One of the questions we get most from entrepreneurs is how companies reach an exit event, and the thinking that goes into acquisitions. Last week, San Diego-based provider of web content classification and security services developer BrightCloud was acquired by Webroot, and we thought it would be a great opportunity to talk to founder Quinn Curtis about how the acquisition of his firm came about. Quinn is now VP of Hosted Security Services at Webroot (www.webroot.com).
Quinn, thanks for the time. How long was BrightCloud around for before being acquired?
Quinn Curtis: We were around since 2005, we were incorporated and funded in 2006.
What's the story behind the acquisition?
Quinn Curtis: We had recently signed Webroot as a licensee of our software, as an OEM partner. In the process of doing that, it became apparent that there were lots of synergies between the companies, and more opportunities to work more closely together. That led naturally to dialog around M&A, and we recently close the acquisition on the 6th of July.
Did you plan to be acquired, or how did that happen?
Quinn Curtis: We were not for sale, although to be fair, we had gotten more than a couple of offers to buy the firm. We'd passed on those others, because they didn't have the right mix. However, Webroot, recently brought on a new CEO, Dick Williams, who had articulated an aggressive vision for the company. Brightcloud fit into that vision very well. So, shortly after our licensing discussions in the early part of this year, we discovered that there were even more licensing deals we should be having, and became M&A discussions. Webroot is a good fit for BrightCloud, and our investors were happy, and our employees were happy.
How does your technology specifically fit into Webroot?
Quinn Curtis: BrightCloud provides hosted security services to our OEM partners, which is a business that Webroot not only intends to maintain, but also enhance using their additional resources. What that means, is we provide both content classification for web sites--which enables web filtering--but also website reputation management. We're also very much marching down the path of IP reputation as well. Webroot, as you probably know, not only has a desktop client, but also a software-as-a-service solution, and BrightCloud fits into both of those in lots of different ways. Our reputation produt and content classification technology is the best on the market. Because Webroot was looking to bring that technology in-house, and own their own IP, they were looking for the best-of-breed product, and BrightCloud fit that criteria on both fronts.
You'd mentioned you had some investors?
Quinn Curtis: We were self-funded from 2006 to 2008, and in 2008 we acquired a small botnet company in San Diego, which had a venture capitalist invested in it. Through that acquisition, we brought on a venture firm, Apax Venture Partners out of Chicago. Armando Pauker, who was at Apex, joined our board and contributed a great deal to BrightCloud.
How much thought went into exit strategy and setting up the firm for a sale?
Quinn Curtis: That's a great question. With any startup, that's always something you think about. But, we build the company for the long term. It was not our intent to exit, it was our intent to build a strong company, with a great group of people. We have been very careful about our spending, hired quality people, and built what we thought was the premier product in the industry. With the M&A and where we wound up, WebRoot was looking for quality in their product and the people, and an alignment of business needs, and BrightCloud was a great fit and made sense, from that perspective.
How big was the team in San Diego?
Quinn Curtis: We were about 7 people, although to be fair, we had 70 people worldwide. We also leverage lots of contractors and non-employees. It's a fairly broadly distributed staff.
Finally, what are you big plans now that you're part of Webroot?
Quinn Curtis: There's a ton of areas where we think we can add value, where we can roll out in Webroot products in the future. The immediate win is the quality that Webroot can now offer around protected web filtering and web browsing, which turns on immediately.