Photo: Norwest Venture Partners
Workday, the enterprise software maker, has wowed investors with an IPO on Friday that really popped.For one savvy venture capitalist, it was a particularly nice payday.
Norwest Venture Partners investor George Still tried to get his firm to back Workday.
When it turned the company down, Still invested his own money—a stake that’s now worth $40 million after Workday soared from an opening price of $28 to $48 on Friday.
Today, on their second day of trading, Workday shares rose again to about $52.
The company is now valued at over $8 billion.
Still’s employer, Norwest, turned Workday down in 2009 when it was looking for a firm to lead a $75 million investment round, reports Fortune’s Dan Primack.
In 1991, Still led a $5 million investment in an enterprise-software company called PeopleSoft. PeopleSoft was the company Dave Duffield founded before he created Workday. Norwest was the sole venture investor in PeopleSoft and Still served on its board for 10 years.
A business-school student named Aneel Bhusri worked for Still at Norwest, and on Still’s recommendation, went on to become an executive at PeopleSoft.
In a very real sense, Workday would not have existed without Still.
PeopleSoft became the target of one of the nastiest hostile takeovers in tech history. After a fight, Oracle bought it for $10.3 billion. The takeover left Duffield a billionaire with an ax to grind. So he and Bhusri founded Workday. Workday offers Web-based versions of human resources software. It competes directly with some of the software tools Oracle acquired from PeopleSoft.
Bhusri went on to become a partner with VC firm Greylock, so naturally Greylock led the first few rounds. But when it came time to raise a big, pre-IPO round, Duffield asked if his old friend Still wanted Norwest to lead. Norwest would have had to put up about $46 million, Fortune’s Primack reports.
For a lot of legitimate reasons, Norwest turned Workday down. But that $46 million stake would have been worth around $722 million today. Another firm, NEA, made the investment and raked in those profits instead.
Don’t feel too bad for Still. Norwest gave him permission to make a personal investment, which also gave him a seat on the board. The firm is philosophical about it: In a statement, it said that Still’s relationship with Duffield and Bhusri helps the rest of its investment portfolio.
Still’s personal stake in Workday, including shares and options, is worth nearly $40 million, Primack wrote.
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