#107: Brothers Sold Their Bootstrapped Software Company for $40 Million – David and Chris Sinkinson
Aug 23, 2024
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David and Chris Sinkinson, co-founders of the successful mobile safety app AppArmor, share their entrepreneurial journey from college campus to a $30 million acquisition. They discuss the innovative features that set their app apart and the challenges of scaling without outside investment. Insightful reflections on ignoring detractors resonate as they emphasize market validation over peer approval. The brothers also introduce their book, 'Startup Different,' aiming to debunk common startup myths and inspire future founders.
The idea for AppArmor emerged from a specific campus safety concern, evolving into a widely-used mobile safety platform across universities.
The founders' decision to bootstrap their company allowed for greater control and a profitable growth model without outside investor pressure.
Managing company culture effectively was crucial for the brothers, leading them to prioritize supportive environments that nurtured team loyalty and motivation.
Deep dives
Founding App Armor and Its Unique Offering
The origins of App Armor stem from a safety app idea conceived by David Sinkenson while working at a university audit committee. The app aimed to enhance public safety by allowing users to send their real-time locations to campus security, evolving from a simple emergency dialing concept to a comprehensive platform utilized by numerous educational institutions. This innovation significantly improved upon traditional blue light emergency poles, offering universities a cost-effective safety solution with extensive features like emergency notifications and location tracking. At peak operation, App Armor serviced around 350 organizations, emphasizing its appeal and effectiveness in the market.
Navigating Growth and Acquisition
As App Armor grew rapidly, achieving triple-digit annual growth and widespread recognition, strategic acquisition interest increased, particularly due to the company's innovative solutions in safe campus technology. After initially rejecting a $20 million offer, the acquisition strategy shifted as revenues soared and the market recognized App Armor's value. The company eventually attracted attention from Rave Mobile Safety, who made a clean offer of $40 million, leading to a successful acquisition in early 2022. During this acquisition phase, App Armor exhibited remarkable operational efficiency, showcasing its capacity for rapid innovation and client acquisition.
The Importance of Culture and Team Management
Throughout their journey, managing company culture and motivating staff proved challenging for the founders as they dealt with the stresses of entrepreneurship, especially during the pandemic. Initial attempts to instill a Netflix-like culture resulted in a significant turnover, prompting a shift towards a more organic and supportive environment. The brothers realized the importance of nurturing a loyal team, recognizing that business is as much about human relationships as it is about numbers. This emphasis on culture ultimately contributed to App Armor's success and positive workplace atmosphere.
Lessons from Funding and Growth Strategies
The founders deliberately chose to bootstrap their startup rather than pursue venture capital, believing that self-funding afforded them greater control over their business. This decision helped them to cultivate a more sustainable growth model, focused on profitability rather than chasing rapid expansion typically seen in funded startups. Their success demonstrated the effectiveness of a B2B model grounded in customer relationships rather than the allure of trendy startup noise. As App Armor navigated the market landscape, they thrived by winning contracts through organic growth strategies and solidifying their reputation within academic institutions.
Reflections and Future Directions
With the sale of App Armor complete, the founders found themselves in a reflective transition period, contemplating their experiences and future endeavors. The post-sale journey included a brief period of adjustment before they began sharing insights through their upcoming book and podcast, 'Start Up Different.' They emphasized the importance of enjoying the entrepreneurial journey, recognizing it as both a formative and rewarding experience. Now, as they mentor other founders, they aim to impart the lessons learned from their journey, promoting a mindset focused on resilience, innovation, and pragmatic growth.
Brothers David and Chris Sinkinson attended Queen’s University in Ontario, Canada, when David learned of the problems maintaining the blue emergency phones on campus. He proposed a location-aware mobile safety app, so Chris built it himself, and it worked great.
AppArmor grew steadily to become the most popular university mobile safety platform in Canada and the US, and over 250 universities use it.
With no outside investors, they bootstrapped the company to $6 million ARR with serious profits before selling the company to Rave Mobile Security for $40 million. They stayed on for another year in transition before writing a book and running a podcast called Startup Different.
Quote from Dave Sinkinson, CEO and co-founder of AppArmor
”The biggest advice I give new founders is to ‘ignore that startup noise.’ Throughout our experience, we had lots of people who I loosely referred to as haters. People who said we’re "just a lifestyle business” or our idea is never going to work. One person literally told my cofounder brother Chris that we weren’t even a startup.
“Just ignore those people. Don’t pursue validation from your peers. Instead, pursue validation in the market. A couple of years into the business, that realization was a big change that helped me stay on track. So, my advice for SaaS founders is to ignore the haters and enjoy the journey.”
This week’s podcast is sponsored by Full Scale, one of the fastest-growing software development companies in any region.
Full Scale vets, employs, and supports over 300 professional developers, designers, and testers in the Philippines, who can augment and extend your core dev team. Learn more at fullscale.io.
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