Interview with Joe Kraus, CEO of Jotspot

JotSpot is a venture-backed company started two years ago. It is what most people would consider a hosted Wiki, but we like to think about JotSpot in the long-term as a pioneer of do-it-yourself applications.

The industry has spent the last 10 years on do-it-yourself-publishing on the net, making it easier for a non-technical person to put words on a page that someone else can read. On the other hand, very little, if any, time has been spent trying to make it easier for an end-user to build an application online.

JotSpot is starting out in the do-it-yourself publishing arena with Wikis, but what we?re really trying to accomplish over the long-term is to enable end-users to build simple, lightweight, web-based applications.

Yes, I believe that Intranets are the sweet spot for our initial Wiki offering.

There is a saying in golf, “drive for show, and putt for dough,? which basically means that when Tiger Woods smashes a 300 yard drive off the tee and the gallery goes crazy, that drive is for show. He makes his money on the 5 and 6 foot putts. Similarly, there is lot of fascination with blogging. It?s huge in the public domain. Wikis, with the exception of Wikipedia, tend to be worked on in a private setting. As a result, I believe that it is, ?blog for show and Wiki for dough.?

Most of the usage of Wikis is behind company firewalls where there is an inherent built in mechanism of trust, because everyone is an employee at the same place. One of the places that Wikis naturally lend themselves to is Intranets and sights for project management inside companies.

The fundamental premise behind a Wiki is that anyone can edit any page. For that to work you have to have trust, which is usually found in tight communities. You can build those communities on the open Internet, but they are definitely rare. Wikipedia has successfully managed to build a community of trust. When someone vandalizes the Wikipedia sight, they are quickly thrown out. Because the community is directly responsible for the site, any defacements are reversed very quickly. There is a lot of care that goes into the site via its very active community.

The L.A. Times also experimented with Wikis, yet they didn’t have that community of trust. It was quickly vandalized and the L.A. Times wasn?t able to correct the defacements and were forced to discontinue the expirement.

There is an inherent trust mechanism, as everyone is an employee of that company. Importantly, there is an enforcement mechanism as well; people can be fired. As a result, you have a much easier time establishing the basis upon which a Wiki can work, which is trust. That is why you see Wikis being more successful and popular behind the firewall.

I think they can and that definitely is the allure of Wikis. If you look at blogs they feel like they are building a community, but in reality they are a one to many publishing system. There is a big interest in identifying technologies that can get people into more of a dialogue with their readers, customers, and communities. That is what I believe is driving the allure of Wikis. I think Wikis can be successful in that role, but I am not sure that anybody has cracked the code for how to do it in a consistent fashion.

The Social conventions for Wikis haven’t been developed yet. For example, in the early days of email people would send random jokes to the entire office. It took a couple a years before social pressure and social conventions came to the point where you just don’t do that anymore. Similarly, we aren’t sure how we are going to use Wikis to engage in conversations more broadly with our community. Though they definitely hold the promise moving forward.

We have customers all over the spectrum. From Mom and Pop sole proprietorships to mid-size organizations with 300-500 people, to some of the largest companies in the country. There is a huge variety of interest. We generally find that it has more to do with function than size. Our customers are looking for the ability to organize a group of people and share information much more effectively than is possible via email. That is the need that ties all organizations together, independent of their size.

My theory is that every five to seven years email spawns a new application. About seven years ago, we were sending out instant messages via email. We would send a quick note to a friend or co-worker not knowing whether they were there or not. If they were to respond fairly quickly we would in effect have a conversation over email that resembled today?s Instant Messaging. It was recognized that email didn’t work well for that type of application and as a result Instant Messaging was created as a separate and distinct communication tool.

Something similar has happened with Wikis, I attribute the rise of Wikis today to the fact that there is an email communication, which is the “Request for Comment. It is very inefficiently done over email. So this might be someone sending out a message to their team “What do you think about …?” They would then receive this huge email thread with all the replies and possibly a conclusion, which was stored in someone?s inbox. This whole ‘Request for Comment’ style is handled much more effectively by Wikis.

Each group takes a slightly different channel. We plan to primarily use an inside sales force to target the mid and large companies. We are seeing a tremendous amount of interest inbound through the blogosphere and people simply interested in Wikis. Everyone knows that they need a new solution for communicating and that email isn?t up to it. No one is certain what the right solution is, which leads people to Wikis as a possible solution and therefore us. Finally, we are doing a lot of experimentation with online channels to reach the small and mid-size businesses. That mixture has been pretty successful so far.

We are trying to build a machine within the company that can scale up with our customers. People are serving themselves. For us to be successful, it has to be about processes and systems. We do not plan to be a high touch business. We are trying to build a self service business model. If you look at our prices we charge between $9 and $250 per month, with a free trial version as well. At those price points it is not a high touch sale. It is a product that people either find useful or they don’t. We have set it up such that users can start out at the smallest package and grow into it as their usage increases. It is a scalable solution for different size companies.

Many of them are very good. First, our focus is on non-technical users and to date most Wikis have been built by Engineers for Engineers. Secondly, JotSpot looks like a Wiki and that is how it presents itself to the world. Though, it really is a platform for building lightweight web applications.

One thing that JotSpot does really well is that is provides a Wiki as well as a host of other applications that are completely integrated; such as blogs, bug tracking, project management applications, time & expense management, etc. They are a whole constellation of services in addition to your Wiki. Thirdly, as a hosted service it is hard to overestimate the value of convenience.

The value proposition of a traditional Wiki is one where you are spending time and resources to install it, maintain it, upgrade it, etc. With a hosted model, those costs are negated. It is a combination of end user focus, convenience and delivery, great customer service and that you receive a whole suite of applications.

There are two kinds of entrepreneurs; top down entrepreneurs and bottom up entrepreneurs. Both are valid models. However, rarely are people both. Personally, I am a bottom up type of entrepreneur. The top down entrepreneur is someone who identifies where there is an established business model, where is there a pot of money being spent, where there is a hole in terms of product offering and how can they build a company to fill that hole. Today, if you are starting a vertical search company you are a top down entrepreneur. Search is a proven business model and you are searching for holes and you are trying to plug one of those holes.

I tend to get very passionate around some particular technology that I believe can be used more broady that it currently is. Graham Spencer, a co-founder from Excite.com and I were thinking about what we wanted to do next and began using a Wiki to coordinate our thoughts. Within 20 minutes of using the Wiki I realized that this is what we were going to do next. In the ten years at that point that I had been involved with the web, I had never been as able to quickly create a web page in the service of business. I was fascinated by it.

It felt like the Internet first did in 1993, which existed as a command line tool via Gopher, Archie, etc. The value of companies like Netscape, AOL, etc. was that they enabled an end user to gain access to it. Just as the Internet in 1993 was trapped in the land of the nerds, I feel that Wikis were trapped in the land of the nerds as well. Finally, we thought that if we could take this collaborative publishing model and turn it into a model for application publication.

Quite honestly, persistence is everything. There were so many times in Excite’s history that it looked like all was lost and we persisted and succeeded. A classic example was when we launched Excite in October of 1995 and we didn’t yet have a lot of traffic.

At the time, Netscape put thee search button on their browser up for bid and there were three bidders; us, InfoSeek, and MCI (which was trying to get into the search business at the time). We had One Million dollars in the bank and we bid $3 Million without knowing how we were going to pay it, but knowing that we had to win the deal. We ended up losing the bid to MCI.

The thing is that we didn’t give up and we acted as though the bidding process wasn’t over. We kept calling them and sitting in their lobby unannounced. It turns out that 21 days later MCI couldn’t deliver and we ended up securing the deal. It was because we were persistent that allowed us to win that deal. We would have never had our run if we hadn’t gotten that deal.

The next big lesson is that you have to hire incredibly well. The adage that A players hire A players and B players hire C players and C players hire losers is completely true. We have a hiring policy here at JotSpot that we call ‘No False Positives. What that means is that we are willing to have an interview process that rejects a lot of very qualified candidates. We have a process that is very restrictive to ensure that we don’t let any bad apples into the company.

It depends upon what you mean by successful. For a lot of people successful means efficient or mostly successful. For us, one negative hire means that our hiring process hasn’t been successful. That is a really high bar and it means we reject a lot of very qualified people, which is unfortunate. Silicon Valley has this myth of hire fast, fire fast.

Startups just cannot do that. When you have 20 people in your organization and you hire a new person, you have increased your size by 5% and it is extremely difficult to fire 5% of your company. It is not like you can easily say that there isn’t work for that person, because they represent 5% of your workforce.

It is vital to not make any mistakes on your hiring especially with your early hires as they set the tone for the organization. Nothing inspires really smart people to come work for you like other really smart people.

It really depends upon the company. A lot of it has to do with the fact that people are persistent and able to take very amorphous situations and create artificial clarity. Can they take a very complex issue and get at the heart of it very quickly? It also depends upon position. There are different things that I look for in Engineers that I don’t look for in non-technical people. One key characteristic that transcends all positions is that they need to be able to communicate extremely well.

Rarely is it for lack of ideas that companies fail, but rather it is the ability to persuade other people that your ideas are good. In the hiring process the question is the answer. After completing an interview if you leave the room asking whether you should hire that person or not, then you know what you should do.

I am sure there are two many things to count. The biggest mistake we made was that we stopped investing aggressively in search between 1995 and 1997. The reason was that everyone was pursuing a portal strategy and no one knew how to make money from search. As a result people weren’t investing heavily.

This reminds me of the rise of any new media. The new media first looks like the old media, which looks wrong and then figures out what it is good at differently than old media. Early television programming was merely radio shows put on TV, which obviously didn?t work very well. They eventually figured out 5 to 6 years later what the right programming should be in conjunction with the right advertising model.

When search came out people applied the old advertising model of print or of radio, which was a cost per thousand impression model. It wasn’t until Overture started and Google perfected this notion of cost-per-click advertising that this whole thing really took off.

One big regret is that we underinvested in search, while pursing a portal strategy, which is a lesson of time. Secondly, we built our whole company on SUN hardware and EMC disk drives. That meant that it was very expensive to make our search index bigger. If you look at successful architectures today they are all Linux and Intel based. They are very, very cheap. Those are two of the thousands of things I would have done differently with hindsight.

I don’t see it, although I am not saying it isn’t possible. They have done a tremendous job being a very aggressive leader in their category. From expanding across the world to continual investment in their core business, to their rapid expansion into other businesses, to the amazing hiring that they have been able to do, I don’t see it as very likely. I don’t see it over the next 5 to 10 years; however who knows what can happen in 50 years.