The Exit That Wasn't: How This Entrepreneur Bought His Company Back
A startup founder who navigates her company through a significant exit might find herself with full pockets and an itch to get back in the game. This is how many an angel investor is born.
Tony Conrad, however, walked backward through the process. He moved his family to the San Francisco Bay Area as the last dot-com boom was heating up, and started helping friends and acquaintances launch their companies with bits of cash. It was only after a few of them became successful that he caught the entrepreneurship bug himself.
After founding a handful of tech companies along with both technical and business-savvy co-founders, Conrad in 2010 launched About.me, a network of personal-profile websites. Just months after the website's launch, he sold the company to AOL for a sum reportedly in the range of $35 to $40 million. About.me experienced two years of lackluster growth under AOL, and in February 2013 Conrad, along with co-founder Ryan Freitas, bought the business back for a fraction of that sum.
Since then, the site's traffic growth has been remarkable, according to Conrad. "Last January we did four million profile views," he says. "This January we did 158 million." The company employs 20 people, and About.me hosts about five million individual profile pages.
When I meet Conrad, who's 52, he's outside a restaurant at the Four Seasons in Austin, Texas, sitting cross-legged on the floor in a hallway hand-brewing himself a cup of pour-over coffee. Our discussion ranged from the advice he gives young founders to the tactic he used to get his company back from AOL. What follows has been edited and condensed for clarity.
You're both an investor and a founder. How do you split your time?
Tony Conrad: When I wake up in the morning, I'm thinking about About.me. I don't know how I manage my time; I feel like I spend 100 percent of my time on [my VC firm] True Ventures, and 100 percent of my time on About.me. But I do straddle this line with investing. I just do it at an institutional level instead of an angel level. It just works for me. It works for [LinkedIn co-founder] Reid Hoffman, it works for Aneel Bhusri at Greylock Partners. There are a lot of unfair advantages that come from being in both roles.
Explain what you mean by "unfair advantages."
I can't imagine being successful at either one of them without the two of them working together. The other reality is, founders get invited to different things than venture capitalists. Venture capitalists get invited to different things than founders.
So, you get all the best invites?
[Laughs] I don't get the best invites. But I think I get meaningful invites that create access in ways that are maybe advantageous.
Why don't you bring me up to speed on how About.me is doing? What's new?
There's a proliferation of social-media sites out there, and a problem we were seeing is: Which one should represent you? None of them should represent you. I am not the sum of my tweets. I also don't think of myself as a person as being the sum of my professional accomplishments only. They're a huge piece of me, but they're not all of me. You wouldn't know I have a tattoo, you wouldn't know I surf, you wouldn't know I've done an Ironman, you wouldn't know I'm a father. It doesn't tell you what makes you tick. We thought that everyone in the world should have a page that could be the starting point for your true identity.
How do you do that?
First off, I'm not interested in being another social network. We are working on a bunch of different things. The first is identity. The next phase is called discover. It's really about getting people to interact with you. We started tracking views on your page, and tags, so we got more information on users, on their school, their work, things that interest them.
What's the business model--or the business model in the future?
The business model is pretty killer. There's some stuff we'll do lightweight around premium offerings--people who want to make their pages a little more spruced up. Promoted profiles, too--that's huge. It is like Promoted Tweets. Our feed works. If I take your profile and put it in our staff picks, you will get 10,000 views in a day. If you're an author selling books, that has value to you. If you're an artist or photographer or just someone who wants attention--hey, we don't judge--that has value to you. It helps people to discover people, but it helps you if you want to be found. And I think secretly we all want to be found. We do.
What was the process of getting the company back like? Where was your head at during that process?
A couple things first. It's incredibly flattering when somebody offers to buy your business. And I often tell this to young entrepreneurs, but when they actually follow through and close the deal, it's even more flattering. You can never forget that. We hear all these ugly stories about acquisitions that go poorly, but you can't forget that something great came out of that. Not only financially, you probably got a good reward, but the best reward you ever get in life is validation.
But obviously you didn't think AOL was the best home for About.me.
With AOL, one of the things that was hard for me was I got there and after a year I started having some reservations about whether we were a fit or not. We sold it prematurely. We thought it would be a good fit with AIM and AOL Mail, but each of those have their own sets of issues in terms of identity, so we're not going to be a priority for integration there. And my interest was how to get to scale. I realized that wasn't happening, and that wasn't going to happen.
How did you start the conversation?
The challenge is that Tim [Armstrong, AOL's CEO and chairman] is a great guy, an honorable guy. I didn't want to offend him. It was a series of conversations. I started talking to Tim about it, in a very adult way. I just sat down and said, "I really think we should spin this out." The first conversation was "no." The second conversation was "no." Finally I got to "yes." I said, "Tim, what's the deal? You have an analyst call in six weeks, are you willing to talk about About.me as a core strategic piece of your mission?" He goes, "Well, maybe." So, I told him that I am a real entrepreneur and this is my baby. The right thing to do is to let me buy it back. To Tim's credit, he said, "I support that."
Did you have to move your team out?
I never moved them in! The company was so young when we were acquired, it was a four-month-old product, that I wanted to maintain our culture and allow it to build.
You almost used it as a growth strategy.
No--not really. I had a vision for integrating our product into theirs that would have allowed it to scale much faster. They have 30 million mail accounts--imagine if every email and AIM account had an identity tethered to it? We could have gone to tens of millions of profiles in a short amount of time. That wasn't happening.
How do you define success?
You know those things that happen to you in your life that make you stop and reflect? After I had an exit on Sphere [a search engine for blogs he co-founded], which was the first company where I felt I was the driving force, I was surprised. The sense of pride I had was the most powerful, overwhelming feeling I'd had in my life aside from my children being born and getting married and my mother dying. It was right up there in that basket of emotions.
Let's talk a bit about your investing. What's the most common question founders come to you needing help with or advice on?
How not to cry at night. [Laughs] No, seriously: The kind of people who want to work with me want practical experience, but they know from my demeanor that I'm not heavy-handed. Yeah, I've done it before, but I'm not trying to impose my way on you.
When you're thinking of making an investment in a company, what's the biggest consideration you make?
I look at the founder and ask myself, "Could this person be the founder of a movement?" I think Bre Pettis [of Makerbot] has this. I learned this from [investing in and working with] Matt Mullenweg, the founder of Wordpress. I think the first time I talked to Matt, he was 18. We were talking on the phone. I had no idea he was that young, and probably didn't know for about a year that he wasn't even 20 yet. But he had it.
What do you get out of the experience of mentoring startup entrepreneurs these days?
Oh, everything. There's been a period for the past five or six years when I didn't see an exponential change in what I was getting from it. But in the past year and a half, the whole thing changed again. It's the same change that happened with the whole "lean, mean" methodology. It's the speed at which they iterate. These kids are really comfortable with going, "you know what, I tried that, let's move on to the next idea." We used to try to build monuments.
CHRISTINE LAGORIO-CHAFKIN | Staff Writer | Senior Writer
Christine Lagorio-Chafkin is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is a senior writer at Inc.