Mergers and Acqusitions
As some of you might have noticed Solidcore got acquired by McAfee. I have transitioned into a CTO/VP Technology role for the Risk & Compliance Business Unit. My wife’s company got sold to Cisco a month earlier, so its been quite a few months for us. It was also interesting to go through both acquisitions simultaneously giving one the opportunity to compare and contrast the best practices for assimilating the new set of employees, products, cultures into the organization. Both MFE and CSCO have a large number of acqusitions over the last ten years.
On a personal note I was very impressed with MFE. It reminds me a lot of MSFT in the mid-90s. MSFT in that era was a force to be reconned with. You would go to meetings and there would be these really smart people, all of whom had made money and were fearless. And you would sit there and say holy smokes I can’t compete with this. MFE is not quite the same as it has gone through several iterations as a company, but it reminds me of that. The top couple of layers of management are really smart, communicate heavily, are organized for efficiency.
It is an interesting journey for me personally. As I have mentioned in my previous posts, I view companies like children. You give them birth, but as soon as they are born they become their own person. Over time they develop their own personalities and go through their teenage years (my kids haven’t hit those yet, so I my experiences are viacarious 
). Solidcore is one more child to graduate from college, the technology just like those of Vxtreme, Teros, GreenBorder will have far reaching impact and it was a good outcome for everyone at the company.
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what was the reason to sell the company?. Was it a good deal for employees/ investors to sell for less than capital invested?
Well there are two different aspects of this:
first of all it was a difficult decision. Q1 of 2009 was our largest quarter to date, we were doing really well in a crazy external environment. Having said that the visibility into the future was challenging as with any other company out there.
In addition if you look at the cost of capital in the current environment it is infinite. Series A deals are getting done, but as one of my lawyer friends put it “all deals these days look like series A”. So if you get your forecast for 1 or 2 quarters a bit off you are going to have a round that wipes out all the equity for shareholders and employees.
So what do you do: roll the dice or not? In this case the total deal value is 54M. McAfee for some reason wanted to list it as 33+14 but in addition we had a lot of money in the bank. The deal given the balance between risk and reward was a good one.
From an employee’s perspective our entire engineering team is in India. It is a very young team and this is a great accomplishment for them. We built the product out of India, we have no engineering in the US (just office of cto). It is one of the first systems products to be built and deployed on over 150,000 endpoints from India. And in India too, built out of New Delhi, not Bangalore. This high quality team has a very bright future inside MFE and all of them made reasonable amount of money. The other thing this does is changes the outlook of 60 people in this company in Delhi towards startups and I am confident that there will be atleast 10 if not more companies that will be started by people at Solidcore today over the next several years.
Finally, to me I view startup’s as children. You give them birth, but they take a life of their own. Go through their teenage years, have teething pains, growing pains. cause you joy and heartache. Some graduate from college, others from high school, some go all the way. With MFE’s reach and penetration we will have this technology deployed very very widely. It will change the face of anti-virus as we see it today.