Sramana: How did the venture capitalist find you?
Ash Ashutosh: I don’t know. He was out of Dallas so I am sure he heard about us somewhere. We were doing very well. The company had zero external financing. There were four co-founders who owned 100% of the company. When we got acquired we realized that investing was a good option and some of us started investing in other companies for a short while.
Sramana: Did you take money from that VC?
Ash Ashutosh: No, we had bootstrapped the company and we did that the entire way through. We never took any investors money anywhere. All of the acquisition proceeds came to us. When we sold the company I wound up with more money than I ever thought I would have in my life. It was significantly more than I ever expected. Some of the founders went on to become VCs. I was able to do whatever I wanted.
Sramana: When you sold the company were you still based in Colorado?
Ash Ashutosh: Yes. During this process I came to a very interesting realization. This business we had created would have been worth ten times more if we had built it on the west or east coast. After we got acquired there were a lot of conversations about how we were able to build our business in Colorado. That is when I found out that location matters. The ecosystem matters.
I had the opportunity to go work with a neighbor of mine who cofounded another company with its headquarters in Boston. In the year and a half as the company was going public I moved to Boston to lead the technology portion of that company. We took the company public and the rule was I had to move to one of those coasts because the environment in Colorado was not robust enough for it.
Sramana: At that point had you committed to becoming a serial entrepreneur?
Ash Ashutosh: No doubt. It was like when I had my first foray into stocks in grad school. I bought AT&T and it went up. You start to feel like all you have to do is buy stocks and watch them go up. When you first start up a business and get a massive return you just feel like you have to do another startup.
More than anything it opened up the opportunity to do what I really loved doing and that is creating stuff. I love solving problems. That opened up a second opportunity in 2000 when I started doing a lot of angel investments. Then in 2001 I started a company called AppIQ and within a three and a half year period we became the market leader for storage resource management. We owned 80% of the market and by the end of the fourth year we were acquired by HP after a decent bidding war.
In that company we had professional investors and I learned my lesson. I had gone through three phases. My first company was all bootstrapped because I did not know investors existed. In the next company I was the angel investor and my co-founder was the VC, which was during 1998. That company was acquired by Sun within 8 months of starting. I guess that was technically my second company but I don’t count it because it happened so fast. The third company was AppIQ and I took investor money.