On February 7, an app-making startup called Orchestra launched an email app for iPhones called Mailbox.
It was a spectacular hit.
Within a day, hundreds of thousands of people signed up for a waiting list to download the app.
Then, a month and a week later – today, actually – Orchestra announced that it had been acquired by Dropbox, the $4 billion startup with a storage-in-the-cloud service.
No one will tell us the price of the sale, but it's safe to say that Orchestra investors are very, very happy with it.
We know, because we just spoke to one, Saar Gur of Charles River Ventures.
Gur was downright giddy.
At one point he said: "Holy shit these guys actually did it!" and later he told us: "Everyone is thrilled about the outcome."
Gur invested in Orchestra long before it launched Mailbox. In fact, he liked the company based mostly on the pedigree and talent of its CEO, Gentry Underwood from Ideo; and co-founder, Scott Cannon from Apple.
Here's a lightly edited transcript of our conversation.
Business Insider: Mailbox only launched a month ago. That was fast, wasn't it?
Saar Gur: Well it's funny — we've been in the company for a while. We invested when it was just an awesome team. We just loved the team. They seemed very mission-oriented around improving people's lives through better productivity applications.
BI: How'd the sale come together?
SG: The early data was super exciting and they've had a lot of interesting offers from people who wanted to invest in them, or present other strategic opportunities. As they spent more time with the Dropbox guys, there was a very strange and uncanny alignment of values. Those values of craftsmanship, ease of use, but [the Mailbox cofounders also admired] how Dropbox has built trust with customers through their ability to protect their most valuable data. Mailbox had a similar sensibility.
I think there's a very – it's rare that you see such a foundational alignment of missions and philosophy.
BI: Why sell instead of raising a big round and trying to become a billion-dollar company?
SG:The company could have easily raised a bunch more venture capital, but in this talent environment they saw a lot of advantages in working with the Dropbox infrastructure. Dropbox has a great recruiting team. This startup was not negotiating from a position of weakness. They ended up with a great outcome.
BI: Orchestra sold because it was easier to sell than to hire talented people?
SG:The team at Mailbox has been world class. Their infrastructure was scaling. The team just proved to be world class and that got a lot of people excited about investing or buying the company. It was like "holy shit these guys actually did it and it's going to work."
But Mailbox is not simple client. They're caching and storing emails. There is no easy way to scale to millions of email accounts doing what they do.
They could have gone down the path of raising money and looking for world-class engineering, but when you look at the types of problems Dropbox has solved over the couple years, there's so much talent and learning that's already there, it's exciting for the founders to have some support there.
BI: A lot of the reason Mailbox got so much hype is that last fall, the Orchestra team put out a really good video previewing the app's functionality. It was marketing genius. How'd that happen?
SG: They reversed engineered the idea of what's the best launch video and they shot it themselves. They went out and got some consulting and the third parties came back and said, "holy shit, you guys know what you're doing. You don't need us."
BI: The waiting list was pretty impressive marketing, too.
SG: The queue they came up with was a part of one of the things they needed to do to launch. It's that sort of creative talent that Dropbox is excited about.
BI: Dropbox seems to be a part of a class of companies in Silicon Valley that bring consumer-friendly, cloud-based productivity applications to consumers AND enterprise users. What's going on out there?
SG: The top-down model of taking mediocre software and building a salesforce to sell it into enterprise doesn't work any more thanks to people like Steve Jobs who have given consumers an idea of what good software looks like. It's been a very compelling theme for the next wave of companies.
BI: No one's talking about how much Dropbox paid for Mailbox, but you're an investor, and you seem pretty pleased.
SG: Clearly the company had a lot of opportunities and was negotiating from a position of strength and everyone is thrilled about the outcome, on both sides.
