After the Bubble Burst, a New Opportunity
Sharat Sharan believes good entrepreneurs inevitably face forks in the road when their decisions can forever impact the company’s future. At the time of the dot-com bubble, Sharan’s financial news multimedia network, ON24, was humming along with more than 100 reporters in various cities and content syndicated to E-Trade and Nasdaq. Then the bubble burst.
ON24 lost its clients. The San Francisco company was burning through almost $1 million monthly, putting it on a path toward bankruptcy by the end of 2001. “It was all about survival,” Sharan recalls. For the tech world, “this is a time when the world had just stopped. The opportunities for everyone were very, very dismal. All around you were things being shut down.”
Solution: Sharan saw that ON24’s streaming video technology could be leveraged for purposes other than broadcasting news, so he took the difficult step of letting go his managers and news staff, and by late 2002 totally transitioned the company into webcasting. At the suggestion of customers, he expanded into virtual conferences and other events, such as a virtual career fair for returning military veterans.
This vision paid off—ON24 now calls itself the global market leader for virtual events, webcasting and virtual communication solutions, partnering with companies such as IBM and Oracle. Staff had plummeted to 35 in 2002, but now numbers 300. Last year it averaged 480 virtual events and webcasts per week—totaling about 25,000 for the year. Sharan anticipates 2011 revenues to reach as high as $75 million.
Part of the reason the company survived, he says, is he started downsizing earlier than other dot-com companies—by October 2001. “We saw that it was going to be very impactful,” he says of the dot-com bust. “You have to be straight-up with your people. You’ve got to tell them. They were seeing carnage all around.”
While webcasting uses the same fundamental streaming technology as the news operation, it’s a completely different product. His company didn’t have that at first, but what it had was staying power. Other larger webcasting companies had gone bankrupt, and some of Sharan’s early contracts were with those companies’ clients, such as Merrill Lynch and Credit Suisse.
At first, “we stuttered, we failed, but once we started delivering on those opportunities, that’s where we got more confidence that we could now really build a product in this category and we could service these very large enterprise customers,” Sharan says.
Sharan admits he was tempted to shut down, but he had always wanted to build a company in Silicon Valley. Plus, he raised close to $25 million from investors in March 2000 and felt he could accomplish a turnaround. “You feel obligated,” he says. “You don’t want to give up.”