Submittable, a Missoula-headquartered software startup, recently raised a hefty $1.3 million in Series A venture capital funding, a rare feat for a Montana-based tech company. The firm, which creates and sells software that is used for accepting and reviewing incoming video, text, image and audio content, aims to use the financing to grow from its current 18 employees to 100 within two years.
Actually, co-founder and CEO Michael FitzGerald is even more ambitious when it comes to the long-term plans for the company he helped start from scratch.
“My goal is to have, eventually, a 500-person company in Missoula, Montana, with everybody making three times the median wage,” he said. “You know, I think one of the more criminal things we do is send all of our kids out of state. We basically take the top 20 percent of every class and send them out of state. I have two kids. I want my kids to think staying here and having a life and a business here is a totally awesome idea. Like an optimal decision, not a backup plan.”
The venture capital funding was led by Next Frontier Capital, a Bozeman-based firm that has found something of a niche market by investing solely in Montana-based tech startups. It was joined by Knight Foundation Enterprise Fund, Flywheel Ventures, Missoula-based Goodworks Ventures, Whitefish-based The Frontier Fund and other investors.
FitzGerald still has a picture on his phone of the $1.3 million being transferred to the company’s bank account.
“We’re just going to use the money for growing and different verticals,” he explained. “We started in publishing and we sort of jumped the fence. We’re now used for something called 'user-generated content', which is big in journalism. We make it dead simple for any organization or any publisher to easily accept video, audio, any sort of text, any media type and then curate it internally or make it available for public curation. There’s people using it for citizen journalism. That’s sort of a chaotic place right now. But in my mind publishers, their value is as a curator of all this stuff."
"And right now, we’re telling everybody to take videos and give it to Facebook or YouTube to monetize, and it’s insane that we’re not giving it directly to the publishers. The Missoulian knows our town way better than Facebook, way better than YouTube does. Except there’s no way to do that right now, so we facilitate that for any publisher. We’re also developing a suite of mobile tools. We’re going big in mobile.”
Submittable was founded in Missoula by FitzGerald, John Brownell and Bruce Tribbensee and is headquartered in the Florence Building downtown. The company has clients all over the world, but 99 percent of their revenue comes from out of state.
The product the founding trio originally created didn’t sell well at first, but FitzGerald said they had faith – or “delusion” as he jokingly calls it – that they could come up with something that people needed and would pay money for. They eventually realized that publishers were telling them that they liked a small portion of the original product. They also got a small early investment from Steve Saroff and Glenn Kreisel, two local software entrepreneurs.
“We were desperate,” FitzGerald, who is also a writer, recalled. “I had two kids. The euphemism for being a startup CEO is you are basically unemployed until you make money. So we had no revenue. My wife is a screenwriter. It was terrifying. We had to figure it out. So we ripped everything out except that 10 percent and we sold that directly as a service. So instead of a centralized consumer marketplace, we just said ‘here’s a widget that let’s you accept a document, it will create a PDF version, and it will let your team vote on it.' And that little widget took off. And took off as in ‘got us to where we are now.' That was four years ago.”
FitzGerald said creating something new presents unique challenges, like figuring out what the product is worth.
“We started off cold calling and trying to get people to give us $10 a month,” he said. “There’s not a business plan for that. You are asking a stranger to buy your brand new thing that doesn’t exist on Earth. We don’t know what it is worth.”
On March 31, 2010, the company made its first dollar.
“That whole first year, I think we made like $437,” he said. “You keep thinking it’s going to take off. But it’s incredibly valuable to see a stranger give you money. When somebody you don’t know pays you, in my mind, the thing I knew then is all we need to do is scale. Which is a lot harder to do. You just have to keep doing that. So we just kept grinding it out and going in debt and all the traditional startup stuff and we’ve added features all along the way. It’s now an insanely robust feature.”
Having access to venture capital not only means that at least some investors think the company has a bright future but the company can also afford to experiment with branching out into new areas. FitzGerald thinks that Montana is home to a lot of smart entrepreneurs and there is a lot of untapped resources here, as far as startups that venture capitalists outside of Montana may be overlooking.
“We’re excited that we can do a lot with it,” FitzGerald said. “Venture capital, to work, really needs a bunch of things in place and there’s a reason why there isn’t a bunch of investment in Montana. And it’s mainly because they kind of look for scaleable products. So they need to be able to hire a hundred technical people, and that’s just not the easiest thing to do here.”
FitzGerald is a graduate of the English Department at the University of Montana and he said his company almost exclusively hires liberal arts majors. He is dismayed that UM is looking at budget cuts – especially in liberal arts departments – due to declining enrollment in liberal arts programs.
“I think it’s shortsighted. Many other startups in town that I admire were also founded or co-founded by liberal arts majors such as Remote Scan, Rocky Mountain Biologicals, Adventure Life and Rivertop Renewables,” he said. “I think the argument should made that the liberal arts don’t produce employees, they produce employers. The liberal arts base is amazing, and we have an incredible campus. We shouldn’t be competing against MSU, we should be competing against the other liberal arts schools in the country, of which there are many.”
Although the company’s success is at an all-time high right now, FitzGerald is still humble and believes that anyone with a good idea can succeed as a tech entrepreneur in Montana with enough vision and hard work.
“If a jackass like me can do it, anybody can,” he said, grinning.