He and the rest of the founders sold ZipList in April for a reported $14 million, presumably producing a robust windfall. Allen would not comment on the deal.
Allen, 41, is a rapid-fire conversationalist who has a gift for finding the next big thing, whether it’s disruptive software, a cool Web site or filming classroom lectures.
“I generally see things ahead of others, and I have the engineering acumen to build a product,” said the graduate of George Mason University.
Allen gravitated to computers — think Atari, Commodore — while growing up during the 1970s and 1980s in Fairfax County, where his father was an engineer for the U.S. Navy and his mother was a schoolteacher.
“I would buy programming books, and they had recipes for games,” he said. “And you could learn to build them yourself.”
In high school, he was pulling down $15,000 a year as a part-time programmer at a Fortune 500 company. He tooled around in a 1976 BMW 530i, which he also used on his second job, delivering Domino’s pizzas at night.
“Precocious, curious and impatient. Those are the qualities you need to be an entrepreneur,” Allen said. “I didn’t come from money. I just worked hard.”
Although he has a knack for starting things, he doesn’t have a passion for the daily grind of managing.
“I’m not great at operations . . . the day-to-day routine,” he said. “Hiring. Firing. Managing the profit and loss statement. Personnel reviews. [Not many fans there.] Taxes. Audits. It’s stuff that is critically important. I would rather help the product development and marketing and engineering teams.”
So he creates the sparks that set the game afoot. Besides ZipList, an online shopping and recipe site that helps consumer goods companies sell their wares to grocery shoppers, Allen has created a host of other companies aimed at disrupting marketplaces.
He started Source Digital in 1989 when he was right out of Robert E. Lee High School in Fairfax. He pushed the desktop publisher, which produced pamphlets and books for corporate clients, to $13 million in revenue and sold it for a seven-figure profit around 1995.
He took that money and rolled it into Axicom, which helped cable TV companies digitize their commercials from tape.
Three years later, he shut down the business and lost $2 million, crushed by well-funded competitors such as nCube, founded by Larry Ellison, multibillionaire creator of Oracle.
The Axicom debacle delivered an important lesson: The best product doesn’t always win. “You need a great product to get in the door, but you also need great marketing, big balance sheets, great sales. You need to understand the competition.”
Next came a Web site design firm called Image Communications, founded by a business associate, which rode the Internet bubble in the late 1990s. Allen handled the engineering and tech side, while his business partner handled the creative side. Image was bought as part of a billion-dollar stock roll-up and brought Allen a windfall.
He took the profit and invested in the stock market, he got whacked with a tax bill and, like many other investors at the time, he lost big when the Internet bubble popped in 2000.
“I am much more careful about how I take my profits and where I invest them now,” he said, adding that a common problem among entrepreneurs is leaving too much money in your own company. “You need to diversify your investments, and I didn’t do that. Asset allocation. I put all my money now in index funds. I’m 41. My retirement horizon is very long.”
He then turned his attention to another forward-leaning software developer called Anystream that simplified the creation and preparation of media content for the Web. He grew the company, with the help of $17 million raised in eight months, to more than 90 employees and $18 million in revenue. By the time the company was sold in 2010, most of the profits and gains were paid to venture capital investors, with little left over for the founders like Allen.
Another lesson learned: Don’t raise so much money that outside investors end up with most of the company. Instead, grow organically and with as much of your own cash as you can muster, and only ask for as much outside money as you absolutely need.
While Anystream was up and running, Allen learned that Harvard University, Case Western Reserve and North Carolina State all had paid handsomely for the Anystream software to record classroom lectures.
“I was curious, so I went out with every one of the customers and asked them, ‘Why did you buy it? Why did you spend this much money?’ They said they were using it to increase their graduation rate, grade-point averages, and . . . to get by with less teaching resources.”
Allen and his investors at Anystream spun out a new company, called Echo360, and went after the classroom lecture market. Last month, the Dulles-based software company, which has 1 million students in more than 6,000 classrooms and 500 institutions, received about $30 million from the Revolution Growth fund, a venture capital firm founded by Steve Case, Ted Leonsis and Donn Davis.
Allen said he still has a small piece of Echo360, but he moved on to start ZipList after having an “aha moment” after forgetting to buy a bottle of wine for dinner.
“That’s when it hit me that people don’t search for groceries on the Internet. But if I own the grocery shopping list, I own the search query.”
ZipList creates an online advertising vehicle for consumer packaged goods, whether it’s ChapStick or charcoal, Coca-Cola or mustard.
“We give consumer goods manufacturers the ability to target the consumer to buy their products before they enter the store,” he said.
I couldn’t get the image out of my head of Allen reversing course, turning on Potomac View off the Algonkian Parkway in Sterling.
He saw the next big thing around the corner.
For previous Value Added columns, go to postbusiness.com.