It was an early wire framing tool for prototyping UIs. The clever bit (that seems obvious now) was that it looked intentionally rough so that clients would focus on the overall UI layout instead of the minor details. It was a great app.
Ehm...why all the past tense? We still ARE very much around...we just had our best year yet [1], and are on track to do even better. Don't count us out just yet! :)
That's funny because the actual value proposition of using Balsamiq to create apps is that they themselves are intentionally rough. So it looks like the founders used Balsamiq to create and pitch Balsamiq. Very cool example of dogfooding.
He was all over various Flex dev spaces, IIRC. Not only was Balsamiq written in Flex, we were all building the kinds of things it was perfectly suited for, too.