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, 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.

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] Follow @gthuang

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  • I’m just wondering what idiot would invest in a company run by a guy that walked with millions, didn’t end up helping the world at all after he ‘retired’ (aka, couldn’t get any business model working, and failed trying a few times) and then goes outside for a promo photo shoot in a shaggy doo cap and a trendy puffy down jacket and jumps up a bit to show how he is the guy to believe in? Its pretty idiotic notion, and sadly there are a lot of bozos out there that will likely flip this clown some money.

  • g

    he is bluffing.

  • Kaz

    An SMTP relay service can be a life saver to people whose ISP is blacklisted for being a spam haven. People in that predicament can’t send SMTP directly even if they have a static IP address (not in a dynamic subscriber range), and they can’t send using their ISP’s SMTP relays either because those are blacklisted.

    However, SMTP relaying isn’t proprietary tech. I would be careful about investing in this. There is no intellectual property there. Anyone with a farm of Linux boxes can relay mail, and just a modicum of custom programming will get to the point of being able to meter it and bill customers.

    The weakness in running a service like this is that it will attract spammers as well as legit users, so you have to run a “very clean ship” because if your servers are repeatedly blacklisted, your service is worthless. Nobody will pay, or continue to pay, to make vain attempts to send mail through a spam haven.

    The business bet here is that A) there isn’t very much competition due to SMTP not being on people’s entrepreneurial radars, and B) that you can run this system better than anyone else, so that you become the number one choice for anyone who is not a spammer, but is not able to send mail directly or via their ISP.

  • Ruttiger has been doing this for years. It used to be free but now they ask for money. If you really need a SMTP host that will not get you black listed check them out.

  • A Sucker’s Bet

    A clear case of “The Emperor has no clothes.” does not compete with legitimate email messaging companies like MailChimp or Constant Contact – doing so does a disservice to these responsible providers.

    Rather, offers email relay services, which spammers can supposedly use to fool ISPs into letting their emails through. ISPs, however, track bounce rates, spam complaint rates, and spamtraps across each email campaign and so SMTP’s service is not going to fool major ISPs that spend tens of millions thwarting spammers’ efforts. Moreover, since the only companies that would seek out an email relay service are spammers, SMTP’s servers end up with the worst clients and therefore the worst delivery rates possible.

    There’s no sustainable business here. With the small revenues and “profits,” playing with a few numbers can make a money-losing operation look like it’s earning a profit.

    Dukach’s history is one of self-promotion with little truth behind any of his statements or claims. Even this announcement of “going public” with 81 investors investing a total of only $100,000 is just another scam. I wonder how many of these people were Ukrainian-based or who put up the money for them. Bernie Madoff, anyone?

    Best for anyone watching this to be very careful. This is a sucker’s bet.

  • SpareMe

    You can’t be serious! This service has been around forever and SMTP doesn’t represent an innovation in any way shape or form.

    Spare me your PR bull, it bores me to death!

  • I know penny stocks can be considered risky but you just need to do your research like any other stock. They do have the advantage of being cheaper and therefore more affordable to the small investor. I really like LSTG. The company recently got $15 million to continue exploration and development of their mines. It is estimated that they could be sitting on about $18 billion worth of gold and sliver. A lot of potential there!!

    To your trading success,

    James H.

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