USA (Commonwealth Union)_ In the dynamic landscape of technology entrepreneurship, Jyoti Bansal, an Indian-origin founder, has created a unique narrative by prioritizing the financial wellbeing of his employees. Bansal’s story centers around the acquisition of his startup, AppDynamics, by Cisco in 2017 for an impressive $3.7 billion, an event that led to nearly 400 employees becoming millionaires.
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The strategic decision
When Cisco approached Bansal just days before AppDynamics was set to go public, he was faced with a pivotal choice. Recognizing the potential benefits for his employees, he opted to sell the company instead of pursuing the IPO route. He stated, “We had dozens of employees with $5 million-plus outcomes. These are life-changing outcomes”. His decision stemmed not just from the financial gain but from a desire to ensure job security and prosperity for his team of approximately 1,200 employees. Bansal’s foresight was guided by several considerations. He evaluated the compatibility of AppDynamics’ products with Cisco’s existing portfolio, which he deemed critical for a successful merger. Furthermore, he weighed the potential risks associated with a post-IPO environment, projecting that it would take “three to four years of great execution” to achieve a comparable market valuation. Ultimately, he believed that selling the company would mitigate risks and provide immediate financial stability for his staff.
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Life-changing benefit
The repercussions of Bansal’s decision were profound. Employees of AppDynamics were ecstatic upon realizing their newfound wealth, many experiencing life-altering changes. Jay Chaudhry, a former AppDynamics employee and founder of Zscaler, reflected on the collective excitement, stating, “People in the company were ecstatic; they had never imagined so much money.” The financial windfall allowed employees to make significant life changes, purchasing homes, acquiring new vehicles, and even taking sabbaticals to travel. Furthermore, Bansal himself received significant rewards. As the founder owning over 14% of AppDynamics, he too benefited significantly from the acquisition. However, he emphasized that his primary concern was for his employees’ futures. He remarked, “As the founder, it was much more than life-changing money for me, personally. But the biggest factor for me was our employees”.
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A bittersweet farewell
While Bansal’s decision proved financially advantageous, it was not without its emotional challenges. Reflecting on the sale, he described it as the “saddest day of his life,” a sentiment underscored by his nine years of dedication to building AppDynamics. Though he occasionally pondered what further heights the company could have reached, he ultimately believed that prioritizing his employees’ wellbeing was the right course of action. Since the sale, Bansal has continued to thrive in the tech industry, co-founding two more successful ventures, Harness and Traceable. Remarkably, Harness reached a valuation of $3.7 billion in 2022, mirroring the success of AppDynamics. His relentless pursuit of innovation has not waned, and his commitment to fostering entrepreneurial growth continues to inspire.
The Good Boss
Jyoti Bansal’s journey serves as a compelling example of how entrepreneurial success can be redefined by prioritizing employee welfare. By transforming nearly 400 employees into millionaires through his strategic decision to sell AppDynamics to Cisco, Bansal not only secured their financial futures but also set a precedent for responsible leadership in the tech industry. His story reminds us that the true measure of success often lies not in personal gain but in the positive impact one has on others.
