An Indian-origin founder opted for a unique strategy to create financial benefits for his employees. Those who used to work in the start-up AppDynamics have now become millionaires. In 2017, Jyoti Bansal, the founder and chairman, received a fascinating offer from Cisco, which wanted to acquire his company for $3.7 billion. Only four days later, AppDynamics was slated to go public. Bansal took it as an opportunity to ensure substantial monetary support for his employees.
Once he accepted Cisco’s offer, almost 400 staff saw their share value reaching at least $1 million each. “We had dozens of employees with $5 million-plus outcomes. These are life-changing outcomes,” Bansal told CNBC Make It.
The 46-year-old considered several factors when he chose to sell his start-up. One of them was the compatibility of AppDynamics’ products with Cisco’s portfolio. Another important factor was the impact the sale would create on those 1200 staff of the company, both culturally and financially.
Bansal also evaluates the post-IPO projection of his company. Considering Cisco’s valuation, he predicted that he would need “three to four years of great execution” to secure a $3.7 billion market cap. The associated risks would be there as well. Bansal thought he could minimise the risk for his staff by selling the company and their financial stability would also be ensured.
About the impact of the sale to Cisco, Jay Chaudhry, who used to work with AppDynamics and is the founder and CEO of Zscaler, said, “People in the company were ecstatic; they had never imagined so much money. Many were buying new houses, and new cars. I know one person who took six months off, rented an RV and travelled around the country. They finally had the freedom to do what they wanted.”
Bansal himself also gained significant profit as he owned over 14 per cent share of the start-up back then. “As the founder, it was much more than life-changing money for me, personally. But the biggest factor for me was our employees,” he said.
Bansal sometimes felt he could have continued to grow the company. But when he made the decision, it seemed like the right call to be taken for the sake of his employees. He has already moved on from AppDynamics and has co-founded two other software companies– Harness and Traceable, which was valued at $3.7 billion in 2022.
