From Campus Safety to $40M: The AppArmor Success Story

How AppArmor Went From Campus Safety to a $40 Million Exit

David Sinkinson, co-founder of AppArmor, shares the incredible journey of transforming a campus safety app into a multi-million-dollar acquisition. With innovative ideas, strategic decisions, and a lean approach, David and his brother Chris turned challenges into opportunities, leading to their successful $40 million exit.

Innovative Features That Changed Campus Safety

AppArmor started with a simple yet powerful goal: to fix a broken campus safety system. Traditional emergency poles on campuses often failed, so David and Chris created a mobile app to replace them. With just one button, students could alert campus security instantly. Major universities like UCLA and NYU quickly adopted the app.

During the pandemic, AppArmor expanded its features to include health assessments and vaccine verification tools. These additions not only boosted campus safety but also opened new revenue streams. According to David:

“We had the best quarter in the company’s history when we introduced that tool.”

Smart Development Decisions

The Sinkinson brothers ran a lean operation, achieving a remarkable 60% net profit margin without relying on outside funding. They focused on creating custom-branded apps for each client, which set them apart from competitors and built trust. As David put it:

“We weren’t one app, we were a bajillion apps.”

This unique approach solidified their market position and made AppArmor an attractive acquisition target.

Bootstrapping to Success

David and Chris bootstrapped their way to success by self-funding AppArmor through side projects. Their business model evolved from one-time setup fees to a lucrative recurring revenue model. This shift increased their annual recurring revenue to $6.5 million, maintaining a 60% profit margin. Bootstrapping allowed them to keep full control over the company. As David explained:

“Customer revenue was funding the business, literally bootstrap the entire thing.”

Overcoming Challenges

AppArmor faced tough times during COVID-19, as campus gatherings became impossible. However, the brothers pivoted by introducing health-related features, leveraging their existing technology to stay relevant. They also dealt with moral dilemmas, such as confronting fraudulent competitors, which led to valuable industry connections. Working together as siblings presented challenges, but open communication and shared goals helped them navigate conflicts.

“We were forced by the market to do something, to address this, to just stay relevant,” David noted.

Mastering Negotiations for a $40 Million Exit

Negotiating AppArmor’s sale was a critical part of the journey. During discussions with Rave Mobile Safety, David’s brother Chris unexpectedly mentioned a price. David quickly reframed it as a starting point, which helped them negotiate a higher offer. Patience and strategy paid off, as David described:

“I want them to give me a sense of what they think it’s worth, and then I’m going to push them and try and get more.”

Understanding Deal Dynamics

The acquisition process wasn’t without its complications. Working capital adjustments and earnout structures added layers of negotiation. David emphasized the importance of a trusted mediator to handle contentious topics and avoid costly disputes. As he put it:

“You want to introduce an explosive topic in any acquisition, because it always happens later too.”

Building Relationships with Buyers

David’s experience highlights the importance of rapport in acquisition deals. Establishing a respectful and professional relationship with Rave Mobile Safety and their investors, TCV, set the tone for successful negotiations. According to David:

“Establishing rapport with them was a pretty quick thing to do.”

Lessons for Entrepreneurs

AppArmor’s journey showcases the power of adaptability, strategic thinking, and relationship-building. By focusing on innovation, maintaining control through bootstrapping, and mastering negotiation, David and Chris turned a campus safety app into a thriving business and secured a $40 million exit.

Their story serves as an inspiring example for entrepreneurs aiming to build, grow, and eventually sell their businesses.

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At Breaking the Mould Consulting Limited, we specialize in helping businesses navigate challenges, innovate, and achieve their growth potential. Whether you’re bootstrapping or preparing for a successful exit, our expert team can guide you every step of the way. Contact us today to start breaking the mould and achieving your business goals!