From Zero to $3.7 Billion: Jyoti Bansal’s Textbook Case Study of Building AppDynamics (Part 7)

Sramana Mitra: I know you filed to go public because we used to cover you before you got acquired. What was the evolution of that journey?

Jyoti Bansal: Companies can go public anytime from $60 million to $300 million in revenue. We filed when we were about $160 million in revenue. We were growing rapidly at that time as well. Our model wasn’t completely recurring revenues. It was mostly subscription revenue, but we had a mix of license model there.

Sramana Mitra: You decided not to go public eventually.

Jyoti Bansal: No, our plan was to go public. We were going public. We were supposed to ring the bell on NASDAQ on a Thursday in January 2017. About a week before that, Cisco came in and said, “Instead of going public, how about if Cisco acquires AppDynamics?” Our roadshow was going really well. We had a lot of interest.

Our plan was that the first 50 employees will go to NASDAQ and ring the bell. When an offer like that comes, you still have to look at it from a shareholder’s perspective. We said no to the first offer. Then Cisco came in with a second offer, which again we said no to. Then they came with a third offer. What is the right thing for shareholders?

For me, it won’t make a difference one way or the other financially after some certain level. At that time, we had 1,200 employees. A lot of the employees have put a lot of time, energy, and effort. You can’t make a decision that’s not financially right for them and their families. We took the offer.

We signed it two days before the IPO on a Tuesday night. A lot of our early employees were already in New York. We asked them to come back. It wasn’t an easy decision to make. We had about 400 of our employees who made more than a million dollars in there. It’s impactful and life-changing. That’s an important part of what’s fulfilling as an entrepreneur.

Sramana Mitra: Very much so. If I remember, you had filed at about a couple of billions for the IPO. Then you ended up selling to Cisco for $3.7 billion. Is that accurate?

Jyoti Bansal: Yes.

Sramana Mitra: And you raised almost $315 million.

Jyoti Bansal: Something like that, yes.

Sramana Mitra: Do you have an estimate of how much money your investors made?

Jyoti Bansal: I’ll do some math here. I would say, on an average, eight times.

Sramana Mitra: That’s terrific.

Jyoti Bansal: Somewhere in the seven to eight times. The early investors made even more. All our investors made good money. As a founder, I have a responsibility towards investors. I have a lot of responsibility to our employees and to our customers as well. I don’t want to sell the company if it impacted our customers in a negative way. Those are definitely important factors.

Sramana Mitra: What are you going to do now?

Jyoti Bansal: I’m already doing some new, interesting things. After the sale to Cisco, I took some time off. I didn’t join Cisco. I wanted to figure out what’s the next chapter. The next chapter could be retiring to doing another startup. What I did realized was, I like to do this. I’m not doing this just for money. I like to go and compete in a market and compete. I just enjoy it. I just wanted to do it again. That was definitely one thing I realized that I wanted.

Sramana Mitra: Being on the beach is a highly overrated concept.

Jyoti Bansal: I did try to retire. After some time, you get bored. The other thing I also realized is, I also like to help other entrepreneurs as well. I was fortunate I went through a successful startup. I need to share my experience and my learning. What I wanted to do is where I can do a bit of both. That’s what my next step is.

I have a startup studio called Big Labs where I experiment with new product areas which I operate as a CEO and Co-Founder. We launched our first company from Big Labs last year. The company is doing extremely well. There’re about 70 employees in the company.

Then I also launched a new seed stage venture fund called Unusual Ventures early this year. I co-founded Unusual Ventures with John Vrionis, who was a partner at Lightspeed and was the first investor in AppDynamics back in 2008. What we are doing in Unusual Ventures is figuring out how we can help at the seed stage. A seed-stage entrepreneur is someone like me trying to build a fat company. How do you help them go from zero to a million dollars? Our focus in this firm is that.

Sramana Mitra: Are you funding this entirely by yourself or do you have other limited partners?

Jyoti Bansal: There are other limited partners. We raised our first round with $160 million, which we announced early this year. We could have raised more than that but we capped that.

Sramana Mitra: This was a fascinating story. Thank you for your time.

This segment is part 7 in the series : From Zero to $3.7 Billion: Jyoti Bansal’s Textbook Case Study of Building AppDynamics
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