The "Real Valuation" Is About Having Fun
Ronen Shilo founded software company Conduit in 2005. Since then, the company has grown to 407 employees. It reached a $1 billion valuation in May, 2012. As part of our series on entrepreneurs whose companies are worth $1 billion, Inc staff writer Jeremy Quittner spoke with Shilo about his billion-dollar valuation, the social worth of a company, and doing the laundry.
When I founded Conduit, I did it with my own money. I wanted to hold control of the company, the shareholders, and hold the majority on the board. It is a good situation to be in. That way we can only blame ourselves for mistakes, and can never say it’s the venture capitalists who pushed us in the wrong direction.
An Israeli venture capital firm called Yozma gave us a bridge loan in the beginning. They had 10% of the company and they sold it to JPMorgan in May. And we did take venture capital money after the company was profitable.
By this spring, we knew we were going to be valued at about $1 billion, because I was having ongoing conversations with all kinds of investors.
The valuation did not really shock any of us. It is nice to have the official approval that comes with it, and it feels good, but nothing dramatic has changed in our life.
I don’t think there is an obligation or a responsibility to serve the expectations of the investors. We have a very good relationship with them, and they are all aware of the challenges we face. Everybody is free to do what they like. It is a known fact that venture capitalists have specific models. They like to see companies go public. We say we don’t feel the time is right and we won't push the company to go public, but we never say never. And we have no intention of selling the company.
As the company grows, the culture shifts and you can't maintain a start-up state. It's not that the valuation changes things. It's more the goals you set for yourself, and the fact that you have more people and more products and more customers.
We've tried to maintain the DNA that we have developed, and we have a division that is oriented to start-ups. But we also now have some things, like the finance and the legal departments, that are in charge of keeping the company safe. Those departments have more to do now.
Also, there are all kinds of ways to value companies. The valuation based on pure dollars is done by very specific people with a very specific way of looking at things. If you ask people who value other parameters in life, like tradition or influence on people, the valuation would be different. I have no doubt that New York Times, [which is also valued at about $1 billion] is valued more than Conduit when you include these other parameters.
For example, there's familiarity of the brand. How many people know what the New York Times is, compared to Conduit? The financial valuation of the company is a curiosity, but it does not really matter. What matters is how people relate to the company and the people who work in the company, and the level of influence. As an Israeli company, we influence the society we are part of, and we work with the community. It is not just the immediate benefits you generate for the shareholders.
I guess the billion-dollar valuation did change my life, because my picture is in the paper. But personally we did not change. I have a family and I have kids, but we did not change our lifestyle. We are still living in the same place and community, with the same people, and I still do the laundry myself. Other than that, I think it is very important to be happy with what you do, and to keep a good relationship among the founders and among the employees. And at the end of the day, you need to have fun. That's the real valuation.