Bootstrapping to $300 Million: Faisal Husain, CEO of Synechron (Part 5)

Sramana Mitra: Tell me more about your thinking around that. It sounds like there’s a philosophy around being self-financed. You must be getting lots of calls from private equity all the time.

Faisal Husain: Yes, we’ve been getting calls for several years. I have met all of them and am on fairly good terms with them. In one or two cases, I’ve even gone down the road of bringing an investor on board. Twice now, I have walked away from the altar. First of all, capital is a business need. As a business that is profitable and is generating cash flows, we do have a source of capital that we use for our growth. On top of that, we have been working with developing good relationships with banks. I can always use more capital.

As a person who has built up his business and brought it to $300 million by myself, I’m hesitant about outside ownership in the company that is only in it for short-term financial gain and doesn’t really care about the soul of the company. I know the private equity model. I know how they come in. They’re in it for the investors and for the money. For me, I have a philosophy that the number one constituency of the company should be the clients. Number two should be the employees. The third should be the shareholders. With investors coming in, it will be the other way around.

At a personal level, I would prefer only people who are giving their blood and sweat for the company to have a stake in it. Meaning, working in it rather than just benefitting. That’s more on a personal level. Never say never. Maybe at some point, we do bring in somebody, but I don’t see that happening at this stage.

Sramana Mitra: What are your feelings about exit?

Faisal Husain: I have very strong feelings about exit. I don’t like the term exit. I’d rather use the term liquidity. I’m a believer in building businesses and building institutions. I don’t like people who are building businesses to make a quick buck. I take great inspiration from people like Mark Zuckerberg and the usual big Silicon Valley names who didn’t sell out for billions of dollars. You can see that when they did that, they made probably 10 times or 100 times the money.

Sramana Mitra: You would consider going public in that process? I imagine you have the financials to go public today if you wanted to. You don’t have to raise money from private equity.

Faisal Husain: Absolutely. We’re big enough to go public. At some point, the default path is that we will go public at a time of our choosing when we’re ready. Perhaps the reason why I would do that, in addition to the capital, is to put the company in the hands of the public and think of the company beyond me and the three founders.

My views on going public are also very strong. I do not believe in going public when you are a small cap company. A company needs to mature and needs to grow and strengthen internally to be able to withstand the harsh realities of being a public company. That, I don’t think happens when you’re a $100 million or $200 million company. At least, not in the services industry. That’s still young. I’d like to use the example of not getting married when you’re a teenager. You need maturity to be able to withstand the pressures of being a public company.

Are we technically ready? Yes, we are $300 million in revenue and profitable. Are we mentally ready? Probably not. In an industry where our competitors go public at $100 million or $200 million, we are a company that will achieve a billion dollars and then go public.

Sramana Mitra: Great story. Congratulations on what you’ve built.

This segment is part 5 in the series : Bootstrapping to $300 Million: Faisal Husain, CEO of Synechron
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