June 2009
Backbreaking Entrepreneurial Effort
Not even a life-threatening bike accident could keep Wharton alumnus Joseph Ansanelli from succeeding in both start-up and corporate settings
Serial entrepreneur Joseph Ansanelli seems to have a knack for predicting the next big thing. First, he helped develop software akin to today's Microsoft Outlook before email was widely popular. Then, he pioneered the world of electronic direct marketing. And in 2001, he started a company focused on data loss prevention, becoming a leader in a new product category.
Ansanelli, who now writes a popular blog about his entrepreneurial experiences, began his first venture as an undergraduate student at Wharton. He was working part-time as an ice skating rink guard when a fellow student who worked as Apple's campus representative, asked if he was interested in working for Apple as well. Trading in the rink guard job, he starting working as a campus rep his senior year, fortuitously entering the world of technology and meeting other Apple reps in Penn's Engineering School.
The students teamed up to launch a company called Trio Development, which created software later known as the Claris Organizer. "We'd go to class, do our homework, meet up afterward to grab a pizza and get to work," he recalls. They spent the year on product design, moving to the West Coast after graduating in 1992 and Ansanelli worked out a deal with Apple to acquire the software. "That was definitely a little scary, but we weren't smart enough then to know that what we were doing was risky," he laughs.
Ansanelli then joined a start-up group within Apple and worked on the Newton, an early PDA that used handwriting recognition software similar to the Palm Pilot. Although the Newton eventually failed and its software was licensed to Palm, along the way the group pushed the boundaries of new technologies and helped create ARM, which today makes processors used in smart phones.
After the software was licensed to Palm, a former Apple employee recruited Ansanelli to run the Internet group at Macromedia. It was 1996 and the beginning of serious commercialization of the Internet. Macromedia had just acquired a Web authoring tool, but one with an inherent challenge: it was targeted to a more technical audience and Macromedia's customers at the time were mostly creative professionals like Web and graphic designers.
"We spent six months trying to sell this product, but it wasn't working so I went to the CEO and said we need to cancel the project. He said, 'We just spent tens of millions of dollars on this and you are telling me we need to cancel it?' I said, 'Yes, but let's redirect some of the resources and take the core technology to launch a product we can sell to our existing customers.'" So they wrote a business plan which ushered in a hugely successful Web design product known as Dreamweaver. It turned out to be one of the most popular software suites ever sold. Ansanelli, the start-up veteran, had mastered corporate venturing, entrepreneurship inside a company.
During this time, Macromedia was collecting tens of thousands of email addresses from people who downloaded plug-ins such as Shockwave (a precursor for Flash), but that information wasn't being used to drive additional sales. The lack of tools for direct marketing via email inspired the launch of Ansanelli's second company, Connectify, which sold direct marketing software to the likes of Williams Sonoma, Charles Schwab, and EBay.
Connectify later merged with another company called Kana that offered inbound email customer relationship management, and Goldman Sachs took the merged company public in 1999. Kana quickly grew, acquiring more companies and integrating bicoastal organizations, but the growth also caused problems. "We got so caught up in our capital and wanting to acquire other companies that there were some instances where I should have said, 'Let's not do that as a strategic decision.' We forgot the basics and those are important no matter what you do, but there was so much hype at the time that a lot of people forgot them."
In 2000, Ansanelli left Kana to work on another unmet need in the industry – data security. "We saw at Kana that we were selling a lot of software that took really sensitive information about people and put it in a database and then gave hourly and part-time workers with high turnover access to the Internet. Needless to say, it created security problems."
Ansanelli and the founding vice president of engineering from Kana created security software to help companies monitor how people were using sensitive information such as source code, customer records, or credit card numbers. They raised $35 million in venture capital and grew the company, Vontu, from $0 to $50 million in revenue. Vontu played a significant role in establishing and defining this new category of security technology, and Ansanelli became known for his expertise, testifying several times before legislative hearings on identity theft and security.
Like any good parent, Ansanelli says he doesn't have a favorite among his start-ups, but Vontu does seem to stand out. Not only did it make the biggest impact on a new category of products, but he also launched it in the midst of a major medical crisis.
"I was out for a bike ride in San Francisco, thinking about the company and how to go about raising money, when I went around a corner too fast and hit a barricade and broke my back," he recalls. He spent a week in the hospital not sure if he would ever walk again.
"The joke at the time was that everyone says it is back-breaking work to start a company, but I literally broke my back starting mine. It was a good test for a great team and we ended up working out of my house. Our first VC pitch was done from my living room and I was literally on the couch," he says.
Fortunately, Ansanelli fully recovered, but it gave him a new perspective on work-life balance. He explains, "The first 10 years after graduation, I was focused on work. But then I realized I needed to find a pace I could sustain and have a life. That ended up being a big part of Vontu – we weren't a startup where everyone worked seven days a week. Very rarely were people on email or in the office on weekends and that was by design."
After helping Vontu fully integrate into Symantec, which acquired the company about a year ago for $350 million, he decided last December that it was time to leave. Now, he writes a blog to share his start-up experiences and give advice as well as to find new early-stage companies to help. In just a few months, the blog garnered tens of thousands of views a month from readers in 70 countries around the world.
"My parents were immigrants from Italy and sent three kids to college," Ansanelli says. "That was hard and I'd like to figure out how to help others" on their own roads to success.
He credits the mentorship and tools provided at Wharton with helping him. "Wharton taught me to think and be challenged by both professors and other students. That is a skill that is pretty valuable to a young kid," says Ansanelli, who has started a new scholarship for students as a member of the Wharton Undergraduate Executive Board.
"Mentorship is so valuable and if there is a way to do that with content that helps people or maybe helps me meet people I end up working with, then that is great too," he says. "Now is a phenomenal time to start a company even in this massively challenged economic environment. It'd rather start now and follow the growth that will occur."
Posted June 2009