Acquired or Acq-hired, Xpenser Adds Expertise to Coupa’s Web Services
Some startups are born great, some achieve greatness—and some get acquired.
Getting acquired can mean different things, however. In the case of Xpenser, a consumer Web startup based in Del Mar, CA (just north of San Diego), the buyout disclosed last week by San Francisco-based Coupa Software was more like getting hired.
Founded in 2008 by Parand “Tony” Darugar, Xpenser is a Web and mobile app startup that specializes in managing work-related travel and expenses. Coupa, which provides cloud-based software that enables companies to manage their procurement expenses and vender invoices, announced the acquisition at its annual users conference in San Francisco.
The price of the deal was not disclosed. But Darugar tells me he won’t be retiring to La Jolla to begin life anew as an angel investor—at least not anytime soon. Rather, he says, “the goal for this acquisition is to take our experience, product, and leadership, and bring that to bear with their existing platform. I’m taking a leadership role. I am now leading the expense management part of the business for Coupa.”
According to a spokeswoman for Coupa, the Xpenser deal is in line with an emerging trend, which includes Dropbox’s March 15 buyout of Mailbox, an e-mail management app startup, and Pinterest’s March 20 acquisition of Livestar, an app that helps people find local recommendations from their friends. In the latter case, Pinterest shut down the Livestar app and said Livestar’s engineering talent would be joining the Pinterest team.
In a statement last week, Coupa CEO Rob Bernshteyn said, “Xpenser’s roadmap is very well-aligned with our vision for smarter expense management, and by leveraging Xpenser’s expertise, we’ll accelerate that vision much quicker, as part of our fast-developing, organically built suite of capabilities.”
Yet Xconomy San Francisco Editor Wade Roush tells me Bernshteyn sounded like he was more interested in Xpenser’s talent in an interview last week during the users conference. “Instead of slapping their product into ours and combining them together,” Bernshteyn told Roush, “we are going to move their key capabilities into the Coupa platform. We are acquiring the knowledge and the years of tried-and-tested market perseverance. They have over 70,000 users.”
Bernshteyn was more direct with me when we talked by phone yesterday. He said, “We’re not as interested in the technology, so we really didn’t buy the product at all. We bought the talent and the people.”
Such talk makes it sound as if Darugar, who was previously a Yahoo director of architecture, was Coupa’s real acquisition target.
Xpenser’s Linkedin profile indicates the company has less than 10 employees. But Darugar would not disclose the exact headcount, which suggests to me that he is Xpenser. Another sign that Daruger is the deal: He says Xpenser will remain in Del Mar, instead of consolidating its operations with Coupa in San Francisco (like most of the other San Diego startups that get acquired by Bay Area companies). In fact, Darugar says he just closed on a bigger office near the Del Mar racetrack and thoroughbred club, “where the turf meets the surf.”
It also might be fortunate that Xpenser did not raise outside capital, as the presence of investors anticipating a big payout might have complicated the acquisition. Darugar says he invested “a pretty significant amount of my own money” to fund all of Xpenser’s operations over the past five years.
Instead of accepting Coupa’s buyout offer, Darugar says he could have spent “the next three to four years” continuing to grow Xpenser “pragmatically.” Xpenser’s revenue growth in 2012 “was better than 100 percent” over the previous year, Darugar says, and the startup’s customer retention has been “excellent.”
On the other hand, Coupa was founded two years before Xpenser, and Darugar says Coupa has reached a stage, “with an established sales force and fantastic enterprise customers,” which could still take Xpenser several years to attain. In his view, the deal makes Xpenser kind of a “startup within a startup.” As Darugar puts it, “we are part of this fast-growing Bay Area business that will be maintaining a local presence in San Diego, and we still get to live here and enjoy the lifestyle here.”
Moments later, he added, “When you control your own destiny, you can make the decisions you want to make.”