From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick (Part 6)

Sramana Mitra: Interesting. In 2007, you said you were at about $5 million in revenue?

Janine Popick: Around that time, yes.

Sramana Mitra: You have just raised that $1.2 million friends and family round. You haven’t raised any more money beyond that? Are you profitable at this point?

Janine Popick: Yes, we’re profitable at this point.

Sramana Mitra: In 2007, what was happening?

Janine Popick: Any money we made, we put back into the business. This entire time since 2002, there has been no shortage of companies wanting to acquire us. Around 2007-2008, we started conversations with Intuit or what I’ll call a mistake of mine. Intuit wanted a product that was embedded inside QuickBooks so that based on certain data points in QuickBooks, a QuickBooks user can easily send an email campaign out maybe saying, “You may want to think about this product.” We listened and worked very closely. As you can imagine, we were a very small company at that time. These guys were big. They’re direct marketers. They totally get it. They were great product marketers for the financial community, but they weren’t email marketers.

Sramana Mitra: Certainly. It sounds absolutely preposterous to have QuickBooks integration because the user of QuickBooks are the accountants, not the marketeers.

Janine Popick: Right. We spent a lot of time and a lot of cycles on this. I’m sure that there was some kind of an acquisition talk happening around this. At the eleventh hour, they decided to do a really fast Homestead integration with us. We just co-branded our product for Homestead and launched both of them. The bookkeeper do not give a crap about email marketing. We’ve been listening to how Intuit wanted it. Long story short, I learned a valuable lesson. You’re the expert of what you do, not necessarily who you’re dealing a deal with.

We certainly talked to more and more companies about purchasing us throughout the year. Deluxe was one of them. Deluxe ended up acquiring us. In fact I was on vacation in Myanmar when Deluxe called us. My team reached out to me to say that Deluxe is calling. I told thwm not to take the call. They called me back saying, “Deluxe called again. They’re really adamant about it. I think we should take the call.” I said, “You guys take the call. I’m on a beach. I’ll be back in a couple of weeks.” It turns out Deluxe was very interested. What happens in a big company is management changes and their priorities change. Every single time we talked to them, it was a different set of managers. This one just happened to be hot on email marketing. I just said, “Please don’t mess with me. We are so close to launching this product.” They said, “No, we’re serious. This is going to be a painless process.” I’m really glad we ended up taking the meeting because it was a real deal.

Sramana Mitra: 2013 was when you got acquired?

Janine Popick: 2012.

Sramana Mitra: In 2006 to 2007, you were doing about $5 million in revenue. What were you doing, revenue-wise, during these acquisition conversations in 2012?

Janine Popick: We were just over $20 million.

Sramana Mitra: Wow! You were just over $20 million. What kind of offer did they make you?

Janine Popick: I don’t think I’m allowed to say.

Sramana Mitra: According to the public information that is available, they bought you for $27 million?

Janine Popick: I think it was $30 million according to the press release.

Sramana Mitra: Help me understand the valuation here. How is it that a $20 million company gets acquired for $30 million?

Janine Popick: Email marketing companies were not being sold up for more than 1.5 times valuation. Not since Eye Contact has there been a real huge exit.

Sramana Mitra: That is a much bigger deal. Basically, you got a 1 point something kind of valuation.

Janine Popick: Yes.

Sramana Mitra: When you sold the company, how many people did you have?

Janine Popick: At the highest, it was about 105.

Sramana Mitra: Where were you based?

Janine Popick: San Francisco.

Sramana Mitra: The entire 105 workforce was in San Francisco?

Janine Popick: Yes.

Sramana Mitra: It sounds like you did the whole thing for $1.2 to $1.5 of financing. You did very well.

Janine Popick: When you think about the valuation, that’s one thing. When you think of what’s the return to the investment, that’s pretty great.

Sramana Mitra: How much of the company did you own when you sold the company?

Janine Popick: Around 26%.

Sramana Mitra: Did the employees have a substantial share or was it a lot of investors making a lot of money?

Janine Popick: A lot of investors made a lot of money but employees walked away with something. Everybody was happy.

This segment is part 6 in the series : From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick
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