BladeLogic chief executive Dev Ittycheria got burned going public in the ’90s. The lessons he learned then are paying dividends the second time around.

The bursting of last decade’s dot-com bubble was a painful lesson for Dev Ittycheria, an India-born tech executive who helped run the second-largest ASP in the U.S., took it public and then watched it crash, with little more than uncollectible receivables to show for it. “When we went public, it seemed like we had reached the finish line,” Ittycheria, 40, says. In retrospect, he understands he was merely toeing the starting block.

This summer, Ittycheria received a second chance to run that race, and he took full advantage of it. BladeLogic, his Lexington, Massachusetts–based data-center automation software firm, went public on the Nasdaq July 25, surged 47 percent that day and has climbed slowly in the months since.

BladeLogic was an overnight success years in the making. In 2001, Ittycheria sold the senior management at Bessemer Venture Partners — where he was an entrepreneur-in-residence — on the idea of spending $6 million to buy a startup and develop a better product to sell to their customers. Then he helped the company raise an additional $23 million from Battery Ventures, Globespan Capital and MK Capital in three subsequent financing rounds, which fueled year-over-year growth of 105 percent. Yet software-development costs meant BladeLogic was still losing money.

Still, he was in a hot area, and pressure was building either to sell or go public. Bankers close to the situation say he refused a half-dozen offers to sell his company over the past five years, and some observers interpreted his refusals as blind entrepreneurial arrogance.

Ittycheria, though, was looking toward a successful IPO not as an exit, but as a growth strategy. “We were betting on ourselves,” he says. “The opportunity to go public seemed far greater than the gain realized from a sale.” Investment bankers were pounding on his door. Ittycheria, who got his start at Teleport Communications Group, claims he met with every top-tier banker who approached him, but only a few stood out. Credit Suisse’s Kevin Scheetz, now 37, began to woo Ittycheria in 2002, when a BladeLogic M&A deal seemed the likeliest course. Having landed at Merrill Lynch in April 2005, Scheetz was thrilled when he was called in for a bake-off. “We didn’t see anyone else who would be in a position to go public like BladeLogic,” he says.

At the end of January 2007, just one week after pitching, Merrill Lynch and Morgan Stanley were picked to lead the deal. But as the road show began, the ground started to shift. Hewlett-Packard acquired BladeLogic’s top competitor, Opsware, for $1.6 billion, for 15 times revenue. Nearby EMC, meanwhile, made an aggressive nine-digit offer to buy BladeLogic pre-IPO. “While this was not a dual-track process, we were prepared for all alternatives,” Scheetz says.

“Ittycheria drove the IPO process from start to finish,” says Merrill’s Paul Roche, the CEO’s longtime private wealth manager, who helped deliver Merrill the business. “He was able to navigate the intricacies of the process, from selecting bankers to writing large parts of the S-1, without losing focus on what had made the company successful to that point.”

Now that BladeLogic is public, trading at 13 times sales with an $800 million market cap, Ittycheria, who owns 4.5 percent of it, has a chance to validate his public-growth strategy.

Scorecard
Dev Ittycheria
Age: 40
City: Lexington, Massachusetts
Firm: BladeLogic
Position: Cofounder and CEO
Education: B.S. in electrical engineering from Rutgers, 1989
Career Arc: Started at Teleport Communications Group. He later cofounded Applica, one of the first venture-backed application-service providers, which was bought by Breakaway Solutions and taken public in 1999.
Really Big Deal: On July 25, 2007, BladeLogic went public at $17 a share. It was recently up 67 percent, giving the com-pany an $800 million market cap.

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