Running a technology startup takes perseverance, money, luck, talent and the ability to adapt quickly.
That’s the takeaway from Bill Boebel’s Startup Ignite talk at the Geekdom in San Antonio Friday night.
Boebel, now an angel investor and managing director of Capital Factory in Austin, gave the audience of about 60 people an overview of how he co-founded Webmail.us and later sold it to Rackspace Hosting.
In 1999, Boebel and his friends, Pat Matthews and Kevin Minnick, founded FieldParty.com, which created searchable city event directories. They dropped out of Virginia Tech University just 20 hours short of getting their degrees to work on the business full time. FieldParty.com raised $120,000 in angel money, largely from friends and family, and on March 10, 2000, the website launched – the same day the Nasdaq started crashing when the great Dot Com bubble burst.
“The world changed the day we launched,” Boebel said.
Immediately, potential investors stopped returning calls, he said. “The website was live in three cities: Blacksburg, Charlottesville and Harrisonburg, Virginia.”
That’s when the company changed names to Exedent Technologies and pivoted from searchable directories to creating content management systems for events for newspapers. The company landed 20 customers paying $50 to $100 a month.
Exedent gave away the product for free to the Virginia Tech University newspaper to serve as a reference customer for other newspapers. The problem was “the newspapers didn’t understand the Internet,” Boebel said. “They thought it was a threat to put their content online.”
So Exedent created a general-purpose content management system.
“It was a pretty cool product at the time,” Boebel said.
But Boebel, Matthews and Minnick had $100,000 in credit card debt and the company was running out of money. Exedent laid off its entire workforce except two employees who received minimum wage.
The company pivoted again into a company that would “do anything for a buck” including content management systems, webmail hosting, search engine optimization and website development.
“We would do whatever people would pay us to do,” Boebel said. “With each change we had confidence that this was the right path.”
Then, the money just about ran out and Boebel said he “thought about quitting.”
Matthews took a job selling books door to door. Minnick took a regular job to support his family. They all decided to go back to college and work crazy side jobs to keep the business afloat. They moved the offices into the basement of a townhouse.
In 2002, they got lucky. Spam and viruses started to plague people’s email inboxes on the Internet. The company started heavily promoting its secure email hosting services. Boebel, using his search engine optimization skills, secured the top keywords for “email hosting” and “webmail” on Yahoo.
“Overnight, it started to become clear that the email thing was a thing,” he said.
In yet another pivot, they added a “c” to the company’s name to create Excedent and decided to focus exclusively on email and “build the most kick ass email company.”
“We had only $1,200 in the bank and no credit to draw from and servers to pay,” Boebel said.
Its bill for Server Vault, a hosting service, cost $1,200 a month, he said.
Luckily, the company landed its first major customer and asked for a $50,000 prepayment. That along with $30,000 raised from a private investor and a $50,000 bank loan from a friend, and the company was funded, Boebel said.
They took advantage of the fact that big companies didn’t quite understand that if a company had a professional looking website that they could still be in the basement of a townhouse, Boebel said.
Also, for two years, they paid pennies for search engine keywords that led to “awesome leads” and customers, he said.
At the end of 2002, the company had $250,000 in revenue. Minnick quit his other job and went back to work for the company full time. The next year revenue doubled with 1,200 customers. They ran a lean operation, Boebel said.
“Lean wasn’t cool back then,” he said.
In 2004, they rebranded the company to Webmail.us and focused on the small business market and partnered with Rackspace as a reseller of its services. Webmail.us had more than 500 resellers. It moved its servers from Server Vault to Rackspace. They also moved the company to the Virginia Tech Research Park and switched from a Windows-based system to Linux and open systems. By the end of the year, the company had $1 million in revenue and 4,000 customers and eight employees.
At the end of 2004, the company also raised $500,000 in venture capital from local angels and Pat Condon, a founder of Rackspace.
In 2005, the company had revenue of $2 million, 13,000 customers and 25 employees. Webmail.us was the place work in Blacksburg, VA and the company got its pick of computer science graduates from Virginia Tech University.
Then in February of 2006, Google launched Gmail, Webmail.us’s first real competitive threat, Boebel said.
Despite the threat from Google, business continued to grow. By the end of 2006, Webmail.us had $4 million in revenue and 30,000 customers.
In 2007, Webmail.us was looking to raise $3 million to expand the company’s operations, but it never closed on the round, Boebel said. Instead, Rackspace acquired Webmail.us in September of 2007. That year, the company had made Inc. 500’s list of fastest growing private companies, ranking at number 217.
When Rackspace bought Webmail.us, the company had revenue of $8 million, 72,800 customers and 65 employees.
“By this point, Rackspace was our largest reseller and we were their fifth largest customer,” Boebel said. It was Rackspace’s first acquisition.
“Essentially, we had the autonomy to run the hosted email business inside Rackspace,” Boebel said. Webmail.us moved customer support to San Antonio but continued to grow the Blacksburg offices.
From 2008 to 2010, Boebel worked at Rackspace and continued to double the email hosting revenue annually. He left the company and moved to Austin two years ago.
Austin has a more developed ecosystem for startups than San Antonio, Boebel said. It’s also a great place to raise a family. He is married and has a two-year-old son.
“A lot of things are happening in San Antonio, but not a lot of things are bringing it together,” he said. He said he hoped Geekdom would change that and serve as a catalyst for San Antonio’s technology community.
Today, Boebel acts as an angel investor in several technology startups, primarily based in Austin. His investments include WP Engine, a WordPress web hosting site and InfoChimps, a data management business.
His investment criteria centers on the people behind the startup.
“I’ve just got to really like the team,” Boebel said. “I definitely look for ones where I get along with the team really well.”
At Webmail.us, the founders hired people they liked and wanted to hang out with after work. That’s the same strategy Boebel uses in his investments.
(Rackspace is a sponsor of SiliconHillsNews.com)
On Friday, 45 student entrepreneurs with diverse backgrounds will participate in the 30th iteration of 3 Day Startup in Austin, a highly energetic, often sleepless, weekend where big ideas are turned into viable companies over the course of three days.
