February 28, 2019

Good Companies Are Bought, Not Sold: the Story Behind the Largest Serbian Startup Acquisition

Serbian cloud computing startup Frame, recently joined forces with Nutanix, in the largest acquisition for a Serbian startup so far. Frame’s founder, Nikola Bozinovic, tells a story of his entrepreneurial journey that started back in 2006 and building a high-tech company from the ground up with a group of talented engineers and enthusiasts.

There is a good chance that you have heard of an American cloud company Nutanix. There is a little less chance that you’ve heard of Frame, a Serbian-American ‘’infrastructure-independent platform built to deliver Windows apps and workflows from the cloud’’.

If you haven’t heard of any, a brief is coming your way. Nutanix is one of the leading companies in the cloud computing industry. It was founded in 2009 and its estimated worth is nine billion dollars. As for Frame, the company is three years younger and its main focus is making desktop apps and software tools run in every browser.

Last summer, Nutanix acquired Frame for almost 200 million dollars, making it the largest strategic (and publicly known) acquisition of a Serbian startup.

According to the deal, Frame’s services will be available on Nutanix Xi Cloud and Google Cloud Platform, while continuing support for third-party clouds like AWS and Azure. This agreement also means that end users are about to encounter a new multi-cloud desktop-as-a-service platform.

Sunil Potti, Chief Product and Development Officer at Nutanix, said about the acquisition for Business Wire:

We are committed to providing our customers with a robust multi-cloud DaaS offering through Frame while working with our partners to enable best-in-class enterprise VDI. We are delighted to add the Frame technology, and the innovative thinkers behind it, to our family.

Sunil Potti, Chief Product and Development Officer at Nutanix

Nikola Božinović, the first man behind Frame, shared his view of the acquisition.

I learned from my lawyer and advisor that good companies are bought, not sold. Same goes for raising funds.

In this situation, you want to come up with good valuation and an exit that is not an acquihire—which means that someone has purchased 20 engineers, fired sales, and accounting, so that they can pick up people and no one has to commit to staying longer than a year. Of course, there are more possibilities for a company to bust up and end up broke.

To get to a few positive outcomes is very complicated. First, you have to have the conviction that the alternative to continue alone is real. If you do not have that conviction, you will never achieve anything. If someone wants to buy your company, their intention to buy it has to be stronger than your intention to sell it. It shows up in everything you do—how you talk, what you say, what kind of business moves you are pulling, how aggressively you continue to invest in your business. A loss of credibility in one millisecond is fatal for the transaction.

Nikola Božinović

In the beginning, there was MotionDSP

It took Nikola 20 years and two companies to get where he is now. Enrolling in the University of Boston led him from Niš, a Serbian town, to America. Once he was there, he took part in a class named Image and Video Processing. That was just the beginning.

After he finished his PhD, Nikola founded his first video processing firm, MotionDSP. Just like Frame’s, MotionDSP’s headquarters were in California, but the entire research and development team was located in Serbia. After leaving MotionDSP in 2012, Nikola once again started from scratch—he set Frame in motion. And from that day on, as far as Nikola is concerned, there are no plans of stepping back. Even now he has several responsibilities:

One of them is being the general manager of Frame Business. We run this as a startup, so CEO of Frame and GM of Frame within Nutanix is ​​the same thing. We didn’t change the reporting structure. We have our budget, we have our own PNL, we make our own decisions about employment and everything else. Nothing has changed. We have our targets for where our business should be this year, next year, etc. We have enormous freedom.

The other thing is what we will do with Belgrade and Serbia as the location for Nutanix. It will include many more things than just Frame itself, meaning other things Nutanix deals with.

The third thing is how I can help them from this leadership, executive position to form the strategy for the next five years of Nutanix, which again has little to do with Frame, with Belgrade and Serbia as a location. Instead, it has a lot to do with having one more executive in a team that can deal with strategy. I cannot imagine what would be more interesting for me at this moment.

Nikola Božinović

On a less personal scale, there is a plan to hire 1,000 people in Frame’s development center in Niš or at least be as influential as VMware is on Bulgaria’s IT scene. In the bigger picture, Nikola wants to change the domestic IT industry which he sees as mainly service oriented.

There is nothing wrong with that, but I think that for a longer-term development of Serbian IT, we should support companies that make their product and can grow to some extent where these products can be seen.

Nikola Božinović

Nikola also spoke about the acquisition and its impact.

This acquisition is great for Serbia and it is not irrelevant in the world, but it is not unbelievable. In terms of Serbia, I feel responsible to set standards for how things are done. I want to try to contribute to more such things, to make people realize that not everything is outsourcing and project economy.

I hope that this will be a step that will lead to the recognition of Serbia as a really important country and that we will be able to bring people from abroad here. Why shouldn’t some people from Prague, Berlin, and Amsterdam come to work for Nutanix from Belgrade?

Nikola Božinović

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