Steven Mitzenmacher, SVP of Corporate Development at Rackspace Technology, discusses the Buy-side thought process on Exit Strategy.
Sramana Mitra: Let’s start by introducing our audience to you. Talk a bit about your background in corporate development.
Steven Mitzenmacher: I’m celebrating over 20 years of experience in corporate development across the enterprise software, enterprise hardware, and consumer internet sectors. I’ve worked at companies like Business Objects, which was a leader in the business intelligence space and was acquired by SAP. I worked at Yahoo. I just wrapped up 10 years at a hardware company that went through an amazing transformation to becoming a cloud company – NetApp.
Then recently, I transitioned over to join Rackspace, which is such a unique company. They were the public cloud before the public cloud existed. They’ve gone through their own transformation having gone private and recently going public again. Now they’re a leader in hybrid, multi-cloud offerings. I’ve really seen the gamut from enterprise to consumer. I’ve gotten to work with countless entrepreneurs and startups. I’ve worked on well over 60 M&A transactions and corporate venture investments. On the buy side, I also do advisory work for startups and other accelerators.
Sramana Mitra: You probably are aware that we were also working with NetApp at one point with the NetApp accelerator. DataStax, that we have just announced a partnership with, was incubated inside Rackspace. Did you know that?
Steven Mitzenmacher: I do. I’ve seen the original documents. One of the first projects I had to do was to deal with market requirements of any investments that we made. It was after DataStax announced their latest funding round that we realized that no one had done that work for about 10 years. We had to dig through the old documents.
Sramana Mitra: I want to focus today’s session on helping our entrepreneurs understand exit strategy better. I wanted to provide a buy-side perspective on acquisition. Tell me first, how do you think about buy-side M&A?
Steven Mitzenmacher: We’re a unique function in organizations. When people ask me how I spend my days especially in companies that are not as serial an acquirer. It’s a unique function in that we’re the special forces group. We do ecosystem engagement. We spend a majority of our time deeply engaged with activities and scouting. We maintain the corporate market texture or landscape map around the areas of interest for us.
We track the technology investment trend. We are at the forefront of investor, advisor, and entrepreneur outreach for the company. Actual transaction execution can be a very small part. It’s sub-20% of day to day for us. Deals are a real force multiplier for an organization. We bring three distinct potential ways to augment a company’s strategy.
Having done this for 30 years, you get forced to come up with shortcuts and little catchphrases for what you do. I’d say there are three kinds of deal archetypes. The first is capacity. That’s your classic tech tuck-in or acquihire deal. Capacity deals are about enhancing your core. They’re a way to fulfill quick and dirty gaps in product offerings. You look for a set of characteristics to say that it’s 100% sellable and additive to what’s in place. It’s the same customers, same buying center, same selling motion, same business model. It’s a drop-and-go.