Semyon Dukach, the MIT Blackjack King, Takes SMTP Public in Latest Effort to Fight the Power
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Cambridge-based Fast Engines, which he started in 1997 on about $50,000 in angel investments. The tech bubble of the late ‘90s was a very formative time for the young entrepreneur. In particular, he found the whole venture capital game rather distasteful.
“I went to VCs, and they hated my $2 million in revenue, $800K in profits,” Dukach says. Then, as the dot-com wave crested, he says, Akamai’s market cap soared to $30 billion post-IPO; when Fast Engines became an Akamai partner, suddenly everyone wanted to invest. “That was sad. I had a really solid business,” he says.
In the middle of negotiations for a VC round, he ended up selling Fast Engines to Adero, a Web content distribution firm, for $35 million. After the acquisition, Dukach left the company with several million in cash. That was in 2000, right as the bubble burst. Meanwhile, SMTP (then EMUmail) had started up, led by Matt Mankins. The firm, which Dukach calls the world’s first Web-based e-mail company, was a customer of Fast Engines. Dukach made an investment in the firm, and after it was acquired by AccuRev in 2001, he bought SMTP back and took control in 2002.
While building SMTP’s business, Dukach has been involved in many other ventures. He’s an investor in and board member of Woburn, MA-based Terrafugia, the “flying car” (OK, roadable aircraft) company. He’s chairman of the board of Global Cycle Solutions, an MIT spinout that harnesses bicycles to power appliances and machinery in East Africa. Dukach also has ventures that didn’t work out so well, such as GottaFlirt.com, an online dating and gaming site that folded about three years ago. “It sounded like a great idea for two weeks,” he says.
In recent years, between learning to tango in Buenos Aires, flying helicopters in Massachusetts, and studying anthropology and history at Harvard and MIT, Dukach has been thinking seriously about philanthropy and social entrepreneurship (hence his involvement with Global Cycle). He also bought a few acres of beachfront property between Boston and Winthrop, where he is starting a rental service for bikes, kayaks, and windsurfing. Yet all of that is less important, now that SMTP has a chance to be bigger than Fast Engines.
“Lo and behold, it’s interesting as hell,” he says. “Suddenly my old ambition is back.” His plan now is to “make a couple billion” and then try to help the world, he says.
As usual, timing is everything—and Dukach has some provocative thoughts on the new tech bubble. “Two and a half years ago, it was plausible that this was the end of the economy,” he says. And every five to 10 years, there is a peak or trough in the market where the emotional behavior of the crowd “pushes us into temporary blindness,” he says. Now, there is “still a balance of fear and greed.” (I would guess that he is timing SMTP’s public trading to ride a new growth wave for a couple of years.)
So what’s the plan in the near term? “Once it’s public, [SMTP’s stock price] will jump around, and then settle,” he says. “We should be able to graduate to Nasdaq in a year or so.” Within three months, Dukach predicts, the company should have more than 300 shareholders, which is the minimum number to stay listed on the Nasdaq. Meeting the earnings requirements will take longer, though.
But whether he’s shunning VCs and investment banks or taking on casinos around the world, Dukach has always done things his way—and you might not want to bet against him.
“Hell yeah, it’s going to be a fun ride,” he says.