SEPTEMBER 2010 ENTREPRENEUR OF THE MONTH
Blackboard Inc. CEO Michael Chasen
At 38, Blackboard Inc. CEO Michael Chasen has already achieved more than he ever dreamed was possible.
His company, which develops and licenses software applications and related services to more than 7,500 colleges, universities, K-12 school districts, corporations, and government agencies in more than 60 countries, projects revenues of $445.4 million in 2010.
Total revenue for the quarter ending June 30, 2010, was $107.7 million, an increase of 17 percent over the second quarter of 2009. The company went public on Nasdaq in 2004 and by the summer of 2006 was making headlines in The New York Times.
“Chasen [pictured below left with his co-founder Matthew Pittinsky] will never be confused with the brash upstarts that defined the Internet boom of the 1990s, or Silicon Valley’s ever-growing crop of disruption-crazed entrepreneurs,” wrote Times reporter William Taylor. “”[Blackboard] may be disruptive, but they conduct themselves like diplomats.”
The making of a multimillion-dollar idea
A walk down the large white corridors of Blackboard Inc.‘s corporate headquarters near Chinatown in Washington, DC, reminds visitors that this company is about kids.
The doors of the executive offices are covered in blackboard paint so that the C-suite team can write their names in chalk.
Toys adorn many of the desks, and just off the lobby is a cafe-style coffee area featuring a glass-front fridge with bottles of free juice and soft drinks.
Although guards check IDs at the front door, it’s obvious that Michael and the directors of this growing empire have not lost sight of the fact that what they are doing is fun.
In fact, Michael still uses the desk chair that he and Matthew, his buddy from American University and partner-in-technology, stole the afternoon they quit their day jobs at KPMG. They had worked together for a year developing a computer application for the company’s technology consulting practice.
“Matthew and I decided that at 25, with enough money saved to live for a year, we’d start an e-learning business,” Michael explains today, sitting on that old torn chair in his corner office. “It made sense to us because we were just out of college and grad school and were still in touch with what college students wanted and needed from school and technology.”
A case in point was the fact that campuses nationwide were beginning to connect to the Web but had no way to put courses online. Soon after, Michael and Matthew met seven seniors from Cornell who had sold a software program to five colleges that did just that.
“We convinced them to move to DC and work with us,” adds Matthew. “For some reason, they figured that as 27-year-olds, Michael and I were the professionals in the group.” They became the founding members of Blackboard Inc.
A strategy that works
Despite the fact that nearly a dozen people were working in a tiny two-room office, Michael and Matthew were able to raise $500,000 in angel funding. It was enough to get the software out to more schools—and impress other investors. Between August 1998 and April 2001, they raised $103 million in five rounds of funding.
The competition was also heating up, as more upstarts got wind of the profitability that results when technology marries education.
“We had 30 competitors with similar products—and they were giving theirs away for free,” Michael says. “We knew that once you give away the proverbial milk for free, no one will pay for your services. So we kept charging. We rented our software for an annual subscription, then sold it for $5,000 to $7,000. When the dot-com bubble burst, we were still standing. We had $40 million in revenue and were breaking even.”
Michael and Matthew both admit that their saving grace was the fact that they had developed their idea before the boom. Plus, they say, while they were in business to make money, they truly wanted to create products and services that would benefit students from elementary school to grad school.
“I think we accomplished our mission,” Matthew says. He left the staff of the company in 2008, but remains on the board of directors. “It was fabulous to build Blackboard with Michael, and after going public the bulk of our wealth came from the stock. It made me realize that what I really wanted to do was solve a problem, not run a company.”
“Mike loves being an entrepreneur, and he’s great at it,” adds Matthew, who has a Masters of Education degree from Harvard. “But my passion has always been education, and my dream was to do research about the sociology of education, so I went off and got my Ph.D. from Teachers College, Columbia University.”
Dr. Pittinsky is now an assistant professor of sociology at Arizona State University’s School of Social and Family Dynamics. In addition to teaching classes, he is conducting a study of the sociological and economic influences on CEO compensation.
He’s also called on by Arizona State to offer advice to business students about what it takes to be a successful entrepreneur. Read his ideas in this month’s Tips for Entrepreneurs column.
The future of Blackboard Inc.
As for what’s coming next at Blackboard, Michael says he’s looking forward to more growth. In fact, Blackboard announced last month that it acquired Elluminate Inc. and Wimba Inc., two of the leading providers of synchronous learning and collaboration technology to the education markets, for $120 million.
They will form Blackboard Collaborate™, the newest standalone platform in the company’s family of education solutions.
“We will pursue greater innovation to meet the growing needs in the area of synchronous learning and collaboration, including continued support for integrations with open source applications and other commercial learning management systems,” says Michael, who also has his sights set on the virtual school market.”
“Virtual schools are the fastest growing segment in education. Due to incredible advancements in technology, we have been able to reach people worldwide that we never had access to before. Having built Blackboard Inc. to this level is a dream come true. But I truly believe we are just at the beginning of what we will accomplish.”