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Dec 8, 2017 · 21m · 20vc

20VC: AppDynamic's Jyoti Bansal on The Sale vs IPO Process with AppDynamics' $3.7Bn Exit & The 3 Simple Things VCs Look For When Investing In Startups

Jyoti Bansal · 13m spoken Harry Stebbings · 7m spoken
0:00 / 0:00

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In this episode of The 20 Minute VC, host Harry Stebbings interviews Jyoti Bansal, founder of AppDynamics and Harness.io. Bansal discusses building multi-billion-dollar enterprise software companies, the dramatic $3.7 billion acquisition of AppDynamics by Cisco right before its scheduled IPO, and his frameworks for startup execution and venture investing.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 35.4% of the talking time here. How this is scored →

Harry as informed peer 2.2 Guest teaching 3.0 Guest disagreement 2.0 Harry pushing back 2.0
05100:0010:0020:002:32–6:44 · Harry as informed peer 3/10 Immigration Challenges and the Creation of AppDynamics Harry introduces a counter-perspective from another founder regarding hiring clones to challenge Jyoti's hiring methodology. Jyoti firmly rejects the premise, stressing the necessity of cognitive diversity across departments.6:44–9:12 · Harry as informed peer 2/10 Navigating the $3.7 Billion Cisco Acquisition vs. IPO Harry probes into the high-stakes pressure of Cisco's last-minute pre-IPO acquisition offer. Jyoti gives an insider look into rejecting initial buyout offers and balancing employee shareholder responsibility.9:12–11:32 · Harry as informed peer 2/10 Developing Internal Competitive Advantages and Market Sizing Jyoti explains how he pitted internal departments against each other to force each function to build standalone competitive advantages. He also instructs Harry on using bottom-up ROI calculations rather than top-down industry spending reports to judge market size.11:32–15:53 · Harry as informed peer 3/10 What VCs Look For and Maintaining Execution Standards Harry challenges Jyoti's uncompromising stance on execution quality by pitting it against Silicon Valley's move fast and break things ethos. Jyoti reframes the concept, explaining that speed applies to learning iterations while goal execution standards must remain world-class.15:53–18:07 · Harry as informed peer 1/10 The Mechanics Behind BIG Labs and Harness.io Harry asks lighthearted questions about why Jyoti returned to founding companies rather than staying retired. Jyoti explains the mechanics of Big Labs as an internal startup studio and incubator.2:32–6:44 · Guest teaching 3/10 Immigration Challenges and the Creation of AppDynamics Harry introduces a counter-perspective from another founder regarding hiring clones to challenge Jyoti's hiring methodology. Jyoti firmly rejects the premise, stressing the necessity of cognitive diversity across departments.6:44–9:12 · Guest teaching 2/10 Navigating the $3.7 Billion Cisco Acquisition vs. IPO Harry probes into the high-stakes pressure of Cisco's last-minute pre-IPO acquisition offer. Jyoti gives an insider look into rejecting initial buyout offers and balancing employee shareholder responsibility.9:12–11:32 · Guest teaching 4/10 Developing Internal Competitive Advantages and Market Sizing Jyoti explains how he pitted internal departments against each other to force each function to build standalone competitive advantages. He also instructs Harry on using bottom-up ROI calculations rather than top-down industry spending reports to judge market size.11:32–15:53 · Guest teaching 4/10 What VCs Look For and Maintaining Execution Standards Harry challenges Jyoti's uncompromising stance on execution quality by pitting it against Silicon Valley's move fast and break things ethos. Jyoti reframes the concept, explaining that speed applies to learning iterations while goal execution standards must remain world-class.15:53–18:07 · Guest teaching 2/10 The Mechanics Behind BIG Labs and Harness.io Harry asks lighthearted questions about why Jyoti returned to founding companies rather than staying retired. Jyoti explains the mechanics of Big Labs as an internal startup studio and incubator.2:32–6:44 · Guest disagreement 3/10 Immigration Challenges and the Creation of AppDynamics Harry introduces a counter-perspective from another founder regarding hiring clones to challenge Jyoti's hiring methodology. Jyoti firmly rejects the premise, stressing the necessity of cognitive diversity across departments.6:44–9:12 · Guest disagreement 1/10 Navigating the $3.7 Billion Cisco Acquisition vs. IPO Harry probes into the high-stakes pressure of Cisco's last-minute pre-IPO acquisition offer. Jyoti gives an insider look into rejecting initial buyout offers and balancing employee shareholder responsibility.9:12–11:32 · Guest disagreement 2/10 Developing Internal Competitive Advantages and Market Sizing Jyoti explains how he pitted internal departments against each other to force each function to build standalone competitive advantages. He also instructs Harry on using bottom-up ROI calculations rather than top-down industry spending reports to judge market size.11:32–15:53 · Guest disagreement 3/10 What VCs Look For and Maintaining Execution Standards Harry challenges Jyoti's uncompromising stance on execution quality by pitting it against Silicon Valley's move fast and break things ethos. Jyoti reframes the concept, explaining that speed applies to learning iterations while goal execution standards must remain world-class.15:53–18:07 · Guest disagreement 1/10 The Mechanics Behind BIG Labs and Harness.io Harry asks lighthearted questions about why Jyoti returned to founding companies rather than staying retired. Jyoti explains the mechanics of Big Labs as an internal startup studio and incubator.2:32–6:44 · Harry pushing back 3/10 Immigration Challenges and the Creation of AppDynamics Harry introduces a counter-perspective from another founder regarding hiring clones to challenge Jyoti's hiring methodology. Jyoti firmly rejects the premise, stressing the necessity of cognitive diversity across departments.6:44–9:12 · Harry pushing back 2/10 Navigating the $3.7 Billion Cisco Acquisition vs. IPO Harry probes into the high-stakes pressure of Cisco's last-minute pre-IPO acquisition offer. Jyoti gives an insider look into rejecting initial buyout offers and balancing employee shareholder responsibility.9:12–11:32 · Harry pushing back 1/10 Developing Internal Competitive Advantages and Market Sizing Jyoti explains how he pitted internal departments against each other to force each function to build standalone competitive advantages. He also instructs Harry on using bottom-up ROI calculations rather than top-down industry spending reports to judge market size.11:32–15:53 · Harry pushing back 3/10 What VCs Look For and Maintaining Execution Standards Harry challenges Jyoti's uncompromising stance on execution quality by pitting it against Silicon Valley's move fast and break things ethos. Jyoti reframes the concept, explaining that speed applies to learning iterations while goal execution standards must remain world-class.15:53–18:07 · Harry pushing back 1/10 The Mechanics Behind BIG Labs and Harness.io Harry asks lighthearted questions about why Jyoti returned to founding companies rather than staying retired. Jyoti explains the mechanics of Big Labs as an internal startup studio and incubator.

speaking balance: gold is Harry, purple is the guest (3 minute bins)

0:00 · Harry 95.4% · guest 4.6%0:00 · Harry 95.4% · guest 4.6%3:00 · Harry 31.5% · guest 68.5%3:00 · Harry 31.5% · guest 68.5%6:00 · Harry 8.8% · guest 91.2%6:00 · Harry 8.8% · guest 91.2%9:00 · Harry 23.3% · guest 76.7%9:00 · Harry 23.3% · guest 76.7%12:00 · Harry 13.6% · guest 86.4%12:00 · Harry 13.6% · guest 86.4%15:00 · Harry 16.1% · guest 83.9%15:00 · Harry 16.1% · guest 83.9%18:00 · Harry 44.6% · guest 55.4%18:00 · Harry 44.6% · guest 55.4%21:00 · Harry 100% · guest 0%21:00 · Harry 100% · guest 0%
Sharpest disagreement ▶ 6:00 Rejecting ideological hiring clones

When Harry presents another founder's strategy of hiring people who think identical to the founder, Jyoti explicitly rejects the premise, arguing strongly for cognitive diversity.

 Hardest push from Harry ▶ 13:21 Testing execution quality against speed

Harry directly confronts Jyoti's stance on execution quality, questioning whether refusing to compromise on quality contradicts the popular startup ethos of moving fast and breaking things.

 Biggest teaching moment ▶ 10:42 Educating on bottom-up TAM modeling

Jyoti corrects standard market analysis frameworks by explaining why top-down TAM figures are unreliable compared to bottom-up unit economics and ROI estimations.

 Harry holds his own ▶ 5:48 Framing counter-perspectives on team alignment

Harry demonstrates interviewing depth by introducing a directly opposing founder philosophy to pressure-test Jyoti's views on team composition and cognitive diversity.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Immigration Challenges and the Creation of AppDynamics 3333 Harry introduces a counter-perspective from another founder regarding hiring clones to challenge Jyoti's hiring methodology. Jyoti firmly rejects the premise, stressing the necessity of cognitive diversity across departments.
Navigating the $3.7 Billion Cisco Acquisition vs. IPO 2212 Harry probes into the high-stakes pressure of Cisco's last-minute pre-IPO acquisition offer. Jyoti gives an insider look into rejecting initial buyout offers and balancing employee shareholder responsibility.
Developing Internal Competitive Advantages and Market Sizing 2421 Jyoti explains how he pitted internal departments against each other to force each function to build standalone competitive advantages. He also instructs Harry on using bottom-up ROI calculations rather than top-down industry spending reports to judge market size.
What VCs Look For and Maintaining Execution Standards 3433 Harry challenges Jyoti's uncompromising stance on execution quality by pitting it against Silicon Valley's move fast and break things ethos. Jyoti reframes the concept, explaining that speed applies to learning iterations while goal execution standards must remain world-class.
The Mechanics Behind BIG Labs and Harness.io 1211 Harry asks lighthearted questions about why Jyoti returned to founding companies rather than staying retired. Jyoti explains the mechanics of Big Labs as an internal startup studio and incubator.

Statements from this episode (7)

Assertion Supported
Bansal: U.S. immigrant visa red tape delayed founding his first startup
“I had to wait to start a company, not just AppDynamics. I had some other ideas that I wanted to start a company on, but I was in the U S on a immigrant visa and it's really hard because of the red tape here for an immigrant entrepreneur to start a company.”
Jyoti Bansal Dec 8, 2017 ▶ 2:55
Assertion Supported
Bansal: AppDynamics did not run a dual-track sale process before Cisco acquisition
“Some companies have a parallel process. Like, you know, you're doing a process for an IPO and you're doing a process for a sale process. We are not doing that for us. It just happened that Cisco came in just a little bit before the IPO and they made an offer.”
Jyoti Bansal Dec 8, 2017 ▶ 7:13
Assertion Not publicly verifiable
Bansal: AppDynamics rejected two Cisco acquisition offers before accepting the third
“We looked at the offer and actually we decided to say no to the first offer. They came back with a second offer, which we said no to, and then they came back with a third offer, which at that point, it was the right thing to do for all shareholders involved, f…”
Jyoti Bansal Dec 8, 2017 ▶ 7:32
Insight
Bansal: Operating public is healthier than staying private past 1,000 employees
“In IPOs and being public companies, it does bring some kind of discipline and rigor that you need at a larger scale. Like once you start getting that scale of like, you know, a thousand plus employees, I do think operating as a public company is healthier than…”
Jyoti Bansal Dec 8, 2017 ▶ 8:57
Assertion Not checkable as stated
Bansal: AppDynamics told each department to operate as if others were failing
“At AppDynamics, you know, it was a bit controversial, but I, what I used to tell the teams was like, I would go to the product team. And I'll tell the product team that you've got to assume that our sales team is, is not going to, there will be times when they…”
Jyoti Bansal Dec 8, 2017 ▶ 9:39
Disclosure
Bansal: BIG Labs invested $5M in Harness's $20M Series A round
“So, like, the first company, Harness, that came out of Big Labs, We just announced a twenty million dollar series A round, and five million dollars of that was put by Big Labs in there.”
Jyoti Bansal Dec 8, 2017 ▶ 17:54
Insight
Bansal: Self-awareness is the top criterion when selecting venture capital partners
“I primarily look for VCs who are self-aware, who are aware of, like, in what they're good at, what they're not good at. That's my number one criteria.”
Jyoti Bansal Dec 8, 2017 ▶ 18:35
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