In May, founder of CXApp, Leon Papkoff celebrated the one-year anniversary of its acquisition by Inpixon (Nasdaq: INPX) – the Bay Area Indoor Intelligence company that is doing some exciting work enabling office return to work policies and helping un-snarl supply chain issues.
Leon’s story is unique as the sale of CXApp occurred in the middle of the pandemic, which both made the CXApp more valuable (one of its key use cases is improving the health and safety conditions of an in-person office), as well as forced he and his team to get creative when going through the process sans an office.
As we know the Pandemic created micro-communities within greater communities due to “stay at home” mandates, so Leon was not able to take part in the one-on-one meetings for advice, consider offers and help his decision along.
In fact, his bubble of influence were his neighbors in his neighborhood in Pleasanton Calif., literally on the street he lived on—as he, like all of us, was forced to spend most of his time at home during lockdown. Lucky his neighbors were made up of other entrepreneurs, VCs and leadership types, so the advice he secured from them was in many cases based on their own experiences.
M.R. Rangaswami: You recently celebrated the 1-year anniversary of The CXApp (now Inpixon Enterprise Apps). What was unique about the acquisition process seeing the majority of it took place in the middle of the early days of the Pandemic?
Leon Papkoff: The most unique thing about the acquisition of The CXApp was timing. About two years prior to the pandemic, we had rolled out our ‘Smart Campus’ solution to address the opportunity for on-the-go experiences for enterprises. We quickly caught the eye of many of the Fortune 500 and began rolling out deployments to customers, many big-name Silicon Valley tech firms among them. Our target customers were forward-thinking companies looking to make a transformative impact in the workplace with an IoT approach to workplace experience.
At the time, the market labeled this as a ‘nice to have’ product, but once the pandemic hit, the market quickly shifted its perspective of our workplace experience app to a ‘must have’ product. Two key benefits of our solution were to maintain high levels of employee engagement amongst a distributed workforce and to aid in bringing employees back into the office space safely and confidently. With this strong product-market fit, and as we rolled out our native desk booking and spaces reservation capabilities, we experienced a strong growth spurt.
It was at this time that we had our first meetings with Inpixon, and we subsequently integrated their mapping product into our platform for a few of our key customers that wanted advanced indoor navigation and wayfinding capabilities. The use cases for an employee app that helps companies address the new workplace realities were and continue to be numerous. Even now, two years later, the demand for companies to support flex work environments persists along with the need to bridge the experience gap for in-person and remote experiences.
Because of our strong growth and great working relationship, the Inpixon team expressed interest in acquiring The CXApp. We had similar inquiries from other groups as well, however we chose to go through due diligence and sign a letter of intent (LOI) with Inpixon because we felt it was a good strategic match and that they could help us scale quickly.
Overall, the idea of The CXApp + Inpixon brought other capabilities and technologies into our growing ecosystem that would allow us to have a more well-rounded and powerful solution for our customers.
The timing could not have been better.
Another unique aspect of the courtship and transaction was the style in which we conducted our meetings throughout the due diligence process. All of that was done virtually through collaboration tools like Zoom and Teams, including highly confidential meetings with Nadir Ali, Inpixon’s CEO, and Soumya Das, Inpixon’s COO. It was more difficult in some ways, but also lent a nice platform for us to communicate.
We took the same approach with internal meetings as well. I used the same video conferencing tools to meet with The CXApp leadership team and conduct working sessions throughout the due diligence process. Anyone that’s gone through an acquisition knows how intense this process can be and the substantial volume of items that needed to be aggregated and coded and sent back to the acquisition team. It was in this way that we collaborated and combed through years of company data to present to Inpixon.
Near the end of the process, we were still in the height of the pandemic, so we continued to use virtual collaboration tools. Our official acquisition announcement was made virtually, with cameras on, of course, across our global team with employees across the United States, the Philippines, and China.
Normally I would have flown overseas to meet with the team, talked them through the process in-person, conducted 1:1 meetings with team leads, and ensured that every employee was comfortable with the news. But, because of the pandemic, I needed to reassure teams remotely and even still conduct 1:1’s within each department. It was a big announcement, and I cared about each individual, so I wanted to make sure they felt confident in their jobs and well being, which of course, Inpixon was invested in as well.
Coincidentally, the day the acquisition was official, there was an Inpixon leadership off-site happening in Northern California, so I was able to attend and meet all of the leaders in-person for the first time which was a pretty amazing experience.
M.R.: Tell us more about the unique counsel you engaged with through the process.
Leon: The entire process took about five months, and I can say with certainty it helped to be backed by a diverse team of experts. I brought in a number of individuals to help with different stages of the acquisition process from negotiations, through due diligence, to signing the LOI, and even for final signature on the definitive agreement. I had one law firm that managed the entire acquisition itself.
I also brought in a very good colleague of mine as an advisor. He had experience in M&As for larger corporations, and I knew his guidance would be critically important for the leadership team to help make the best fiduciary decisions on behalf of our shareholders.
The combined experience with these individuals that have their own skill set beyond mine was especially helpful for such a small company.
M.R. What are your 3-5 tips you would offer other startup owners to consider before they sell their business?
Leon: Firstly, timing is critical. If you’re planning an acquisition strategy, expedite when you start to see velocity with your product, customers, and the market.
Secondly, partner with strategic companies. When you have a robust partner strategy, you add more value to your product. Similar to networking, use your business positioning to grow your network of products, vendors, partners, potential acquirers, etc.
Thirdly, keep tight organization on your intellectual property. If you have a product that is engineered, write code natively from scratch to keep it clean.
And lastly – listen to the experts. Invest in third-party experts. Try to bring in strong advisors that have experience in M&A to help you negotiate the best offer for your shareholders and to protect your interest. You’re responsible for more than just yourself.
Have open conversations with your leadership team. Be open to discuss key decisions with top leaders in your organization. Different perspectives help round out the entire position of your product, strengths and weaknesses, and even aspects of the deal. I value my leadership team’s opinions, so it really helps me to talk out loud and bounce ideas around to nurture organic brainstorming and assessment. I go through that process anytime I make a big decision to ensure my ideas are the best ideas, and if not, I have strength in knowing that my trusted peers will help me arrive at the best conclusion for everyone.
M.R. Rangaswami is the Co-Founder of Sandhill.com