46-year-old sold a business for $3.7 billion—and immediately regretted it: That was my ‘saddest day'

This story is part of CNBC Make It's The Moment series, where highly successful people reveal the critical moment that changed the trajectory of their lives and careers, discussing what drove them to make the leap into the unknown.

Jyoti Bansal got to live out a scenario that most people can only dream about: He built his own startup, got an acquisition offer he couldn't refuse and sold it for billions.

Today, it's among his biggest regrets.

Bansal, 46, is the founder of software developer AppDynamics, which was preparing to go public in 2017 when tech giant Cisco swooped in at the last minute, offering to buy the company for $3.7 billion. The deal made hundreds of the startup's employees, Bansal included, instantly wealthy. But what should have been a joyous moment became Bansal's "saddest day," he tells CNBC Make It.

Bansal had long dreamed of becoming an entrepreneur, and worked as a Silicon Valley software engineer for eight years until he got a Green Card — he was born in India — and launched his own startup. He built AppDynamics around the biggest problems he faced as an engineer, creating tools for troubleshooting outages and other software applications flaws.

"When I started [AppDynamics], I didn't think about a financial outcome," he says. "I just thought in terms of: This problem needs to be solved."

AppDynamics developed a reputation for helping big companies fix their wonky apps. But after selling it to Cisco, Bansal realized that he hadn't finished the job at AppDynamics — which could've become a "much bigger" company, he says — and he was aimless without a big problem to focus on.

After six months of traveling the world, Bansal launched a San Francisco-based startup called Harness, which also makes tools for software developers. It was most recently valued at $3.7 billion in 2022, according to the company, the same amount AppDynamics sold for.

Here, Bansal discusses how he made the difficult decision to sell AppDynamics, his near-immediate regrets and why he'd almost certainly turn down a similar offer for his startup today.

CNBC Make It: It's January 2017. You've just sold AppDynamics for $3.7 billion. How are you feeling in that triumphant moment?

Bansal: We announced the sale, and then we had a huge party at our office in San Francisco. Folks from Cisco were there. It was a very happy celebration.

But walking home after, I was sad and depressed. I spent nine years of my life fully dedicated to what we were building there. Suddenly, it's the end of a chapter.

That's the bittersweet part of selling your company. It's a great outcome in a lot of ways, but it's the end of a chapter, or end of a book, in many ways too. I was kind of lost.

What was your initial reaction to Cisco's last-minute offer?

It was definitely a surprise. We were about to go public, and we weren't stopping our IPO. [The AppDynamics board had] six days to figure out how we were going to go on this.

People think: "Oh, that must have been the easiest decision to make." But it was the hardest decision. For three days, I got maybe three hours of sleep [per night]. We were getting on calls and figuring out what to do, getting all of the point of views.

I was chairman of the board and the biggest shareholder, so I had to drive a lot of those conversations.

What were the biggest factors you considered?

Is it really possible in that timeframe? Is it the right thing to do? What's the joint story of the two products and the two companies? Does [the acquisition] allow us to continue the vision of what we set out to do?

We could be part of a bigger platform, like Cisco, and their customer base and market. That's one factor. The second is culture, what kind of home your employees get. Cisco, to their credit, did an excellent job giving a high degree of independence to the AppDynamics unit, I'd say.

The third factor is financial. Is it the right thing for the stockholders — founders, investors and employees? As the only founder, I was fortunate enough [that] any outcome financially would be fine for me. [But] we had about 300 or so employees who made more than a million dollars in the final offer we accepted. We had dozens of employees with $5 million-plus outcomes.

That's life-changing, so it all became risk versus reward.

You seemed to believe you made the right decision on paper. So, why feel sad or lost? 

When I started AppDynamics, if someone said, "Your company could be worth $100 million," I would have said, "Oh, that's mind-blowing success."

[After the sale] I realized that I really enjoyed building the company, creating products, solving problems, competing in the market, every element of company building that I'd gone through. It was intense and stressful, but I really enjoyed it. I also felt like we didn't fully finish what we could've done.

Everyone told me, "You should retire. Go on the beach. What else do you need to do?" That was my first instinct, as well. I wanted to trek in the Himalayas, hike Machu Picchu, do a safari in Africa, see the fjords in Norway.

In six months, my bucket list was done. And I started to realize: That's not it for me.

You're currently weighing a potential IPO for Harness. Hypothetically, what would you do if you got a great last-minute offer to sell it?

We'd have to entertain the offer, but I know the answer is most likely no. 

[At AppDynamics] it felt like we were closer to the finish line. At Harness, we want to get to billions of dollars of revenue. We're expanding into new markets, new products, solving more problems, and we create the organizational culture that does that. That's what I want to do, as long as we can.

It feels like our journey is just starting, so it doesn't make sense to sell to someone else. That's a big part of what would drive a decision. We have so much [room] to grow from here.

So, the answer is no — unless something crazy happens.

This interview has been edited and condensed for clarity.

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