Vistaprint, the office supply company that caters to very small businesses, will acquire digital marketing company Webs.com for $117.5 million, the companies announced today.
Silver Spring, Maryland-based Webs, founded in 2001, appeared on the Inc. 5000 in 2009.
The company says it has served over 40 million customers globally since its founding, and claims 100,000 paying subscribers. It forecasts $9 million in revenue for calendar year 2011."Webs' suite of products delivers incredible value to micro businesses, helping them to look professional online in order to grow their business," said Robert Keane, chief executive officer of Vistaprint, in a statement.
Vistaprint has "hundreds of thousands of active registered customers," Keane said, and more than $50 million in digital subscription revenues last fiscal year.
"Webs complements this success with a business model based primarily on free products that has achieved impressive customer reach," he said. Webs has free website and free custom Facebook page offerings. Vistaprint is infamous for its offer to design and print 250 business cards for free—an offer Inc., for the record, rated as "don't waste your time."
Brothers Zeki and Haroon Mokhtarzada started Webs—then called Freewebs—while still students at the University of Maryland-College Park. The pair (Zeki, who is older, was studying computer science; Haroon, economics) designed websites for family and friends in their spare time, and quickly realized a website-creation tool would be a lot more efficient. So each invested $1,000, funds they used mostly to buy servers (which were then stored in Zeki's apartment). Their then-14-year-old youngest brother, Idris, did a little PR for the fledgling company, listing it on a web directory.
The brothers' entrepreneurial streak came from their parents, Afghan refugees who arrived in the U.S. in 1983 with virtually nothing and promptly started a visa and passport procurement company. “It exposed us kids at a very young age to two things that are important,” Haroon said in a 2009 interview. “One was entrepreneurship, and the second is we got access to computers really early because they got a computer for the business.”
The trio worked on the company part-time from 2002. Zeki had a job at the National Institutes of Health and Haroon pursued a law degree at Harvard University. (Idris was still in high school.)
When Haroon graduated from Harvard in 2005, Freewebs beckoned.
"[It] was making enough money to pay our salaries, so we said, let's give it some love," he said. In August 2006, the company received $11 million in Series A funding from Novak Biddle Venture Partners and Columbia Capital. Between 2003 and 2007, Freewebs grew 1,704 percent, according to the company history. (It rebranded as Webs in 2008.)
Haroon Mokhtarzada, the company's CEO, said of the Vistaprint deal: "Our companies share a common vision for the future of micro business marketing, and bring complementary products and competencies to the table. Together, we imagine a future in which a micro business will market itself through seamlessly integrated digital and physical marketing media with significant cross-over potential.
Vistaprint will acquire the company for $100 million in cash and $17.5 million in restricted shares "subject to continued employment of the founding shareholders," the company said. The deal is expected to close in January 2012.