_We had planned last week to post on GigaOM about Durham, North Carolina-based “iContact”:http://www.icontact.com/. The four-year old email marketing and blogging software startup closed a $5.35 million round of funding from “Updata Partners”:http://www.updatapartners.com/interior_portfoliocompanies_dev.asp and “IDEA Fund Partners”:http://www.ideafundpartners.com/ on June 29 — which is still news, especially in Durham. Then we met (virtually) the company’s 22-year-old founder and CEO, “Ryan Allis”:http://www.icontact.com/about/company. When we read a bit more about Allis’ tumultuous experiences as a founder–and the lengths he and his partner went to get their business off the ground–we determined iContact’s story would have more runway on Found|READ. So here it is. *Read and Learn.*_
_(What follows is an edited version of the original memo Allis drafted for Om.)_
iContast is one of many in the growing ranks of Web 2.0 companies. Like most, we’re young: the company is run by a 22-year-old CEO (that’s me), and a 26-year old-Chairman. That’s my colleague, “Aaron Houghton”:http://www.icontact.com/about/company. But we are different from many. For starters, we waited until iContact was profitable, had nearly 12,000 customers, and was steadily growing before we sought a Series A round of funding.
When we started out we wanted iContact to be a Web 1.0 email marketing company. We began in July 2003 as a two-person start up in Chapel Hill, North Carolina. I and my co-founder, Aaron, were 18 and 22 at the time. We met in college at “University of North Carolina”:http://www.unc.edu/. We weren’t able to raise funding initially, probably due to our relative youth and the economic climate of the time; this was post-dotcom crash. With few other options, Aaron and I bootstrapped the business for the first three years, doing everything we had to do to keep our expenses low and grow revenue to a point where investors would take us seriously. It sort of goes without saying that we deferred our own salaries. We did. But we also employed a few other, rather more outrageous, tactics to help get iContact to the point at which we felt we could start looking for professional money. Here is a shortlist.
*5 Things We Did to Bootstrap our Business:*
*1) Lived in our two-room office* and slept on a futon for three months in 2003.
*2) Cooked our meals on a “George Foreman Grill”:http://en.wikipedia.org/wiki/George_Foreman_Grill.* _(Test him on the cookbook, we dare you to.)_
*3) Jumped in a dumpster* to get the proof-of-purchase tags off of an office supplies box once we realizing the tags were needed to get the $50 Staples rebate.
*4) Extracted a $5,000 zero-interest loan* from a friend — for which we had to give up equity (not the kind of thing one wants to have to do).
*5) Convinced first employee to work for $1000 per month*– of course, we added stock options, but this is still never an easy sell. (_Can you live on $12k/year?_)
You might wonder why we chose to raise professional money after being self-financed (and dramatically so) for so long. We chose to raise $500,000 from IDEA Fund Partners in May 2006 to help us migrate from Web 1.0 to Web 2.0 — by then a transition that the market clearly demanded. By focusing on our customer’s needs, we redesigned our application to be easier to use and added the ability to publish full-fledged social media channels.
Today *iContact softare enables email, newsletters, blogs, RSS feeds, surveys, and autoresponders — all from a single web app.* Our market remains mainly small businesses and non-profits, but we have a few blue-chip clients now as well, such as Bank of America, Symantec, International Paper, Ford, Re/Max, and Super 8 Motel.
iContact’s revenues have grown from $12,000 in 2003, to $296,000 in 2004; $1.3 million in 2005; and $2.9 million in 2006. We are on track for $6.5 million in 2007. We now have 58 employees! *Thankfully, we no longer need to dumpster dive.* We are very excited about the $5.35 million in funding from Updata Partners and IDEA Fund. We raised this additional capital so we can scale customer acquisition efforts aggressively, continue to build-out our “rockstar team”:http://www.icontact.com/about/company, and move forward more quickly to fulfill our mission of creating the easiest-to-use online communications web app. Here is to humble beginnings!