A Window Into the Mind of NC Serial Entrepreneur Aaron Houghton

Aaron Houghton likes to build things.

Sure, it was exhilarating running his previous company, Morrisville, NC-based iContact, after the e-mail marketing firm had grown well past the point of an initially bootstrapped startup formed by a pair of University of North Carolina at Chapel Hill students in 2003.

At the apex of Houghton’s and co-founder Ryan Allis’s tenure—before they sold the company to Vocus in 2012 in a deal valued at up to $180 million—iContact employed more than 275 people, had 80,000 customers, and was doing about $50 million in annual revenue, Houghton says.

“It was a big scale,” Houghton says. “That’s a big challenge and keeps the pace fast.”

He has been enjoying the slight breather post-iContact. His less frenetic schedule allows him to informally mentor fellow entrepreneurs, and the iContact payout gave him the means to dabble in angel investing.

But he says he feels most at home in the role of entrepreneur. He’s currently trying to build another successful company from scratch, the two-year-old BoostSuite, which has five full-time employees.

“I don’t like investing,” Houghton says. “I like being an entrepreneur. I’m an operator.”

It’s still too early to tell if Houghton can repeat iContact’s success with Durham, NC-based BoostSuite, but the Web marketing startup is getting some initial traction. BoostSuite is generating less than $1 million in annual revenue (Houghton declined to be more specific), but it has 19,000 users, including “several hundred” customers paying for premium BoostSuite services, Houghton says. The company is raising $1.5 million in convertible debt, according to a July SEC filing, marking BoostSuite’s first outside financing.

I spoke with Houghton recently to get his take on North Carolina’s tech startup scene and to learn more about what makes the serial entrepreneur tick. Here are a few of his lessons for entrepreneurs, followed by some fun facts about Houghton.

—Is there a secret sauce for growing a company to the point of an exit?

Not really, Houghton says.

“For the growth, it was really simple, looking back on it,” he says of iContact. “We had a good product. In the early years, we were ahead of the market.”

Once the market got more crowded, iContact got “really good” at acquiring customers using paid search and display advertising, he says. When competitors were reducing their digital marketing budgets in 2008 and 2009 due to the recession, iContact was boosting its budget to $2 million.

“We were doubling and tripling down on our ad spend and getting a great return,” Houghton says. “In 2008 and 2009, we were one of the top-10 B2B advertisers in the world, outspending B2B advertisers like Cisco.”

The trick to attracting an acquirer, Houghton says, was growing the company without an acquisition in mind.

“We built the business by focusing on the long term and building a company that could be taken public,” he says. “We were never trying to build a company that we could flip quickly. At board meetings, it was always, ‘How do we prepare this company to go public, reduce risk, and increase growth?’ By focusing on that, we were a great company to be acquired.”

—Vocus took some flak for downsizing iContact after the acquisition, although it has reportedly started growing again. Does that make Houghton think twice about selling BoostSuite, or at least question the consequences of selling a startup?

Houghton’s response is nuanced. He characterized the initial layoffs by Vocus as more a product of iContact’s poor hiring strategy in the three years leading up to the acquisition, and less of a ruthless head-chopping by the new boss. In retrospect, Houghton thinks iContact weighted the staff too heavily toward software developers, and not enough toward marketing.

“When an acquirer came along, they probably had that same conclusion,” Houghton says.

And he cautioned startups not to fall into the trap of … Next Page »

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Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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