A tech industry leader has shared how he transformed 400 of his employees into millionaires, emphasizing that his decision was meant to secure their future.
Before selling his software company, AppDynamics, in 2017, Jyoti Bansal couldn’t have anticipated the significant impact it would have on his team. Just days before the company was set to go public, Cisco, a communication technology firm, presented an offer that Bansal believed to be in the best interest of everyone involved.
The offer amounted to $3.7 billion, ensuring a substantial profit for Bansal regardless of the decision. However, the ramifications for his employees were a major consideration.
He explained that one path would ensure his employees’ financial prosperity, and he chose this course as the best decision for himself and his company. By accepting the offer, around 400 employees suddenly found themselves as millionaires.
Bansal told CNBC Make It: “We had dozens of employees with $5 million-plus outcomes. These are life-changing outcomes.”
The decision to sell was influenced by how AppDynamics’ software could integrate with Cisco and the potential effects on the company’s 1,200 employees, both culturally and financially.
Bansal assessed his post-IPO projections against Cisco’s valuation to determine the optimal path. He estimated that achieving a $3.7 billion market capitalization would require “three [to] four years of great execution” and noted: “That means three [to] four years of risk that we … reduced for all of the employees there. [That’s] a significant impact.”
Had Bansal declined the offer, employees would have continued with their regular salaries. However, many employees who owned shares experienced a significant increase in their value, at least $1 million, according to Bansal’s spokesperson.
After the sale, Bansal sought new challenges and founded the companies Traceable and Harness, with Harness reaching a valuation of $3.7 billion in 2022. The financial windfall was not exclusive to his employees but extended to Bansal himself as well.
He remarked: “As the founder, it was much more than life-changing money for me, personally. I would be in a good place. So that was a factor for me, but not the biggest factor. The biggest for me was our employees.”
Bansal made a lasting impact on his employees’ lives by prioritizing their well-being during the sale process. Instances like this are uncommon but not unheard of, as demonstrated by the sale of SecureIT to VeriSign for $70 million in 1998.
Founder and CEO Jay Chaudhry witnessed the life-changing effects after VeriSign’s stock surged two years later. He recounted to Make It that almost all of his 80 employees became millionaires.
Chaudhry mentioned: “People were going crazy in the company, because they had never thought of so much money. A lot of them were buying new houses. They were buying new cars. I know one guy, he took six months off, rented a [mobile home] and went around the country. They could do what they wanted to do.”
With newfound wealth, employees could finally indulge in the purchases and experiences they had long desired.