It's every startup founder's dream: being acquired for hundreds of millions without years of slogging away for decades.

 

And it came true recently for the founders of Acompli, an 18-month-old mobile email app.

I know what you're thinking--how in the heck did that happen? The industry is flooded with startups toiling away at email apps. How did Acompli get acquired by Microsoft for $200 million before it even reached its second birthday?

It turned conventional startup wisdom on its head.

Its strategy makes a great deal of sense when you consider how the biggest and best products are developed, yet it's contrary to the day-to-day grind that  traps so many companies and startups.

I spoke recently with Kevin Henrikson, one of Acompli's three co-founders and a friend of mine, about his startup experience. What he told me about Acompli's pre-acquisition growth strategy blew me away.

They Had a Huge Vision

Henrikson and his co-founders, Javier Soltero and JJ Zhuang, had a huge idea. "Email on mobile is broken for business users," Kevin told me. "We needed to reimagine and develop a mobile email app that would work on any device for any email account and enable any user to do the same kinds of tasks that business users are accustomed to doing with their email at the office." Their goal was to enable professionals to complete key workflows from mobile without ever leaving the app.

Their target: the professional mobile-power user--an incredibly important market.

As a relatively late entrant into the mobile email app market, Acompli was also looking to penetrate one of the most saturated marketplaces on the planet: the App Store. It would have to be more agile and move far faster than the Internet-based email incumbents who just couldn't get on the ball quickly enough to satisfy mobile-first business users.

This technically complex and challenging vision really should have slowed Acompli down. The way most startups are structured, it would have.

But it didn't.

Realizing Their Big Vision Meant Prioritizing Development Over Marketing

Of course, we know a massive, crazy ambitious vision is critical to venture startups. But realizing this bold vision is a huge challenge. Here's why.

It's pretty tough to build a software business without funding (and almost impossible to do it quickly), yet Acompli went through just one round of Series A funding in its relatively short lifespan.

The challenge is that in order to land an initial and subsequent rounds of venture capital investment, investors (particularly east coast VCs), want to see evidence of market traction in the form of product sales and revenue before they'll get behind an idea. You're typically looking at hundreds of thousands in revenues and non-trivial numbers of paying clients to prove you have product-market fit.

This inevitably means investing heavily in sales and marketing early on. However, this carries with it its own set of challenges.

Essentially, it's very easy to fall into a trap of endless loops of feedback and modifications to please your existing client base. Your bold product vision can become diluted with someone else's. Supporting customers too early on means you're slower to develop and fine tune your product, with more emphasis (and budget) on sales and marketing and less on actually making something really, unbelievably awesome. Is this really the best way to grow?

Acompli went in a somewhat unconventional direction, with a team of 23 that consisted of 20 engineers. All three founders are engineers.

"You need to conquer the big technical problems first," Henrikson told me. "Getting involved in sales and marketing too early can hold you back in a lot of ways--you end up chasing the next deal instead of building a better product."

That's not to say Acompli completely deprioritized marketing; it invested in three incredibly talented and essential non-engineering executives for marketing and business development. But clearly the ratio of people at the company was heavily skewed toward engineering.

This unusual allocation of resources afforded Acompli the ability to hyperfocus on product. Its big engineering team could move at warp speed and overtake competitors, to reach its target audience first. It also allowed marketing to clearly position the product and stack all messaging and marketing programs against that audience.

As Henrikson says, "When you solve things with technology and engineers, it's a more scalable solution. That's where the greatest leverage is."

Acompli was highly disruptive in its timing and tapped into a strategy that enabled it to move fast enough to keep that edge. Rather than taking a typical allocation of equally splitting hires into sales, marketing, client support, engineering, etc., for its mobile email app (it's free for consumers, by the way), it prioritized innovation and the development of its vision.

The unusual approach was a winner, to the tune of a $200 million acquisition in just 18 months.

Published on: Dec 10, 2014
Like this column? Sign up to subscribe to email alerts and you'll never miss a post.