This week, KC Roundtable welcomed Matt Watson, founder and CEO of Stackify, the much anticipated start-up due to launch in November. But rather than gush about his exciting new venture, Watson shared battle stories from his last multi-million dollar endeavor, the company he claims should have failed 1,000 different times: VinSolutions.
With a fiercely competitive background in software development**, Watson’s brief experience with the automotive industry led him to realize a large opportunity in streamlining its day-to-day processes, like inventory data and customer relationship management (CRM). VinSolutions offered a complete turnkey solution, solving five different problems for its car dealership customers.
After a slow start of bootstrapping and pouring sweat equity into the cause, VinSolutions eventually found leverage and doubled in size every year, landing on the Inc 500 list as the 33rd fastest growing software company in 2010.
But getting there wasn’t easy.
Business partners came and went like the wind, one of whom sued Watson on his way out the door. An attempt to resell the software flopped. Harvard MBAs laughed their way through the business plan.
Regardless of external challenges, VinSolutions had a quality product, and Watson knew it. Through a strenous sales campaign — regulated by an ex-drill sergeant, no less — customers took notice of VinSolutions quickly.
The company grew so fast, it couldn’t support the high demand. Cash flow was choking on its own breath. They owed all of their vendors money, and new customers sat in queue for 90 days before receiving the product.
Eventually, 40 percent of the company was sold to raise growth capital and iron out revenue.
In 2011, VinSolutions sold to Autotrader.com for nearly $150 million, making a few of its 300 employees instant millionaires and allowing others to accept gigantic signing bonuses during the acquisition.
According to Watson, “One of the reasons we really succeeded was (because) we had very strong technical and product expertise, and a really strong sales side. So often, you see companies that have one or the other, and they often fail because they don’t have the other piece.”
**In middle school, Watson programmed his video games to play themselves while he was at school to ensure he retained the top scores.