Pop
culture has stereotyped the successful tech entrepreneur as an
individual who strikes it rich after getting an infusion of venture
capital, and then quickly grows his or her startup into a big company
by focusing on selling a product with mass appeal. But that’s not
always the playbook.
Take
the experience of Chris and Dave Sinkinson, two brothers who built a
software as a service (SaaS) custom personal safety mobile app
company called AppArmor
from their Queen’s University
dorm room while getting their MBAs and then sold the company to Rave Mobile Safety
for $40 million in 2022.
They
turned conventional wisdom on its head while growing their business.
Now the brothers are keen on debunking startup myths and misnomers so
other entrepreneurs can learn from their experience. In their new
book, “Startup Different”
(Page Two Publishing), they offer a blueprint on how to build a
multimillion-dollar business using a practical and principled
leadership approach.
“Starting
a business is an emotional roller coaster and you face a lot of
challenges,” said Dave Sinkinson, AppArmor’s Co-founder and
former CEO. “There are a lot of people skeptical of you.” As he
explained, the key is to hammer away at building a brand and market
share, while developing a strong corporate culture based on
empathetic and collaborative leadership that differentiates your
business from rivals. That eventually will help you be successful.
The
story of how they did it involves debunking startup myths many
entrepreneurs swear by.
Myth
#1: You need an angel or venture capital investor to fund your
startup.
Reality:
Not true. You can bootstrap your business by plowing revenue back
into the business to use for growth capital. This is especially true
for software businesses that are not making a capital-intensive
product, the Sinkinsons said.
In
AppArmor’s case, the brothers launched their business as a side
hustle in 2011 and never sought venture capital funding. Instead,
they had a couple of other software side hustles that brought in
revenue. They used that money as working capital to get by until
their safety mobility app started getting purchased by hospitals and
universities —
like
the Mayo Clinic,
University of Florida,
New York University,
and Texas A&M University —
that wanted to use the product on their campuses.
“We
never wanted to raise venture capital since we heard a lot of horror
stories from other entrepreneurs,” said Chris Sinkinson, Co-founder
and former Chief Technology Officer of AppArmor. “It’s hard
raising funding; and once you do you have to spend a lot of time
managing your investors who are just focused on short-term objectives
so they can reap returns quickly.”
“We
knew we needed time for our market to develop and we didn’t want
them crushing our dreams,” Dave added.
According
to the founders, instead of focusing on getting funding, it is best
to focus on customer acquisition. Funding permanently alters your
business model, culture, and product — and not necessarily in good
ways, they said.
[Read more: How 4 Entrepreneurs Are Making Millions on Amazon as Third-Party Sellers]
Myth
#2: A niche product idea doesn’t always pay off.
Reality:
The opposite is often true. Sometimes a niche market needs a product
that solves a problem really well, according to the Sinkinsons. Going
after such a market is easier for a small company, especially if it’s
being overlooked by large corporations.
While
studying at Queen’s University in Ottawa, the founders saw a real
need for an app that allows students on campuses to notify security
response teams of any problem by simply pressing a button on their
phone. So they homed in on developing a customized end-user safety
app for the school. There wasn’t a product like that on the market
back in 2011 when they launched the business.
“Bigger
markets are harder to penetrate if you are a small business with low
credibility,” Dave said.
We learned that you need to have face time with clients. It helps legitimize your product. Going to conferences and trade shows are a must.
Dave Sinkinson, Co-founder and former CEO of AppArmor
However,
as Chris explained, over
the longer term, you can sell more into that bigger market base with
new products or enter adjacent markets that can also benefit from
your product.
That’s
what AppArmor did. After targeting university campuses that wanted
mobile security for students, it marketed its product to schools and
hospitals across the country.
[Read more: 3 Businesses Get Creative to Counter Mounting Customer Acquisition Obstacles—And Win]
Myth
#3: Co-founders often butt heads, which is bad for business.
Reality:
It’s
best to share duties and responsibilities with a partner in
leadership with different but complementary strengths.
While
building AppArmor, Dave was the sales and marketing guy who was a
good leader, while Chris, a software and product developer, was the
Chief Technical Officer.
To
avoid disagreements, the brothers had a framework. To resolve issues,
they used data to examine what was going on and then used a consensus
approach.
“We
never tried to force one another to do something or break a deadlock
by voting. Instead, we kept talking until we could find common
ground. This requires an open mind,” Chris said.
Myth
#4: Creating a culture for your startup is easy.
Reality:
You need to foster creativity and innovation, which are especially
important for a startup. You also need to be an empathetic,
collaborative leader, not a faux-alpha. This will help boost employee
loyalty, the brothers said.
This
is hard to do, according to the founders. As they learned, every
company’s culture is unique and it’s not all foosball tables and
beer kegs.
“At
first, we tried to replicate the culture at Netflix
since it had good reviews, and many other startups were following it.
But copying another company’s culture doesn’t work. It alienates
the staff in the process,” Dave said, noting they lost their only
two employees at the time as a result.
After
that failure, in 2015, the founders came up with five guiding
principles for AppArmor’s employees: deliver quickly, deliver
quality, thrive on freedom, leave your ego at the door, and act in
our best interest. In addition, they made sure the staff knew that
every customer is just as important to the company regardless of how
much they paid.
“Always
remember, your culture is a fundamental strategic advantage in the
marketplace because it is difficult for rivals to replicate,” Chris
pointed out.
Myth
#5: Your product is so awesome that it will sell itself.
Reality:
You need to keep your focus on sales from the get-go. Many tech
founders tend to focus on making their product, not selling their
product. But even the best products will not sell themselves.
You
need a strong sales team and good distribution channels in place for
sales to grow. How well the product is sold will determine success.
Keep
in mind that there is no silver bullet in marketing.
AppArmor’s
co-founders found that out through trial and error. They tried a host
of things to see what worked. They went to conferences and trade
shows, launched direct mail and social media campaigns, and used
referral programs.
“We
learned that you need to have face time with clients,” Dave said.
“It helps legitimize your product. Going to conferences and trade
shows are a must.”
Myth
#6: You need to shop your company around to sell it.
Reality:
“If
you’re running a profitable, systematized, and growing business,
buyers will come to you. You don’t need to shop your company. Venture
capital, private equity, and strategic competitors will see you and
come knocking,” Chris said.
This
is especially true if you have a great product and you operate your
business with a moral compass, according to AppArmor’s founders. As
they explained, they competed fiercely in the marketplace to win
business, but they did it fair and square. There was no mudslinging,
disparagement, or business-by -litigation against competitors.
“This
approach generated a lot of respect for our company from our
customers and rivals. Investors and others took notice,” Dave
recalled. “In 2022, when Rave Mobile and its investor group were
looking to boost their competitive position in the marketplace, they
came to us with a buyout proposition that we couldn’t refuse.”
CO— aims to bring you inspiration from leading respected experts.
However, before making any business decision, you should consult a
professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
CO— Exclusives: Insider Strategies
How the buzziest brands and hottest startups are solving today’s biggest business challenges. CO— brings you advice from startup founders and top executives for thriving in a new world.
Subscribe to our newsletter, Midnight Oil
Expert business advice, news, and trends, delivered weekly
By signing up you agree to the CO—
Privacy Policy. You can opt out anytime.
Published
Lori Ioannou