Barry Crist

Few details were available last week when EMC purchased Likewise Software. Now, GeekWire has learned that EMC’s Isilon unit paid $36.6 million for the 7-year-old Bellevue company — a deal that Likewise CEO Barry Crist described as a “solid win” for employees and shareholders. As part of the deal, $3.5 million is being set aside in a bonus plan for employees. Another $3.5 million is being held in escrow as part of an “indemnification escrow fund” related to potential legal matters, some that could be associated with Quest Software Inc.

“It was a good cultural fit,” Crist said of EMC/Isilon. “But also a very good vision and roadmap of where the two teams wanted to go.”

Backed with $27 million from Ignition Partners, Trinity Ventures and others, Crist admitted that Likewise consumed too much capital in the first years as he stubbornly focused on a technology that helped Windows administrators easily manage Linux servers.

“That idea ended up not being as fruitful as we had hoped,” said Crist. “We spent too much time there and burned too much capital. In the end, we burned $12 million on the wrong idea.”

Likewise was gaining customers for its Linux server management product, but Crist said the deal size was just too small and each customer needed extra hand holding, making it hard to scale.

“I was too stubborn. We just kept putting our shoulder into it, and we were getting deceived by customer traction,” said Crist, adding that Likewise gained an OEM deal with both IBM and Novell. “We hung in there too long. We should have pulled the plug and pivoted earlier.”

Even so, Likewise was able to transform itself, winning business with customers such as Isilon and others. And by the time Isilon came calling, Crist said that the company was on the brink of winning a couple very large, long-term $10 million orders. In fact, Likewise’s revenue doubled into 2011 to $4.6 million, though it lost $4.1 million last year.

“It was a difficult call, and we had significant hand-wringing,” said Crist. “This was not a forced decision to sell.”

And while not a “grand slam home run,” Crist said that a 35 percent return over the past seven years is better than many have done in the stock market or in real estate. Furthermore, he’s delighted that the bulk of the 30 employees at Likewise will move over to Isilon’s new Pioneer Square offices, where a portion of the fifth floor has already been set aside for the team.

“Certainly investor return is a big part of it, but I couldn’t think of a brighter spot in technology, and certainly in Seattle, than Isilon. Those guys are completely kicking it over there,” said Crist, who also has joined EMC/Isilon.

And now Crist and his crew are starting to kick it with them. In fact, he said employees were thrilled a few days ago when Isilon sent a bus to Likewise’s Bellevue office to pick them up for an office tour.

“My joke was that it was like the first day of Kindergarten,” said Crist.

Comments

  • http://twitter.com/JPNicols JP Nicols

    Congratulations Barry and team! (You stubborn? I’m shocked….)

  • Guest

    It’s interesting how many local companies get snapped up by players other than MS. It’s like MS doesn’t spend enough time looking at what’s available in its own back yard.

  • http://profile.yahoo.com/UXEUUNXR5UFOTY3YAVCVH5673Q Eric

    The inside details on EMC’s $36M purchase of Likewise Software · Amazon adds DRM to ‘DRM-free’ Harry Potter eBooks

  • Curious

    This article has misleading statement about outcome “35 percent return over the past seven years “.
    How it could be if was invested 27 million while all shareholders got back 36.6 – 3.5 = 33.1 million. Investors would barely get their money back if some proceeds go to non-investors shareholders.

    • Tizzlefever

      agreed… I was just reading the article and did the math… don’t see how anyone gained any profit here… anyhow, best of luck to EMC. hopefully they aren’t investing in a venture that is similar to Likewise’s play in the AD bridge space…. where they unfortunately failed

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