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 give 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 days to spend more time with his wife and three young children at home in Bethesda. 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.
A boyish 41, Chasen is now one of the elder statesmen of the tech community here, a status confirmed by his invitation to address one of the Titans of Technology mega-breakfasts in Tyson’s Corner 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.”