Sramana Mitra: How did they know about your software?
Matt MacInnis: We found out later that they had discovered Inkling through a publisher who had gotten a job at Starbucks and looked at what Starbucks was doing every quarter by shipping binders out to their district managers. We were a software platform that lets you build interactive content for iPad. There was a match. They opened our eyes to this opportunity, that we could license the technology for businesses to communicate with their employees, and that we could probably get more money as a SaaS business than we could in a consumer business.
Sramana Mitra: You started in 2009. At that point, was this a bootstrapped business or did you already raise money in 2009?
Matt MacInnis: In 2009, we did a little bit of a seed round with friends and family. We did an institutional round in 2010. Sequoia invested.
Sramana Mitra: What was the size of the seed round?
Matt MacInnis: $600,000.
Sramana Mitra: What did you do with that seed round leading up to the 2010 Sequoia investment? What did you have to show to Sequoia?
Matt MacInnis: If you go to Sequoia’s website, you’ll see a quote from the partner who said, “When Matt came in with nothing more than a deck and gave us his vision, we knew we had to be in business with him.” It’s flattering. It’s only partially true.
Sramana Mitra: I know it’s only partially true, because I actually have talked to several Sequoia partners who have told me that they do nothing of this sort.
Matt MacInnis: Exactly. The special circumstance in our business is that the iPad had just come out. You couldn’t have gone too far on the technology front because you needed that stuff to shop and you needed people to buy the iPad. There was almost no need for a market validation even though, in hindsight, there probably was not a market.
We had really detailed designs of what this thing was going to look like and they were really freaking impressive. We got some pretty talented folks who joined the company early on. They knew how to do that. We were able to make three things. One is we were able to make really clear progress on the vision of the product in very specific terms. The second is business deals. We were able to secure commitments from publishers to work with us, which is a big validation. Third is we were able to attract talent.
We had this beautiful situation where everybody was familiar with the problem. We had this strong swell of interest and excitement about the problem that we were going to tackle from investors, partners, and prospective employees. The third thing that we achieved before we raised Series A was, we had assembled an amazing team to tackle the problem. Traditionally, you’d achieve product milestones before you can go and raise an institutional round from Sequoia. In this particular case because of the technological circumstances, it came down to all of these other equally hard things that you had to do in a business that we ticked off.