00:07 Jose Ferreira: There's this kind of personal, you feel like you're a failure but really, the reason that's so bad is because a lot of people you failed, that's why you feel like a failure.
Before Jose Ferreira founded education technology company Knewton in 2008, he ran DizzyCity, a start-up website with block-by-block views of five U.S. cities.
00:25 Ferreira: I had always been a product guy my whole career, there was a product I was usually proud of when we produced DizzyCity, it got incredible plaudits from the press and the public. But it was just kind of a half baked business model, in terms of... We had some customers but not enough to get to profitability. We could have gotten there eventually, I think if it lasted long enough, maybe Google buys us because it was so similar to what they've ended up doing, Street View. But it didn't happen, we ran into the dotcom crash and the company went out of business. And so what happens when you raise friends and family financing, you've got all these employees, is you wake up one morning and you realize you've gotten an incredible amount of responsibility you never ever thought you would had, that you didn't expect to have when you first started the company 'cause I literally raised money from friends and family.
01:12 Ferreira: And I had these employees who were just killing themselves working so hard because they loved it so much, the product. And so it kind of blew up one day. We couldn't raise any more money and it was just so devastating to have to go into that office and say, "It didn't come together, the round we were working on didn't materialize, it's not gonna materialize, we're gonna have to shut down operations", and let go all of these people who have just killed themselves for you.
Jose shut down DizzyCity in 2001.
He had to lay off twelve employees.
01:46 Ferreira: When I had to shut down the office and I was the last person there and we were just getting rid off all the stuff and I'm sitting there, the last place in the world I wanted to be, throwing away all these things, trying to sell them at fire sale prices, that was just a terrible, terrible week, the worst week of my life probably. And I was really, really broken up about all the employees we had to layoff, but we had this one employee named Yuri who I'll never forget. He was an immigrant from St. Petersburg and he didn't speak a lot of English. He was a little bit older and one of our hardest working people. He was so proud that he was a professional that he had this job in an American tech startup and he had this young son at home, and I could just imagine him going home and like his son being proud of him the way I was proud of my dad when he would come home. And to look Yuri in the eye and let him know that it didn't happen, it wasn't gonna happen was... It just crushed me. I mean, it was all terrible, of course, but for some reason, that just really stood out. And I kind of promised myself I'd never go through that experience again and I thought that that minute, I'd never start another company again.
Seven years later, Jose did start another company.
He founded Knewton, which sells online education tools that adapt to individual students' learning needs.
02:59 Ferreira: The lessons of DizzyCity were, it's not don't start another company again, don't rely on luck again. Control as much as you can, have as much control of your future as possible, in terms of making a product that people almost have to buy and having enough runway to get there. Those are the lessons 'cause I never ever wanted to look another Yuri in the eye or be in that empty office space all by myself, last man standing, I just never wanted to do that again. It's not all luck, there's a lot of luck in starting a company but there's also things you can control and I've just made it my business to make sure I control as many of them as possible this time. And I'll tell you one thing, the responsibility is just as crushing. I feel there's so much responsible right now even if things are going great for Newton than I did back then.
Knewton has raised $55 million in financing, including a recent round led by the Founders Fund and Pearson.
This fall, more than 600,000 students at 500 colleges across the country will be using Knewton's educational tools.
04:01 Ferreira: When I started Newton, I did try to find Yuri to see if I could maybe bring him back, sort of make up for last time. Unfortunately I never found Yuri but if he's out there, I'd love to talk to him.