Our sale of Apptio to IBM for $4.6 billion marks the culmination of a four-plus year partnership that saw Apptio grow from a category-defining solution to a comprehensive IT spend management platform that now serves more than 60% of the Fortune 500. Vista Senior Managing Director and Head of Value Creation, Nadeem Syed, sits down with Apptio Co-Founder and CEO, Sunny Gupta, to discuss Apptio’s journey and lessons learned over more than two decades as an enterprise software entrepreneur.

NS: Apptio was recently acquired by IBM for $4.6 billion. Can you take us back to the beginning and the opportunity you saw when launching the company in 2007?

SG: Prior to Apptio, I co-founded IT process automation software provider iConclude, which was acquired by Opsware in 2007, and shortly after, Opsware was acquired by HP. During this time, I was having regular conversations with CIOs on the biggest pain points they faced in their day-to-day operations. The recurring theme was the complexities of IT spend management. How do you optimize the spend of a large, growing and ever-evolving technology stack?

This is where the Technology Business Management (TBM) concept developed – analytics-based software to help enterprises maximize the value of their technology investments. I founded three companies before Apptio. In my first venture, I validated my product with only one customer. In hindsight, that was a mistake. With Apptio, I had the “what keeps you up at night” conversation with more than 40 CIOs before we ever began coding. In my experience, success starts with the customer – gaining a deep understanding of their challenges, building technology to solve them and continually innovating that technology as their challenges evolve.

NS: Apptio joined the Vista portfolio in 2019 via take-private transaction. What was that experience like, making a successful IPO and then returning to the private markets?

SG: It’s every founder’s dream to take a company public. In our first few years as a startup, nothing was easy – raising capital, acquiring customers, recruiting talent – you name it. When we went through our IPO in 2016, it felt like the top of the mountain. But the challenges an entrepreneur faces never stop.

Our share value increased 46% on our first day of trading. Less than five months later, it was less than half of its peak. We stayed public for several years and decided that the best path forward was to return to the private markets to have the flexibility to accelerate growth while maintaining our commitment to innovation and solving customer challenges. We knew we needed a partner that shared our vision for building a comprehensive IT spend management platform on the foundation of a category-defining product, and had the resources, experience and expertise to help us get there. We couldn’t be happier that we chose Vista.

NS: What was the deciding factor to join Vista when you had various options when considering going private?

SG: If I had to point to one thing, it’s the partnership mindset that Vista applies to help founders and management teams realize their goals. Vista understood our vision to expand from a single product to a multi-functional platform for CIOs to manage IT budgets, turning IT from a cost center into a strategic function. And together, we devised a strategy to get there.

Strategic M&A was a key aspect of our broader growth strategy. It started with the acquisition of Cloudability in 2019. This provided increased exposure to the rapidly growing public cloud and hybrid market and enhanced our capabilities in those areas. We then acquired SaaSLicense in 2020, 7Park and TargetProcess in 2021 and Cloudwiry in 2022. Each acquisition played a calculated role in augmenting existing capabilities for today’s multi-cloud, hybrid world. We grew our TAM, opened new go-to-market channels and expanded platform offerings.

NS: Beyond M&A, how did you work with Vista to accelerate growth and innovation?

SG: From platform innovation to go-to-market, the mix of technical and operational support we had to enable our vision proved invaluable.

Vista’s product and technology team helped us advance our AI and hybrid cloud capabilities while opening and scaling new international Centers of Excellence (COEs). We implemented several go-to-market Vista Best Practices to reach new customer groups and improve gross retention via early renewal programs. We also worked together to streamline core business operations to support both the top and bottom line. As a result, total revenue grew at a healthy rate while EBITDA margins expanded significantly over the course of our partnership.

NS: Apptio is your fourth enterprise software company to be acquired by a financial or strategic buyer, what advice do you have for other entrepreneurs?

SG: First, it’s never easy – no matter how long you’ve been doing it or how successful you are. With Apptio – my fourth company – the trials and tribulations we’ve been through the past 16 years are too many to count. It requires almost blind faith and optimism in yourself, your team and your vision to create something truly special.

Second, and I touched on this before – it all goes back to the customer. You must be obsessed with solving customer challenges. I attribute much of Apptio’s success to the due diligence that was performed to understand a CIO’s challenges and create the TBM category, and customer learnings since that have shaped our product to platform transformation.

Last, you can’t fear failure. Leading a startup is a series of failures – one after the next until learnings from those failures shape your success.

There’s a lot more, and I don’t know if I’ll be writing a book on entrepreneurship anytime soon (laughs), but those are the takeaways from my journey over the past 23 years.

Endorsements presented herein are made by current or former employees of Vista portfolio companies, over which Vista may have the ability to exercise discretion on employee compensation, promotion and other employment decisions and may also be investors in Vista funds.