Are We Built to Flip?

There is a lot happening on the Internet these days. As I’ve mentioned before, it feels like 1999 again with all of the startups launching, all of the M&A; activity taking place, and all of the big boys launching something new and cool every other day.

With all of this type of stuff going on combined with the successes and growth we’ve been experiencing here at Webmail, we often get the question:

Are you all looking to sell the company?

We’re getting it more and more from these days from prospective employees, customers, prospective customers, friends, family, investors, and potential buyers. So I figured I would take the opportunity to answer the question as clearly and concisely as possible.

The answer is NO—we’re not looking to sell the company. If that is all you wanted to know, you can stop reading now. If you’re interested in hearing the details, please keep reading.

I first heard the term “Build to Flip” in the summer of 2004 in a Business 2.0 article by Om Malik (sorry, I can’t find the article). I especially paid attention to the article because he referenced Oddpost, an email software company that had just been acquired by Yahoo for $29M.

To my knowledge, Oddpost had fewer than ten employees and less than $500K in revenue—with them being a player in the email space, you can imagine that it caught my attention. In the article, Om pondered whether or not there was a new breed of startup companies—those that set out with the goal of being acquired quickly, hence, “Built to Flip.”

Fast forward to the present and you can’t help but to notice that tons of companies are launching these days with the sole hope of being acquired by what VCs call GAMEY (Google, Amazon, Microsoft, eBay, Yahoo). There are a lot of others out there that do big-time acquisitions, but these are the ones that get all of the hype. While I think it’s great that some of these companies find a big pay day early, it’s the exception, not the rule.

As far as we go, we’re much different than any company that’s built to flip. We’ve got a long term vision here and we’re putting the pieces in place to help us realize that vision. Here are some of the things we’re doing or have done at Webmail that should hopefully get people to realize that we’re in this for the long haul:

• 1. We’re privately funded. Although most of our growth has been funded the old fashioned way (blood, sweat, tears, and customers), we did raise $500K in early 2005. However, all of that money is from private individuals. In other words, we don’t have any venture capitalists sitting on our board pushing for liquidity. In fact, Bill, Kevin, and I still own most of the company and all three of us are very bought into our long term vision. That is a good thing. Now I’m by no means saying we’ll never look at institutional money. But right now, I think it’s important to know that we’ve never taken any.

• 2. We’re hiring. To my knowledge, any company looking to sell wouldn’t be hiring. Regardless of what others companies do though, I know that I personally would not look someone in the eye and convince them to come work with us knowing we were just looking to sell. Anyone that knows me should already know that.

• 3. We continue to allocate some of our top resources to our next generation billing system. I highly doubt any acquiring company would care about our billing system. I guarantee any company that is built to flip doesn’t spend a minute even thinking about billing systems. Big companies that acquire little companies already have those, right? 😉

• 4. We continue to invest heavily on the customer service and support side of the business. Service is one of our core differentiators and one of the reasons I believe we’ll continue to thrive in the face of heavy competition (more on this in an upcoming post). But again, nobody is going to buy us because we have a great customer service team (at least I don’t think). In other words, we care much more about serving our customers than we do about being acquired.

• 5. We’re preparing big time for continued and increased growth. We’re investing both financial and personnel resources on the infrastructure and operations side of the business. More servers, more bandwidth, long term leasing agreements, better processes, etc. I could go on, but I think you get the point. We’re focused on growth, not exit.

• 6. Our overhead is getting bigger. We’ve recently hired two senior managers in sales and finance as well as a human resources coordinator. I mean, how blah is that unless you’re trying to build a real company?

Another thing to keep in mind: GAMEY isn’t going to buy us. In fact, most of the really big boys already have an email hosting offering that they’ve spent a lot of money building and buying.

There is a lot more I could talk about. But at the end of the day, we’re a very entrepreneurial spirited group. We’ve been in the real trenches. We’ve worked excruciatingly hard to get to where we are today. We’re not going away anytime soon.