News & Views

 

Apptio and TBM’s Next Journey
AUTHOR: Matt McIlwain

The journey from Day One to building a successful customer base, company and market category is exhilarating! As company building partners, we are honored to work with great entrepreneurial teams every day. One of the most special companies and groups of people we have ever worked with is Apptio. Today is a major moment in Apptio’s 11-year company life and is the beginning of the next phase of their journey.

Apptio’s five founders, led by CEO Sunny Gupta, started the company in the fall of 2007. Their passion was to help Information Technology (IT) and finance organizations at large enterprises better manage the business of IT. As virtualization, and later cloud computing, were increasingly adopted in big companies, the technology business leaders didn’t have adequate management tools. Apptio started by categorizing and connecting the IT data around hardware, software and services costs with the finance and accounting cost systems. Over time this costing service was combined with SAAS-based planning, decisioning and agile learning systems. And, Apptio became the underlying system of record for enterprise CIOs. Within a few years, they were servicing several of the largest customers in the world and pioneered the category of Technology Business Management (TBM).

Sunny Gupta and I first met in 2001. From that first meeting, we both somehow knew that we were going to work together for many years to come.

He was and is one of those rare innovators who combines customer-centricity, product passion and genuine humility in an authentic way. And, he inspires teams to achieve their full potential.

We first worked together at Performant which was my first VC investment. In the spring of 2003 Performant was acquired.  In early 2005, Sunny, Jeff Gerber and I partnered to found and seed iConclude to automate IT “runbooks”. During those next few years, we added a great CFO in Kurt Shintaffer and outstanding co-investors Tom Bogan (then at Greylock) and Ravi Mohan from Shasta Ventures. iConclude was then acquired by Opsware.

While at Opsware, Sunny got increasing exposure to enterprise CIOs and the finance people who were helping understand and allocate the IT costs to different business units and teams. When Opsware was bought by HP in summer 2007, Sunny knew that a bigger opportunity was on the horizon to build a systematic way to align IT business units and finance. So, in the fall of 2007, we “brought the band back together” and started Apptio.

Apptio’s 11-year journey to date has, like every start up, included great mountaintop moments and a few low points. The highlights included early customer wins at companies like Cisco, Goldman Sachs and First American. Equally important were incredible executive hires including Larry Blasko, Chris Pick and Dione Hedgpeth. And, the company helped create and build a movement around cost transparency and data-driven decision making known as Technology Business Management. These successes were balanced with an early over-reliance on platform technology over finished SAAS apps and the occasional executive hire who proved not to be the best fit. But, by almost any measure, Apptio is an amazing success story.

On the financing front, Apptio raised several private rounds of private capital – each at a higher valuation. Then, in September 2016, the company went public at $16 per share and opened the first trading day at almost $24 per share. I will always cherish the celebration in New York City with the Apptio founders, team members customers and board!

Apptio missed Wall Street’s earnings expectations their second quarter as a public company causing some investors to lose faith and the stock to drop to under $12. But, Sunny and the Apptio team showed their resilience by clarifying priorities, building use-case specific applications and improving operational execution. In time, the business regained growth and momentum and the stock rallied back above the IPO price.

Throughout the Apptio journey, strategic and financial partners have had a strong desire to work with and invest in the company. Apptio’s strategic perspective on the enterprise journey to hybrid cloud and breadth of CIO relationships may be unmatched. Today, the company announced that it has entered into an agreement to be acquired by Vista Equity at a $38 share price or total equity value of approximately $1.94 billion.

Vista has a strong track record of investing in quality SAAS software companies like Marketo and Cvent and building even more value in those businesses.  When the acquisition closes, Sunny and the Apptio team will partner with Vista so they can best help enterprise customers fully embrace their cloud computing applications over the long-term. And, I am highly confident they will be aligned with their new investor partners to do just that!

For myself and Madrona, it is a day of mixed emotions. When the acquisition is finalized, we will no longer have a direct role with Apptio. I will greatly miss our spirited strategy discussions, the problem solving on hard challenges and the celebrations of successes. Which really means, I will miss the more frequent interactions with Apptio’s amazing board, executives and broader team. I can’t wait to see all the great things Apptio does under Sunny’s leadership in the years ahead.

Finally, I have no doubt that the Apptio team will be lifelong friends. Whether we are helping to build other companies together, making a positive difference in our community or cheering on our beloved Seahawks, we will be serving the Seattle innovation ecosystem for many years to come. And, in my heart, I will always be an Apptian!

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Apptio, Inc. (“Apptio”) and Bellevue Parent, LLC (“Bellevue”).  In connection with the proposed transaction, Apptio intends to file and furnish relevant materials with the Securities and Exchange Commission (the “SEC”), including a proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, Apptio will mail the definitive proxy statement and a proxy card to each stockholder of Apptio entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement or any other document that Apptio may file with the SEC or send to its stockholders in connection with the proposed transaction. The proxy statement described above will contain important information about the proposed merger and related matters. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF Apptio ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT Apptio WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT Apptio AND THE PROPOSED TRANSACTION. The definitive proxy statement and other relevant materials in connection with the proposed transaction (when they become available), and any other documents filed by Apptio with the SEC, may be obtained free of charge at the SEC’s website (http://www.sec.gov) or at Apptio’s website (http://www.apptio.com) or by contacting Apptio’s Investor Relations at ir(Replace this parenthesis with the @ sign)apptio.com.

Participants in the Solicitation

 Apptio and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Apptio’s stockholders with respect to the proposed transaction. Information about Apptio’s directors and executive officers and their ownership of Apptio’s common stock is set forth in Apptio’s proxy statement on Schedule 14A filed with the SEC on April 19, 2018, and Apptio’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 21, 2018. Additional information regarding the potential participants, and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the proposed transaction.

Notice Regarding Forward-Looking Statements

 This communication, and any documents to which Apptio refers you in this communication, contains not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Apptio’s current expectations or beliefs concerning future events, including but not limited to the expected completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, management plans and other information relating to the proposed transaction, strategies and objectives of Apptio for future operations and other information relating to the proposed transaction. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “intends,” “forecasts,” “should,” “estimates,” “contemplate,” “future,” “goal,” “potential,” “predict,” “project,” “projection,” “target,” “seek,” “may,” “will,” “could,” “should,” “would,” “assuming,” and similar expressions are intended to identify forward-looking statements. You should read any such forward-looking statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and assumptions include, (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect Apptio’s business and the price of the common stock of Apptio, (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the stockholders of Apptio and the receipt of certain regulatory approvals, (iii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement, (iv) the effect of the announcement or pendency of the proposed transaction on Apptio’s business relationships, operating results and business generally, (v) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction, (vi) risks related to diverting management’s attention from Apptio’s ongoing business operations, (vii) the outcome of any legal proceedings that may be instituted against us related to the merger agreement or the proposed transaction, (viii) unexpected costs, charges or expenses resulting from the proposed transaction, and (ix) other risks described in Apptio’s filings with the SEC, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.  Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, Apptio does not assume any obligation to update any such forward-looking statements whether as the result of new developments or otherwise.