System1: Silicon Beach’s Sleeping Giant

System1: Silicon Beach’s Sleeping Giant

Michael Blend and Chuck Ursini founded System1, the ­sleeping ­giant by the beach, quietly ­amassing one of the best computer engineer and data scientist teams in the country, and raising $270M in the summer of 2017

On a not-so-nondescript corner of Venice Beach (I’m talking about the roundabout at Main Street and Windward Avenue) sits a two-story office building that—apart from the eclectic Venice Beach murals—likely goes unnoticed by the scooter-riding, skateboard-kicking, Lyft-riding passersby.

Within said office building lies the Silicon Beach behemoth you’ve never heard of, System1—an industry-leading Internet technology company that works with the world’s largest search engines to enhance their businesses by unlocking what System1 calls “latent intent.”

If I’m correct and you have indeed never heard of the company, that’s fine with System1 co-founders Michael Blend (President) and Chuck Ursini (CEO). Blend and Ursini, along with their 170 employees, have kept their heads down and mouths shut since founding System1 in 2013. Today it stands as one of the city’s most proficient and successful technology companies with an upward trajectory that would make any shareholder giddy.

For the time being, however, System1 has no public shareholders and that’s also not a problem for Blend or Ursini. “We have a lot of options in our future,” Blend states. “If we go public it would be more as a financing event but it is not a goal in and of itself …. our goal is to keep growing the business … frankly we’re big enough now to be a public company and have chosen not to be.”

If we go public it would be more as a financing event but it is not a goal in and of itself …. our goal is to keep growing the business … frankly we’re big enough now to be a public company and have chosen not to be.

Coming Together

Well before System1’s inception, Blend and Ursini experienced successes separate from one another. Blend grew up in Texas (Ursini likes to remind people Blend was a Texas State Math Champion as an adolescent) before going to Duke, where he double majored, and then the University of Chicago for his J.D.

Ursini meanwhile grew up in Southern California before attending Washington State, returning to Los Angeles after his undergraduate studies to work in finance. “I was trading bonds and working West Coast hours but bonds start trading before the market … it just was not what I wanted to do,” Ursini recalls. As fate would have it, he was destined for bigger and better things. He went to USC, earned his MBA, developed an interest in technology, and moved to Seattle to work at Amazon.

While Ursini built equity in professional experiences at Amazon, Blend was developing a knack for invention, founding and running internet-based companies in San Francisco for 15 years. “I’ve only had a ‘real job’ for six months of my life,” he recalls. “I have been starting companies since I was 25 years old.” His first was an ergonomic keyboard company  – Hotkeys – he started in 1996. A combination of hardware and software, it won Internet Product of the Year in its category in 1997.

Several startups later, Blend would again be at the helm of a company he also named Hotkeys—he apparently really liked the name—a domain name adtech company that he sold to Demand Media in 2006 at the same time Demand acquired eNom, a domain name registrar company. These acquisitions would ultimately introduce Ursini and Blend, both of whom were in Seattle running Demand Media’s domain business together.

The duo would ultimately shift their focus, moving to Los Angeles, where they would play a pivotal role in Demand Media’s media business, supporting the company’s efforts as it prepared to go public. Demand Media went public with a market cap of more than $1B in January 2011.

“Taking a company public is exciting … it was pretty fantastic to actually ring the bell at the New York Stock Exchange,” Blend notes. Ursini adds, “Leading up to it we had been at Demand for a few years and spent so much time chasing that goal … when you get to it, there is a little bit of a let down.”

While both recognize the exciting opportunity an IPO represents, they also point out the cliches that accompany it, from added infrastructure to determination of decision-making (short-term calls dictated by the market, for example). As they paint this picture for me, I can’t help but imagine that those experiences color their canvas today, informing the decisions they make as they grow System1.

All Systems Go

After Demand Media’s successful IPO, having not expected or planned to be at the company for as long as he had been, Blend left and spent the next few months “hanging around the house annoying my wife.” Luckily for his wife, Ursini—recently departed from Demand to pursue an idea of his own—brought said idea (System1) to Blend.

“Our philosophy,” Blend explains, “is that someone may want a product or service but has not yet done a formal search … we call that latent intent, intent that has not yet been demonstrated … we identify that in consumers based on a large variety of proprietary data.”

“In our business,” Blend adds, “if we can gather as much data as possible, give it off to our engineers and data scientists, and then manage the two effectively, the business can quickly scale.”

They launched the company with no financial backing beyond their own in 2013 at 21 Market Street down the street from our aforementioned roundabout. “We had about 10 people crammed into 500 square feet subletting from Stack Commerce,” Ursini remembers.

The building that houses System1 in Venice Beach, CA

Today, System1 has grown from 10 to 170 and from 500 square feet to their own building. How did they scale so efficiently and effectively? The short answer: culture. The longer answer: System1’s CTO and Co-founder John Fries. Fries had been at Google prior to System1 where he worked on projects like “related” and “recommended” content on YouTube.

“I met him [Fries] while at Demand and when he came on board, we put him in charge of building the best engineering organization he could and we told him we would handle the business operations, getting us to profitability,” Ursini says. The pair continue to credit Fries throughout our conversation, with Blend adding that Fries “handpicked something like the first 30 people we hired, refusing to lower the bar.”

Markets change … Snap didn’t exist four years ago, Instagram was hardly popular … what is important is that we have a thesis about what we’re doing and building from a product perspective.

The result? One of the best teams—led by some of the best managers—in the nation, according to Ursini. “Our chief data scientist is maybe the best in Los Angeles … he went to MIT with John [Fries] … we gave them carte blanche to scale how they wanted and we had ultimate faith in them given their high standards.”

Scaling Up

Blessed with past successes professionally (and financially as a result) and now in possession of a crack team of engineers and data scientists, System1 took flight. They raised $30M from Raine (a PE firm they had previous dealings with while at Demand) in July 2015 and then made a series of successful acquisitions, including Bellevue, WA-based InfoSpace.

In the summer of 2017, continuing to grow and scale the business without traditional venture capital investment, they raised $270M from private equity firm Court Square Capital, buying out their previous investors in the process. “I think a lot of people view raising a VC round of funding as an achievement,” Blend says. “What’s really an achievement is building a successful business.”

While they were able to launch, grow, and sustain the business with their own funding thanks to their previous successes, it also doesn’t hurt that the two work so well together. Ursini is CEO and leader of the company, overseeing product and business operations while Blend, President, focuses on corporate development and M&A.

“Our roles and relationship have evolved over the years … but since we’ve worked together for so long they can be interchangeable so if we have to step up and swap roles, we can,” Ursini says. Blend adds, “Investors think they get two people for the price of one.”

What is important is that we have a thesis about what we’re doing and building from a product perspective. Our vision is unwavering.

Looking Forward

Today, the System1 machine is well oiled and running smoothly, something that is not lost on the pair, who admit nothing is ever as easy as it seems. “Culturally, we celebrate successes,” Ursini says, pausing to add, “we’re in the infancy of the company based on what we want to achieve and how we want to grow … we know there will be bumps.”

While the bumps may be unavoidable, Blend and Ursini certainly won’t be unprepared. Ursini, reflecting on the growth of Los Angeles’ tech landscape and System1 notes, “markets change … Snap didn’t exist four years ago, Instagram was hardly popular … what is important is that we have a thesis about what we’re doing and building from a product perspective.” Blend, confidently reiterating this vision for the future, says, “Our vision is unwavering.”

With a clear vision, (possibly) Los Angeles’ best engineering team, and the financially backing of a firm with several billion dollars on their balance sheet, the view is not just unwavering but bright for Blend and Ursini. Both mention the importance of geography and family on their happiness. Ursini spends as much time with his daughters as he can, while noting how much he enjoys team dinners on Abbot Kinney. Blend, meanwhile, admits to loving Santa Monica more than anywhere else he ever goes for business.

For now, in between Ursini’s trips to Deer Valley and Blend’s visits to the nearest karaoke bar (karaoke is a Blend family affair), the pair will keep chugging along, unlocking consumer latent intent, building a company culture, and enjoying their modicum of privacy.

Photography by Teira Lockhart Church

Michael Blend & Chuck Ursini

Michael Blend & Chuck Ursini

Co-founder & President & Co-founder & CEO | System1

Age
50

Residence
Santa Monica

Education
DUKE (DOUBLE B.A.), UNIV. OF CHICAGO (J.D.)

Family
WIFE AND TWO CHILDREN

Wrist
NOTHING SINCE CELL PHONES CAME OUT

Garage
MINI COOPER

Business Over a Drink
THE GASLITE FOR KARAOKE

Travel
KAUAI

First Time Tech Changed Your life
CODING ON A RADIO SHACK TRS-80

Success
WHEN EVERYONE DOES BETTER

Mentors
MY FATHER, STANLEY BLEND, AND EMMET STEPHENSON


Chuck Ursini

Age
42

Residence
MANHATTAN BEACH

Education
WASH. ST. (B.A.), USC (M.B.A.)

Family
TWO DAUGHTERS

Wrist
BRACELET FROM MY DAUGH­TERS— I DON’T WEAR A WATCH

Garage
BMW

Business Over a Drink
GJELINA

Travel
DEER VALLEY, UT

Success
SATISFACTION IN THE EFFORT PUT INTO SOMETHING

Mentor
MICHAEL BLEND


System1

Founded
2013

HQ
Venice

Employees
170

Fundraising History
$30M (2015); $270M (2017)

Core Competency
USING TECHNOLOGY AND SCIENCE TO IDENTIFY AND UNLOCK CONSUMER INTENT

Notable Partners
GOOGLE, BING, VERIZON

Mission
BUILD THE BEST-IN-CLASS TECHNOLOGY PLATFORM FOR IDENTIFYING AND UNLOCKING CONSUMER INTENT AND HAVE A FUN TIME DOING IT