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Reflections on Acquia following investment by Vista Equity Partners

on Tue, 09/24/2019 - 20:48

Today Acquia, the company I co-founded in 2007 with Dries Buytaert announced that a majority investment in the company had been acquired by Vista Equity Partners. This is a dramatic next step for the company and team, and I could not be more pleased.

I have always wanted to build a cornerstone company: one that would last long-term, become substantial, and well serve its customers, employees, partners and investors for decades. Acquia has become that company, and I am very, very proud to have been part of that journey.

As the company prepares for the next stage of growth with Vista as partner, I hope you’ll find some value in my reflecting on the road to this point.

And there’s really just one message. You hear it all the time, but - team is everything.

Good founder relationships are more important than you imagine

Dries and I talked for many months before becoming co-founders, and doing so made sure that our founder relationship would serve the company well no matter what came along.

For example, Dries had never been a CTO before, and we needed to make sure the career would be the kind of work he wanted to do. We needed to be thoughtful about the relationship between the company and the Drupal community, and how the company could add value to it and grow the community, and (importantly) not damage it. What would we sell - since open source Drupal itself costs nothing to use? And, we mostly needed to make sure we both knew what kind of company we wanted to build, and what we would - and would not - do to get there.

Even though we weren’t building the*product*, we were building the *company*. We crossed the Atlantic (since he was in Belgium and I in Boston) to make certain we were well-aligned as entrepreneurs, shared the same vision & goals - for the company, for ourselves personally, and the Drupal community - and that we personally enjoyed working together.

I encourage founders to invest the time to make sure they want to, and can be well-aligned co-founders. In the time since I left the company to focus on helping other young founders, I’ve discovered this alignment is not guaranteed - maybe not even that common - and lack of it can be the reason a company blows up before it achieves success.

External capital partners also need to be aligned

We wanted to build a huge business with revenue measured in the hundreds of millions. This meant we were going to need substantial capital to apply all the resources required to reach this goal.

I incubated Acquia in the offices of North Bridge Venture Partners. This gave our sponsoring partner Michael Skok the opportunity to help me make sure that I was building something that was viable, fundable, about which he & his firm could be enthusiastic.

This was a good decision, though I do have a caution to other founders that might consider the same path. We founders are repeatedly told to “validate” our businesses. But remember that it is just as (more?) likely you might *invalidate* the beliefs / assumptions you had about your opportunity. Think about that for a moment. You could be discovering that you do not have a business opportunity; what does that mean to you and potential investors? Are you digging the grave for your business? I definitely recall some times at North Bridge where I was worried that I might be sending wrong signals to the team about whether Acquia was viable.

I was fortunate that my investing partners were willing to let me keep working on this until I figured this out. Dries & I were fortunate that we did in fact have a big opportunity, and that the investors believed in it - and us.

Then, when we raised our Series A, we had more investors interested than we had room for. Dries & I were very intentional in selecting investors we believed were aligned with us. John Mandile at Sigma Prime Ventures was immediately a guy who fit this mold. (And thanks to Roger Krakoff for helping us create our relationship with Sigma.) I have always felt that John had our founder interests in mind as we’ve gone through the steps required to build this company. We chose O’Reilly Alpha Tech Ventures for similar reasons of alignment, and declined investment from others.

So, think just as hard about whether your investors are aligned with you long-term. You’re going to be working with them for a decade or more.

Hire people better than you

There are two sub-elements to this: How to hire your team, and when/if to replace yourself as founding CEO.

Let’s start with the latter. As a founder you are expected to be an incredible entrepreneur. Your customers, team, and investors all look to you to identify a solid business opportunity, build amazing products, effectively sell to & service your customers, hire a great team, know your metrics / financials, maybe raise capital, and a litany of other responsibilities.

If you turn out to be good at this, it is super easy to keep doing it. It is super hard to know when you should not be the person doing it anymore. After the first $1M in revenue, every time a company grows by an order of magnitude the CEO and Board should be asking themselves “Do we still have the right CEO for this company at this time?"

One of the hardest moments for me at Acquia was to ask myself this question. I thrive on the high-stakes process of making early decisions on the product (I’m a former product manager), where to find early validation in sales, getting initial marketing messages correct in order to position us well, establishing culture when there is none, and more. This is all super important when you have under 50 people; but at some point I found myself working more on these details, and not enough on building the company at the “right” level.

Frankly, it’s better if you (founding CEO) answer that question than have your investors answer it for you; you’ll have more involvement & control over who will sit in that seat if YOU make that decision instead of them. Happily for me, Tom Erickson - my outside director after the Series A closing - was advising me on how to run the company, and it became blazingly clear that he was better at this level of operating than I was. Replacing myself was one of my hardest decisions at Acquia, but was also instrumental in how we’ve achieved what we have.

Next, how do you know who to hire - whether you are replacing yourself, or handling the regular growth of the team? I’m a big believer in the key principle of behavioral interviewing: The best predictor of whether someone will be successful in a role is their past behavior, not their past experience. People are too-often hired for what they know - and end up being fired for who they are. People who aren’t functioning in the manner required for a position can be big trouble. It’s hard to re-train how they think & function, because behaviors don’t change easily. When you have somebody who isn’t working out, it will take months to fix the problem. So, it is much better to improve your chances of hiring somebody who operates in the manner you want, and then teach them what they need to know in your domain.

This worked super-well at Acquia, and I can name dozens of people - from our first hires (Gabor & Kieran), to our first VP of Engineering (Chris), Tom E., and many many more - who were instrumental in making Acquia what it has become.

I want to point out one more team element: The Drupal community. Dries has recently written about how to keep open source communities healthy as commercial ecosystems evolve around them. But I just want to make a simple acknowledgement of how the Drupal "team" (community) deserves to be proud of the endorsement the investment in Acquia by Vista implies about the impressive success of the Drupal community, too.

Kudos to the team at Acquia for building a unicorn so-far, and good luck on using the resources Vista will provide in order to continue our original vision of building an incredible, long-term substantial technology company.