Despite exiting as a “unicorn,”, or a company worth more than $US1 billion, DataGravity CEO Paula Long now recommends companies aim for the IPO.
Long sold the first company she co-founded, EqualLogic, to Dell for $US1.4 billion in 2008 — more than what Facebook paid for Instagram.
Even with such a large exit that garnered her company a real “unicorn” status, Long told Business Insider that her preference is actually a company going public.
“You can control happy customers. You can somewhat control positioning yourself to be a public company,” Long said. “You can’t control being bought.”
Dell had approached EqualLogic earlier, but the numbers “weren’t interesting to us,” Long said. She preferred keeping the company private.
By 2008, EqualLogic was ready to go public and had filed its IPO paperwork with the SEC. But then the numbers started getting bigger, Long said.
“When someone offers you a billion, I joke around that when someone offers you something with a B, you should listen,” Long said.
“We closed the deal Sunday night. The following Tuesday we would have been on the roadshow and going public. So we were two days away from going public, so we were very serious about that.”
Long hadn’t built the startup to be sold. Long was serious about going public and had the happy customers and revenues to support it.
Her new startup, DataGravity, is set up to IPO because it’s going after happy customers and differentiating itself, Long said. It analyses data in companies to tell if employees are copying files to Dropbox accounts or if there are files with sensitive data accidentally being hosted on a public server.
Once again, she insists, she didn’t build this company just to sell it.
“If you build a startup to be bought, 90 per cent of the time you’ll fail. Because you’ll take shortcuts or you’ll start to focus on the wrong thing, you’ll focus on hype because you want some company to buy you based on hype. Or you’ll focus only on their customers because you’ll figure that if you become a pain in the butt to them, they will take you out,” Long said.
It’s the difference between looking for a way out in five years versus building a company to spend the next 20 years innovating on it — one that the public markets will value.
“A lot are going to do amazingly well. But if you have a short-term view, and I think a lot are maximizing their non-public value to customers, you’re going to find yourself in a world of hurt in a few years,” Long said. “My preference is public offering because that’s the only one you can control and happy customers get you there.”
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