The path to profitability and acquisition doesn’t always require hoards of venture capital dollars.
That’s what Siftrock just proved. The Seattle marketing automation startup today announced that it has been acquired by Drift, a Boston-based marketing company that raised a $60 million round earlier this year. Terms of the deal were not disclosed.
Founded by Chris Hundley in 2014, Siftrock developed email reply management software used by B2B marketers at more than 150 companies including Glassdoor, Okta, SurveyMonkey, and others.
Simply Measured co-founder Adam Schoenfeld joined the startup as co-founder and CEO in 2016 and helped grow the bootstrapped company to profitability with more than $1 million in annual recurring revenue.
Drift is making a strategic acquisition of Siftrock. Both companies serve B2B marketers, but Siftrock’s product and technology complement Drift’s existing services.
Drift will create a Seattle office, where Siftrock already has five employees and expects to hire more post-acquisition. It also today announced Drift Assistant, a new product powered by Siftrock, which will continue serving its existing customers under the new brand name.
Getting acquired was never in the master plan when Hundley launched Siftrock four years ago. But he said Drift shares a common vision with its approach to “conversational marketing.”
“Once we started talking, it became clear that the customers we were selling to, the features we were building, and how we executed B2B marketing were aligned really, really well,” he said.
Drift CEO David Cancel said Siftrock has “built best-in-class product that manages email replies at scale, and this acquisition will help us deliver on that vision even faster.”
“On top of that, the team is amazing and they have proven to be leaders in the B2B sales and marketing space,” he said in a statement. “But most importantly, this is a move that adds real value to both of our customer bases immediately.”
Hundley and Schoenfeld will now have access to plenty of resources from Drift. It will be a big change from starting and growing a company with no cash from investors.
Hundley, a former CTO at Optify and entrepreneur-in-residence at Madrona Venture Group, had previous experience working for two venture-backed startups. He said bootstrapping is not for every startup, particularly ones that require lots of upfront investment to get going. But Siftrock proved to be a good fit for the strategy.
“I always wanted to try a bootstrapped approach because it gives you this nice independence and flexibility,” Hundley said. “You need a broad set of skills in order to execute without having the capital, but if you have that and you have the right idea and customers and a simple-to-serve product, I believe it’s a great path.”
Schoenfeld said growing a business without outside capital provides a good lesson on focus.
“We focus on a very specific type of customer and a very specific problem,” he said.
Siftrock’s success with bootstrapping comes during a time when venture capitalists are raising massive funds and pouring record amounts of investment into startups. Other companies, including Seattle-based SparkToro, have demonstrated that there are alternate ways of achieving profitable growth without VC backing.
We asked Hundley to share advice for entrepreneurs who are thinking about bootstrapping. Here are his tips:
- “Go full time as soon as you can. 60-70 hour weeks are common, if not necessary in the early days.”
- “Have some cash savings on hand you are willing to spend on your venture. Make sure you have enough to continue living your lifestyle for 18-24 months without a paycheck.”
- “If you are married, make sure your spouse is bought in. You will need their support.”
- “On that note, it was important for me to be transparent about the business with my family. I held a once-a-month meeting to share financials, progress on product and customer development, etc. My wife always knew exactly where we were, and that was key in holding her interest and support in the business.
- “The highs will be really high. Getting that first check is something I’ll never forget. On the flip side, the lows can be oppressively low. Make sure you either have a great co-founder to lean on, or once again, a family that can help pick you up.”
- “Spend time on your network and find a great co-founder. In the beginning, I thought I could do it by myself. It worked for a while but at some point the scale challenge is too great to overcome alone. Find someone who aligns with the business, the customers, and a shared vision. They should be great at the things you are not, and vise versa.”
- “Focus on solving pain for customers. Build products people love. Word of mouth is the only marketing you can afford when bootstrapped.”
- “Failure is common, but it isn’t a rule. ‘It can’t be done’ is said at the beginning of almost every great success story.”
- “Enjoy the journey, it goes by fast. Come up for air every once in a while and celebrate what you have learned and achieved.”
