This was a one line email sent to me on February 17th, 2008 from my friend Rajeev Motwani at Stanford. This led to a fortuitous introduction to Jyoti Bansal and AppDynamics. (AppDynamics began as Singularity Technologies.) What followed was an extraordinary first meeting with Jyoti, a brilliant and entrepreneurial young engineer who had just left Computer Associates after the acquisition by Wily. (Greylock also backed Wily.) Jyoti had started to think through what might lie ahead for application monitoring.
Our first meeting led to a detailed whiteboard session with Jyoti at the Greylock offices one Saturday evening. We continued that Saturday evening at a Szechuan restaurant in San Mateo to discuss where application intelligence and automation was headed — all while plowing through house-special Dan Dan noodles and spicy chicken. When you meet an entrepreneur like Jyoti — who has so much energy and clarity of vision – it is infectious. I was hooked. I invited Jyoti into our partner meeting on Monday morning, and we signed a Series A term-sheet a few days later on Jyoti’s birthday. The Series A was co-led equally with my friend Ravi Mhatre at Lightspeed Venture Partners.
AppDynamics made an exceptional first hire in Bhaskar Sunkara, who partnered with Jyoti to build the initial engineering team. Bhaskar today is the head of products and CTO at AppDynamics, and the driving force behind the company’s vision. The early team worked out of Greylock’s offices on Campus Drive in San Mateo (great karma – Palo Alto Networks, Data Domain, Success Factors, TellApart, Sumo Logic, among others all made their starts or early journeys there!), and then moved up to San Francisco. An initial team of a dozen engineers delivered the first AppDynamics product, and the engineers along with one sales rep began on-boarding customers. The early customers that were bold and saw the future included Netflix, Priceline, Williams Sonoma, Electronic Arts, and Tivo.
Fast forward a few years. AppDynamics was growing rapidly in San Francisco, and had also added additional corporate offices in India and Texas. Every large enterprise business was starting a digital transformation, and AppDynamics had the foresight to focus on one of the largest and most strategic opportunities in information technology: The opportunity to provide enterprises with a software platform that could help manage customer experience journeys over digital, and directly impact and improve business results and revenue.
As word of the exceptional technology and customer demand spread, the company was able to attract several experienced enterprise sales leaders including Joe Sexton, Dali Rajic, and Jeremy Duggan. These gentlemen rapidly built out a world-class enterprise sales organization, focused on helping enterprises navigate digital transformation for business results.
In 2015, AppDynamics had grown to hundreds of employees and well over a thousand enterprise customers – a long way from the founding team cramped at Greylock offices! We realized we had the opportunity to build a very valuable multi-billion dollar revenue business. Jyoti and the board decided that we should start a search for a senior executive who could help scale the business to the next level, and lead AppDynamics as a future public company. Over an extended search period, we met with several of the best executives in technology, but weren’t sure we had found a strong match. We doubled down on our search as a group – Paul Daversa (retained search), Jeff Markowitz (Greylock talent partner), Jyoti, and the board. We had heard that there was a star executive at Adobe called David Wadhwani. We cold called David and I found myself in a first 1-1 meeting with David, over take-out dinner at Greylock offices. Sitting across the table from David, I quickly realized we had found the right fit for AppDynamics. What followed was an intense four month courting period. David joined AppDynamics as CEO in September 2015, and Jyoti became Chairman of the Board.
David Wadhwani built out the executive team with multiple strong additions. The senior leadership team now included Bhaskar, Dali and Dan Wright (all early at company), along with Randy Gottfried, Kendall Collins, Danny Winokur, and Susan Lovegren. David had been central in Adobe’s move to a subscription model, and he and the AppDynamics team instituted a strong discipline around benchmarking business metrics, growing valuable subscription streams, and focusing on customers with the strongest lifetime values. The company also demonstrated very strong “land and expand” metrics – all customers to date and on average purchased 5x their initial land purchase, and the company’s top 25 customers to date on average purchased 14x their initial land purchase. Gartner also ranked the company as #1 across all key dimensions in the product category.
The company publicly filed their S-1 in late-December and began their IPO roadshow about two weeks ago. We were humbled by a very strong reception and interest from the top technology public market investors. The IPO was heavily oversubscribed within days, and the company was scheduled to start trading on Nasdaq on Jan 26 – at likely a very strong up-valuation from the last late-stage private financing. Enter Cisco. AppDynamics and Cisco had met several times over the last year and Cisco was also a significant customer of AppDynamics technology. With the clock running on AppDynamics IPO, Cisco CEO Chuck Robbins invited David Wadhwani to his home a few days ago and proposed a merger. Chuck painted a vision where AppDynamics combined with Cisco’s world-class reach and resources, could dramatically accelerate the AppDynamics mission.
AppDynamics was committed to growing to a multi-billion revenue business independently as public company, but after additional conversations with Cisco’s leadership team, they decided in favor of a merger, if it could be accomplished ahead of company being public. The agreement got signed yesterday evening and announced within minutes after signing. With AppDynamics, Cisco gains the leader in cloud application performance management and the ability to combine application analytics and infrastructure analytics to provide enterprise customers with an unparalleled view of their business environments.
Congrats to Cisco and AppDynamics on their milestone merger. We will be cheering from the sidelines for strong continued business success.