Jyoti Bansal made “the hardest decision” of his career when he sold his software startup AppDynamics for $3.7 billion to Cisco in 2017. AppDynamics was days away from going public, but Bansal accepted Cisco’s acquisition offer with his employees in mind. The sale made roughly 400 AppDynamics employees millionaires, with their shares rising in value to at least $1 million.
“We had dozens of employees with $5 million-plus outcomes. These are life-changing outcomes,” Bansal said. Bansal considered factors like the fit of AppDynamic’s products within Cisco, the cultural and financial impact on employees, and the monetary difference between his own post-IPO projections and Cisco’s valuation.
He estimates reaching a $3.7 billion market cap would have taken “three to four years of great execution,” adding, “That means three to four years of risk that we reduced for all of the employees there.”
After the sale, Bansal felt aimless and believed he could’ve kept growing AppDynamics. He now runs two other software startups, Traceable and Harness. However, he maintains selling was the right decision based on the information he had at the time.
As the founder with over 14% ownership, the deal was “much more than life-changing money” for Bansal personally, but his employees were the biggest factor. Startup founders don’t always prioritize their employees when considering selling their companies. Jay Chaudhry, founder and CEO of SecureIT, focused on ensuring his employees’ financial future when the cloud cybersecurity firm was acquired by VeriSign for $70 million in 1998.
Many of Chaudhry’s employees became millionaires when VeriSign’s stock later soared. “People were going crazy in the company because they had never thought of so much money,” Chaudhry said. “They could do what they wanted to do.”
In his mid-forties, Jyoti Bansal had spent years in Silicon Valley honing his software engineering skills before his entrepreneurial dreams took shape.
Bansal founded AppDynamics to help large firms tackle issues with faulty apps and prevent service disruptions. In 2017, as AppDynamics prepared to go public, Cisco made a $3.7 billion acquisition offer. Bansal could have made substantial money from either an IPO or acquisition, but he saw the acquisition as a way for his employees to earn their fair share.
Around 400 AppDynamics employees saw their stock value rise to at least $1 million, with many surpassing $5 million. Despite the financial windfall, Bansal had sleepless nights over the sale. “People think it must’ve been an easy decision, but it was the hardest,” he said.
The hardest decision of Bansal’s career
Walking home from the celebration, Bansal realized he wasn’t ready to let go. “It was bittersweet – it felt like we were closer to the finish line, but not quite there.”
Though he cites it as a profound regret, Bansal’s decision to sell AppDynamics to Cisco undeniably changed many of his employees’ lives and set a precedent in the tech industry.
At 39, Jyoti Bansal sold his startup AppDynamics to Cisco for $3.7 billion. Despite the financial gain, the sale became a moment of regret for the Indian American founder and former CEO. Born in Rajasthan, India, Bansal had always dreamed of being an entrepreneur.
After working as a Silicon Valley software engineer for eight years, he launched AppDynamics, which provided tools for troubleshooting software issues. The company’s journey ended unexpectedly when Cisco acquired it in 2017, instantly making hundreds of employees, including Bansal, wealthy. However, what should have been joyous marked Bansal’s “saddest day,” he revealed.
Reflecting on his journey, Bansal said, “When I started [AppDynamics], I didn’t think about a financial outcome. I just thought in terms of: This problem needs to be solved.” After selling, Bansal felt a sense of unfinished business, believing AppDynamics could have grown much larger. Six months later, Bansal founded a new startup, Harness, which also provides tools for software developers.
Harness was valued at $3.7 billion in 2022, the same as AppDynamics’ sale price. This time, Bansal is determined not to repeat what he considers a “mistake.”
Bansal recounted his post-sale feelings to CNBC. “It’s the end of a chapter,” he said.
“That’s the bittersweet part of selling your company. It’s a great outcome in many ways, but it’s also the end of a book. After the sale, I felt sad or lost, realizing that I really enjoyed building the company, creating products, solving problems, and competing in the market.”
Bansal’s immediate reaction was to retire and travel, including trekking in the Himalayas, hiking Machu Picchu, and doing a safari in Africa.
However, after six months, he realized retirement was not for him. When asked if he would consider selling Harness, Bansal stated, “We’d have to entertain the offer, but I know the answer is most likely no.” He elaborated, “We want to get to billions of dollars of revenue, expand into new markets and products, and create a strong organizational culture. Our journey is just starting, so it doesn’t make sense to sell to someone else.”
Bansal emphasized his commitment to seeing Harness grow and achieve its potential.
“We have so much room to grow from here,” he said. “So, the answer is no—unless something crazy happens.”
Looking Back on the Journey
Despite the success of the sale, Bansal often reflects on the journey and the challenges he faced as a founder. The decision to sell AppDynamics was never easy, especially when considering the potential growth of the company. However, he believes that the value he provided to his employees by securing their financial future was worth the bittersweet feeling of letting go.
His experience taught him that entrepreneurship is not just about financial outcomes but also about the lives you impact along the way. This realization continues to shape his approach to running his new startups, where employee well-being and company culture remain central priorities.
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