Making the connection: How Tim Schigel and ShareThis brought Internet users together

nca_slider_cs_TimSchigel_0414

Tim Schigel sensed where the Internet was headed and developed a platform that changed the way people connect.

“I had this notion that people were going to become the center of the Web, not domains or websites,” says Schigel, chairman and founder of ShareThis Inc., a widget featured on more than 130,000 websites that allows Web surfers to share items through social media networks and email.

While sharing is now accepted as an integral part of Web use, that wasn’t the case in 2005 when Schigel reached out to a professor at the University of Illinois, David Goldberg, one of the inventors of genetic algorithms.

“I was looking at the overall digital marketing space, and Google owned just about all of it,” Schigel says. “There aren’t many companies that have really changed the dynamic of that landscape, but it has to change because there is so much growth in front of it.”

ShareThis was launched in November 2007, with installation on 1,000 sites within the first week. A second round of funding was raised in February 2008.

Here’s how Schigel created ShareThis to take advantage of a growth opportunity.

Blazing a trail

A common theme among entrepreneurs is that they tend to find their own path. Schigel says he’s never liked going to where the crowd was, so it wasn’t hard to ignore venture capitalists who said they wouldn’t invest in ShareThis unless it had a Facebook plan. Schigel favored an open model approach to sharing rather than the closed model used by Facebook.

“If you are so enamored by Facebook, go ask Accel (Partners) to let you invest. But I’m trying to do something new. Something different,” Schigel says.

It helped that Schigel had experience in the media technology space. While director at Blue Chip Venture Co., he led investment in advertising.com, which was sold to AOL in 2004 for $485 million.

“If I were younger and hadn’t been a venture capitalist myself for a little while, I might had been more intimidated by it,” Schigel says. “I just couldn’t believe how many of them — it was that follower mentality — just wanted to do what was being written up in Tech Crunch.”

Illinois Ventures joined Blue Chip in investing in ShareThis, which eventually attracted other investors.

“If you think about how networks recreate, we create these networks through sharing. So before long investors started realizing that we were onto something,” Schigel says.

He did have to educate people about the value of sharing, however.

“The way I think of it from a marketing standpoint is that instead of three channels, you have millions of channels. Every single person is a channel,” Schigel says. “You need to activate those channels and you need to understand those channels.”

Many companies and app developers have made it easy to invite friends to visit a site, for example. But while they have become adept at the mechanics of social networking they don’t fully grasp its implications.

“I still think there is a big opportunity and not as much understanding of the true science of influence,” Schigel says.

Marketers get caught up in viral and want viral videos, for example.

“Viral can work, but it is very unpredictable. You can’t predict that by investing $1 million in a video it will go viral. So if I can tell you with 99.9 percent accuracy that if you invest in this you will saturate the market, that’s what marketing is all about,” Schigel says.

The problem has been that there hasn’t been a system in place to track and measure networks.

“What I like about ShareThis is that sharing creates those network connections beyond just who knows each other, but how information and influence flows between people. Then we can measure it and hope to influence it,” he says.

Focusing efforts

All companies need to continue to innovate, whether a startup or an established business. But it can be difficult to determine your next step when the possibilities are endless.

That’s why Schigel is a firm believer in constraint-based engineering.

“It means that the most innovative ideas come from conditions that are very constrained or set. If I said, ‘Go and invent something cool,’ and don’t give you any rules, you will just float around in this ambiguous space,” he says.

“If I say, ‘Go figure out how to lift something that weighs 10,000 pounds using a device made out of toothpicks,’ now innovation starts to come in.”

One limitation ShareThis had to address concerned the functionality of websites that were using the widget.

“We were embedded in some pretty big sites, like ESPN and Disney. And we knew that Web developers were going to be very critical of any third-party code that slowed down the performance of their site. So we had very high constraints on trying to do as much as we could while taking up as little compute power as possible,” Schigel says.

ShareThis also decided to focus on using the Amazon Cloud rather than hiring a systems engineer.

“As we grew, there was an argument that we were going to have to invest in a data center. We still haven’t done that. We are still 100 percent in the cloud,” Schigel says.

Instead, team members were told the entire system had to work in the cloud, which meant they had to find a data warehouse solution in the cloud. Although there were questions as to whether such a solution existed, they discovered a company to work with.

“If we changed that first rule, they would have been defocused. They would have said, ‘What about this?’ or ‘What about that?’ But they were told not to bring up anything that’s not in the cloud,” Schigel says.

Google has set engineering constraints that a new product cannot be launched unless its performance for things like Web page loading speed meets certain criteria, he says. That was done because Google learned that search results were perceived as being better based on how fast the page loaded.

“They know it has a perception on behalf of the user. It is more powerful that the function itself,” Schigel said. “That’s another example of learning an important lesson to set a constraint and not violate it.”

Creating insights

Collecting data is important, but the real value is in the insights based on that information.

Schiegel and ShareThis made a contrarian move not to sell data, but keep it and produce relevant strategies from the information.

“The reason why is we believe data was just going to get commoditized, and most of the people who consume the data don’t know how to apply it. The value is in the insights from the data. I can give you all of the data about the stock market, but it doesn’t mean you’ll make any money,” Schigel says.

ShareThis recently launched application programming interfaces to allow others to access the data. Schigel expects that app developers and service providers will develop some interesting new ideas based on the APIs.

Entrepreneurs can learn a lesson from this approach, Schigel says. The big ideas come from creating a platform that other organizations become dependent upon.

“There are plenty of opportunities for people to build apps or solutions on top of that, that are still good money makers, that could transform a certain industry or domain by taking some of these concepts and applying it to health care, let’s say,” Schigel says.

That’s one key difference he sees between the Midwest and the West Coast.

“Midwest companies think in terms of platforms, how to create an ecosystem in the market that builds on top of what we’ve made instead of a point solution,” Schigel says.

Big ideas also evolve from understanding the customer’s viewpoint, he says.

“That’s where the idea for sharing and ShareThis came from,” Schigel says. “We were asking a group of people, a cross-section of ages and experience — not necessarily techies — to describe their Internet experience.”

What they discovered was that people were not satisfied with searches and knew results were being manipulated.

When people were asked about their sources for new information, they said it was from links shared by others.

“That’s how information is shared, No. 1. I do it all the time and nobody tracks it,” Schigel says. “In my mind I was envisioning this fiber optic network of hot points that represented when people shared information, with information crossing these bridges. Nobody knows it’s happening and nobody tracked it. So it was literally that moment a light bulb went off.” ●

Takeaways:

  • Constraints help spur innovation.
  • Avoid the follower mentality and find your own direction.
  • Create a platform others depend on.

The Schigel File:

Name: Tim Schigel
Title: Chairman and founder
Company: ShareThis Inc.

Born: Tacoma, Wash. Fort Lewis Army hospital. Grew up in Cleveland.

Education: Bachelor’s degree in electrical engineering from Case Western Reserve University.

What was your first job and what did you learn from it? Aside from cutting grass, etc., my first real job in high school was at a fence factory. We made decorative fences and snow fences. I would work a shift from 2 to 10 p.m. I had to manage a number of older Polish immigrants and close down the factory. I learned the value, honesty and integrity of real work and had a great deal of responsibility at a young age.

Who do you admire in business? Charlie Mechem, former CEO of Taft Broadcasting, commissioner of the LPGA, Arnold Palmer’s adviser for more than 30 years and many other roles. Charlie is the classiest person you could meet. He is sharp as they come, disciplined, pioneering and all the while the warmest person you could imagine.
What is the best business advice you ever received? Listen. Listening is the key to understanding. It’s critical in any role you might be in. We could avoid a lot of wasted time if people would take the time to listen to each other.

What led you to entrepreneurism rather than a career as an electrical engineer? Many of my relatives were entrepreneurs and also very creative. I don’t see it as a choice between “entrepreneurism” and engineering. They are one in the same. I believe the best entrepreneurs have a strong foundation, or expertise, in some industry, field or skill. It helps to have a platform from which to understand and interpret the world. I choose electrical engineering because my father was an electrician and we always had electronics around the house, including my guitars and amplifiers! I didn’t know exactly what I wanted to be, per se, but I knew that I enjoyed new ideas and cutting-edge innovation. I’ve tried to blend those interests and my passion for music in all that I do. In my freshman year I helped launch a program between CWRU and the Cleveland Institute of Music for the study of digital music and recording. For the late ’80s, it was pioneering stuff!