Serial Entrepreneur Zack Rinat on Model N (Part 4)

SM: What was the price range of the NetDynamics acquisition, and when did it occur?

ZR: We signed the deal on July 1st, 1998 and we closed the deal on September 1st, 1998. It was a stock swap and some cash. It was about $180M in value.

SM: For that time it was a good deal.

ZR: It turned out that it was more than a good deal because 90% of this was a stock swap, and the value of this was close to $2B less than a year later.

SM: What did you do a year after that? How long did you stay at Sun?

ZR: I stayed officially for a year, but unofficially for a lot less than this. It was a very painful time at Sun actually, working for a hardware company. I left to help out with TradingDynamics.

SM: How did that happen? Yoav had the idea and he came to you? I have worked with Yoav Shoham, a Stanford professor of Game Theory on one of his later companies … so I knew about Trading Dynamics through him and Mark Perry at NEA.

ZR: Yoav started a company before which Paul Allen funded. Paul ALlen had an incubator in the Valley which was a think tank, Interval Research, and they spun off a company from that. Paul Allen funded this spin off. The company was not successful, and it was closed after two years.

Yoav came to me and asked me to help him put the new one together. I did not tell him that I had no passion to start another company, but he was a friend and coming off of a painful experience, so I decided to help him. Basically my role was to put the company together, so I introduced him to the first CEO of the company who was someone I knew for a long time. I brought in investors and invested myself as well for the seed money. Jim Dorian who was on my board at NetDynamics, and I brought Mark Perry to do the first round. I also found Kirk Cruiskshank who worked for Jim Dorian and we brought him on as well. My role was to put the business together and to put in the money for the infrastructure. The second thing was that I sold the company.

SM: Trading Dynamics was something to do with auctions if I remember.

ZR: It was a B2B auction server. You could put it on an exchange if you desired. It was a company that did not last too long; it was in business a year with 14 employees.

SM: That was a bubble deal.

ZR: We did get a good deal for it. Afterwards I started this company, Model N.

SM: Tell me about how you started this. Where were you at personally, did you get back your passion?

ZR: I think it was 1999 that we started this company, and I had only retired for a couple of months. I was getting a bit antsy. I decided there was one more company in me, little did anyone know. I had too much time on my hand, and there was a benefit to doing another one. At the time I was a little bit upset because I thought Silicon Valley lost direction. I think there were a lot of gold diggers in the Valley.

This segment is part 4 in the series : Serial Entrepreneur Zack Rinat on Model N
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