Selling a startup can come with an emotional cost

Every founder dreams of building a substantial company. For those who make it through the myriad challenges, it typically results in an exit. If it’s through an acquisition, that can mean cashing in your equity, paying back investors and rewarding long-time employees, but it also usually results in a loss of power and a substantially reduced role.

Some founders hang around for a while before leaving after an agreed-upon time period, while others depart right away because there is simply no role left for them. However it plays out, being acquired can be an emotional shock: The company you spent years building is no longer under your control,

We spoke to a couple of startup founders who went through this experience to learn what the acquisition process was like, and how it feels to give up something after pouring your heart and soul into building it.

Knowing when it’s time to sell

There has to be some impetus to think about selling: Perhaps you’ve reached a point where growth stalls, or where you need to raise a substantial amount of cash to take you to the next level.

For Tracy Young, co-founder and former CEO at PlanGrid, the forcing event was reaching a point where she needed to raise funds to continue.

After growing a company that helped digitize building plans into a $100 million business, Young ended up selling it to Autodesk for $875 million in 2018. It was a substantial exit, but Young said it was more of a practical matter because the path to further growth was going to be an arduous one.

“When we got the offer from Autodesk, literally we would have had to execute flawlessly and the world had to stay good for the next three years for us to have the same outcome,” she said at a panel on exiting at TechCrunch Disrupt last week.

“As CEO, [my] job is to choose the best path forward for all stakeholders of the company — for our investors, for our team members, for our customers — and that was the path we chose.”

For Rami Essaid, who founded bot mitigation platform Distil Networks in 2011, slowing growth encouraged him to consider an exit. The company had reached around $25 million run rate, but a lack of momentum meant that shifting to a broader product portfolio would have been too heavy a lift.


By Ron Miller

Autodesk agrees to buy PlanGrid for $875 million

Autodesk announced plans to acquire PlanGrid, a San Francisco startup that helped move blueprints from paper to the iPad when it launched in 2011.

This digitization of construction fits with Autodesk’s vision of digitizing design in general, and CEO Andrew Anagnost certainly recognized the transformational potential of the company he was buying. “There is a huge opportunity to streamline all aspects of construction through digitization and automation. The acquisition of PlanGrid will accelerate our efforts to improve construction workflows for every stakeholder in the construction process,” he said in a statement.

The company, which is a 2012 graduate of Y Combinator, raised just $69 million, so this appears to be a healthy exit for the them. PlanGrid took what was a paper-intensive task and shifted it to digital, taking a world of hand-written mark-ups and sticky notes onto the fledgling iPad.

In an interview with CEO and co-founder Tracy Young in 2015 at TechCrunch Disrupt in San Francisco, she said the industry was ripe for change. “The heart of construction is just a lot of construction blueprints information. It’s all tracked on paper right now and they’re constantly, constantly changing,” Young said at the time.

Those manual changes often resulted in errors she said, and that was costly for the contractors. As an engineer working for a construction company, who was at one time responsible for making the paper copies, she recognized that the process could be improved by moving it into the digital realm.

PlanGrid CEO Tracy Young onstage at TechCrunch Disrupt San Francisco in 2015

Her idea, which was kind of radical in 2011 when she started the company, was to move all that paper to the cloud and display it on an iPad. It’s important to remember that the enterprise was not rushing to the cloud in 2011, and most people considered the iPad at the time to be a consumer device, so what she and her co-founders were attempting was a true kind of industry transformation.

Young sees joining Autodesk as a way to continue building on that early vision. “PlanGrid has excelled at building beautiful, simple field collaboration software, while Autodesk has focused on connecting design to construction. Together, we can drive greater productivity and predictability on the jobsite,” she said in a statement.

PlanGrid currently has 400 employees, 12,000 customers and 120,000 paid users, and has been used on over a million construction projects worldwide, according to data provided by the companies. They believe that under Autodesk’s umbrella and combined with their existing product set, they can provide a complete construction solution and grow the business faster than PlanGrid could have on its own — pretty much the standard argument in an acquisition like this.

PlanGrid was efficient with the money it took. In fact the last raise was $40 million almost exactly three years ago. The deal is expected to close at the end of January pending the normal regulatory approval process.

 


By Ron Miller