TechSmith Takes Long Road to the Top in Screen Capture and Recording Software

9/30/10

“Why not have a high-tech company in Michigan?”

This is the question Bill Hamilton asks of those incredulous of the possibilities of success of a software company based in Okemos, MI. Hamilton, an Ann Arbor native, started TechSmith in 1988, and the company, best known for its screen-capture software, has weathered the challenges of a startup from the rust belt state.

“We see a lot of positives being here in Michigan,” Hamilton said in an interview last week. “The one problem we have is more of a psychological problem than a real one. And that is when we go to recruit people from outside of Michigan, the press is so bad on Michigan right now, so we get people who have a lot of pause.”

Working in a state known more for blight than innovation hasn’t seemed to hold TechSmith back. Hamilton expects the company will end the year with about $41 million in sales.

TechSmith first introduced its flagship product, Snagit, in 1991. And since then, the technology—which allows users to take a shot of their PC screen, save the snapshot, manipulate it, and share it with others—has taken off. But it hasn’t always been steady success for Hamilton and the company. TechSmith has faced challenges common to many startups. The company developed a variety of products, some commercially successful, some not, before finding a viable business model.

Hamilton and a business partner co-founded TechSmith in February 1988, knowing they wanted to develop and sell software products, but they had to start by focusing most of their time on consulting, instead of developing software. “Mostly what we did was help people get PCs to talk to many computers and mainframes,” he said. “We did that for some time. It was partly to put food on the table, but it was also partly to understand what people were looking for.”

After the founders consulted for a few years on the side, they were able to develop their first product—a gateway for local area networks to connect to databases—and were selling it with some success. But an unfortunate partnership stalled the company’s trajectory, at least temporarily. “I made a bad business decision and got into a business relationship with a company that turned out we didn’t have a level of compatibility that we thought,” Hamilton said.

As part of the “divorce,” as Hamilton calls it, TechSmith gave the other company the technology for local network interfaces and was forced to start from scratch, about seven years after the initial founding of the company. “Our choices at that time were either to go back to consulting or figure out something we could sell,” Hamilton said.

To avoid having to don a tie and head back out into the consulting world, Hamilton’s team started developing a variety of technologies and ultimately came up with a newer version of Snagit. The next step, he says, was to “try and figure out how you use this crazy thing called the Internet to market it.” And according to Hamilton, the advice available in the late 1990s was pretty limited. “Pretty much every book that was out at that time was, to put it politely, BS,” he said. “In some ways that sort of reminds me of today with social media.”

With the threat of wearing a tie still looming, the company put up a website and tried to learn e-commerce, Hamilton says. The experiment paid off. In a period of about 18 months, sales of Snagit increased six-fold. That was 1999. Flash forward about 10 years, and TechSmith’s Snagit is part of a larger suite of technology that Hamilton says he hopes will keep growing. The family of products includes Camtasia Studio, which allows people to record things they view on their computer and turn them into their own videos, and Jing, which Hamilton describes as a “quick and dirty recording tool.”

One of TechSmith’s latest products, Camtasia Relay, allows professors to easily integrate screen shots, videos, and other teaching tools into their lectures. Hamilton says he hopes the company’s technology suite will help consumers “do more effective visual communication.”

“What we’re working on doing over time with our products is creating this whole 360 degree communication and feedback system where it’s not just simply doing lecture capture and distributing those lectures, but giving students the support,” he says.

Camtasia Relay is already used widely at universities across the country, and even at some universities abroad, but Hamilton says the company is still making improvements to the technology by talking to customers and stakeholders. “A lot of what we’re doing now is making sure we have the right people and that we’re having the right conversations with them,” he says.

Despite the initial challenges the company faced, Hamilton said TechSmith is now focusing on its products in terms of the “big picture” of what they will provide. “The bottom line was in 1999 we did about $1.8 million in total sales and had under a dozen employees,” he says. By the end of this year, the company will have about 210 employees and around $41 million in sales. Which sounds like a typical overnight success story in software—and something Michigan could use a lot more of.

Jillian Berman is an intern for Xconomy Detroit. Follow @

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