Sep 19, 2016 · 14 minutes

If you are a regular Pando reader, you know one of my favorite quotes about entrepreneurship is this: “Companies only go out of business for two reasons, they run out of money or the founder gives up, and only one of those is in your control.”

I credit it to Naval Ravikant; I’ve heard it credited to Ben Horowitz too. Whoever first said it, they were dead right. We’ve written story after story about entrepreneurs-- from Elon Musk, to Airbnb’s Brian Chesky, to Pandora’s Tim Westergren, to, well…. me-- who come within days of missing payroll or even stop taking salaries to keep going.

They watch their bank account dip lower and lower-- even negative on funds-- but still not giving up. Far more entrepreneurs take the face saving acquihire instead when a startup isn’t going to plan. It’s the rare Facebooks and Ubers that never have to face that ultimate moment of just refusing to go when it seems to be all but inevitable.

One of my favorite survival stories of the Web-- one that has spanned my entire career in Silicon Valley-- is JibJab, started in the era of 56k modems. Whatever comes to mind when you think of JibJab-- whether it’s Elf Yourself, Nasty Santa or This Land Is Your Land-- is a good indication of how old you are and how long you’ve been on the Web.

JibJab has been bootstrapped, it’s been venture backed, it’s been profitable. It’s survived the dot com crash and the 2008 recession. It’s survived blind alleys doing custom work, selling talking plush toys, and producing political satire. It had to learn to survive before “virality” was a thing, while everyone else was over-exploiting viral hacks, and now in a closed mobile platform world where virality is limited.

Pretty much the only thing JibJab has never been is roadkill.

They aren’t a unicorn, they are something even more impressive: A survivor of whatever almost two decades of the Internet media business has thrown at them.

Last week I got an email from JibJab’s co-founder and CEO Gregg Spiridellis. JibJab was featured on stage at Apple’s WWDC, and it got the number one featured spot when the platform launched last week. Spiridellis is so bullish about this new platform that he’s redirected his entire product roadmap around iMessage. “I think it poses a major threat to the third party messenger platforms and is the biggest opportunity for developers since the Facebook Web Platform in 2007,” he wrote.

Those are pretty dramatic words for a man whose short form videos have navigated the early days email forwards, YouTube, Facebook’s platform, and was also featured during at the launch of Facebook’s Messenger platform. Spiridellis has never met a Web or mobile platform he couldn’t exploit: And more surprisingly, that strategy hasn’t yet bit him. “Facebook fucked over people who were gaming the system and were not delivering the best experience for Facebook users,” he says. “That was never our thing.”

Since 1999, JibJab’s focus has always been on video. That was well before this new golden age of Web video everywhere, all the time, autoplaying constantly. Now that every platform is prioritizing video in its feeds, has JibJab’s best years finally arrived? Or will a raft of well-funded, newer entrants horn in on its particular brand of self-expression?

Intrigued by what the Forrest Gump of platforms saw that was so exciting about iMessage, I hopped on the phone with Spiridellis to talk about what makes this platform such a unique opportunity for developers and to talk about what perserverance really looks like building an online media company. The following are edited excerpts of the conversation.

For those my age, this interview will be a walk down viral video memory lane. For others, it may be a history lesson. For me, it’s a reminder of what entrepreneurship is really all about: Always finding a way.  

SL: Let’s go back to the beginning because you guys were started… a long time ago. I guess you didn’t have a platform strategy back then.

GS: Yeah, we started JibJab in 1999. I was at Wharton at the time; I was doing my MBA; I was an investment banker and my brother was at Parsons in art school. He was interested in doing television animation. I saw the Internet and I saw flash and vector animation over 56k modems and I called him and said “Holy Shit, you have to look at this. You can create something and distribute it all around the world without going through multinational media conglomerates.”

So the first platform that we were on was the Internet and the thesis was if we created something that was funny and interesting that people would share it with their friends. This was before the term “viral.” People would share it, and we would be able to build a brand for JibJab.

We had no idea how we were going monetize it, but we believed the Internet would evolve into the most important media communication channel in our life, and that if we had a brand, that ways to make money would evolve.

The first platform was just the Internet. Getting out there and building an audience one person at a time.

So what happened to you guys in the dot com crash. You didn’t die, obviously.

Yeah so we were bootstrapping, doing service work to fund our original branded content production. We’d do a job for the Sci-Fi channel or Disney and then funnel the profits into the original JibJab programming. There were a lot of venture backed companies in the mid-1990s and 2000 that were all licensing original content. Then they all went bust. In 2001, my brother and I were like “Holy shit all of our clients just went out of business.” We went from 13 people that we bootstrapped in Brooklyn down to the two of us. So we did the whole startup cliche of packing the truck and driving out to LA.

We set up shop here, and then we started producing toys. We were producing original content on the web, but to pay the bills. We were making toys; we did a children’s book; we were doing whatever we could do with our original content to make money.

We’d go into to stores like Spencer’s Gifts, because we had a character on the web called “Nasty Santa.” I was like “Hey we’ve got like a million views for these Nasty Santa cartoons, we want to make a talking plush.” So we got a talking plush order, and I was like “How the hell do I make talking plush?”

We were kinda surviving on toys and publishing and then in 2004 we were like, “Is this Internet thing ever going to materialize?” We knew from 2000 that elections were really interesting, because you can create one thing that was relevant to everyone all at the same time and it would have a shelf life for a good four or five months. So we just said “We’re going to produce another election video like we did in 2000, and if this doesn’t work, I think we’re going to have to go get real jobs or something.”

And sure enough we produced the video called “This Land Is Your Land.” This is pre-YouTube, and sure enough it just blew the doors off our servers. We had 80 million views in a Pre-YouTube world.  

We went from one week wondering if we were going to have to go get jobs, to the next week we were on Jay Leno’s couch and doing the Today Show.

And you didn’t even have something like Donald Trump to work with.

Yeah, we had to be creative! We didn’t have something like Donald Trump that wrote himself!

2004 ended with my brother and I being named people of the year by Peter Jennings on ABC News, and Larry and Sergey were the 2003 guys. So you could say I’ve significantly underperformed the market since then. But look, there was a bigger market opportunity for what they do.

We just spun that and spun that into licensing deals, and we started rebuilding the business. In 2006, seven years after we started, I raised my first round with Polaris Venture Partners. In 2006 YouTube was surging, and we could work with brands in these new channels. We realized quickly, it’s really not scalable. This is the problem with brand and entertainment, or any kind of branded sponsorships. You wind up taking time away from your own brand, and it’s expensive and time consuming.

But I’d come across the fact that American Greetings, which was a public company then, had a digital greetings business, and they were doing almost $80 million a year for a subscription eCard service. And I thought, “Well, hey, let’s bring some innovation to this category.” People won’t pay to watch something funny, but if that something funny also has utility, if it’ll help me say “Happy birthday” to my friend or serve as my Holiday Card, people will open their wallets for it. And so in 2008, we launched our subscription eCard service, and the other thing that happened at that time was Facebook opened its platform on the Web.

And so the second I saw that I said “Holy shit, Facebook Newsfeed is basically the equivalent of how we built our original business with our short videos.” People used to email their entire address book, remember when that was socially acceptable? When you can send a joke to your entire contact list? Holy shit this is in essence the same exact thing except there’s no moral obligation to reply to the person and say “this is funny.”

So we saw that not only was this a viral channel, but we’d come up with doing personalization. We could build tools that let people personalize the content. We came up with “Starring you” and with Facebook’s Platform, we could access your photos and insert people and their friends into our videos. We started the JibJab Greetings business with the focus on personalization. We did another round in 2008, but we haven’t raised a round since 2008 because that business is well over 1 million paid subscribers. We have a 65 person studio that’s been generating enough cash for us to invest in new areas and that’s where we are today.

So how do you think of JibJab today? Is this a lifestyle business or still a high growth company?

I think of this business as a growth business. The greetings business could be an amazing cash generating lifestyle business if that were our objective, but everything we’ve done is about following communication patterns.

Back in the early days when we were doing short form political videos, email was the emerging communication channel. We had to figure out what people would forward to their friends. Then when Facebook Platform opened and we were looking at Newsfeed we were saying, “OK what kind of content formats work for social channels and Newsfeeds?” And then three years ago I was looking at the growth in messaging platforms, and I was like “Wow, this is the next wave.”

We’re not just going to take political satire and put it in messaging ;we’re not just going to take eCards and put them into messaging. We need to think about what format will really work in the lightweight, high-frequency messaging scenario. Not only that: The thesis was there are all these messaging platforms out there, and they are completely undifferentiated from one another. These platforms are going to have to open up; they are going to want to have richer experiences. I felt like I’d seen this movie before. This is what Facebook did, and this is what makes sense.

We launched our messenger product in 2014 as a stand alone app, but the vision was that messaging platforms are going to open up and when they do, we’re going to have the best content and tools for self expression in these channels. You see from emojis the behavior is there. We can offer richer more fun alternatives to emoji.

In 2015 at F8, when Mark Zuckerberg announced the opening of Messenger as a platform, he used JibJab as  a launch partner. I said “Ah, finally this vision is vindicated! These platforms are going to open up.”

So that was really great, but there are these structural issues with third parties in messaging. If i get someone to engage with my content and share it, there’s gotta be a smooth path to share that content and to come back to us and to engage and become a user themselves. It’s the viral loop, and it’s structurally really hard for a third party messenger to offer a place where a viral loop is possible.

That’s because there are two problems. One is the integration of content within the messenger experience, The other piece is the App installs. If a third party messenger wants to get the recipient to interact with the content they have to send that person to the Apple app store to install the app and the whole experience breaks down. If I send you something in messenger, it’s like I’m taking you out of your conversation. That’s not a good experience.

So this spring when Apple called us, and we went to Cupertino, and I heard exactly what they were doing; that the experience would be one tap or two taps away from the user in iMessage, integrated within iMessage-- which means it opens up in the keyboard space as opposed to kicking you into another app. And not only that, but the recipient of our content can-- without ever leaving iMessage-- install our app. I said “That’s the key.” There’s the potential for virality now. The people who see our content can easily get it, and we can onboard them all without ever leaving iMessage. The conversation flow is never broken.

We were the featured app when they announced the opening of iMessage, and then last Tuesday when they opened the platform, we were thrilled that we got the number one featured spot. And I think it’s just because we’ve been thinking about and building for this moment for a long time. And now that we see the platform, I’ve redirected my entire product roadmap for it. We’re really, really bullish on it.

You’ve gone through a lot of different platforms, but you seemed to skip over the part where Facebook totally fucks you over. That’s usually where the story goes. Have you had negative experiences with them?

You know what? No. I think Facebook fucked over people who were gaming the system and were not delivering the best experience for Facebook users. And you know, I don’t mean to get on a high horse here, but we’ve always said if you build something of quality, people will want to share it. We were never in there gaming Facebook notifications or spamming users. That was never our thing. We were really smart about optimizing virality but it was always user driven.

We built the business we have today on the Facebook platform, and I have none of that. I understand it with Zynga and others, but I think a lot of that was about maximizing invitations. I think Facebook protected their user experience.

It’s a bit the same with news and publishers relying on Facebook and gaming it with over-optimized headlines and quizzes.

Absolutely. There’s some variation of this theme, whether it’s game companies spamming the feed or whether, it’s these headlines that are A/B tested to death and designed to get the click or the content farms that were doing the same kind of thing with SEO. And you know what? You never survive in the long term. You might flip it. You might ride a wave for a little bit. But no one survives, and the problem is you build a company that has a culture gaming something not building something.  

Ultimately you have to play by the platform’s rules if you want the benefits.

And iMessage is a closed ecosystem. We grew up in the Web where it was all open. iMessage is so closed and so controlled, but you say “My God, they have 500 million to 1 billion monthly active users.” I mean no one really knows what the answer is, but it’s gotta be around there and because it’s so closed and so controlled, if we can actually build a really good user experience, we can build something really valuable.