How To Start A Software Company And Exit At The Top: Interview With Michael Fountain, Co-Founder Of ModernBill

Published by 30 Comments

Michael Fountain - Co-Founder of ModernBillI was speaking to Michael Fountain on a 30 minute coaching call, which he qualified for as a bonus because he purchased a product via my affiliate link recently, and he happened to mention his previous life as a software developer.

It turns out Michael was one of the co-founders of ModernBill, a billing platform primarily used by hosting companies. This was very interesting to me because I knew ModernBill from my previous business back in the early 2000s as a web host reseller.

I never made huge money with webhosting, but for a while I hosted a handful of sites and did some very basic website design work while I was at university. During that time I spent a lot of hours inside the WebHostingTalk Forums, where I learned a ton about hosting. ModernBill was always the top recommendation when it came to billing customers and in fact many of the hosting fees I paid back then went through this software.

I asked Michael what happened to ModernBill and he explained that he sold it off to a company called Parallels a few years ago, which was the company behind the PLESK server control panel, which I also used on all my reselling accounts back then.

How To Start A Software Company

This interview is all about how to start a software company while working a full time job, grow it to over 20 employees, then sell it off with a nice exit paycheck.

Here’s what I found really interesting about Michael’s story:

  • This is yet another start-up success story that began simply because a person had experienced a need, built a solution, then thought other people might need the solution as well, so started selling it
  • Michael was part of a partnership, where two people with very different skills were able to come together and compliment each other and build a solid company
  • ModernBill grew very quickly because it was first to offer a product in the web host billing market and Michael was very diligent, quickly adding new features requested by his customers
  • Michael and his partner hired new staff as needs grew, filling roles as they became apparent, making for a very organic growth process
  • Being passionate about what you do, and experiencing the same thing your customer experiences is a great combination because you know the problem intimately and have the skills to build the solution yourself
  • Finding the right strategic partners was critical for creating new sources of revenue as the company expanded beyond just the software
  • When it came time to sell the buyer surfaced from within the existing community Michael was a part of, so maintaining a connection to the industry you work in is very important

You will enjoy this interview with Michael, especially if you’re interested in launching an online software company. Make sure you check out his websites too – MichaelFountain.com and GotPHP.com.

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30 Comments

  • Tim

    Yaro, this is great. I’m a software developer as well so stuff like this would really fit my need and my dreams to become an entrepreneur someday. A mentor once told me that if I can channel my technical skills to business then I will become successful. Thanks! Downloading the MP3 now!

  • Rob

    Hey Yaro!

    What a superb interview. I’m also a programmer and as Tim pointed out, you can have the technical skills to create a great product, but it’s whole different ball game to deal with the business side of management. Thanks for the insight.

    Also, Michael’s partnership with another differently-skilled individual puts me into mind of a similar scenario, where two men by the surnames of Jobs and Wozniak started a little known company a few decades back, you might of heard of it, “Apple”…

  • Hi Yaro… It would be great if you could (as time permits) – and when on your travels – get as many interviews as possible in… it’s inspiring and insightful to hear other people’s stories about how and what they did… it’s an uplifting reminder (and reinforces) our own potential… Thanks :) Martin

  • I think being a part of your market and filling a need you have is a brilliant strategy. I see people way to often get bogged down by their idea of what it takes to create a business. They think they need to build a massive audience, survey them to death, and construct the ultimate product. We can a lot about needs by simply paying attention to what we need.

  • @Tim & @Rob — Going from developer to entrepreneur was not without it’s challenges for sure, but having a partner you can trust and rely on was the key for us.

    Thanks for the comments guys. Feel free to connect with me if you have any questions or just want to bounce some ideas around. :)

    • Tim

      Thank you for the encouraging words! Yes, somehow know that the key to success in entrepreneurship has something to do with making connections. It’s a tough cage to break through… A lot of heartbreaks right early at this stage even though I haven’t even started putting up a company (but continuously studying). I like what you said about knowing and having experienced the problem you are trying to solve and what you said about being either an asset or a threat to your customers. In fact, I downloaded a copy of your interview in my cellular phone so I could listen to it all the time.

      I guess this is my entrepreneur’s journey. And thanks to Yaro for posting this stuff, it really keeps the fire burning.

    • Rob

      Thanks Michael, and @tim couldn’t agree more, networked connections and partnerships (as Michael mentioned in the interview) are really something to place more importance on. Best of luck for your next ventures.

    • Tim

      Hi Michael,

      I was just listening to your interview today. So the company you started actually got sold!? Sorry, I did not pay enough attention on that. I was more interested on how you guys got started. Anyway… How do we actually get connected with you? Since I don’t have your e-mail, I would like to humbly ask you to contact me through everypesocounts at gmail dot com if possible so I can just make a stick connect to your bridge. Thank you very much for sharing your experience Michael.

      • Hello @Tim….Yes, we did sell the company back in 2008 to Paralleles, Inc. (parallels.com). Check your email. Thanks!

        • dear micheal
          i am medical doctor.i m doing my fertilizer & agriculture machienry buisness in pakistan.i am intrested in starting my software buisness.i have no knowledge or experience of programming.i need guidence how to start it.what shhould it requires me.kindly guide me about this

  • Thanks Yaro,
    I am an engineering student and looking for a guidance about industry related stuffs from really BIG people. I think this interview will be more helpful for students like me.

  • All Right! Finally another podcast from Yaro, I can’t get enough of these things. One of the best podcasters in the blogosphere. Thanks for the great content Yaro!!!

  • Awesome new podcast. Thanks for sharing Yaro, always looking forward to your podcasts and posts.
    Darkman

  • Ha! No way! Hi Michael!

    I met Michael at the Modernbill HQ back when they did a customer event years ago. We used Modernbill until I sold my hosting company in 2007.

    I suck at listening to podcasts…just can’t do it…too short of an attention span. So Michael, what are you up to these days?

    -Erica

    • Well hello Erica…Simpli.biz if I recall, right? You seem to be doing well after your exit too. Congrats!

      People don’t realize that the web hosting industry is a hard industry to be in. You really have to go above and beyond in order to rise above the rest. We saw a lot of entrepreneurs try over the years, but very few actually made it over the start-up hump. Like you said in your blog, perseverance is key.

      As for me today, mostly consulting and helping local businesses with their product development efforts. I still enjoy getting into the business side of things and working with developers to create solutions to real-world problems. (Cliché I know, but it’s fun!)

      I was never big into “blogger”, but I’m trying. :)

      To your success!

      ~ Michael

    • I’m glad you had enough attention to finish the interview we did Erica!

  • Great interview Yaro. He makes some really good points. The one the weighs the heaviest is that you can be a brilliant person and create something of great value but if you don’t know business you will get squashed. A friend of mine started a company that is and was widely known, but because of bad business decisions he ended up losing. To top it all off it happened again and he got voted off the board of a company he created. You got to be smart.

  • Hi Yaro, Michael,

    Really enjoyed listening to this insightful interview. I’m building a membership site at the moment, and also working on a larger web-based project. A lot of the points raised in the interview gave me great food for thought on the direction I want to take and on the practical aspects of building a sizeable and valuable business.

    So many thanks, and please keep it coming!
    Luke

  • Software industry is not dead ! Especially when you see the boom of smartphone applications, making some business will always be possible in that field. Thank you for this interview.

  • I like the idea of having a partner who has a different set of skills. This lets us have a good distribution of work and helpps us ensure that outputs are kept at a high quality.

    PS: I like the interview but I wish there was a transcript.

    • Talking about having a partner… I think that’s essential to getting to where you want to go…I have a ‘tech’ person and it’s saved (and saving me) literally hours and hours of work… work that I’d struggle to do anyway! So that sort of ‘partnership’ is great. There’s also having a business partner who understands what you’re doing, or want to do. Finding that person is a little trickier…Probably helps a lot to go to seminars and talk with other like minded individuals… Martin

  • Yes I thought about starting an software company here soon, cause I already have a SEO company. So listen to this interview has kick me into gear to get this off the ground. Thanks Yaro

    “TrafficColeman “Signing Off

  • Thank you all for your feedback. The comments and emails thus far have truly been inspiring. I love hearing your startup stories as I can relate to a lot of them. :)

    If you are a developer and would like to bounce some ideas around and learn more about how to go from developer to entrepreneur, connect with me and we can chat. I’d love to share my experience and maybe provide some useful advice for your journey as well.

    Thanks again to Yaro for allowing me to share my story.

  • I just LOVE a good success story especially now when I am trying to start my own Apps development company. It is not always easy in the beginning but it’s easier to work after you read about other success stories. Thank you for this interview!

  • The most inspiring site I know in terms of start-ups in software engineering is Paul Graham’s. His blog, which is set up as a collection of essays at about biweekly to monthly frequency, is linked to his investment company Y-Combinator. I can only advise to check it out and I say this being an avid Yaro-reader as well. I find his essays to stretch beyond their topic, as thought provoking essays about society as a whole, just like Yaro’s stretch to the area of self development and being.

  • Very interesting interview. It’s always great to hear about successful ventures borne out of the need to fill a gap. More so when there’s genuine passion behind the venture by those involved in it.

  • Interesting stuff mate, maybe I should post this on my facebook? It’s great that this guy actually did it for himself first, and THEN started selling it to other people. Can’t beat that kind of experience and no doubt it’s one reason why he’s successful. (Do you have a transcript available?) Thanks for this one, got heaps out of it :)

  • In any business, filling a need is important to growing. It does help though when the people who are working together to fill this need complement each other so well. Thanks for the interview.

  • It is incredible that Michael was manually entering people’s credit card info every single month. How far the Internet has come indeed.

    I am glad he mentioned the importance of understanding people’s problems and offering a solution. That seems to drive most successful companies, especially the many blogs out there today.

    Asset vs a Threat model is a unique way to look at an exit strategy. I never thought of it that way. I assume the asset model is a much smoother transition, but the threat scenario could potentially be even more profitable.

    I have to say that Michael is the calmest and seemingly most laid back business man I’ve ever heard interviewed.

    Andrew

  • Another quality podcast interview. Thanks Yaro and Michael.

    As a small online software vendor myself selling products into the hosting marketplace, Michael’s story serves to inspire me.

    I built the software for my own needs, and saw that others would benefit from it as well. It’s a classic model of startups isn’t it.

    I’m going down the asset model pathway. In fact Yaro already mentioned to me recently about looking for a buyer from the larger hosting companies. But it’s only early days yet.

    Thanks once again.

    Aaron

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