This founder launched AppDynamics in the 2008 recession and later sold it for $3.7 billion – now he raised $20 million for a new startup with a plan to win in this tough economy

  • Jyoti Bansal founded AppDynamics during the 2008 recession — and sold it a decade later for $3.7 billion.
  • He says the recession was good for AppDynamics, and give the startup focus during a tough economic period. 
  • Now Bansal is launching a new cybersecurity startup, Traceable, which searches applications' computer code for security issues.
  • Bansal says persisting while rivals fade, bringing a product quickly to market, and improving the product with customers' is a winning formula.  
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Jyoti Bansal founded AppDynamics during the economic downturn of 2008. He thrived in the hard times, and got an offer many would have jumped at in a recession – to sell the company for $350. He turned the acquisition offer down, and in 2017 sold the company to Cisco for $3.7 billion (on the eve of AppDynamics' pending IPO, no less). 

Now he's launching a new startup – once again in the middle of a pandemic-besieged economy – with strategy for success in hard times that worked wonders before. 

This week Bansal is launching Traceable, a cybersecurity startup that focuses on apps and the code they use to connect with computer systems via application programming interfaces (APIs). The startup came out of stealth mode Tuesday with a $20 million Series A funding round from Unusual Ventures and BIG Labs, Bansal's own startup incubator. Bansal is joined by Sanjay Nagaraj, a former AppDynamics vice president, as chief technical officer and co-founder.

Why would a wealthy tech success story want to launch another startup during a challenging time? Because he says a recession can be the best thing for a startup — a lesson he learned in 2008.    

"We were a small startup with ten employees, zero revenue, and zero paying customers when  Lehman Brothers collapsed," he says of the failure of the investment banking giant, thought by many to have set off the 2008-2009 recession. The venture capital market froze and some of our competitors started running out of cash and shut down."

But that economic downturn helped his startup, Bansal says. "I actually feel that the recession was a great thing to happen to AppDynamics. It shaped who we were as a company."

Bansal's formula for launching a company at a tough time is to persist as competitors fade during hard times, focus on bringing a simple and effective product to market quickly, and work with customers to make sure the company is effective. Startups in downturns need to be "product-focused, scrappy, super-competitive and customer-obsessed," he says. 

Keep the company focused on a few things

"The primary lesson I have learned is to keep the organization focused on a few key things that matter. We are going to bring the same focused approach here at Traceable, recession or not."

He says his new company uses artificial intelligence to study how computer code is supposed to work in apps and APIs, where they connect to other programs. When a hacker tries to break into a system, Traceable notes the disruption in the code and alerts the company, suggesting a solution. 

"If you're on an online banking website, you don't care about the bank's computer network. You  care about that application that you're using, and whether it's secure," Bansal says. "That depends on the computer code, and it's a huge problem." 

The new startup counts Google's former head of security, Gerhard Eschelbeck, as an advisor. "The broad use of APIs in cloud-native applications has greatly expanded" security vulnerabilities, Eschelbeck says, and "until now, there hasn't been a solution."

What if Traceable blows up the way AppDynamics did? Will he finally take it easy? 

"Hey, I tried to retire," he says of the 2017 sale of AppDynamics. "My wife and I had a list of all the places we wanted to go. For six months we traveled. I got tired of beaches and started itching for a new challenge."  

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