Ryan Smith had been planning for months to take his software company, Qualtrics, public. Four days before the IPO, he sold it instead. Inc. recently spoke with Smith about the uncertain period prior to the exit, why he changed course, and how the business arrived at its massive valuation.

You ran Qualtrics at a positive cash flow for 10 years without outside investment. What made you decide to start taking venture capital?

We got an offer to sell the company in 2012 for half a billion dollars. We turned it down. I think we wouldn't have raised a round if we hadn't had an outside offer, because it really showed the decision we had to make: Are we going to keep running this like a homegrown Utah company, or are we all in to build a multibillion-dollar company? And we just said, let's go.

What was your near-IPO experience like?

In 2018, I sat the whole company down and said, hey, our biggest bet yet is going public this year. We saw that we could do it right before Thanksgiving. Then, at the beginning of October, the stock market went to hell. I got multiple calls from banks asking, "How are you going out on a road show now?" Our thought was, look, we're not smart enough to time the markets. Either we're going to be a great public company long-term or we're not. We were the only company on the road at that time, because everyone else was kind of spooked.

Before the road show, you and SAP CEO Bill McDermott had been discussing a possible partnership. When did that idea turn into an acquisition?

Bill and I went to lunch and scribbled out a deal on a napkin. They had done a ton of homework. Then he said, "Don't go on the road show." I said, "No, I can't not go on the road show when all I have is a napkin. But I'll tell you what--I'll go Monday through Friday. We're going to ring the bell at the stock exchange the following Thursday. You've got seven days." They called me on the Sunday afternoon before the IPO and said, "We just had a board meeting and a vote, and we're going to be able to pull the trigger."

Your last valuation before the acquisition was $2.5 billion. How did you get to $8 billion?

We always wanted upside in there. For the IPO, we were going to price at $18 to $21 a share and then raise the price days later, as we were already oversubscribed. So we would have easily been in the $4 billion to $6 billion range and gone on from there. Some people thought we sold for too cheap, other people didn't. That's what you want, and we did what we felt was right.