By early 2009, Widgetbox was a company on life support. The startup ran a platform that allowed developers to build and distribute small software applications called widgets that could be dropped into consumer or enterprise websites. But the three-year-old San Francisco firm was nearly done in by the triple whammy of the recession (which meant there were few paying customers for widgets), Facebook (which had created its own massive market for embedded Web applications, sucking away software development talent), and Apple (which did the same on mobile devices). The company laid off half its staff, and spent the better part of a year searching for a new business model. “To be totally transparent, we had no idea what to do,” says CEO Will Price.
Then, on July 21, 2009—coincidentally, the 40th anniversary of Neil Armstrong’s walk on the moon—“I got an e-mail that changed the company,” Price says. The note was from Ryan Roslansky, the director of product management at LinkedIn. Roslansky explained that LinkedIn was planning to start showing display ads alongside its social-networking profiles. But it didn’t want to show standard banner ads—it wanted to offer advertisers a different type of ad unit, something that would be more customized, interactive, and engaging, and would therefore fetch higher rates. Such ads would need to function like mini-websites, but they’d have to be far faster, easier, and cheaper to create than traditional “rich media” ads. Roslansky’s suggestion: Widgetbox already had the technology to do this.
“Ryan said, ‘If you don’t call these things widgets but call them banner ads, you guys are on the cutting edge of what ads are,'” says Price. “So we found ourselves in the display ad market.”
It was an epic pivot, and it saved the company. Today the startup is called Flite (it abandoned the Widgetbox name in March), and it’s got a long list of publishers, ad agencies, and brands, including LinkedIn, paying for what it calls its “cloud-based” advertising platform. The “cloud” part is really just the fashionable term these days for what Flite has been doing all along—that is, connecting a gallery of small applications with a back end of data and services. If you see a Web ad for HP, FedEx, or Toyota that has lots of clickable tabs, videos, forms, sliding images, and social sharing links, chances are the ad was authored on, and served up by, Flite’s platform.
Widgetbox ran through $14 million in Series A and B funding before its stall. But with 65 employees and $12 million in new cash from General Catalyst, Sequoia Capital, and Hummer Winblad, Flite is airborne again. Its main challenge now, Price says, is the “behavior change issue.” Big brands that want nifty interactive ads are accustomed to paying big money to big advertising agencies, who put big creative teams on the case and take six weeks to build one ad. None of that is necessary with Flite’s ad-authoring platform, which makes assembling and staging a new ad as easy as clicking a few buttons. Indeed, the system is designed to be so easy to use that brands themselves can change the content of their ads every day, if they feel like it. “Any technology change that requires a behavior change has a risk,” as Price puts it. “But somebody is going to win this ability for brands to do their own programming.”
Oh, and Ryan Roslansky? His 2009 note and Price’s response was the purest possible example of a startup listening to a customer, even if it was driven by desperation. “I wanted to give him stock, but his general counsel wouldn’t let me,” says Price. Instead, Roslansky serves today on Flite’s “Customer Council,” a group of advisors from top publishers, agencies, and brands.
Flite’s story starts even before widgets. Co-founder Ed Anuff had previously started Epicentric, a dot-com-era maker of enterprise portal software, which grew to more than
