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How to Manage A Successful Pivot: Bullhorn CEO Art Papas (Part 7)

Posted on Tuesday, Jun 16th 2015

Sramana Mitra: The IPO window will be fine even if the market corrects itself. Most of the problem with the market right now is with the late-stage venture capital as it pertains to private businesses. I don’t think there’s a lot of problem with the public market.

Art Papas: I’d like to be a little larger when we go public. I’d like to be over $100 million, which we will be next year. I’d also like to be in a position where I feel like my team is ready. I hired a CFO from a public company in Boston called Constant Contact. I hired a COO from Parametric Technology Corporation. I hired a Head of Services recently from Salesforce.com, which is our largest competitor. The CFO has the most work to do to get ready for an IPO. I think it’s in our future.

Sramana Mitra: Why did your venture investors want to sell to private equity? When companies are growing well, venture companies tend to not want to sell to private equities. What was the motivation?

Art Papas: The thing that crops up in these deals is venture investors try to focus on the long term, but they also have their own fund dynamics. When they’re trying to raise capital, it’s always nice to have a huge win to talk about. Vista Equity came at a time when it was serendipitous for both Highland and General Catalyst. They were both in fund raising mode. Bullhorn was a huge win that they were able to brag about. A lot of it is timing.

I think those guys are kicking themselves a little bit these days. They both got a great return. They have nothing to complain about. It was a right deal for them at the right time. We were also at a point where we wanted to do some M&A. That’s a different ball game than the traditional venture. We saw an opportunity with a few deals. Vista really had a lot of expertise with that.

Sramana Mitra: Did you end up acquiring companies?

Art Papas: Yes, we ended up acquiring four companies since we closed the deal.

Sramana Mitra: What kinds of companies were they?

Art Papas: Mostly, we acquired additional products that we could sell to our existing customers. We did three deals. In one of the deals, we wanted to acquire somebody who had a similar product to ours, but they had a fantastic team. We saw an opportunity to acquire that team and make them join forces with us.

Sramana Mitra: That’s aqui-hiring kind of opportunity.

Art Papas: Yes, but it was a big customer base and a successful product. They were about 45 people. It was more than an aqui-hire. Ultimately, it was about acquiring their engineering and customer service teams.

Sramana Mitra: Have you kept their product?

Art Papas: We kept their product. We stopped selling it but we still support it. That team has become an integral part of our operations. Now, there are about 80 people in that location.

Sramana Mitra: They’re not in the Boston area?

Art Papas: No, they’re in St. Louis. There’s a lot of technical talent in the St. Louis area. We love recruiting in that town. It’s just great.

Sramana Mitra: That’s interesting because in major tech hubs like Silicon Valley, Boston, and Seattle, the competition for talent is high. If you can go to a second or third-tier place, that creates a much stable work force.

Art Papas: It’s had an interesting effect. There’s just a different culture in St. Louis than there is in Boston. We co-mingle the team. The St. Louis folks will always work on a development team with the Boston folks. They always have to collaborate remotely. It’s been an interesting experiment for us that’s worked out quite well.

Sramana Mitra: Terrific. Thank you for your time.

This segment is part 7 in the series : How to Manage A Successful Pivot: Bullhorn CEO Art Papas
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