated bidding, as well as knowing how to build and optimize landing pages, which is what we were starting to specialize in in the website business and the direct response principles there, there was just an arbitrage in that era where if you knew Google AdWords, it was so cheap, there was a lot of volume, and if you were savvy with managing it, you could generate leads.

It’s not the same way anymore. I think in different eras, sometimes there’s little pockets where you have marketing opportunities and there was an opportunity at one point with mobile apps in the App Store where you could kind of put yourself out there for free or try to optimize your listings, of course, Facebook, Instagram, whatever. In that era, it was AdWords, and so I opened $100 AdWords account. I got 20 free trials with that 100 bucks. Four became customers, which generated 150 bucks.

30 days later, I put the 150 bucks in, grew like that, and then within a few years, I was putting $300,000 a month on my credit card in Google AdWords, and it was just a flywheel. Eventually, I, to get more volume, wasn’t able to get it back all in 30 days. It became 60 days or 90 days or whatever, but I had enough recurring revenue that I could do it, and also with my credit card, I had 30 days to pay it, and so eventually, I was putting 200,000 plus on my credit card and Amex finally contacted me and they’re like, “Would you mind giving us some financials?” I’d never had to apply for any … They just kept increasing my credit to the point where they started to probably get worried that if I eventually didn’t pay one month, they were on the hook for like two or $300,000, so I just funded it with credit card.

Aaron Dinin:

Wow. I bet you got some serious credit card reward points off of that.

Jesse Lipson:

I did. When I left Citrix, eventually, we switched off my credit card, but I think I had like five million points, something in that neighborhood, which I’m still riding on those even to this day in terms of free flights and stuff.

Aaron Dinin:

I heard something similar when I spoke with David Cummings, founder of Pardot who, I think was actually a contemporary of yours at college, if I’m not mistaken. You might have even known him. He said he was basically able to fuel Pardot’s growth on the back of Google AdWords too. It sounds like in a way, timing played an important role in both of these startups.

Jesse Lipson:

Exactly. Yeah, there’s a weird parallel between … I think he had a website company to start with as well. Then, he had Pardot. That was bootstrapped, and eventually, I think we’ve diverted now.

He’s a venture capitalist and I’m enough of a masochist to try to be a CEO and be an entrepreneur again, but yeah. I think there was something about that era, where people who got into Google AdWords had some really great opportunities to build a company much more easily than you can today.

Aaron Dinin:

How do you think about customer acquisition now? How has it evolved, and if you were giving advice to a young entrepreneur right now about acquiring customers, what would you say?

Jesse Lipson:

My personal opinion is that it is harder now than it was then to acquire customers mainly because SaaS, software as a service, is so much more mature that a lot of those arbitrage opportunities in sales and marketing have gone away. There was a time when you could blast people with HTML newsletters very cheaply and acquire customers that way. People have gotten savvy. It’s been very saturated. It’s very difficult now to just blast a bunch of people with email and get great results.

Google AdWords is more expensive. Facebook’s more expensive. For the right product, I think there’s a lot of people in the consumer side who can do really well with social, Instagram, Facebook, whatever, with the right type of business, but I’ve always been involved in B2B, so I think it is harder today. There’s really kind of two paths if you’re a B2B software player, kind of in the modern world. One is you kind of suck it up and do the hard work, which probably means raising funding and getting a sales team, and you’re not going to have that initial low-cost customer acquisition, but you’re going to build something sustainable, which is you’re going to events, you’re calling people, you’re doing all kinds of traditional sales prospecting techniques, which do work, but they’re not the kind of things where you could start with 100 bucks and scale up like I did.

The second approach, which I think is the best if you can make it work is more of a product-led growth if you’re able to avoid any traditional sales and figure out a way to either start with a network that you have or something like that and get warm introductions and get people kind of discovering your product. Much easier said than done, but I think that because the paid channels are so much more difficult and so much more expensive, if you’re able to make the product-led growth strategy work, it can make the business so much more efficient because if you even look at public SaaS companies, they’re spending 50, 60% of their revenue on just on sales and marketing, and so if you’re able to figure out a way to not hire a sales team, put yourself under those constraints, which won’t always work, but if you can make it work, I think in today’s marketplace, it’s the best way to go.

Aaron Dinin:

That’s interesting. It kind of sounds like you’d take venture capital if you were starting ShareFile now, like your philosophy has maybe shifted a bit versus back then.

Jesse Lipson:

There’s different philosophies, but I think one of the keys is whatever the philosophy you have is, you got to stay consistent with it and stay disciplined, and so we had almost like this Walmart type philosophy of be humble, have a small team. When Citrix acquired us, they were so shocked that only 5% of our revenue went to R&D, that they felt that something must be really wrong and this must be like a shoddy product, but it was really, we were just very disciplined in terms of adding members to the team and how we did everything, so that was my general approach. It gave me a lot of discipline on multitasking to the point where I actually read every support ticket up until we had 15,000 customers. It was an interesting discipline that was forced on me to read customer requests and really understand the pain points of customers. I think the nice thing about it is it does give you some really good insight into every function of the business and really good empathy and discipline for the fact that you’ve got to be focused on the customer impact, the pain that customers are feeling.

I felt the pain sometimes where I would personally release some software. I have a couple of distinct memories. It would create a bug or an issue that interrupted people’s work and just how bad that felt, and seeing the customer reaction really made me like truly feel the pain and the empathy for them, and so I think it ended up forming who I am in my philosophy as an entrepreneur since then.

Aaron Dinin:

Interestingly, when I was talking with Jon Oringer, founder of Shutterstock back in Web Masters episode number 72, he said something along the same lines. Jon, you might recall, similarly built Shutterstock on his own early without significant outside investment. As a solo founder, he was deeply embedded in every part of this startup’s business from the beginning and he emphasized the importance of staying close to customer service even as the business grew. I’m going to go out on a limb here and say that seems like important advice. If you’re running a company right now, how much do you deal with customer support?

If the answer is not much, maybe you need to change that. It worked for Jon when he built Shutterstock. He grew it into a publicly traded company, and, of course, it worked for Jesse in ShareFile too. As I already mentioned, he wound up selling ShareFile after six years to Citrix. Let’s hear a bit more about how and why that happened.

Jesse Lipson:

Citrix had two divisions, one was GoToMeeting, and they had another product called GoToMyPC. It was part of its online division. Citrix had acquired that back in 2003, and then there was another division, which was like a desktop and app virtualization enterprise kind of product, where they had software where you could access your desktop remotely in the cloud essentially or in a data center and access apps, and that was mainly for security, and so the company’s strategy for Citrix, they identified that, “Hey, we’ve got, on this one side of the business, we help people access their desktops and their apps, but what about their files? We should have a way to let them securely access their files.” Then, on the other side with GoToMeeting, they had the virtual meeting kind of business, which is similar to Zoom, and then they had GoToMyPC, which was kind of a, you might remember it, but it was a way to get remote access to your computer.

It’s like literally sitting in your office and you have a way to get into it and access it, and so both of them had this use case for file transfer, and so Citrix basically went out shopping specifically for a file transfer company. It was a little bit of serendipity, I think. I don’t know if they would’ve discovered us, except we put out a press release and we launched our file sync tool, and it got into TechCrunch, and I think that put us on the radar, otherwise, the small company, they would’ve never known about us. I found this out later. They actually looked at Box, made a verbal offer to Box.

Box accepted. They almost acquired box, and then that kind of fell through, and so then, they started looking at the market. They came across us. It happened that the head of Corporate Development at Citrix lived in Raleigh, even though Citrix had no office here. He was just like the one remote guy in Raleigh, so they kind of contacted us, and then I later found out a company called Ignite and a company called SugarSync.

These other file transfer providers kind of had a little bake off, I guess, of, “Which company should we acquire?,” and ended up choosing us. I think it was primarily on liking our team and our business acumen, where they probably felt that some of these other ones had technology that was more mature, but they liked our business, and so ended up making an offer to us. The bootstrapping had carried us for six years, but I felt that at that point, we probably needed to either get acquired or raised venture capital because some of our competitors were starting to raise hundreds of millions of dollars, and so even if they were making some irrational spending decisions, I like to say the market could stay irrational longer than you can stay solvent as a business, so we still had to do something, and so we ended up deciding to take the offer and join Citrix.

Aaron Dinin:

When you look back on that decision to sell the company, which I guess would’ve been over a decade ago at this point, you’ve had a chance to see what the file sharing industry has become. Do you think you made the right choice?

Jesse Lipson:

One of the things I constantly struggle with, and I can’t say whether I’m ashamed or regretted or don’t, is the decision to sell the company. I think that’s just a really difficult decision for entrepreneurs, and sometimes I think I made a huge mistake. I should have just kept running it and I could have had a much bigger impact overall by staying independent and maybe made more money and things like that than did we sell too early? One of the reasons I sold was I was convinced that we couldn’t win in the competitive landscape, kind of the classic business 101. There’s only space for two winners in every market.

There’s the number one that gets like 70% of the market and number two gets 20, and everyone else competes for the scraps. I think what I learned after the acquisition was that wasn’t really the case. We ended up still being pretty successful competing against these well-funded players by kind of finding a niche, and so I think that’s probably one of the biggest things that I still can’t tell you 10 years after the acquisition whether that was a horrible mistake or a good decision.

Aaron Dinin:

You mentioned ShareFile was able to continue growing in the face of intense competition from companies like Box and Dropbox, even after the acquisition, and you referenced it as being kind of a byproduct of, I think you said finding a niche. Could you talk a bit more about that? Would you argue that that’s a good strategy for founders to target a specific niche, and if so, why?

Jesse Lipson:

I absolutely would argue for it because first of all, when you’re starting a company, it’s much better to start narrow, be successful. I think people worry that if they start to narrow, the total addressable market is not big enough and it’s not a big enough idea, but one thing that they forget is most of the companies that are now huge didn’t start with a vision that was as broad as it is now. Like Facebook started as a site for college students. All kinds of businesses started narrow. It’s very easy to broaden your market over time from a point of success, but I think the advantage of being narrow is first of all, when you’re early on, you have very limited resources. Let’s say your idea was to build the next Google Docs.

Being able to do that and have a product that can be anywhere close to competing with what’s out there is just so tough, but then, if you narrow the solution enough with one or two developers, you actually can create something that’s better than anything else, if you say, “Okay, I’m going to do a Google Docs for doctors or something to communicate with each other in a super compliant way,” and so, yeah, maybe I’m missing a lot of the bells and whistles. The only thing I’m nailing is the security and the market, so from a product perspective, it lets you build a good product with the resources that are available in a small startup, which is not many. Then, from a go-to-market perspective, it allows you to also be much more efficient because, hey, if I’m only selling to pediatricians or something like that, there’s like 100 pediatricians in Raleigh, go visit some of them or go call some of them, it becomes kind of easy. Whereas you think about, “Wow, I’m going to try and build a Google Docs competitor,” how do I get that out into the noise of what’s happening in the world and educate the entire market? One caveat to that is sometimes people don’t know what their niche is.

The ideal is you know what the niche is. You go after whatever pediatricians or college professors or whatever. Sometimes you don’t know and you just may have to start with a broad product, and then just listen very, very closely early on to the customers and try to pick a niche as quickly as you can. See who happens to gravitate toward your service, and then narrow as fast as you can. It gives you a lot of efficiency, a lot of differentiation.

Aaron Dinin:

Could you maybe talk about how sticking with a niche, in your case, being business-focused as opposed to being more of a broad consumer-focused platform, how doing that likely contributed to ShareFile’s ultimate success?

Jesse Lipson:

We had a competitor called YouSendIt, and at the time, in 2005, they were the biggest player out there, 2005, 2006, 2007 for large file transfer. I never thought we would ever have a chance of being bigger than them, and that’s not even what we were trying to do. We’re just trying to make a successful company. We’re trying to do the market leader, but like I was mentioning earlier, we kind of just stuck to our principles. There were some trends that were happening with freemium and things like that.

Because of our business market focus and the fact that we were bootstrapped and needed to be profitable, we kind of resisted some of those trends and we were kind of basically mocked, I think by most VCs at the time for being in Raleigh, which now, it’s like not a big deal, but back then, it was like, “Why the hell would you not be in Silicon Valley if you’re a tech startup?” I still believe we made the right decisions on some of this stuff, thinking, “We don’t want to be an also ran, trying to do freemium and chase Dropbox. We have our niche. Let’s double-down and focus on that,” and so what I’m really proud of is we had a strategy. We were brave enough to be willing to be criticized or ridiculed by the VCs of the world.

We executed on that strategy. Ultimately, a lot of these guys came around to the strategy that we had. We ended up becoming much bigger than YouSendIt, and Box eventually started focusing on the business market a few years into when we had already found it and started doing that. They eventually started doing other things that we were doing, doing kind of vertical market focus and some of these other kind of focus on the fundamentals, and so we had core values and principles, we stuck to our guns, we executed on our strategy, and it worked. When I left, we were $200 million revenue business.

Aaron Dinin:

A $200 million revenue business. Not too bad for a company that spent its first six years being bootstrapped, and as you heard, Jesse did it by sticking carefully to the company’s strategy, staying niche and making fiscally responsible decisions based on data. That’s definitely great advice for, well, pretty much every entrepreneur. I hope you enjoyed hearing it, and I hope you’ll join me in thanking Jesse Lipson for taking the time to share it with all of us here on Web Masters. If you’d like to see what he’s up to today, you can do that pretty easily.

Jesse is on Twitter. He’s @jesselipson. While you’re there, give a follow to @webmasterspod or find me, I’m @AaronDinin. Send us any thoughts or questions you have about the episode, and we’ll try to answer them, or you can reach me over on my website, aarondinin.com, where you’ll also find plenty of other good stuff related to startups, business, and entrepreneurship. Thank you to our audio engineer, Ryan Higgs for helping put together this episode, and thank you to our sponsor, Latona’s for their amazing support.

Be sure to check out latonas.com if you’re interested in buying or selling an internet business. If you’re interested in more Web Masters, you can get that by checking out our archives of incredible conversations with all sorts of amazing internet founders that’s available wherever you listen to podcast, and be sure you also subscribe so you get the next episode as soon as it’s released. We’ll have that for you very soon. Until then, it’s time for me to sign off.