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A capital adventure with venture capital
Former Springfielder Chris Dixon, the son of two Wittenberg University professors, created the wildly successful SiteAdvisor and sold the company for a reported $70 million. Here's the story.
Monday, December 04, 2006
In January of 2005, former Springfielder Chris Dixon disappeared down the venture capital/startup company rabbit hole not knowing when, or if, he would successfully emerge.
Among the specifics he didn't know:
Extras
—Whether the company he had helped to form could make the product he envisioned.
—Whether he could persuade high-powered computer experts to trust in his dream enough to go to work for him.
—Whether he could raise the $2.6 million he needed to give it a shot.
—Whether, in the end, he could pay the money back.
Most of those questions were answered this April when the 35-year-old CEO sold SiteAdvisor to Internet security giant McAfee for a reported $70 million-plus.
But in a recent phone conversation, the son of Wittenberg University English Professors Kent and Mimi Dixon said it's only recently that he's "finally starting to feel relaxed" after an experience he describes as both exhilarating and exhausting.
Red light, green light
Now that it's up and working, SiteAdvisor seems a simple concept: to warn users of Firefox and Internet Explorer search engines of the the Internet sites where spyware, spam and unwanted pop-up advertisements are lurking, rating all sites with red, yellow or green traffic light icons.
The traffic-signal simplicity was the signal idea.
"My view generally is that most technology companies are very good at technology, but they tend to assume their customers are a lot more sophisticated about technology than they really are," Dixon said.
Dixon likens SiteAdvisor to a computer program that can do what your Internet-savvy cousin would do if he were sitting with you: let you know whether it's OK to click on the site and take the next step.
"Its purpose is to kind of give you (Internet) street smarts," he said.
Base 5 at age 3
Before Dixon arrived in Springfield at age 8, he'd already shown considerable math smarts.
"His brother Laird, who is four years older, took him to show and tell" because at age 4, Chris knew his multiplication tables, their mother, Mimi Dixon, said. "He learned them because Laird was learning them."
That wasn't surprising for a child who at age 3 was working in base 5.
Chris went to Snowhill Elementary, Roosevelt Middle School and two years to North High School, all the time learning computers on his own, designing his own computer games and continuing to play with abstractions as he had from an age when most children were playing with blocks.
He finished high school at Western Reserve Academy in Hudson, Ohio. Before going on to New York City's Columbia University, he took a couple of years off, spending the first working in Arkansas on Bill Clinton's first presidential campaign.
He worked under Susan Thomases, a close friend of Hillary Clinton, doing campaign scheduling. When Clinton was elected, Dixon was called on to do the scheduling for the Economic Summit that was the opening flourish of the incoming administration. He was just 20.
Dixon continued to work for Thomases' New York law firm while studying philosophy and logic at Columbia, advancing as an abstract thinker.
His work in logic led to the study of artificial intelligence, an interest he had had during his Springfield days.
An interesting business
After graduation in 1995, Dixon stayed at Columbia for a master's in philosophy the next year.
While at Columbia, "I was kind of doing some side work" — computer programming for a technology group that built financial options trading systems and created Arbitrade.
Arbitrade greatly expanded and eventually was sold to Citigroup, which still uses the programming Dixon worked on.
For someone who says he had a "naive" view of business — one that equated it with door-to-door sales and the marketing of kitchen ware — the dynamic, creative world of cutting edge entrepreneurship was a total surprise.
"This is kind of interesting," he recalls saying to himself.
With his interest piqued and four years of research and development experience at Arbitrade, Dixon went through the MBA program at Harvard Business School.
There, he learned that while many people can come up with good business ideas, bringing them to life in the real world is a skill those with the ideas often lack.
"The biggest challenge is, how do you get it out there and market it?" he said.
A new venture
When Dixon came out of Harvard, he found himself trying to solve that very problem for customers at the New York office of Bessemer Venture Partners — a venture capital firm dating back to Andrew Carnegie.
The goal of Bessemer is to find people with good ideas and, for a share of the company, provide them with money and help to get on their feet.
"They happened to want someone with a financial/technical background," Dixon said.
His background at Arbitrade made him the perfect choice.
One of the companies he worked with at Bessemer was Skype, a program that allows people to talk on the phone over the Internet for free.
That company sold to eBay for $4.1 billion last year, and Dixon had been an early investor.
Having seen others bring ideas to life, "I said, 'Hey, maybe I could do that, too,' " Dixon said.
Unexpected burdens
After coming up with the idea for SiteAdvisor, Dixon met with two MIT grads with multiple computer science degrees for a simple reason.
"I actually needed somebody to build the stuff," Dixon said.
They founded SiteAdvisor in January of 2005.
"I was the CEO of the company. My job was primarily coming up with the concept of the product, raising money, helping to recruit employees and helping to sell the company."
Adding a little adventure to the venture was the unknown.
"This was something where we didn't even know if we could build it," Dixon said. "We knew that Google (with its resources) could, but we didn't know if we could."
"We told this to our investors," he said.
Those investors were his former employer, Bessemer, and General Catalyst Partners. Both were lined up during what Dixon describes as a "long and stressful" four-month process.
By the end of April 2005, with $2.6 million of someone else's money committed to his project, Dixon began to feel the real weight of responsibility to his investors and his staff.
"People have joined (the company) because they have faith in you," Dixon said. "You're taking a risk with other people's money and lives.
"It's a huge burden. I don't think I realized what a burden it was."
That pressure was endured during months of 18-hour days in a 2005 in which the New York resident spent weekdays in the company office near Chinatown in downtown Boston.
"I literally slept on the floor of the office for months," Dixon said. "I didn't have a place to live there."
But for the boy who started working as a News-Sun newspaper carrier at age 8 and worked full time while he went to graduate school, the task seemed within reach.
That gave SiteAdvisor a chance to get on its feet.
Crash test dummies
It was in January of this year that Dixon knew his company actually had a product.
The specifics of how SiteAdvisor works are a closely held secret, but the principle is simple, Dixon said.
"We set up computers and go to the Website and do all the things a computer might do," he said.
The bank of computers — actually virtual computers — then keeps track of what happens to a computer that comes in contact with a particular site, much as car safety firms record and analyze what happens to a car in a staged accident.
"We have thousands and thousands of crash test dummies out there (on the Web)," Dixon said.
What the computers found was enough to get a front page reference on the Wall Street Journal. The essence is that paid Web sites are about three times as likely to be linked to problem sites.
Multiple intelligences
Rob Stavis, a partner at Bessemer, said Dixon was able to pull off SiteAdvisor because he is the business world's equivalent of "a really versatile athlete," someone who can do several things "at the highest level.
"He has a great strategic mind," which allowed him to see a place in the market for the product, Stavis said.
Dixon also:
— had strong enough technical knowledge that he knew the task of building the machines was difficult but not impossible;
— was a "great team builder," who quickly assembled and motivated the talent needed for the project;
— was able "to tell the story" that allowed SiteAdvisor to make it in on to the market.
With those abilities, Stavis said Dixon created a product that is "making very sophisticated technical judgments" about Web sites but communicates the judgments to the customer "in a very elegant, simple fashion."
DixonAdvisor
To those who would ask his advice about getting involved in start-up companies, Dixon offers both a green light and a yellow.
"It was a great experience," he said. "If I had another chance to do something like this, I'd do it again."
His one regret is that he didn't put himself out there and take more chances earlier.
"I look back, and I wish I'd taken more risks, I think," Dixon said.
On the other hand, he added, "The only way you can sustainably work on something like this is if you are genuinely passionate about it. Because there's no other way to work on it for 18 hours a day" for the amount of time required.
"If I had the best dental billing software package in the world, I probably couldn't (develop) it," Dixon said.
What appealed to him about SiteAdvisor is that "it's protecting people from these various kinds of bad guys," he said.
What relieved him about successfully bringing it to life was the ability to sell it in April of this year and make good on the promises he had made not only to the venture capital firms but also to the people who had come on staff for the project.
When SiteAdvisor was sold to McAfee, Dixon said, "part of our deal was everyone was guaranteed a job."
All the employees who were with the company when it was sold in April still are with McAfee, including Dixon.
"No one's left and no one's been fired," he said.
Being absorbed into a larger company, Dixon feels assured "we'll be around now. The burden is mostly lifted."
Another lasting lesson for the philosophy major who came up with the idea for SiteAdvisor is that the idea is only part of the equation.
"There's no question the idea's important," he said.
But given that only 1 in 10 startup companies makes it, taking the idea and making it a reality in the working world is the bigger challenge.
YouTube, the fabulously successful site at which people can post their own videos, was not a new idea when it was developed and then sold to Google, Dixon said.
"The fact that (the YouTube team) did it, did it right and did it at the right time" was the crucial thing, Dixon said.
Tackling such challenges issues "is what makes it exciting and interesting," he said.
Whether in business or some other field, he added, taking on any substantial task one can feel passionate about "is a worthwhile and satisfying experience."
At the age of 35, the creator of SiteAdvisor has some insights that might make him a LifeAdvisor, too.
