Sramana Mitra: Who funded you?
Jon Hirschtick: The first investor to commit was Atlas Venture. Axel, my co-founder from my first company, is the Managing Director of Bolt and an associate at Atlas Ventures. He got interested.
He introduced me to Mike Payne, co-founder of PTC. Mike and I met. We have very different personal styles, but intellectually, we totally agree on what we needed to do in this industry.
Sramana Mitra: He was no longer with PTC?
Jon Hirschtick: He left.
Sramana Mitra: He had made money off of PTC?
Jon Hirschtick: Yes. We met and I showed him what we were doing. He’s very critical, but he said, “I think you guys have a chance.” As soon as he started to say good things, then Atlas got more interested. The Polaris guys got interested.
Sramana Mitra: This is all coming together in 1994?
Jon Hirschtick: Yes.
Sramana Mitra: What was the name of the company then?
Jon Hirschtick: Winchester Design. We were building SolidWorks in my house. My wife got pregnant the day I got the term sheet. We get the venture capital. We ship the product. Immediately, it starts to sell like crazy. The fax machine was running out of paper.
Sramana Mitra: How long did it take you to build that product?
Jon Hirschtick: From the time I started the prototype until the time we shipped it, it was just under two years.
Sramana Mitra: That’s a very big product.
Jon Hirschtick: Big product compared to some. For shipping a whole CAD system, it was light speed. No one believed we did it in two years.
Sramana Mitra: What I’m saying is this is not something you can cobble together in three months. This is a substantial product.
Jon Hirschtick: A year of that was before venture money.
Sramana Mitra: Was there a particular segment where you were finding the adoption?
Jon Hirschtick: Not really. It was primarily with smaller companies. Maybe a little bit leaning towards consumer goods but pretty broad base mechanical engineering usage out of the gate. We had renamed the company to SolidWorks. They were going to replace me as CEO when we raised venture capital. They said, “We will invest only if you’re not CEO.”
Sramana Mitra: Why?
Jon Hirschtick: Because they didn’t think I was competent to be CEO. I didn’t really care as much for being CEO. I just wanted to win. Months later, they decided they liked what they were seeing me do. Then we found a great guy to join the team as COO. That worked out really well.
Sramana Mitra: After the product launched and you were finding product-market fit, what was the next step? When did you raise your next round? With what milestones?
Jon Hirschtick: Product-market fit found us. It was crazy good. The first round was in 1994. The second round was at the end of 1995. We had a Japanese company come in. We raised an unheard of large round of $9.2 million. This was a B round. Our A round was $3.8 million.
PTC sued us over non-compete agreements because of some of the people we hired. We settled the lawsuit. They said, “You have to agree not to hire anymore of our people.” I’m like, “Okay. We’ll make it bi-directional.” They were unable to hire our people. But what a crappy deal for employees to have agreements like that.
We raised our second round around a year later. Things were doing great. We were selling a ton of products.