In a way, it was Paul Nakada's fault, because it all started when he brought Tom Shields into Oracle and introduced him to John Danner in the spring of 1992. The three of them worked in the same division, and they played volleyball together nearly every sunny day for the next two years. During that time, they tossed around the possibility of starting a company someday, but the discussions didn't become serious until John returned from a walkabout in Australia in the spring of 1995.
John initiated the process by holding weekly meetings at his apartment with a variety of people who might be interested in founding a company with him. Tom joined in many of these meetings, and Paul went to a few, during which they generated literally dozens of new product ideas. The guidelines for the startup were not formally codified, but it was generally agreed that the company would be in the internet software industry, and would develop a product that made people's lives easier or better in some way.
The Internet was just beginning to take off, so many of the ideas were related to making the Internet easier and more useful. John spent most of his time writing business plans for the more promising ideas, and talking with many industry leaders about them, while Tom and Paul did more research and design in their spare time. Many of the plans were good enough to start companies with, and in fact many of them later became successful companies, but John kept pushing to find an idea that was just right. Finally, John articulated the idea that advertising would pay for much of the Internet's content, and that tools to help manage advertising would be required to enable the revenue stream that permits free content distribution.
The breakthrough came in August of 1995, when John and Tom presented this idea during an early breakfast meeting with Randy Haykin, then VP Marketing of Yahoo, and his response was "I identified this as Yahoo's number 1 problem within the last 48 hours." He then asked to see a demo of the software, at which point John and Tom gulped and audaciously promised to show him a demo the next week. Tom didn't sleep much that week as he pounded out a demo using Visual Basic and Microsoft Access, showing ad entry, rotation, and minimal reporting. Yahoo's response to the demo was even more scary: "How soon can you install the software?"
Yahoo's response, in addition to the research John had done, and the compelling nature of the idea, convinced John and Tom that this was the right idea to start a company with. John went out and rented some desks and chairs, and converted his living room into an office. Tom bought some computers to set up a small network, and began coding night and day. Paul Nakada and Russ Seligman began coming down after work every day to help build the software. John and Tom raised seed funding from themselves, their families, and a few industry veterans, and incorporated under the name that Russ had suggested: Netvertiser, Inc.
Paul and Tom successfully installed the first version of the Netvertiser software at Yahoo, and served their first ad live on the Internet on October 23, 1995. The company moved to offices in San Mateo in November, and Brad Husick joined the company as VP of Sales and Marketing at that time. John concentrated on strategic planning and raising money, Tom and Paul focused on building the product, and Brad went looking for more customers. After several red-eye flights to NYC, Brad landed Pathfinder as the company's second customer, and Tom began the install there in December of 1995.
With the product installed at two customers, John was able to secure venture capital funding in early 1996, at which time the company began paying salaries. This, in turn, made it easier to hire more people (paying a salary helps recruiting a lot), and the company entered a period of rapid expansion. The company also changed names, to NetGravity, after days of intense brainstorming sessions and research - rejected contenders included White Box, Lasceaux, and Eland.
The official launch of the company was in February at Demo 96, a conference for introducing new technology to industry leaders and press. The product (and the company) received tremendous attention, which fueled sales and additional product development. The first generally available version, 1.0.5, went production in May of 1996.
Versions 2.0 and 3.0 followed over the next couple of years, and sales grew substantially, reaching nearly $2m in 1996 and over $6m in 1997. After two contentious private financings, and despite continuing losses, NetGravity filed for IPO in the spring of 1998.
NetGravity priced at the bottom of the range at $9 a share on June 11, 1998. On June 12, in the public market, our shares rocketed up to 9 1/4 by the end of the day. Over the next few months the stock fluctuated dramatically between 6 and 30. By the end of 1998 the company had over well over 300 customers, but was losing $12m on $12m in revenues.
In October 1999, DoubleClick purchased NetGravity in a stock deal valued at $530m. The NetGravity product line is now completely incorporated into the DoubleClick portfolio of advertising management products. The original founders and management team have all left to pursue new opportunities. NetGravity, having helped to create the multi-billion dollar internet advertising market, has essentially ceased to exist.
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