An opportunist who made his won luck

 

Washington

Michael Chasen loves to tell the story of the day he and his roommate from American University, Matthew Pittinsky, left their jobs as education consultants at KPMG's Washington office to launch a technology company in 1997.

Their boss, aware that the 22-year-old entrepreneurs were strapped for cash, told them they could take their desktop computers with them. So on the last day, they loaded the bulky computers onto their rolling desk chairs and headed downstairs.

The guards in the lobby were naturally suspicious and demanded some authorization for removing the computers from the building. Chasen pulled out a letter from his boss, and the guards duly made a copy of it, along with a copy of their drivers' licenses. They also took care to write down the serial numbers of the monitors and processing units. Then, with all the paperwork complete, they headed out the door.

"Of course, what we were really doing was stealing the chairs," Chasen confesses.

Chasen tells the story with the perfect setup and timing of the standup comic he might have been if he hadn't founded Blackboard and grown it into one of the world's dominant providers of course management software to colleges and universities, with more than $600 million in revenue, 3,000 employees and a market value of about $2 billion. Anyone who's been a student or teacher (like me) at a college in the past decade knows Blackboard.

But sometime in the next few weeks, Chasen will walk out of Blackboard's headquarters for the last time, having sold the company to a private-equity firm for $1.8 billion. As usually happens in such circumstances, after a one-year transition, he is now stepping down as chief executive.

Blackboard is one of Washington's most remarkable business success stories, all the more so since it has nothing to do with the federal government. And by all accounts, much of the success is because of Chasen, a force of nature who combined hard work and wily determination with an uncanny knack for getting investors, employees and customers to follow his lead.

As the story of the chair illustrates, Chasen is one of those opportunists who manages to create his own luck, a geek whose entrepreneurial bent was already evident when he began charging $25 an hour while still in junior high school to write programs on his father's Radio Shack computer for small businesses in his hometown of Cheshire, Conn.

While in college, he managed to snare a rare part-time job doing tech support at the FBI. And after spending hours filling out applications for law school and business school, he came up with a program for online applications that he and Pittinsky tried to peddle to U.S. News and World Report, the Princeton Review and several universities. They all said it would never fly.

One of Blackboard's early backers was Novak Biddle Venture Partners. Roger Novak admits to turning down Chasen's first proposal because of his lack of experience both with business and software programming. He changed his mind six months later after Chasen and Pittinsky teamed up with a rival group of programmers from Cornell that had already developed a crude course-management program.

Blackboard is one of the few startups from that era to survive the bursting of the dot-com bubble. Chasen and Pittinsky resisted the lure of taking the company public and never fell into the trap of chasing eyeballs rather than revenue. By the time the bubble burst, the small company was already breaking even and had attracted $100 million in private investment from a group that included Washington's Carlyle Group and Kaplan, a subsidiary of The Washington Post Co.

"We used to joke that anyone can be smart and successful — it's when you're dumb and successful like we were back then that is the mark of true genius," recalls Pittinsky of those early days.

Once the dust from the dot.com bust had cleared, Blackboard used its cash stash to buy up any upstart competitors. This aggressive acquisition campaign, which received no resistance from Bush-era antitrust regulators, culminated in its 2005 purchase of Canada's WebCt, giving Blackboard a 70 percent share of the fast-growing market for Web-based course management systems.

"We knew that if we could get scale quickly and sign up 300 schools, we'd become the IBM of the industry," Novak told me last week. As with the old IBM, Blackboard became the default choice for any IT director not wanting to stake his career on choosing an upstart competitor offering a cheaper, better but unproven alternative. Then, once a school had signed up, the hassle involved in switching to a new system created a strong incentive to renew its Blackboard contract.

A few years back, a new set of rivals began gaining market share by offering cheaper and more flexible alternatives based on free open-source software known as Moodle. Blackboard responded with a patent suit that seemed like bullying to many in the more genteel world of nonprofit higher education. But as the suit dragged on and the company's market share fell toward 50 percent, Chasen pulled out his old playbook and began acquiring some of its open-source competitors, including Baltimore-based Moodlerooms. As a result, Blackboard is now the largest supplier of open-source course management software as well.

Novak, who has seen his share of entrepreneurial failures as well as successes, marvels at the way Chasen was able to mature as his company grew, avoiding all of the usual potholes into which company founders often fall.

Early on, he and Pittinsky agreed to hire an experienced chief executive until the pair of young founders had enough experience to take the reins: Pittinsky as chairman with primary responsibility for dealing with investors and customers, Chasen as chief executive focusing on operations.

When it was time to take the company public in 2004, there was some concern that Chasen's direct, hard-charging leadership style might not sit well with Wall Street. With prodding from Novak and the board, Chasen smoothed some of his rough edges, learning to listen better and delegating more.

In many startups, the early camaraderie of the original founders and initial employees gives way to jealousy and rivalry. Not at Blackboard. Many of the original Cornell programmers are said to have left on friendly terms to start their own companies, in several instances with investments from Chasen. And in 2008, Pittinsky decided to give up his executive duties and pursue a long-delayed academic career while remaining a Blackboard director and close Chasen friend.

Even the sale of the company to Providence Equity Partners last year has managed to avoid the usual rancor between entrepreneurial founder and his new bosses. The hiring of a new chief executive, Jay Bhatt, is a reflection of Providence's desire to combine Blackboard with another of its holdings and take the combined company to the next level. It also reflects Chasen's desire, at 41, to throttle back after 15 years of 80 hour weeks to spend more time with his wife and three young children at home. With an investment bubble developing in the education technology space, maybe Chasen also sensed that it was a good time to get out.

Although he a millionaire many times over — his compensation in 2010 topped $3 million and his proceeds from the sale to Providence exceed $20 million — Chasen keeps a low profile. He's not active in politics or the charity circuit, doesn't have any vacation homes, doesn't play golf or collect art or serve on nonprofit boards. His one indulgence seems to be a motorboat he uses to take the kids out on the Potomac River.

A boyish 41, Chasen is now one of the elder statesmen of the tech community in Washington, a status confirmed by his invitation to address one of the Titans of Technology mega-breakfasts last week. He expects to continue doing angel investing while looking for some other enterprise to build and grow. He is full of pride and satisfaction with the company he built and still marvels at how lucky he is to have been able to realize his boyhood dream of growing up to run a computer company.

"What's it like to be giving up your baby?" I asked him last week as he sat in a temporary, windowless office across from his old suite. The stolen desk chair, which he has used ever since, had already been moved to his office at home.

"It's not my baby anymore," he replied somewhat wistfully, "It's my 25-year-old, and it's time for him to move out of the house."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Travel
travel
Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
artCultural relations between Sydney and Melbourne soured by row over milk crate art instillation
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
News
i100
News
Kenny Ireland, pictured in 2010.
peopleBenidorm, actor was just 68
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Arts and Entertainment
arts + ents
News
Morrissey pictured in 2013
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Principal Marine Mechanical Engineer

£60000 - £70000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principle Geotechnical Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Renewable Energy Construction Manager

£40000 - £50000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Senior Wind Energy Due Diligence Project Manager

£50000 - £60000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices