Good Technology CEO Christy Wyatt sold her company to a competitor Blackberry for $425 million, took home about $6 million for herself and protected her investors’ investment, the New York Times reports.
That sounds like a good thing, but it wasn’t really a happy ending for a company with a long history of dramatic turnarounds.
That $425 million sale was less than half of the company’s year-earlier $1.1 billion private valuation. Employees’ common stock became worth a mere 44 cents a share, down from $4.32 a year earlier, the Times reported, and some employees were hit with astronomical tax bills on the high value of their stocks at their peak, using life savings or borrowing money to cover those bills.
After the sale, Wyatt told Business Insider how she did due diligence on the sale to Blackberry by staging a meeting at a “secret location” in Palo Alto for key product managers and engineers of both companies. She described that meeting as if it was magical, where it was like each company was looking at “its twin across the room,” she told us.
But clearly, not every employee was feeling the love. Employees were so angry at the money they lost on the fire sale price to Blackberry that someone broke a glass conference room wall at Good’s headquarters, the Times reports.
A long and dramatic history
While Good Technology is being shown as an example of unicorn startups tanking, it wasn’t really a startup. Good was a 15-year-old company that had already gone through many pivots and exits.
Good was a 15-year-old private company that had already gone through many pivots and more than a few exits and attempts to IPO.
It began life back in 2000 as a company called SpringThings, an email reader device that got crushed during BlackBerry’s heyday. It shifted to software and Motorola bought it in 2006.
Then in 2009, Motorola sold Good to another company called Visto, which around the same time received more than $260 million from BlackBerry in a patent infringement settlement. Visto kept the Good name.
In this incarnation, Good finally found its calling helping companies manage their employees’ mobile devices — a market where its old rival BlackBerry also competed.
Good raised about $146 million in venture capital. But the market quickly matured as mobile devices became more of a known quantity in the enterprise. Good’s competitors were snapped up by tech giants like SAP, IBM, Google, and even VMware, which bought AirWatch for $1.54 billion. The biggest standalone competitor remaining in the space is MobileIron, which went public in June 2014.
Wyatt tried to steer the company to an IPO
Good hired Wyatt in 2013, and she promptly shook up the management staff, raised another $65 million and tried to take the company public in with an IPO filing that would have raised $100 million.
When the IPO was delayed, Wyatt raised another $80 million in September 2014.
Wyatt and her board reportedly shooed down a reported $825 million acquisition offer from CA Technologies in March 2015 because they still thought their IPO would value the company at around $1 billion.
But the market’s interest in mobile device management waned, Good’s public competitor MobileIron was struggling (and today is trading at about one-third of its IPO price), and Good began looking for buyers.
In the meantime, Wyatt assured the the troops that the company was in good shape with lots of healthy exit options, the Times reports. Hearing that, some passed on a chance to sell their shares on the secondary market, others bought options offered $3.34 a share, they told the Times.
Good was reportedly running out of cash
Blackberry smelled its chance, so Wyatt and the board made the deal and she left the company.
Some owners of Good’s common shares were not pleased. In October, they filed a lawsuit naming Wyatt and the board, trying to block the sale.
The complaint charged that after Good paid off debt and other expenses, the BlackBerry deal would provide around $40 million to common stockholders while the preferred stockholders — earlier investors — got about $250 million. Of that, $165.4 million was paid out to venture capital investors, reports Law360.
The complaint says that six of nine of Good Technology’s board of directors are managing directors or founders of venture capital firms that had invested in Good.
The story is serving as a warning about what can happen to employees when valuations at highly valued unicorn startups tank. But it’s also another chapter in the never-ending saga that is Good Technology.
We reached out to Good Technology and Wyatt’s representatives for comment and will update when we hear back.