Most people could only dream of making their first $1 million before they could legally buy an alcoholic drink, but that’s exactly what happened to these young co-founders. After being sent home from college during the pandemic, they decided to build a company.
“We were a remote team from day one,” co-founder and CEO Rithwik Pattikonda said. “In being fully remote, we had to coordinate everything and rally together completely online as we were building the company.”
They built OctoShop, an all-in-one shopping browser extension that helped shoppers compare prices across stores, set restock and price-drop alerts at a time when inventory shortages were rampant, and earn cashback on the websites they shopped on. In the early days, they called it Instok.
In less than two years from its creation, OctoShop went on to sell for a 7-figure sum. But how did this startup founded by a squad of University of Texas students soar to success so quickly?
How OctoShop became a consumer tech innovator
All four of the founders were technical. CEO Pattikonda had worked as a software engineer at Google and previously built and sold another data-based company. CTO Darshan Bhatta and COO Sriram Hariharan are also software engineers, and design lead Taamannae Taabassum is a product designer with development skills.
Darshan and Rithwik launched InStok, and Sriram and Taamannae joined just a few weeks later. The creation of the business aligned with a time when shoppers were housebound due to the pandemic. It soon gained popularity and the team quickly grew to seven people.
“Social media played a crucial role in driving the growth of our company,” said Pattikonda. “Utilizing platforms with high reach such as TikTok, Reddit and Twitter, we were able to reach new users without spending any money on marketing campaigns.”
To kickstart the project, the group received a $10,000 non-dilutive grant from Genesis, the University of Texas Austin’s student startup fund.
“We also focused on adding features that people need and would be likely to share with their friends, like stock alerts,” Pattikonda said. “The strategy of scaling users through building these ‘share-worthy’ features helped us grow at a viral pace.”
Companies began expressing interest in buying the startup once they reached 100,000 users.
Ibotta stood out from that crowd and bought the company in September 2021.
“We felt that the acquisition offer was attractive relative to our revenue and growth projections and believed that Ibotta was a great partner to further our mission,” Pattikonda said. He declined to share more details about that growth, but a previous entry on his LinkedIn profile showed the company was making about $360,000 ARR (annual recurring revenue) ahead of the sale, a detail that was confirmed by another founder’s LinkedIn post.
Ibotta is a cash-back rewards platform. When the company acquired OctoShop, they closed down the browser extension and moved all existing functionality to the Ibotta extension instead (as of January 15, 2022).
OctoShop was completely free for users and generated revenue through affiliate commissions from retailers as the extension sent them traffic for features like price comparisons and alerts. At the time of sale, OctoShop had 130,000 active users, 4.9 stars on the Chrome Web Store, and had been featured as an editor’s pick on the front page of the web store, Pattikonda said.
“For us, the sale was a relatively quick and straightforward process,” he said. “It was definitely stressful with negotiations and due diligence, but the folks at Ibotta made the process very smooth for us.”
In a LinkedIn post announcing the acquisition, OctoShop’s CTO Darshan Bhatta said, “From launching InStok in a week to releasing OctoShop in 2 weeks, these past 2 years have been wild. It has been an incredible experience bootstrapping to over 100k users with $300k+ ARR to a multi-million dollar acquisition all while juggling between school, a part-time job, and internships.
“On the engineering side, it has been a joy leading, architecting, and building out our highly scalable price comparison and tracking engine, serving 1B+ requests a month.”
Finding startup success in trying pandemic times
Pattikonda credits OctoShop’s success primarily to his team’s speed in identifying and solving timely problems in the context of the constantly changing world of retail during COVID.
“When a new retail issue popped up, we would build out a solution within our website or extension in a matter of days,” he said. “This speed in building and rolling out new features to solve issues like in store stock, online scalping, and price gouging was very challenging, but necessary.
“If we missed the critical period when these issues were at their peak, we would either miss press coverage and sharing or would have been beaten to market by a competitor. At times, we were also growing faster than we could handle, so we had to pull some all-nighters to put out technical fires as they happened.”
Following the sale, Pattikonda took a job at Google while co-founders Hariharan and Bhatta are at Ibotta, and Taabassum is at Figma.
While the co-founders were all students at the same university, two of them only met in person for the first time when they flew to Ibotta’s headquarters after the deal closed.