This is definitely one of the most emotional post I have written in a long time! Yesterday, SolarWinds (NYSE: SWI) announced that it will acquire Samanage for $350M in cash. The deal is expected to close in the next 30 days.

It has been one of the most exciting 6.5 years working with Samanage Founder & CEO Doron Gordon and the super committed management team we have built, including Steve, Nir, Itay, Ryan, Karen and of course the always energetic Darroll.

I tend to “fall in love” with the companies I invest in during the first meeting. Those who are familiar with my way of thinking know how much emphasis I place on not just having a great product, but also on being able to market, sell and support – or in short, generating tens or hundreds of millions of dollars in revenue. I didn’t know anything about the IT service management (ITSM) market in that first meeting – I only knew that it is large enough and that Doron and the team will be able to deliver on its promise.

If you ask Doron, he will tell you that “executing” needs to be a two-way street. I believe that our ability to issue a term-sheet, complete the due diligence and have the money in the bank within just a few weeks has set the ground rules of our relationship, which goes a little something like this:

1) He needs to execute, and we need to have his back.

2) If we disagree, we don’t hold it back – we always know where we stand. There are no surprises on either side.

3) We always find time to focus on the long-term vision, i.e. “where is the ship sailing?”

4) We are humans. We both have bad days, and we both have families, but there is nothing a glass of Scotch can’t solve! (Works in any relationship)…

We had our share of bad times: We missed the mark in some quarters, we needed to bridge the company internally, we had a hard time finding the right executives, etc. Doron is an opinionated guy and so am I, so the principles above have always guided us. I am going to miss our conversations immensely and will cherish our friendship forever.

On a more professional note, it may be too early to summarize, but I would like to share some of the immediate conclusions I have drawn from this journey:

Some of the things we did differently that eventually contributed to the success of the company:

1) We are passionate about our product.
The world is progressing fast. The competitive environment today is nothing like it was 6.5 years ago when we made the investment, so it was always important not to lose the passion for having an innovative, sexy product. Our tagline for many years was “a service desk that people love”, and it’s that emotional attachment to the product that we tried to instill in our customers.

2) We built a finance infrastructure early on.
Running a SaaS company requires finance, IT and data infrastructure from Day One. No customer is big enough to make a strategic change, it’s all about understanding the data, getting insights early on, being systematic in our analysis and being true to ourselves. Hiring a strong finance and data team early on (thank you Itay!) is one of the top best-practices we recommend to any company with high ambitions.

3) “Land and expand” is a great business model when it works at scale.
We won customers with an IT service desk use case and invested in making them successful early on, and as a result, they quickly expanded the use of our platform. When you pair a great product with focus on the customer’s experience – you get significant positive net churn that fuels growth.

4) We set the HQ not in California.
How we got into having the HQ in Cary, North Carolina is a subject for a different post, but eventually it was a blessing. Located in the heart of the Research Triangle with three main universities and large campuses of tech companies (RedHat, Cisco, LogMeIn and Citrix, for example) allowed us to recruit both experienced and emerging talent quickly and offer them a great working environment, which allowed us to enjoy low attrition and to win “the best place to work in North Carolina” for 5 years in a row. It wasn’t always easy to convince investors to invest there, but in retrospect, the advantages were certainly worth the pain. Being in Cary was “fundraising hell, but an operational heaven”.

5) We raised money at reasonable valuations.
Hyped-up companies are very common these days. As very early investors, our interests were aligned with those of the founder and management from the beginning, but I believe we had the wisdom to raise money at reasonable valuations, so it was easy for the new investors to see how they can make money. It has to be a win-win situation for everybody, including the new guys.

Struggles we faced along the way

1) Marketing is tough. Very tough.
Demand generation is becoming increasingly complex. As competitors increasingly strive to implement best practices (optimized SEO, inbound and outbound campaigns, implementation of marketing tools etc.) it is getting harder to stand out, keep marketing costs at a reasonable level, and find good people including a marketing leader that can be both analytical and creative.

2) The only way to advance in up market, is to never go down market.
We started as a mid-market company, and as we grew, we experimented going both up market (enterprise) and down market (self-serve small businesses). Changing the go-to-market is always risky but going down market is almost impossible in my mind, and Samanage was no different.

3) Scaling can be a challenge.
There were times when we just couldn’t hire more than two engineers per quarter, even though the budget allowed for 10. We all talk about this in Israel, but seeing how tough it really is makes you wonder about the real ability to scale. Nir and the engineering team have done a fantastic job in training junior developers and creating a real versatile technical workforce. I wish we had done it way earlier.

As for now, I am going to enjoy a glass of wine (Doron is buying…).

Ronen with Samanage's management team

Proud to recognize a good catch when I see one:
Me (in the green T-shirt) with Samanage’s management team.