Today is a day for celebration with the announcement that Checkr has acquired Inflection. We’re celebrating a great outcome for all stakeholders and – as important – the great company they built. Inflection attracted (and developed) incredible people, served its customers well, affirmed our values and created significant value. Inflection has been a long and winding road, but it’s been a joy throughout because getting the people and relationships right always makes it worth doing – win, lose or draw. But I’ve always known that. So here are a few new things I learned from my decade working with Inflection:
1. Momentum isn’t enough. I was lucky to invest when Inflection was doing well. That’s unusual for me, since most of my investments are very early stage and, therefore, pre-traction. For several years, the company grew quickly, attracting great people and celebrating big milestones. But then a dramatic shift in its partners and key distribution channel undercut the business. We had to rethink everything and create a new business from the company’s existing resources and strengths. It took clear thinking and tough decisions, including a painful layoff. It was grueling. But “doing the work” mattered and the founders, Brian and Matt Monahan, led the team through the trough.
2. Values only matter if you’re willing to sacrifice for them. As college students, the Brothers Monahan founded Inflection as values-based from the beginning, creating a place of autonomy, community and people-centered leadership. Their values showed up in their product, which delivered Fair Chance Screening before it had a name. When they sold the Archives.com unit to Ancestry.com for $100m back in 2012, the first thing they did was to create a foundation (to which they’re now giving all proceeds from this sale). When their competitors started tricking consumers into signing up for subscriptions, they refused to do the same. It was a painful decision that required shrinking the core business – a sacrifice felt throughout the company and its stakeholders – but we knew it was the right one.
3. Invest in innovation. Inflection always created space for experimentation. They built the Archives.com business by translating the company’s core skills into an adjacent market. That gave Inflection the scale and profitability to continue investing in innovation. Max Wesman (now Inflection’s COO) developed GoodHire, the core business that Checkr has acquired, over several years via significant experimentation with marketing and sales. Even when the numbers were still small, we could see the opportunity for scale. We bet the company’s resources on GoodHire to see if we could make it. And here we are today.
4. Be like Tim Duncan. For 15 years, the quiet basketball star led the San Antonio Spurs on an incredible run of success. He wasn’t flashy. He didn’t talk trash. He just did the work and led by example. As GoodHire grew and the Monahan Brothers chose to step back, we needed someone to lead the team in its next phase of growth. Mike Grossman was that leader. He narrowed the company’s focus, brought in new skills and talent, and focused on execution. That generated good unit economics and efficient growth. Once the company demonstrated control over the levers of the business, we invested to help accelerate its growth.
5. Don’t give up. Silicon Valley is renowned for its Go Big or Go Home ethos. When things turn south for a venture-backed company, some investors are often first to head for the exits, focusing their energy on other investments in their portfolio. But if we’d done that, we wouldn’t be celebrating today, and all the people Matt Monahan mentioned in his heartfelt blog post would have scattered to the winds. Doing the work to make Inflection successful was important and worthy. All the stakeholders did well financially, but as important, built a great company. That’s work we can all take pride in.
Like almost all startups, Inflection has been a wild ride. I’m glad we stuck around to celebrate today – proof that companies built on values, that do the right thing even when costly, can create tremendous value. For us at Costanoa, every journey is a learning journey, but this one has been special. We’re grateful to have been a part of the Inflection team for the past decade, and excited to see what they can do next.