We've Been Acquired: Local Startup Makes Good

Aloha, TechHuians - I am happy to announce to the local tech community that Sprout has been acquired by InMobi, nearly six years to the day from when we started our dot-com venture in Honolulu under the name ChipIn. Here's some of the press about the acquisition:

• http://www.inmobi.com/press-releases/2011/08/02/inmobi-acquires-spr...
• http://venturebeat.com/2011/08/02/inmobi-acquires-sprout/
• http://techcrunch.com/2011/08/02/html5-ad-builder-sprout-acquired-b...

After we launched, Hawaii Business News covered ChipIn's story over a two-year series of articles - we wanted to present as accurate an account as possible of what it was like to grow a dot-com startup in Hawaii so others could learn from our experience. We very honestly described how often we changed our business model and technology, the pitfalls of doing business in Hawaii and our fights with the Tax Department, the difficulty of creating a good team from the middle of the Pacific, and our successes:

• http://www.hawaiibusiness.com/Hawaii-Business/March-2006/Anatomy-of...
• http://www.hawaiibusiness.com/Hawaii-Business/April-2006/The-Evolut...
• http://www.hawaiibusiness.com/Hawaii-Business/August-2006/Fits-and-...
• http://www.hawaiibusiness.com/Hawaii-Business/February-2007/Startup...
• http://www.hawaiibusiness.com/Hawaii-Business/April-2008/Chip-Off-t...

But after two years of giving the group donation concept a good try without getting much traction, we decided to take a 180-degree turn and evolve the company into something very different - a Flash widget maker - and then after that, a Flash and HTML5 ad creation tool. Because technology changes so often, what's most important is having a quality team and perseverance. You can't run a successful startup without either. But we had both, and ultimately found the most useful fit for what we had built.

As I write this the Sprout team has been just a few days back from a two-week stay in Bangalore (now Bengaluru), India, where we worked on integrating our platforms, organizations, and processes. We're excited to be part of such a talented, fast-moving, and international engineering effort, and now that we have at least seven offices strategically located around the globe, we'll be able to take our technology and solutions worldwide. Nevertheless InMobi realizes that Sprout started in Hawaii and is committed to keeping the team located in Honolulu - believe me, everyone in every office would love to visit and work here! Rather than thinking of us as a local company that's been bought by a foreign company, think of us as a local company that has now become a global startup, with the ability to attract business, talent, and partnerships from around the world.

I want to thank the HTDC (which has been running the Manoa Innovation Center) for maintaining its commitment to growing tech companies like ours. For dot-coms the MIC is the primary center of innovation in the Hawaiian Islands and what we constantly tell our international partners is the "Silicon Valley of Hawaii". I started working at the MIC in 1993 as a student intern doing game programming and have watched it evolve and grow over the years. Without such a facility, coupled with the inspiring beauty and mix of resources in and around Manoa, the startup landscape in the islands would be significantly impacted. I also want to thank our many local investors who believed not just in our original concept but more importantly our team, supporting us through countless technological and business shifts. We could not have reached this point without you.

What have we learned so far?

• Tech companies are no longer local. Foundational collaboration platforms like Google Apps and Skype have matured to the point where startups can pick and choose their teams no matter where people live. Finding top talent is so difficult, and relocation costs so expensive, they have very little choice to do otherwise. That's why our core team for the last few years has been made up of engineers working in Vancouver, San Francisco, Virginia, Boston, and New York, and we've evolved our own practices and methods of working and meeting remotely (centered around Hawaii Standard Time). More to the point, this means that if the state wants to attract serious dot-com business it will have to rethink its approach in light of this industry shift.
• Infrastructure is important. Startups now increasingly outsource operational services (legal, accounting, human resources) to online services, not just engineering. We can't afford the net to be down for an hour, much less a day, not when we're constantly holding meetings, sharing documents, and running development and test applications in the cloud. Online companies need a good reliable amount of bandwidth for constant stress testing, product deployment, and rich collaboration needs, and this capability must be cheap and ubiquitous to be competitive with startups (as well as established players) in the rest of the world. Hawaii is not there yet, but with recent right-of-way and broadband initiative developments I maintain hope.

Out of these two facts emerge a number of things that can be done to encourage more dot-com activity in the state:

• Build and encourage more, smaller, flexible venture incubation areas with solid net infrastructure (such as The Box Jelly in Honolulu or The Hub incubator network)
• Put a priority on more sustainable ventures with a low to no physical footprint (I call them "zero footprint" companies, such as software companies that produce nonmaterial goods and services as their main products)
• Convert single-use developments into mixed-use communities to attract creatives, eliminate commutes, and spur the growth of strong, interdependent local mini-economies
• Encourage established, profitable software businesses to open offices in the state
• Work with the Hawaii Tourism Authority to provide messaging to potential talent - a significant percent of our longest-term engineers wanted to work in the state because they initially went on vacation here

Let's build the world we want to see!

Aloha,

  Kevin Hughes

  Co-Founder, ChipIn/Sprout

  Chief Designer, InMobi