Everybody in tech knows (and often deifies) the PayPal mafia, the group that sold PayPal and turned their initial success into seven “unicorn” companies worth more than $1B each. In founding these companies and investing in others, they changed Silicon Valley forever.
Well, the same concept applies to other companies (albeit on a smaller scale). A) Core group of founders and early employees find tremendous success. B) They then branch out – investing in other companies, helping spur on an innovation ecosystem, and build again. There are examples of this in Washington, D.C., and one is the Blackboard Mafia.
It makes sense for an education company to take root on college campuses.
Michael Chasen and Matt Pittinsky met as roommates at American University, while Stephen Gilfus and Dan Cane met at Cornell. Cane and Gilfus founded CourseInfo in late 1996 with Cane writing websites for instructors and Gilfus developing a sales and marketing strategy. They were soon joined by two engineering students at Cornell, Tim Chi and Lee Wang.
At this same time Chasen and Pittinsky were recent graduates working at KPMG in the consulting company’s higher education practice. In 1997 they both left the company to found Blackboard, where they consulted on the standards for online learning applications. While working on consulting projects they came across CourseInfo – the technical match for their platform. Soon after, the two teams merged with the goal of providing an online course management system for higher education. In June 1998, CourseInfo’s 10-person team joined Blackboard and all moved into a real office.
As young, recent grads, the team was very close to the problem they were trying to solve – and in combining education and the Internet, the team’s timing was ideal. They managed a profit with sales over $1M in their first year. However, “we weren’t an overnight success,” Pittinsky said, “but everyone bought into the story and was driven to achieve the mission.”
D.C. provided the perfect home for the young company – local universities and associations to learn from and sell to, motivating competition with the emergence of edtech, and a steady supply of talented and hungry young people. “When we started Blackboard we had a group of people passionate about education and making a difference and developing great technology,” said Chasen. “There was competition internally but it was more driven by a passion for education,” Pittinsky mentioned. “We were very nice people trying to solve an important problem. Pink, super smart, blank slates with a problem to solve.”
AN ENTREPRENEURIAL CULTURE
Blackboard was a sales-driven organization from the beginning and started to grow quickly in both revenue and personnel. From 1998-2002 revenue grew by 11,047 percent, the fastest of any private education company ever.
David Yaskin joined Blackboard in the spring of 1999, leaving Thompson Publishing where he was working on an ebook concept, and got to know Chris Etesse, who was a recent addition at Blackboard. Yaskin entered a culture that was “a balance of structure and informality – chaos and constructive at the same time.”
The company scaled based on what Pittinsky called “radical incrementalism” – building new products quickly, taking them to market, and repeat. “It was a good use of technology coupled with really good sales people,” said Yaskin, “it was more useable than feature rich.” Winning ugly is still winning.
An overriding theme of Blackboard’s success, and perhaps the two most important drivers of that success were the people and the contagious entrepreneurial spirit. “We hired unusually good people, and not necessarily on paper. But it worked out that we got people that were early, affordable, and they grew from there. It was OK to be an entrepreneur, there was a lot of flexibility for people that were trusted.”
With continued growth, and profitability in the second half of 2003, Blackboard went public in 2004 (netting $50.9M in their IPO). It’s difficult to maintain a nimble, innovative system for all large companies, and the added pressure of the public market only adds to this. In some cases, where Blackboard once would have developed a product, they started acquiring many companies in the mid to late aughts. “The company was a success when we were fighting for attention, and then we became the incumbent, ” said Yaskin. But this didn’t detract from the entrepreneurial drive of the key figures, and the Mafia’s diaspora took hold.
Greg Davies and James Rianhard left Blackboard in 2003 to found Presidium learning, where they were joined by colleagues Andrew Rosen and Chris Etesse. They would eventually sell the company to Blackboard for $53M. Chi, who “was always good at everything,” and Wang left in 2006 to found WeddingWire. In 2007 Yaskin established Starfish Retention Solutions, which now employs 15 Blackboarders and is a formal Blackboard partner. “If nothing else, the customer and personal relationships at Blackboard helped me build this company,” said Yaskin.
Gilfus founded his own education company in 2008, the same year that Pittinsky returned to academia (before joining Parchment in 2011). In 2009, Cane created social sharing site Kadoo, pulling in Etesse as well.
“We attracted that top talent and kept an entrepreneurial spirit so of course when people decided to leave Blackboard they chose to go on and do their own ventures,” said Chasen. “The early team stayed at Blackboard longer than other teams may have, I think because they could grow as company and individuals,” added Pittinsky.
The success of the team after they left the company is perhaps the most impressive element of Blackboard’s legacy. Some were entrepreneurs when they entered Blackboard and many more were when they left – something not often said of large companies.
“Besides obviously Blackboard had financial success that allowed the natural leaders that had strong backgrounds in technology to go pursue their other passions,” said Chasen. There was clearly positive encouragement for others to go out and start their own companies.
“I think Blackboard, early on, because we were going after a big idea we attracted top talent. I felt lucky to work with them and keep confined to Blackboard as long as we did but yeah, I think of the first 20 employees 18 of them are either CEOs or running their own companies and startups. There have been dozens of companies created by people who worked at Blackboard,” said Chasen.
In July of 2011, Blackboard was bought out by a PE group led by Providence Equity Partners for $1.64B. Roughly a year later, Chasen announced he would step down as CEO, effectively ending an era as current CEO Jay Bhatt took the reins.
The key players in building Blackboard look back upon it fondly. The more they talk about the experience the more entwined the story becomes: marriages, investments, friendly rivalries, and reunions. They speak highly of their colleagues, remain connected, and are rightfully proud. Pittinsky and Chasen talk weekly, still giving each other pep talks, advice, and sometimes reminders that growing a company is hard. Similarly, Yaskin mentioned “if I have a problem, I call Michael, and he picks up.”
More often than not, industry conferences serve as Blackboard reunions. The success of Blackboard is most real, Pittinsky said, when “ standing at a conference seeing all the Blackboarders in the industry across the room. There were interns who had fallen in love with the education experience and Blackboard made their career.”
The majority of the Blackboard Mafia has remained in the D.C. area, and they remain close. Pittinsky splits time between D.C. and Arizona, and when in town often gets together with past colleagues. They continue to invest in each other’s new ventures, as well as fueling mentorship and investment in other local companies.
Blackboard was a massive success story for the D.C. innovation ecosystem, driven by passionate entrepreneurs who continue to build companies locally. They shaped the Edtech industry, and in doing so established D.C. as one of the best places in the world to build an Edtech company. Yaskin noted that “when we screwed up the progress of e-learning shifted.” It shifted when they succeeded as well, and the region and industry continue to benefit.
There are hundreds of people who can be considered part of the Blackboard mafia, all vital to the success and legacy of the company. During our series of interviews it was clear how deep these connections run, and how they have impacted the D.C. business community. Here’s a look at some of the “subplots” uncovered.
- The initial angel investor was Ching-Ho Fung, who later co-founded Parature (where Lee Wang was VP of Sales), the DC-area customer service software company that sold to Microsoft for $100M in 2014.
- The Novak Biddle Connection – The Bethesda firm was Blackboard’s first institutional investor in 1997 and has since backed “BB Mafia” companies Starfish Solutions, SocialRadar, Parchment, and Intelliworks.
- Joe Tiano never worked at Blackboard, but he was the team’s corporate lawyer early on. He became part of the group, marrying a Blackboard employee and then did the legal work for Presidium, WeddingWire, and Starfish Solutions. Inspired by his work with entrepreneurs he created his own startup, Legal Decoder last year.
- Home to the “original Blackboard,” 1111 19th St. in D.C. has stayed in the family. Today, three companies (SocialRadar, Flatworld and Full Measure) are headquartered in the building. Pittinsky suggested this is bit of “a nostalgic nod to a great entrepreneurial experience.”
- David Yaskin met his wife at Blackboard, Juliana Davies. Greg Davies is his brother-in-law. Juliana worked as a VP in Blackboard’s K-12 division, leaving in 2013 after 14 years with the company.
- Angel Investing – There are many cases where members of the Blackboard Mafia have invested in each others ventures. Pittinsky for example, has been an angel in companies started by Chasen, Yaskin, Davies, and Fung.
- Sales Rivalries – As mentioned, Blackboard was a sales culture, and the top players continued to compete after leaving the company, often against one another. Len Nepalitano works with Pittinsky at Parchment and would sometimes sell against Jack Delanian, who worked with Gibby at Intelliworks. All competitors who used to work side by side. With Hobsons, Gibby became huge competition for Yaskin and Starfish.
Editors Note: Much of this story is based on a series of interviews InTheCapital conducted with Michael Chasen, Matt Pittinsky, and David Yaskin.