The mid-to-late 1990s to 2000 are often described as the era of irrational exuberance, at least during the dot-com boom, which included overly optimistic expectations of the Internet’s potential (later, many learned that popularity does not equal profit).
The euphoria surrounding dot-coms was indeed contagious, and as a 20-something business reporter at that time covering the San Diego tech scene, I was caught up in it too.
I used to love visiting local dot-com offices, many of them with game rooms filled with ping pong tables, foosball, and other games, and catered lunches, all to feed the creativity of their mostly young employees. Cash was flowing freely and so was the buzz. I remember one company in particular, WebSideStory in Sorrento Valley, which was famous for its “Champagne Fridays,” BMW Club, and six-month salary club for employees in the early days.
“We were competing with every other VC-backed company to recruit and keep talent,” says WebSideStory founder and CEO Blaise Barrelet. “I remember our phones ringing constantly with recruiters trying to steal our people. We had to come up with a strong corporate culture. We also had ‘open house for the family’ parties and many other activities to develop the sense of being a team and a family. It’s funny to see how far Google and the likes have extended the concept today.”
WebSideStory grew fast and tried an IPO in April 2000; it was one of the few internet companies making money with little or no net profit loss at the time. However, that IPO failed as the dot-com market crashed two days before.
WebSideStory was in trouble and was losing money and needed a dramatic turn-around. Enter Jeff Lunsford, who was recruited as WebSideStory’s new CEO in 2003 (replacing John Hentrich), and built an enterprise SaaS (software-as-a-service) business with paying customers.
“I am a big fan of Jeff. He literally saved WebSideStory,” Barrelet says.
WebSideStory tried another IPO in 2004, with a date set for August 19. “That’s the day when Google decided to go public and we had to cancel again and postpone for a few months,” Barrelet says.
Despite its ups and downs, WebSideStory became a pioneer of the SaaS model that was called ASP (Application Service Provider) back then, and paved the way for analytics as we know and can’t stop using today.
Below is a look at the company’s backstory, its key players, and what they’re up to today.
Backstory: WebSideStory originally launched with an SaaS business model, charging customers a monthly fee for web analytics. But since finding customers willing to pay for web analytics was tough, the company then offered a limited version of its analytics product, HitBox, for free in exchange for a small advertising banner on each website. The technology enabled webmasters to track and analyze traffic to their Web sites, providing them with information such as the number of hits, time spent on site by visitors, returning visitors, page views, referring URLs and loyalty index. WebSideStory finally had a successful IPO in 2004, raising $42.5 million. In 2006, WebSideStory acquired high-end private data analysis and visualization software company Visual Sciences for $57 million. A year later, the company rebranded itself as Visual Sciences, Inc., which was acquired by Omniture in 2008 for $394 million, and then by Adobe Systems in 2009 for $1.89 billion.
Purchasing Power: WebSideStory almost acquired Omniture in 1999. At the time, Omniture’s size was 10% of WebSideStory.
Fun Fact: WebSideStory’s name came from Barrelet’s father-in-law, who was a big fan of the musical West Side Story. “He heard me once in the early days explaining to potential customers that our technology would tell them the story of who, what and when for their website,” Barrelet says. “He instantly came up with the name of WebSideStory, which resonated very well with 50-year-old IT managers at the time, who all seemed to like the name.”
Fodder: A 2004 Forbes article declared, “A small company like WebSideStory may not be able to keep pace with its larger rivals.”
It’s safe to say that WebSideStory eventually proved the writer wrong.
Where are they now:
Blaise Barrelet, Founder and CEO, WebSideStory, is considered a trailblazer in website analytics.
After the sale of WebSideStory/Visual Sciences, Barrelet – a former hardware and software engineer-turned entrepreneur who is fascinated with the power and value of data – retired at the age of 36, but remained on the Board of Directors of the company until 2005.
He came out of “retirement” in 2009 to invest in and form Anametrix, the first company to offer a marketing analytics platform. Anametrix was acquired in 2014 by Ensighten (financial terms of the deal weren’t disclosed). Barrelet, founder and managing partner of San Diego-based Analytics Ventures since 2012, has also invested in and co-founded a handful of other local companies.
“After I retired, I started to help local entrepreneurs and then created Analytics Ventures. We’ve since raised our first institutional fund to create our own companies and to fund them as they grow,” says Barrelet, whose VC office is located in the old WebSideStory office in Sorrento Valley. “We’re all about artificial intelligence, and we even started our own AI lab with a small team of top scientists. We are industry agnostic and have built an incubator-like ecosystem where we can share many expensive resources between our startups, including our AI developments.”
“I was diagnosed with leukemia five years ago and while I was searching for answers, I ended up meeting some exceptional scientists from UCSD with an interesting AI concept towards the detection and treatment of cancer,” he says. “CureMetrix is all about breast cancer detection using AI, while CureMatch computes the best combinations of new drugs to fight cancer more effectively. The latest is currently saving my life, and CureMatch also recently won the San Diego annual MetroConnect Prize.
“I love all of our companies, but I think CureMetrix and CureMatch are the only ones that have a strong social impact so far as they are saving lives,” he adds.
Notable quotes from Barrelet:
Company Culture: “Many employees saw their WebSideStory experience become the perfect ground to start their own company. Working in a fast-growing startup is better than any business school. I am quite happy to see many successful companies like Tealium and Certona, to name a few, started by former WebSideStory employees. I don’t necessarily think it’s specific to WebSideStory. A lot of companies have been started by former Qualcomm employees too.”
San Diego’s Tech Ecosystem: “I think San Diego is one of the most attractive ecosystems to create companies. It reminds me a lot of Silicon Valley 30 years ago. The only thing missing are another three-to-five serious VC firms that can provide Series A and up. Mike Krenn from the San Diego Venture Group has done a fantastic job in attracting firms from Silicon Valley, but these spoiled venture capitalists are reluctant to fly to attend board meetings here in San Diego. On the positive side, we have here some of the best universities and talent, while the cost of living is relatively less than the Bay Area. I personally lived there for a few years and then moved down to San Diego. I don’t regret one minute of it.”
Jeff Lunsford, Chairman & CEO, WebSideStory, served on the Board of Directors of Visual Sciences for two years. Lunsford, a former F/A-18 fighter pilot who served in the Navy for six years, was recruited by TA Associates (venture investors) to take the CEO role at WebSideStory to get the company growing and profitable, and then take it public. (At that point, Barrelet was no longer with the company, just a happy shareholder.)
“These were the early days of SaaS and we were pioneering a new business model. We were the third SaaS company to go public and had to train public investors how to think about our model versus the traditional software license model,” Lunsford says. “This was also an exciting time when many of today’s most valuable companies were arising out of the ashes of the Web 1.0 bust. A great Darwinian process had shaken out the non-viable lifeforms, but the strong ones, and those that learned and adapted, survived and thrived.”
After WebSideStory, Lunsford was chairman and CEO of Limelight Networks, which he took public in 2007 as part of a $240 million IPO, and co-founded DefenseStorm, where he still serves as chairman. These days, he heads up Tealium, a San Diego-based tag management and unified marketing company founded by former WebSideStory colleagues Mike Anderson and Ali Behnam.
Notable quotes from Lunsford:
Culture Creation: “We went through a massive culture change when I arrived at WebSideStory. We developed a culture I call an ‘open meritocracy,’ where information flows freely, and all employees are empowered with knowledge and facts, and where you identify and promote those who perform against their key metrics. This is a great culture that leads to enablement of capable people who learn while they are there and then go on to be great leaders and company builders elsewhere.”
Why San Diego Rocks: “We have great talent here and five-to-six great universities to hire from. We also have many talented folks who forged careers in the Bay Area or elsewhere who are excited to move here to enjoy a better lifestyle while still working at a high-growth tech company with a promising future.”
Editor’s Note: The is the beginning of a series about San Diego’s SaaS and digital analytics pioneers who rose out of the dot-com bust of the early 2000’s and went on to build extraordinary companies that still call this region home. Read Part 2 & Part 3.
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