The Dawn of a Digital Ecosystem

When you ask a perfect stranger what line of business they’re in, and they answer that they use your technology, you know you’re on the right path. That’s the position Jeff Haynie and Nolan Wright are in as the CEO and CTO of Appcelerator, a mobile-app development platform, cloud-service, and real-time analytics provider experiencing explosive growth due to an interesting business model. In the span of less than two years, the company’s mobile-developer ecosystem, called Titanium, has grown exponentially: the amount of developers using Appcelerator technology to create apps jumped from 20,000 in 2010 to 400,000 in 2012. However, compared to the first six months after Titanium’s launch, in the summer of 2009, the current figures make the early days look every bit as humble. “It was a typical start-up,” read the Appcelerator website. “Wright worked all day in his pajamas, Jeff in his basement, and the company’s first office was less than 150 square feet.”

Haynie and Wright first met in Atlanta, at Vocalocity, Haynie’s telecom company that he sold in 2006. While there, Haynie had been tinkering with desktop-application development and imagining the future of mobile. After leaving Vocalocity, the partners began brainstorming voice-recognition software similar to the concept behind Apple’s Siri. But with the standard set at subpar palm devices, they had little infrastructure on which to expand those ideas.

By the fall of 2009, iPhones had been around for about two years, with the App Store having been in operation for a little more than one. Jumping into this uncharted market on “boot-strapped” funds and in the midst of a stuttering economy, Haynie says he and Wright knew they were doing the right thing. “We felt in our soul that this was direction of technology,” Haynie says. “We knew that, much like the way that the web democratized the Internet, once Apple could democratize the mobile platform and allow independent developers to build, the same thing would happen.”

Enter Titanium, Appcelerator’s cross-development app platform. As an open-source software, it allows contributions from anyone who downloads it, manipulates the code, submits their improvements, and agrees to do so without royalties. In turn, Appcelerator offers the platform for free. Needless to say, Haynie and Wright’s intuition was spot on. According to a 2012 Nielsen report, 116 million Americans 13 years and older access the web via their mobile devices.

Wright and Haynie’s first big break came in 2008, while paying the bills with consulting jobs and continuing R&D on the side. It was through this work that Pearson, a publishing company looking to build an app for the App Store, recruited them. “Like any great small company, we said sure, that shouldn’t be too difficult,” Haynie recalls with the humor of hindsight.

The partners and their team soon found the process wasn’t as easy as expected. “We’re reasonably sharp developers and entrepreneurs who have been coding for 20 years and built telecom servers and complicated software, and this was pretty difficult,” Haynie says. “It made us think [about how] the average developer is going to have to do this. If we could make it easier, we would have a huge opportunity in front of us.”

The partners and their six employees made it to Silicon Valley on the first series of funds raised from private equity. However, despite the rapid success of mobile applications and the demand for simplified yet high-quality development, Wright and Haynie knew they would need something more substantial than consulting dividends to continue their business. To add unnecessary suspense to the mix, in the spring of 2010, the Apple-Adobe war changed licensing terms in such a way that Titanium-developed apps could not market in the App Store (though Apple never rejected any app). “On one hand we were terrified, because we thought our business was dead,” Haynie recalls. But the collateral advantage of the dispute actually benefitted Appcelerator in the end. “We got a tremendous amount of attention in the media,” Haynie says. “Downloads skyrocketed, and people rallied to our side.”

One last question was left before Titanium became the sustainable profit-generator it is today: what were Haynie and Wright selling? Haynie began getting calls from companies interested in developing with Titanium and looking for a quote. For independent developers and small enterprises, “freeware” was a welcome response, but for some of Appcelerator’s earliest, notable clients—companies like NBC and eBay—freeware with no warranty was not an option. As tech-oriented developers, the partners realized they needed to create a marketing arm for the company and devote attention to defining their product as a commodity.

With an additional $36 million raised in a series C round (a total of $50 million has been raised to date), Appcelerator went on a hiring binge, and Haynie quickly realized that running a technology-based business—especially one that traffics in the cutting edge—requires different considerations.

When first hiring, Appcelerator focused on the best and brightest minds in software development. However, the partners quickly found that personality and versatility were equally important. “We hired very specialized engineers in the beginning, and the disadvantage was that people were myopically focused and they became very isolated,” Haynie says, noting that he and Wright realized the need for a responsive team. “It’s not like we’re building a better car,” Haynie says. “We’re doing things that have never been done before. We’re inventing the future.”

With its start-up days not far behind it, Appcelerator is moving full-speed-ahead on new technology, such as Appcelerator Cloud Services, and real-time analytics. And though Titanium has been monetized, users can still download it and benefit from Cloud services and real-time analytics for free for up to a million users. Moreover, Appcelerator has already made four acquisitions in four years: Cocoafish brought Appcelerator into the cloud market. More recently, Nodeable strengthened the company’s real-time analytics. Finally, an Innovation Fund has given Appcelerator a start-up investment program to support and fund transformative early-stage mobile companies. The company’s first investment was with Lanica, a gaming-platform company.

Whether the company is partnering with the first lady or helping one man in Pakistan employ 20 people in surrounding villages, the evidence of Appcelerator’s rapid, hard-won success is pervasive. “It’s the most gut-wrenching thing you can do as an entrepreneur, but also the most exciting thing,” Haynie says. “I couldn’t imagine doing anything else.”