MindTouch

Aaron Folkerson met his co-founder Steve at Microsoft, where both worked in the Advanced Strategies and Policies Group under chief strategy officer Craig Mundy. Aaron's responsibility was packaging distributed systems research (what would become IoT) into a form that product teams could use. Frustrated by the lack of self-service technology to distribute this information at scale, he explored options with SharePoint, Office OneNote, and other teams—but nothing fit. This led to a fundamental question: how do we turn a newbie into a ninja in the shortest time possible?

Aaron and Steve left Microsoft to pursue this vision. They started an open source project in 2005, shipping the first version at O'Reilly's open source conference in Portland in 2006. By late 2007, with a small team of five, they'd gained remarkable traction. When Steve put their code on Sourceforge alongside 300,000 other projects, they received 2,000 downloads in a single day and ranked in the top 5 most popular projects on the platform. The vision was compelling: an open-source core with commercial enterprise connectors, inspired by emerging "open core" models.

By November 2007, they began selling support subscriptions for their on-premise product. In 2008, they generated "just shy of a million dollars in cash receipts with an average sale price of $3,500." Revenue nearly doubled to $2.3-2.5 million in 2009. But growth masked a critical problem: they were burning cash in a crowded, indefensible market competing against SharePoint, Dropbox, and hundreds of other vendors. Customers were mostly IT buyers deploying the software internally. With only months of runway left and no ability to fundraise during the 2008-2009 financial crisis, they faced a choice: fail with principles or succeed without them.

In early 2010, Aaron and Steve sat down at Carl Strauss Brewery and established three principles that would define the restart: (1) build a product customers loved so much they'd recommend it, (2) create a work environment attracting smart, hardworking people, and (3) "no douchebags." These weren't feel-good platitudes—they were anchors for a company on the brink. They pivoted to cloud delivery and narrowed their focus exclusively to helping companies turn self-service support into a customer engagement channel. Aaron visited their best customers—Exact Target, PayPal, Intuit, Mozilla—with slides for a new cloud product launching end of 2010. The response was immediate enthusiasm; most had already built parts of this themselves on the open source.

The transition was brutal. They cut headcount by 40% in 2010-2011. Their legacy on-premise business funded the new product, generating $6.2 million from 2010-2013 while the company operated at break-even. By late 2011, with just one month of cash in the bank, they achieved profitability. From there, the new business "took off like a rocket," growing to over $10 million in ARR within three years.

By 2014, MindTouch outperformed the highest-performing SaaS companies measured by Bessemer Venture Partners and Pacific Crest across all key metrics—retention, churn, customer acquisition cost, growth, and gross margins—by 1-2 standard deviations. The company's customer roster expanded to include manufacturers like Whirlpool and Remington, software giants like Docker and Salesforce, and financial firms like Charles Schwab. A former server at Carl Strauss became their QA manager; a graphic designer became VP of Customer Success and later earned $400,000 annually at a Silicon Valley unicorn. Aaron credits the three principles for transforming MindTouch from a failing startup into a bootstrapped, profitable, market-leading business—proof that persistence, focus, and integrity beat speed and venture capital.