MuleSoft's Ross Mason started out as a frustrated IT guy — today, he's worth over $167 million

 

MuleSoft, the first enterprise tech IPO of 2017, is a big hit so far on Day 1, with the stock price popping about 50% over its $17 opening price, to about $25.50 a share, in its first few hours of trading on Friday.

At $17 a share, MuleSoft raised $221 million at a $2.9 billion market cap, well above its $1.5 billion valuation as of its last round of private funding, in May 2015.

The company is a classic Silicon Valley tale of the hard work and success of its founder, Ross Mason.

Mason, who turned over the CEO role a few years ago but stayed on as vice president of product strategy, remains the largest individual shareholder.

At $25 a share, his 6.7 million shares, a stake of slightly more than 5%, are worth $167.5 million.

MuleSoft lets apps talk to one another and share data — a technology known as application programming interfaces — and offers these APIs as a cloud service.

It all began in 2006, when Mason was living on the island of Malta in the Mediterranean Sea and working as a corporate IT developer "complaining to my wife every night how stupid everything was."

"One day she said, 'Stop moaning. Start doing something,'" Mason told Business Insider in 2013.

Every time Mason wanted one app to share some data with another app, he had to move mountains to do it. There were similar software tools out there like Tibco and Informatica, but they were pricey. By Mason's reckoning, enterprises were spending $500 billion a year on custom APIs, each one reinventing the wheel.

So he spent three years of his free time on his couch in Malta building an open-source tool called Mule, which he said took the "donkey work" out of working with APIs, hence the name.

A volcano changes everything

At first, Mason was running his company and practically commuting from Malta to the Bay Area, taking more than 30 trips in about four years, he told us. He was giving talks about Mule to developers, as well as selling a commercial version to customers. All of his employees worked from their homes.

REUTERS/Armann Hoskuldsson

In 2010, he was on a plane flying to Europe when the pilot ominously said the plane would make an emergency landing back in San Francisco.

"I immediately thought a terrorist attack and 1,000 other things," he told us at the time. He said he worried afterward that if he didn't change his lifestyle, he would die in a plane crash and never see his family again.

The problem that day wasn't terrorists. The Icelandic volcano Eyjafjallajökull had erupted and covered part of Europe in ash.

But he was stranded in San Francisco for weeks. That's when Mason decided to move his family and company there.

Things took off for MuleSoft from there. By 2013, he employed about 200 people, and 150,000 developers were using Mule at over 3,000 companies. (It remains a popular open-source project today.)

Mason and his team went on to launch the tech as a paid cloud service known as AnyPoint. By December 2016, AnyPoint had over 1,000 customers.

MuleSoft generated $187.7 million revenue in 2016, up from $110.3 million in 2015, and employed 841 people. It was cash flow positive — it had gross profit of $138.7 million before items like research and development, sales and marketing, and general and administrative expenses, with a net loss of $49.6 million.

The disrupter

Twitter/MuleSoft

By the end of 2015, Mason's two biggest traditional competitors, Informatica and Tibco, had both left the public markets, selling themselves to private-equity firms in leveraged buyouts. While it's probably a stretch to say MuleSoft was solely responsible for that, the startup did a happy dance anyway.

In 2015, MuleSoft did another big raise. Its total venture-capital investment came in at $128 million at a $1.5 billion valuation, including investments from the VC arms of Salesforce, Cisco, SAP, and ServiceNow.

Mason had sold off most of his company by then, and he had cashed out of about $3 million in equity in 2013, before anyone had heard the term "unicorn startup." He has done a bit of angel investing since then, too.

Mason told us in 2014 that selling off so much to raise money was a measured gamble.

"The goal is to build a really big business so even though the stake gets smaller, even down to single digits, it's worth more as the company grows," he said.

On Friday, Mason's gamble clearly paid off — from a couch in Malta a decade ago to a multibillion-dollar company and $167 million worth of stock in an IPO.

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