Bootstrapping To $1 Million, Then Growing to $40 Million: iContact CEO Ryan Allis: Chapel Hill, North Carolina (Part 3)

Sramana: Where did the money come from to get iContact off the ground?

Ryan Allis: We bootstrapped for three years. Initially it was just the two of us, and we did not draw a salary. We were in downtown Chapel Hill. I lived in the office, so I did not have any rent personally. Aaron had started a company beforehand that also did software development and website design. He has a small two-room office that he paid rent on, and he let me work out of there free. We had zero expenses other than $50 a month for hosting.

Sramana: Were your visions in synch from the beginning?

Ryan Allis: To be honest, I don’t think we had much of a long-term vision when we started.

Sramana: At that time, what did you think you were going to do?

Ryan Allis: Aaron ran a company and had developed a very basic e-mail marketing tool. I saw it and realized that it was Web-based, which was new and pretty cool nine years ago. I suggested that we build a company around it, so we partnered our companies around his list builder product to build our first product which originally was called IntelliContact Pro. We have shortened the name since then.

In the second semester of my freshman year, I sat in on MBA classes at UNC. They told me I couldn’t, but I just showed up and sat in the back and listened. I found some good mentors from the venture capital and legal side. I worked with a guy through the MBA school to incorporate the company. We set it up as a Delaware C Corp. because we knew that we would eventually want to raise money.

Sramana: You originally structured this as a partnership between two companies. How did that fold into the new corporation?

Ryan Allis: We took all of the intellectual property and converted it into iContact Corporation on July 2, 2003. My freshman year ended in May 2003, so I moved into the office then. I would drive to my friend’s houses to take showers.

We would sleep until we woke up and then work until we fell asleep. We were not on a 24-hour day; it was probably more like a 28-hour day. We would go to sleep at 4 p.m. and wake up at midnight and then work until 6 p.m. the next day. It was just programming and online marketing initially. We were very efficient and kept costs low. We jumped in a dumpster to get the proof of purchase off the chair box from Staples to get our $50 rebate.

Sramana: How did you get your first customers?

Ryan Allis: We gave the product away free to local restaurants. The first one was Jimmy Johns Sub Shop in Chapel Hill. They were downstairs, so we gave them the software, a pad of paper for their customers to write their e-mail addresses on, and a fishbowl for other clients to put in business cards. We came once a week to collect the data, and we typed in the data for them. We would then collect a coupon from them and send it out to their 200 to 300 subscribers.

We did that for two or three months to get feedback. We did that just to get case studies, proof points, and customers. By midsummer we had a good enough product that we were able to start selling it for $15 to $20 a month. Our first client ever was a cottage in North Carolina that became a paying client early on. We did $12,000 in sales our first year and had 50 paying customers by the end of our first year.

This segment is part 3 in the series : Bootstrapping To $1 Million, Then Growing to $40 Million: iContact CEO Ryan Allis: Chapel Hill, North Carolina
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