Apr 212011

Backwards

Backwards

I came to an interesting conclusion about Return Path recently.  We’re building our business backwards, at least according to what I have observed over time as the natural course of events for a startup.  Here are a few examples of what I mean by that.

Most companies build organically for years…then start acquiring others.  We’ve done it backwards.  In the first 9 years of our company’s life, we acquired 8 other businesses (SmartBounce, Veripost, Re-Route, NetCreations, Assurance Systems, GasPedal Consulting, Bonded Sender, Habeas).  Since then, we’ve acquired none.  There are a bunch of reasons why we front loaded M&A:  we were working hard to morph our business model to achieve maximum success during the first internet downturn, we knew how to do it, there was a lot of availability on the sell side at good prices.  And the main reason we’re not doing a lot of it now is that there’s not much else to consolidate in our space, though we’re always on the lookout for interesting adjacencies.

Most companies tighten up their HR policies over time as they get larger.  We’ve gotten looser.  For example, about a year and a half ago, we abolished our vacation policy and now have an “open” system where people are encouraged to take as much as they can take while still getting their jobs done.  Or another example is an internal award system we have that I wrote about years ago here.  When we launched this system, it had all kinds of rules associated with it — who could give to whom, and how often.  Now those rules have faded to black.  I’d guess that most of this “loosening up” over time is a vote of confidence and trust in our team after years of demonstrated success.

Most companies start by investing heavily in product, then focus on investing in sales and marketing.  Here we haven’t exactly gotten it backwards, but we’re not far off.  Two years ago, one of our major company-wide initiatives/priorities was “Product First.”  This year, we decided that the top priority would be “Product Still First.”  The larger we’ve gotten, the more emphasis we’ve placed on product development in terms of resource allocation and visibility.  That doesn’t mean we’re not investing in marketing or the growth our sales team — we are — but our mentality has definitely shifted to make sure we continue to innovate our product set at a rapid clip while still making sure existing products and systems are not only stable but also improving incrementally quickly enough.

I don’t know if there’s a single generalizable root cause as to why we’ve built the company backwards, or if that’s even a fair statement overall.  It might be a sign that my leadership team is maturing, or more likely that we didn’t know what we were doing 11-12 years ago when we got started — but it’s an interesting observation.  I’m not even sure whether to say it’s been good or bad for us, though we’re certainly happy with where we are as a company and what our prospects look like for the foreseeable future.

But it does lead me to wonder what else we should have done years ago that we’re about to get around to!

  • http://www.cheesecare.com HimS

    I think all bootstrappers first build a business, then they build the company and then they build the product. Bootstrappers do not have the luxury of first building and then selling. They sell first and then build often funding the build part using advances from customers.

    • Matt Blumberg

      You're right to some extent. But the good ones do some of both out of the gate.Matt

css.php