Imagine founding a company in your garage, leading it to $300 million in revenue and an IPO and then, years after you left, seeing it go private in a leveraged-buyout deal.
How does it feel? Sad.
But at the same time, it can be exhilarating — especially if you founded a startup that competes with your old company.
Welcome to the life of Gaurav Dhillon, cofounder of two enterprise software companies in the same space: Informatica and SnapLogic.
Earlier this week, Informatica announced it was going private in a $5.3 billion leveraged buyout deal. It's a modest win for investors who will get $48.75/share, about a 6% premium.
"I founded that company out of my garage 1992, $0 to $300 million in revenue. I was its first employee and its first CEO for 12 years and created a global company," he told Business Insider.
"As an individual I feel incredibly mixed," he says. "I feel bad for the single mom who I hired 15 years ago who put her kids through college working for that company. I feel bad for all the customers who are going to get squeezed through this private equity leverage, the debt payments. Wall Street will do alright, as will a certain set of people at the tippy-top of that company."
He added, "It's that old recipe of how do you make lemonade from lemons? Squeeze, squeeze. You know how private equity is. Its a well studied spectacle. It's not a charity."
Dhillon left Informatica about 10 years ago over disagreements with the board about the strategic direction of the company, he told us.
A "clean break"
About a year later, he founded SnapLogic, a competitor to Informatica that offers its products as a cloud service. (It's a similar story to Dave Duffield, PeopleSoft and Workday, without the huge ugly hostile takeover by Oracle.)
Informatica was founded before the internet and is a key player in data warehousing, which stores mega amounts of data for business analysis, and in "middleware," which connects computer systems together to fill the warehouse with data.
Today data warehousing is being replaced by faster, cheaper "big data" technologies and middleware is taking a beating from cloud integration services such as those offered by SnapLogic and MuleSoft.
Dhillon had no remaining financial ties to Informatica — he completely cashed out of his holdings to help fund his new company, he told us.
"Leaving was the hardest and best thing I ever did," he told us.
A meeting with Mark Leslie, the founding CEO of Veritas ,convinced him to do it.
"I asked him out to lunch and he said 'Make a clean break, knowing that some things will be different after you go and some things worse, but if you don’t make a clean break you won't free yourself up to do the next thing. Don't hang around as chairman. Don't wander around the halls.'"
While he's sad to his old company hit the go-private reset button, he's also kind of happy.
Informatica was one of his biggest competitors. And his other big competitor, Tibco, went private last year for $4.3 billion.
"I genuinely feel that this kind of financial engineering is not good for customers," he tells us. "But from a SnapLogic perspective, we're cleared for takeoff. It's the best feeling."
Changing of the guard
We heard a similar sentiment from SnapLogic's other big competitor, MuleSoft.
Its founder, Ross Mason, told us, "Tibco and and now Informatica, this is what a changing of the guard looks like. The traditional integration companies are losing ground to cloud competitors with their technology and business models built a generation ago."
SnapLogic has hit its stride, Dhillon tells us. It targets only companies that have $1 billion in revenues (unlike MuleSoft, which is popular with all sorts of developers).
It tripled employees to 115 last year, including a lot of new salespeople. It has "more than tripled bookings last year" has huge companies in every industry as customers.
Two classes of stock
And he says he would do it all again and take SnapLogic public when the is right. But he's increasingly a fan of having two classes of stock, an option that allows founders to retain control in the company.
"Now you start to see the value, if its done right, of two classes of stock," he says pointing to Adobe. "It's fantastic how the founders of Adobe are around and able to steer their company through multiple challenges."
That dual-class share structure has become more common in public tech companies recently, with Google, Facebook, and Alibaba all using them to help founders retain more control.
