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When Jyoti Bansal faced a pivotal moment in his career—deciding to sell his company AppDynamics for a staggering sum—his primary concern was the welfare of his employees.
In early 2017, as AppDynamics prepared for an initial public offering (IPO), Cisco, a leader in communications technology, made a dramatic bid, offering $3.7 billion for the startup. Bansal, the founder and chairman, recognized that while both paths could lead to personal wealth, the acquisition ensured substantial financial rewards for many of his staff, which was a crucial factor in his decision.
Following the sale, approximately 400 employees found their stock options boosted to values exceeding $1 million, with a number of individuals seeing even larger gains. “We had dozens of employees with $5 million-plus outcomes. These are life-changing outcomes,” Bansal noted in an interview.
Bansal’s considerations before finalizing the deal included not just the financial aspects but also how well AppDynamics’ technology aligned with Cisco’s offerings. He also assessed the company’s culture and the potential long-term implications for its nearly 1,200 employees. Balancing the prospect of a successful IPO against the immediate benefits of the acquisition was paramount. He estimated that achieving a $3.7 billion market cap independently could take “three to four years of great execution,” a time frame that posed significant risks for his team, which the acquisition would alleviate.
Despite the deal’s success, Bansal later expressed some regret, revealing that he believed the company had further growth potential and that he felt a lack of direction without the startup’s operational challenges. Currently, he serves as the CEO and co-founder of two new startups, Traceable and Harness, the latter recently achieving a valuation of $3.7 billion as of 2022.
While the sale was financially beneficial for him—Bansal reportedly held over 14% of AppDynamics—a larger driving force in his choice was the impact on his employees. “As the founder, it was much more than life-changing money for me, personally,” he remarked, acknowledging that, while his own financial security was important, his team’s well-being was paramount.
This focus on employee outcomes is not always typical for startup founders in acquisition discussions. A parallel can be drawn to Jay Chaudhry, founder of cloud cybersecurity firm Zscaler, who sold his company to VeriSign for $70 million in 1998. He later reflected on realizing the sale’s profound effects on his employees during a celebration—a significant portion of his staff became instant millionaires when VeriSign’s stock value surged. Chaudhry recalled the exuberance among employees, many of whom made significant life changes as a result of their newfound wealth.
This narrative underscores the importance of leadership decisions that consider the overall impact on staff, highlighting a progressive approach that more founders may need to emulate in a competitive business landscape.
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