At first glance, Google’s binge of buying Web 2.0 companies looks a lot like Yahoo’s. But there are some clear differences, which become apparent when you consider the search engine’s purchase of JotSpot. The purchase fits into a puzzle whose picture is becoming very clear.
Let’s start off with a little history. Joe Kraus and Graham Spencer founded JotSpot about three years ago. This was at least the second time around for both of them; during the early days of the first dot.com boom, they were two of the five co-founders of Excite.com. You may remember that Excite merged with AtHome.com in a deal worth $6.7 billion at the time – then suffered the fate of so many Internet companies when the bubble burst in 2001. In October of that year, Excite@Home filed for bankruptcy and sold its high-speed network to AT&T for around $300 million. Excite is still around; it’s now owned by IAC Search & Media, and has long since lost the search engine wars.
But it’s nearly impossible to keep a good entrepreneur down. So Kraus and Spencer started to toss ideas back and forth for a new company. As Kraus tells it, “We realized we’d need a tool to help us organize our thoughts or we’d quickly become overwhelmed. So Graham set up a wiki. I was hooked…Everything was kept in one place, not locked in email threads…we could both make changes to the same document, without having to know HTML…”
That seems to have been Kraus’ “a-ha!” moment. “After twenty minutes of using a wiki, I was convinced that they were like the Internet in 1993 – useful, but trapped in the land of the nerds (which both Graham and I proudly inhabit). So we set out to start JotSpot as a way to bring the power of wikis to a much broader audience.”
The nice thing about having been a part of the first dot.com boom is the connections, and I don't mean hardware. Kraus and Spencer were able to round up $5.2 million in venture capital from Mayfield Fund and Redpoint Ventures. In three years, the start-up grew to 27 employees and attracted 2,000 companies as clients. JotSpot now boasts 30,000 users who pay up to $200 a month to use its software, and ten times as many people who use the web application for free.
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