Eight years out of Harvard, Sam Yagan has helped build two online companies and he says he's not done yet
CAMBRIDGE - Success came early to Sam Yagan. So did failure.
By the time he was 22, the son of Syrian immigrants was living the American dream, Internet version. Early in 1999, in the spring of his senior year at Harvard, he and two classmates launched an online study guide called SparkNotes.
Hello, dot-com boom. Less than a year later, they sold SparkNotes in a multimillion dollar deal negotiated by Yagan. So at an age when many graduates sweat and struggle to pay back their college loans, Yagan was already a wealthy Internet entrepreneur, free to gamble on his next move.
By age 25, he was garnering national coverage as the president of eDonkey, a peer-to-peer file-sharing network with more than 2 million users. But record labels had another name for what eDonkey did: music piracy.
With his knack for sound bites, Yagan became a go-to source for journalists in search of a trenchant quote on the intensifying battles between the recording industry and such sites as Grokster and Ka zaa. He made Billboard magazine's list of 30 top young entertainment executives. He testified before the Senate Judiciary Committee, arguing for a balance between innovation and intellectual property.
But that high profile came with a price: namely, the dead-serious threat of lawsuits, aimed at both eDonkey and at him personally, from the Recording Industry Association of America. Confronting the prospect of legal fees that might run into the millions of dollars, Yagan reluctantly agreed to a settlement and shut the company down. "These people didn't want to talk. They wanted to sue," he says now. "They made us write them a big check. It was frustrating. I felt that I couldn't have my day in court because it would cost too much."
Older (but not much; he's 30) and presumably wiser, Yagan is once again placing all his chips online. Once again, he is taking on large, entrenched forces. And once again, he has teamed up with Chris Coyne and Max Krohn, the two classmates with whom he created SparkNotes.
This time, they are making a foray into the world of online dating, with a site called OkCupid. To compete against such established players as eHarmony and Match .com, which charge fees to customers, OkCupid's gimmick is simple: It's free. (The firm makes money by selling advertising on the site).
The site is designed to be a social environment that allows users to create their own quizzes with individualized, pinpoint questions like "How much of a Red Sox fan are you?" or "If you were a 'Lost' character, which one would you be?" This approach may be a case of making a virtue of necessity. Yagan, Coyne, and Krohn are all married (Yagan married his high school sweetheart). "We're a bunch of math guys," Yagan jokes. "We don't know anything about dating."
OkCupid boasts more than 420,000 "active users," defined as users who have logged on in the past eight weeks. There are 40,000 active users in the Boston area, according to Yagan. "Boston is probably our biggest city, per capita," he says. "There's a lot of young, single people, and it's a very Web-savvy town."
It's fitting that Yagan is living out his career in cyberspace, because he has always liked to operate at high speed. In fourth grade, over the objection of his teacher, Yagan insisted on tackling the fifth-grade math assignments. "I was definitely very nerdy," he admits. In sixth grade, he leapt at the chance to take the SAT. By 15, he was living and studying at a residential magnet school outside Chicago.
His mother, a pediatrician, and his father, a computer scientist, had moved to the United States from Syria. "When I've wondered where my entrepreneurship comes from, I look to them," Yagan says, noting, "Immigration is the ultimate entrepreneurship." As the only Syrian family in Bourbonnais, Ill., his parents struggled, Yagan says, to find that "tough balance between assimilating to American culture while maintaining roots back to the old culture. They erred on the side of Americanizing."
In keeping with that goal, one university in particular loomed large in the family's imagination: Harvard. "It was my mom's dream," says Yagan. "I remember her saying 'Harvard' before she said the word 'college.' "
So it was a big day in the Yagan household when their first-born gained admission to the university on the Charles (his younger brother would later attend as well). But it took Yagan a while to adjust to the new sensation of competing with many students who were as smart or smarter than he was. One of them was Krohn, his roommate; another was Coyne, who lived across the hall. The three of them, all math majors, became fast friends. Over the next few years, they would have the usual undergraduate conversations about their future, with this difference: They envisioned a future in business together.
Yagan struggled academically at times, even getting some once-unthinkable C grades during his sophomore year. But he was more focused on bolstering his managerial skills, so he worked as a teaching assistant who helped supervise the education of other students. "Sam sees short-term decisions in terms of what their business implications will be down the road," says Coyne. "He was absolutely like that at 18."
The penalty Yagan paid for his less-than-stellar grades was that he got the cold shoulder when he applied to top-tier consulting firms after graduation in 1999. That ceased to matter much when SparkNotes took off, became a success, and was bought by an Internet company called iTurf. However, Yagan says, after the tech bubble burst in 2000, iTurf (which would soon go out of business) demanded that Yagan, now working for iTurf, and his partners renegotiate the deal. Eventually, SparkNotes was sold to Barnes & Noble ("I'm one of the few people who's gotten to sell the same company twice," Yagan says dryly). As part of the deal, he went to work for the book retailer, in charge of building up its study guide business and a line of test-preparation materials.
He learned a lot about retailing and publishing at Barnes & Noble, and how to operate in a more traditional business environment. "I remember sitting in on meetings where everyone in the room was twice as old as I was," he says. But his innate restlessness asserted itself, and he left in early 2002. He became president of eDonkey, and - being an inveterate multitasker - he decided to pursue his MBA at Stanford at the same time. He took a course taught by Google CEO Eric Schmidt that one day featured as a guest speaker Meg Whitman, the CEO of eBay. He eventually graduated at the top of his class - a substantial improvement on his Harvard performance.
Now, Yagan is hoping that lightning will strike a second time. When they built SparkNotes as a free online site, he and his partners capitalized on what they saw as a weakness in a big rival, Cliffs- Notes. They concluded, Yagan says, "If you put free and better together, you can build something powerful." He sees OkCupid as another test of that proposition.
All in all, it's been a hectic eight years since he left Harvard and plunged into a career that has paralleled, and been defined by, the growth of the Internet. If the ride has been bumpy at times, it has also been exhilarating. And while Yagan envisions partnering with Coyne and Krohn for the rest of his life, he does not seem to view online dating as the last stop on that road.
"There's still plenty of interesting stuff to do," he says. "That's what keeps me excited."
Don Aucoin can be reached at firstname.lastname@example.org.