Canadian Brothers Built Bootstrapped Safety App Business to a $40M Exit
Who is Chris Sinkinson?π
Chris Sinkinson, the co-founder of AppArmor, hails from Kingston, Canada, and holds a degree in Computer Science. After finding limited job prospects post-graduation, he leveraged his tech skills to launch AppArmor with his brother, David, following their shared entrepreneurial education at the same business school.
What problem does AppArmor solve?π
AppArmor solves the issue of unreliable campus safety systems by providing students with institution-branded mobile apps that offer quick access to campus security, ensuring peace of mind during emergencies and attracting large institutions due to its reliability and adaptability to their branding needs.
How did Chris come up with the idea for AppArmor?π
Chris and David Sinkinson's journey with AppArmor began unexpectedly when David, working on campus security issues at their university, identified a glaring problem with emergency blue light poles. An audit revealed that about 30% of these poles were malfunctioning, sparking the idea of replacing them with a mobile app that could directly alert campus security through the push of a button. This innovative approach was well-received during discussions with the campus safety committee, which encouraged the brothers to develop a working model.
Motivated by this feedback and guided by Chris's technical expertise, the brothers created an MVP (Minimum Viable Product) and tested it on their campus. As the app gained traction, they refined its features, focusing on customization and branding to meet different institutions' needs. They followed the lean startup methodology, adapting their product based on direct user feedback and initial market response. Recognizing a growing demand in campus safety, they expanded the app's capabilities and leveraged their connections to penetrate the market.
Both brothers faced challenges, from competition in the tech space to working closely as siblings, but they used their shared business background to persevere. Especially critical was their decision to bootstrap the startup, using revenue from other side projects to fund AppArmor's development. Their experience underscores the value of resilience, market responsiveness, and maintaining strong personal and professional relationships to nurture a successful business from a simple, yet impactful, idea.
How did Chris build the initial version of AppArmor?π
Chris and David Sinkinson developed AppArmor through a methodical process, leveraging Chris's technical expertise and David's business acumen. The initial concept came from David's experience assessing campus safety systems, leading to the creation of a mobile app prototype designed to enhance personal safety on college campuses. Chris, an adept coder, implemented lean startup principlesβsuch as build, measure, learnβto develop a minimum viable product (MVP) which was iterated upon based on direct feedback from early users and stakeholders.
The brothers utilized a technology stack suitable for mobile app development; early versions even included support for platforms like BlackBerry, reflecting the app market's early days. They iterated on the MVP with input from campus safety personnel, conducting thorough testing and responding to real-world issues as they arose. Initial customer feedback was critical in shaping the product, tailoring it to meet institutional needs effectively.
Building and refining the app into a scalable product took several years and presented challenges, such as overcoming technical obstacles and perceived market limitations. The project's bootstrapped nature meant early financial constraints, compelling them to cleverly leverage small revenues from side projects to fund development initiatives. This strategic approach allowed them to focus on building a robust, highly customizable product, culminating in a successful platform that served over 350 institutions before their exit.
What were the initial startup costs for AppArmor?π
- Self-Funding and Bootstrapping: Dave and Chris Sinkinson funded AppArmor primarily through revenue generated from early side projects and a $15,000 contest win. They did not initially seek external funding, relying instead on customer revenue.
- Minimal Initial Funding: They bootstrapped the entire business, which allowed them to maintain control of the company and avoid taking on debt or investor obligations.
- No Venture Capital: At no point did AppArmor rely on venture capital, which is atypical for a tech company but enabled them to keep a clean cap table and higher profit margins.
- Acquisition Offer: The company received an initial acquisition offer of $20 million, which they declined due to an extensive earn-out requirement. After significant growth, they later accepted a $40 million offer with more favorable terms, including a minimal earn-out period.
How did Chris launch AppArmor and get initial traction?π
Local University Partnerships
AppArmor initially launched its business by targeting universities and leveraging personal relationships within the academic environment. The founders began by conducting on-campus audits of existing security systems and, through their involvement in committees like Campus Safety Working Groups, proposed a mobile app solution for campus safety issues. This strategy led to the initial development of their product.
Why it worked: The direct connection with universities allowed AppArmor to quickly identify and address specific safety challenges faced by campuses. By positioning the app as a solution to broken emergency systems, they were able to secure buy-in from academic institutions who were invested in enhancing campus security.
Pilot Programs and Word of Mouth
AppArmor implemented pilot programs with key Canadian universities, offering their services at a favorable rate to gain initial traction. These institutions effectively acted as brand ambassadors, spreading the word to other universities and instilling trust in AppArmor's capabilities.
Why it worked: By providing an affordable technology solution, AppArmor built strong case studies that demonstrated improved safety measures. This organic growth strategy was fueled by endorsements from these initial partners, thus encouraging other universities to adopt the platform due to word-of-mouth recommendations.
Referral and Sweetheart Deals
To entice educational institutions, AppArmor introduced referral incentives and "sweetheart deals" with schools to spark initial interest and build a critical mass of users. These discounted deals were instrumental in gaining a foothold in the competitive market for campus safety solutions.
Why it worked: The discounted rates and referral bonuses made it financially viable for budget-conscious universities to experiment with AppArmor's innovative solutions. Satisfied customers subsequently referred them to other institutions, simultaneously broadening their network and strengthening their market credibility.
Metrics:
- Prior to their acquisition, AppArmor successfully onboarded 350 organizations, including prestigious schools like UCLA and NYU.
- By the time of their exit, they maintained a customer base that retained over 98% of their clients annually, showcasing the stickiness of their service.
What was the growth strategy for AppArmor and how did they scale?π
Referral Marketingπ
AppArmor effectively utilized referral marketing to grow its customer base. The company captured its initial clients by providing compelling deals, often referred to as "sweetheart deals," which led to strong referrals within the industry. These initial contracts were not only about revenue but also served as strategic moves to establish credibility and tap into the networks of those early clients. Especially in the B2B landscape, word-of-mouth and references play a critical role, and AppArmor's approach ensured that satisfied clients became advocates. This strategy was potent in the educational sector, where institutions often share best practices.
Why it worked: By offering excellent service and favorable initial terms, AppArmor secured early adopters who were pivotal in spreading the word. This approach is impactful in sectors like education, where collaboration and referrals among institutions are common. Once they captured a few notable clients, like the University of Florida, they leveraged these relationships to enter the US market and secure more clients, validating their product's effectiveness through trusted endorsements.
Direct Sales & Personal Engagementπ
AppArmor placed a strong emphasis on direct sales and personal engagement with potential clients. By attending numerous trade shows (up to 50 per year) and addressing the nuanced needs of institutions directly through face-to-face interactions, the company significantly enhanced its market presence. David and Chris Sinkinson were heavily involved in these sales processes, highlighting the importance of direct communication and relationship-building.
Why it worked: Trade shows and direct sales efforts allowed AppArmor to display its product in action, create personal connections, and receive immediate feedback. This hands-on approach was crucial, given the personalized needs of each institution regarding safety solutions. The significant presence in these spaces showed commitment and built trust with potential clients. Customization and personal interaction played a vital role, especially in an industry like campus safety, where trust and reliability are paramount.
Product-Led Growth & Customizationπ
The customization capabilities of AppArmor's product were vital. The company created a white-label solution allowing for high customization, enabling clients to have apps tailored to their branding and specific safety needs. This flexibility made the product very appealing to large institutions like NYU and the University of Florida, enhancing stickiness and reducing churn.
Why it worked: Offering a customizable product that institutions could brand as their own was attractive, reducing barriers to adoption by integrating seamlessly into existing systems. The ability to adjust features quickly in response to feedback also helped maintain high satisfaction. The robust customization options allowed them to cater to a range of specific safety needs, ensuring relevance and utility across varied client bases, effectively turning their clients into long-term partners rather than just customers.
What's the pricing strategy for AppArmor?π
AppArmor employs a tiered pricing strategy where institutions pay based on size, with fees ranging from $5,000 to $50,000 annually, eschewing consumer charges in favor of institutional billing.
What were the biggest lessons learned from building AppArmor?π
- Listening to Customers is Key: AppArmor thrived by actively engaging their clients, understanding their needs, and incorporating feedback, which led to a product that satisfied market demands and fostered loyalty.
- Bootstrapping Can Lead to Success: The founders successfully bootstrapped AppArmor, focusing on profitability and efficient use of resources without relying on external funding, proving that it's possible to grow sustainably with careful financial management.
- Know When to Bet on Yourself: By initially turning down a $20 million acquisition offer, the founders demonstrated confidence in their business's potential, leading to a doubled offer a year later, highlighting the importance of evaluating one's own growth potential before making decisions.
- Navigating Team Dynamics: Working as brothers, Chris and David Sinkinson learned the importance of complementary skills and candid communication, which helped them handle internal conflicts and leverage each other's strengths for the business's benefit.
- Resilience Through Challenges: AppArmor's journey through market and pandemic-related disruptions showcases how they adapted by pivoting their product offerings to meet new demands, demonstrating the importance of agility and resilience in business to overcome unexpected challenges.
AppArmor Acquisition: How much did AppArmor sell for and what was the acquisition price?π
In December 2021, AppArmor was acquired by Rave Mobile Safety for $40 million after AppArmor initially turned down an earlier offer of $20 million. This acquisition marked a strategic move for Rave, allowing them to bolster their product offerings and customer base with AppArmor's profitable and high-growth mobile safety solutions.
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More about AppArmor:π
Who is the owner of AppArmor?π
Chris Sinkinson is the founder of AppArmor.
When did Chris Sinkinson start AppArmor?π
2013
What is Chris Sinkinson's net worth?π
Chris Sinkinson's business makes an average of $650K/month.
How much money has Chris Sinkinson made from AppArmor?π
Chris Sinkinson started the business in 2013, and currently makes an average of $7.8M/year.
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