Start-up Flowtown, which started out helping small businesses connect e-mail and social marketing, has been acquired by Demandforce.

It's an especially sweet victory because the two-year-old company has gone through several iterations. It started life in the social discovery business: When all you had was an e-mail address, the company used to be able to give you all the social networks a contact was on.

But 11 months later and just as it neared profitability, it faced the decision to shut down or go back to the drawing board. Amid growing concerns about Facebook privacy issues, The Wall Street Journal published results of an investigation that criticized the social network for handing over data. Facebook issued new terms of service prohibiting selling user IDs and Flowtown effectively was without a product.  

So the fledgling company, which today has five employees and $1 million in funding, switched its focus to gift marketing. (The service never launched publicly.) It also built a tweet-scheduling tool called, which is now part of Demandforce's small business marketing software.

"I realized it's not about failing. It's about not dying," co-founder Dan Martell joked of the post-Facebook pivot at Startup Weekend in May. "It was like building houses and you can no longer buy wood. It changed everything." To adjust to the Facebook changes, he and co-founder Ethan Bloch drew three ideas on a whiteboard "and said let's go," Martell remembered.

Martell is originally from Canada and is an informal angel investor in several Canadian start-ups. He's also a founder of the Maple Butter blog, which attempts to bridge Canadian start-ups and Silicon Valley.  

Bloch started his first business, an electronics ecommerce site, at age 13. He used Internet Relay Chat, aka the grandfather of Twitter and Instant Messaging, to directly market his Playstation and Dreamcast accessories.

Bloch said his drive to help small businesses came from his father's experience.

"In the late ’90s, my dad owned a small business and wanted to use the Internet to generate more business. He got sold on this online marketing package, this video, and really got taken advantage of," he told All Things Digital in 2009. "Ever since then I’ve really been passionate about building products that really add value to businesses and that really let you see the results you are getting. That’s really my North Star."



Oct 17, 2011