Brad Feld

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Sun Acquires Another Colorado Anchor Tenant

Jun 02, 2005
Category Technology

Yesterday I posted a chart showing the large cap tech buyers over the past two years.  Sun was on the list – but near the bottom (three deals).  This morning, I woke up to the news that Sun has increased its number of deals to four through their acquisition of StorageTek.  

I haven’t decided whether this is a good deal for Sun (I’m sure plenty of pundits will weigh in on this over the next 24 hours).  I do know that Sun has to either acquire or be acquired to maintain long term relevance, so from that perspective it’s a smart move.

I’m actually more intrigued by the implications for Colorado.  StorageTek has been one of the anchor tenant’s in the Colorado technology scene.  When PeopleSoft bought JD Edwards, many people bemoaned the idea that the largest independent software company in Colorado was no longer “independent” (of course, Oracle then bought PeopleSoft, making the entire conversation even more entertaining.)  Today, another anchor tenant is no longer independent.

Colorado tech companies have a long history of being acquired.  In the past 12 months, I’ve had two of my local companies acquired by out of state large cap buyers (ServiceMagic by IAC; Finali by Convergys).  BEA, Rational (now IBM), Doubleclick, and Mercury have also been visible buyers of Colorado-based software companies.  In some cases such as BEA and Doubleclick, the company has created a large footprint in the Boulder area as a result of their acquisitions.  In others, such as Rational, there’s not much left.

A while ago Sun built out a big presence in Colorado (ironically just across “the street” (actually the highway – US 36) from StorageTek) around a chunk of their services, training, and software business.  Sun obviously just increased their commitment to the Boulder area through this acquisition.

I think this is good for the local Colorado tech scene.  The entire technology business is undergoing a widely publicized (and very trendy) industry consolidation that appears to be accelerating among the larger cap players.  Colorado’s long term relevance in the technology industry is increased by its participation in this trend (better to be a player than to be on the sidelines.)  While there will be natural attrition and “rightsizing” (or whatever euphemism you want to use) at the acquired companies (e.g. StorageTek), the talented folks will quickly end up in new roles at younger emerging companies, helping with the chronic talent shortage – especially on the engineering side – that we have in this region.

Underlying all of this is an incredibly renewed sense of excitement around core innovation in the computer industry.  Some of this may be the contrast to the darkness we went through in 2001 and 2002, but there’s a level of excitement and accomplishment in many of the companies I’m involved in locally that’s refreshing.  While I’ll always have companies that struggle and/or fail (if I succeed 10 out of 10 times with my investments, I’d both be a mutant and wouldn’t be in the venture capital business), the fact that exits are happening to Colorado-based high tech companies should give everyone a nice lift.