In our third podcast, Hatchit chats with Joe Colopy of Bronto email marketing software about his entrepreneurial journey from bootstrapped startup to acquisition exit. You can listen to the podcast or read a transcript of the interview below.
Elizabeth: Welcome to Hatchit. I'm Elizabeth Wilcox, and here today we are speaking with Joe Colopy, a former Peace Corps volunteer and entrepreneur, a startup investor and most relevant for this podcast, co-founder of Bronto Software, a cloud-based provider of commerce marketing automation solutions. Joe co-founded Bronto in 2002 and sold it to NetSuite in 2015 for $200 million. NetSuite has since been bought by Oracle. So great to have you joining us.
Joe: Well, thanks for having me, Elizabeth.
Defining Automation Solutions
E: We're very privileged. I'd like to start by kind of defining what Bronto Software is. You co-founded in 2002, as we mentioned. But what exactly it is, or was the cloud-based provider of commerce marketing automation solutions. What exactly were you doing?
J: Yeah, sure. Well, there's a lot of buzzwords in there. It started off quite simpler, but really, at the end of the dotcom bust or somewhere in there started a very simple email marketing newsletter product. It was just the idea for small businesses to send email newsletters to their customers. And then, over the many years, it kind of evolved. And we started focusing our email marketing with retailers, particularly online retailers, and they got more and more sophisticated. What it evolved into is something we like to refer to as commerce marketing automation. It was a way for retailers and online retailers to manage all their communications with their customers. So, if someone purchases something, it would send the receipts. If they wanted to share specials, if they wanted to do special promotions, if they wanted to do things like, hey, we know she's been looking at umbrellas all day. Here's a coupon for 10 percent off. It facilitated all those things. And we worked with about fourteen hundred of the top brands in the US and across the world helping them really drive revenue through this kind of marketing coordination tool.
E: Wow. I know to get to that point was probably not as simple as it just sounded. Did you begin that business with that kind of objective or what service were you providing initially when you just started? You were working at Red Hat at the time. What did you think that business would be?
J: Yeah, so it was a very different time and kind of timely now, given that we're going through coronavirus. So back in the summer of 2000, I left my mid-level marketing job at Red Hat because I simply didn't want to climb up the corporate ladder. I decided it was time. I learned enough and it's ready for me to show my entrepreneurial stripes. And then more or less, over the next year and a half, I started brainstorming different ideas. I started learning how to code a Web application and tried some things, a lot of things. It didn't work, but eventually settled on a very simple email newsletter product that small businesses could use. So, it took me a long time. I definitely did not have an idea or good idea when I left my job and it took me about a year and a half to try different things, feel different things and finally find something that started getting just a little bit of traction.
E: What was that little bit of traction? I mean, what was your metric for determining whether it was working or not working?
J: So, the third main metric was to create something someone actually found useful. And I had a friend who ran essentially a newspaper and he was like, wow, I actually could use this. And he told his friend about it. And they actually found my simple email newsletter product called Bronto Mail, at the time M-A-I-L, actually useful. Everything I'd done before that, it was an interesting product, but had no real application. It was people use it because they're nice, but no one found true utility of it. It was just more of an exercise in creating some interesting products. And I think that's kind of the fundamental aspect of it. You have to create something that people want and it sounds very basic, but it's actually quite hard to figure out the core of what people really, really want. And so, once I had early friends use it, I was able to turn that into some people they knew that started paying a little bit and then, kind of, away we went.
E: I read once that you made a distinction between the need to have and the nice to have. So, this was a need to have you determined. And then once you determine that there was a need to have because you effectively got a client and then did you sit down and say, OK, I'm going to put together a business plan?
Startup Approach vs. Business School Teachings
J: I think I changed my approach a lot. I graduated from MBA school at UNC late or mid 1999. So a couple of years earlier and very much in business school, you're taught all the right things. You plan it out, you write your business plan, you create your PowerPoint, etc. But when you're starting a business, you got to throw all that out the window. And I really had to hark back to when I had a paper route when I was 12 and I was trying to hustle free Dr Peppers out of a pop machine, down the block. It really is about just trying to take care of a customer and then get another one. It really wasn't very academic at all. It really needed not to be very academic at all. It really just needed to be a hustle. And so, once I changed my mindset to kind of strip away all my educational background and all the things that was kind of taught and I focused a bit more just on your survival, things got a lot better. And so, I was able to turn one customer to two customers and then three customers to ten customers. And then you start having something that you could see a pattern. You just need to get more of them. But it was very difficult before I start getting those first few customers, because my head was filled with all the theory when the reality is I need to get off my butt and go out there and sell and take care of customers.
Growing the Business
E: And then what about in terms of growing as a business? Was it you and then who else initially? And what kind of skill sets did they bring that complemented you?
J: Sure. Well, early on it was just me. I left my job in summer of 2000 from Red Hat and really just started trying to figure out how to code, how to come up with a basic business idea and did that for a little over two years. Got to the beginning of 2002. My wife and I, we had a baby on the way in six months and I hadn't been working. So, it was time to get on it. At the same time, started seeing progress with this new idea called Bronto Mail. And then in a few months later, I was starting to get some traction. At the same time, there is a fellow that I’d known a little bit, because we both worked at Red Hat and we both had gone to UNC business school and he suddenly was free on the market. I'm like, hey, you're not doing anything. The economy's crap. Why don't you just join, help me out here? And he was like, OK, sure. So, we were able to kind of take that, incorporate the businesses Bronto mail and start taking our first early customers and turn them into a few more. So, we really were extremely lean early on. We didn't have a team. It started with me and then him, and then we just started executing.
E: Did you think, this guy would be good because he's got these skill sets and I have these? Or was it more just a function of this person's in a position to try to start something as am I and I like him. I mean, how did that work out?
J: It was very much the latter. It was, hey, he's a smart guy. We haven't killed each other yet. Let's just see how this goes. You know, early stage startups, they're really messy. They're not necessarily very scientific approaches. We bootstrapped that entire business even from the get go. We only put in a few thousand dollars each and we only spent it for a computer and some furniture. And so most long-lasting businesses actually have very scrappy beginnings. And ours was no different. We are very, very scrappy. It wasn't played out on a business plan. It was very much, hey, let's turn one customer into two and two customers into ten and then twenty.
Scaling the Business
E: So, at what point did you develop the business plan?
J: Well, I think business plan takes a lot of different parts. You can look a lot of different ways. We definitely didn't need a business plan to start executing a business, I think. But at the end of the day, we both had a master's in business and we were both pretty smart, capable people. So, I think there is a transition to some extent. The first million dollars of revenue is hustle, hustle, hustle. But I think the unique thing we're able to do is we're able to kind of slowly transform who we were to become good managers and directors and leaders and executives. So that's how we had to play our game up to a million dollars in revenue was very different than we were many years later, more than forty million dollars in revenue. We were able to transform ourselves. And that is a rare entrepreneurial trait because what it takes to start a business is often usually very, very different then what it takes to scale a business and to exit the business.
E: So you've just spoken to the fact that it's hustle, hustle, hustle for the first million or whatever that figure may be, and get one client, and then there's a point at which you start to say, OK, let's start to think of some other facets of this business. That's actually a different paradigm, if you will. What do you start introducing at that point?
J: Well, I think first off, you know, I think speaking to these entrepreneurs, it's great. And I think I can have a lot of credibility with them because I was there. I did code the first product. I did have zero dollars in it. We didn't raise any capital at all. So, I know it's extremely difficult. Some ability to identify with their struggles and say, hey, it's really hard, but here's what I did. And it's a tough, tough path that gets a lot of credibility. At the same time, when they start going saying, OK, well, you need to start think about these things. You need to start thinking about your team. You need to start thinking about, for example, hiring. You don't want to just hire people that look like you. You want to be conscious of your culture. These things early on when you're just trying to get started and get revenue are not so relevant. You start approaching a million dollars and next, you know, it's going to be ten million dollars. You really want to make sure you have a good culture and you're putting the seeds for that early on. So that culture is one thing. I try to bring in ideas of planning, ideas of watching their cash flow. I think a lot of early entrepreneurs are too focused on funding, getting investment is the sign of success. And I really tell them not to focus on that. It's really more about getting customers and being very lean and smart with their pennies. Later on, you have to change that game. But most entrepreneurs with early startups, they don't get to keep on playing. Very few of them move on to the next stage. So, you know, I try to give them advice that will let them do that. And it's hard.
Exiting the Business
E: And what about when you decided - when you sold to NetSuite in 2015 - what led you to the point of thinking, OK, it's time to let it go and to move on to something else?
J: Well I think Chaz and I, Chaz, the co-founder, we have been doing it a long time. I left my job in summer 2000. We started working together in 2002. So, you're talking about at least 13 years. And we really enjoyed building the company. But I felt to go to the next stage of business for us to go to forty million dollars revenue to one hundred two hundred million dollars revenue. We're going to have to raise a lot of capital, go public and/or join up with a larger partner. And so, we ultimately decided on the latter, that we are going to go through a different phase and we needed something bigger than us in order to get there. That was one decision. Another part is I have a family of four kids and I had spent a lot of time working on the business, having a hangover my head worrying about it, trying to build it. And I really want to spend more time with my family. I wanted to just kind of mix it up a little bit. So, I was ready for a change. I thought the business was ready for a change, even though we are still doing very, very well. I didn't want to be in a place two years down the road where our growth was going to flatten out and then we wouldn't have the same options. I thought, you know, it's best to make a change while we're all on the upswing.
E: Do you think the skill sets of an entrepreneur, a sort of startup entrepreneur versus a skill set of somebody running a two hundred million dollar company, are they quite different?
J: I think they are different skill sets. I think early in my journey I wouldn’t have said that. But the reality is, is when I finished up at Bronto, it was a three hundred person organization. We had offices in London, Sydney, L.A., New York, including North Carolina, where the majority of people were. We had we had done a lot of stuff and we had figured it out and it was hard and we had made a lot of mistakes. But then we had made a lot of right choice. So, I actually felt like I could have totally ran a two hundred million dollar organization. It would have been hard. I think it's a very different job, but I'd gone through that transition. I had been very far removed from the day to day. I spent most of my time communicating, setting a vision, working with different stakeholders. I'd already kind of made that jump. I think it would have been more of that kind of stuff. We never had any outside shareholders. We would have been a publicly traded company. That would have been a different skill set. I would have spent a lot more time working for the board, but that was more similar to what my day to day life was anyways, then certainly the early stages, which was radically different,
E: Now, given where you are, what are your aspirations and hopes and dreams professionally? How do you feel like you've had your big success and now you're content to try to develop or support other people or get involved in other small ventures or what are you thinking professionally now?
What I'm Doing Now
J: Professionally, I am most focused on supporting other software engineer entrepreneurs in the Raleigh Durham, North Carolina area. That is where I grew Bronto. And it's my form of giving back. It's what I find interesting.I like working with entrepreneurs. I like helping them. I like teaching them. I started my career as a teacher. And so in a weird way, I get to kind of return to that and help build others up because I've had my big success. I've learned a lot of lessons. I want to make sure they don't go for waste. And if I get to pass some small fraction of those to others and help them be and have the next Bronto success, then awesome.
E: You say you started your career as a teacher. Were you referring to your time in the Peace Corps and after that?
J: After I graduated college in 1993, I joined the Peace Corps. I was a Peace Corps volunteer for two years in the small island nation called the Seychelle Islands, which is off of East Africa. And I was essentially a high school teacher and I taught a number of different things. But one of the main things I taught was computing, which was kind of an unusual Peace Corps post. But they don't get a lot of computer scientists that they tend to score. So I guess I was well slated for that. And then I did that for two years and my students were 16, 17, and they were very bright. They were like the country's brightest students. It is a small country, but still they're still pretty bright. And then after that, I had a small, short stint in Guayaquil, Ecuador, more of a middle school teacher, also teaching computers and accounting to middle schoolers, which was controlled chaos. As you can imagine, middle schools around the world are all kind of similar in their approach. But that was a great experience. And then when my wife and I, we first moved to North Carolina, I actually did computer training classes and consulting around the Internet. And this was in the nineties. I really had three different teaching experiences, one very bright, older high school, maybe first year college type students in a different country, than middle school students, a different country, and then adults in the US all around technology. I had a pretty good idea. I had gotten pretty good at how to communicate ideas among different people, particularly different groups that was either a different language or in the case of middle schoolers who really for the most part had little interest in listening to me. I could make it somewhat entertaining, which is widely applicable actually, when you work with adults.
E: That's interesting. In terms of looking at the skill set you had as a teacher, you point to communicating ideas and being effective at that. Do you think that played a pivotal role in your success in building a company?
J: Absolutely. I think starting a company was much more about being resourceful, being able to come up with a product by myself, willing to make the calls and do whatever it takes. There's a lot of grit, a lot of persistence, a lot of hustle there. But building a company, I think my teaching experience was instrumental, the ability to communicate clearly, rally other people around a common cause. I work with lots of different types of people. Be clear, and the larger you get, that becomes even more important. It really is. Certainly when I finished my time at Bronto and for a number of years before that, it was really about setting vision and communicating. This is where we're going. Make sure it's very clear. I think being a teacher develops a skill set in an awesome way. And I think that's why I'm fairly confident that Bronto could have gone from forty million dollars in revenue to two hundred million dollars of revenue. I think those skills, that's even more important, and I enjoyed it. I think being a great communicator and being able to articulate your ideas very clearly is key for any leader, certainly a leader of a large organization.
E: Interestingly, it sounds as if being a teacher helps cultivate leadership skills, is what you're saying?
J: I think so. I think it definitely can. You become very refined in how to communicate with people with lots of different answers and I think is a great skill for being a leader, particularly a technology leader, where often the concepts are kind of complicated or confusing or intimidating to certain people.
E: Great. Well, that sounds like a great place to end our conversation. I so appreciate you joining us today. Very insightful. And we thank you. And stay well too.
J: Thank you very much. And you stay well as well.
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