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You are undoubtedly one of the most successful entrepreneurs in Spain. Could you share your journey with Cloudways, including the challenges you faced when bootstrapping the company in 2012, and how you overcame them to transform it into a leader in its sector?
Successful, I would disagree. Most unknown, maybe true, but it is mostly by design.
It has been said many times, but being persistent and not letting go are the main traits that you need to overcome the many challenges that you will face when building something. Bootstrapping all the way to exit, at least, didn’t add investor pressure, but it usually takes longer and you need to endure more financial stress.
Of course, beyond endurance, you need to be in the right place at the right time. Cloud transition was in full swing in 2012 and the market was there. We also executed reasonably well. From 2012 to 2014, we did mostly “services” helping companies migrate to cloud with basically playbooks and lots of manual processes, but this gave us plenty of insights to (in 2014) build the fully automated platform that Cloudways is now. From the launch, it was a success and we grew strongly and consistently.
Besides that, I had terrific co-founders (from Pakistan) that did all the hard work.
At what point did you realize that selling Cloudways to DigitalOcean was the right move, and what factors influenced that decision? Could you also describe the process?
By 2021, some misalignment existed between co-founders. I wanted to exit (we had had a few opportunities already, which we passed) and Aaqib (the other main co-founder) wanted to raise capital and eventually list. Then in the middle of the Covid pandemic, I got infected and ended up with bilateral pneumonia in a hospital. During those days, knowing things could turn very nasty from there, I reflected over where (metaphorically) I was in life and where I wanted to be. Then and there, I decided that I had to move on.
From there, we had a series of conversations with Aaqib. We decided to raise capital and for me to quit through a secondary transaction, but then Digital Ocean (that was the most obvious acquirer given our role in their ecosystem) got wind of it and made an offer for a full acquisition that was impossible to refuse. We completed the transaction in less than 3 months. I moved on to set up my family office and Aaqib joined Digital Ocean as Chief Revenue Officer.
What inspired you to launch a family office, and how has your approach to supporting entrepreneurs evolved since then?
Part of the “I want to move on” process was thinking where. Of all the time at Cloudways, I enjoyed the first few years more. The ideation, building things from scratch, testing hypotheses, the relationship with early customers… As Cloudways grew to more than 400 employees and tens of thousands of customers, some of that early feeling was lost. It was clear to me that I wanted to help people building things, so it was a natural process to start early-stage investing (I was doing it even before the exit). Simply with the family office, we do it in a much more structured way, surrounded by very knowledgeable people.
Your foray into the search fund industry is impressive. What excites you most about this model, and how do you envision its growth in the markets you are targeting?
Initially, we were doing direct early-stage venture, and we also wanted to do full acquisitions in the tech space, grow them and sell them in a quick cycle under a shared services structure within the family office. This “mini-PE” attempt didn’t fully materialize as some of the people who had to lead it finally couldn’t (we just did 1 acquisition that we recently sold). At the same time, I discovered through one of our analysts the Search Fund model. I liked it a lot as it is very much uncorrelated with the very significant tech risk we assume in venture. Also, the risk profile is much better than early-stage investment, plus you are as active/passive as you want, which gives you plenty of freedom, something that is critical for me at the current stage. So we went to speak with the Cabiedes, JB46 and other players, grew convinced about the potential in Europe and reallocated all budget for “mini-PE” to Search Funds and started in full swing in November 2023.
About growth potential, we are in very early days into all this, so we have plenty to learn, but I think that the “reindustrialization” talk now happening in the US will eventually get to Europe, and this should be good for the type of companies that SFs target. I think that it is an asset class that will undoubtedly grow.
With investments planned in diverse regions such as Europe and Asia, what strategies do you use to understand and adapt to the unique dynamics of each market?
That question sounds too sophisticated for us. Cloudways was from day one a global business and it succeeded precisely for being global. My default way of thinking is global, so that we invest mostly everywhere (directly or indirectly) is just natural. The second thing is that I totally believe in diversification. I understand that it may lower returns (vs a more focused winner bet), but I prefer to spread the risk vs potentially higher returns. Besides, investing in different types of companies in different regions with different searcher profiles is real fun as it exposes you to the full diversity of planet earth.
Your goal was to back 40 searchers this year and 25 more in 2025. How many have you backed so far, and how do you plan to manage and scale these investments while maintaining high-quality support for entrepreneurs? What’s your strategy for building and managing your portfolio?
We closed 2024 with 31 searchers, but it was a tough year at a personal level; otherwise, I think we could have made it. Now the first opportunities from portfolio searchers are starting to arrive. We still don’t have an answer about how we will cope. To set the right expectations with searchers and given our tech background (unusual in other search investors), we tell them we will focus on tech as leverage (for efficiency or whatever) and so, will be more active in the opportunities where this is possible. This also aligns very well with what we already do with our venture investments.
As a successful entrepreneur, what advice would you give to searchers looking to build high-growth companies in today’s rapidly evolving global market?
My experience is totally different from the one a searcher will get. It has nothing to do with building a startup vs growing a long-running business. But with our limited experience, I think that attention to detail, especially during the search stage, is a critical trait. We have seen very bad things happen because of false assumptions, small misunderstandings, or questions that were not thought of. So being thorough and paying attention to the small details will highly increase the chances of closing a deal. From there, we need to gain more experience to form our opinion.
Are you considering expanding your geographical focus? What are your thoughts on the North American and Latin American markets? Africa and India are promising regions where some trailblazers are starting to pioneer. Would you consider exploring these opportunities?
India, we already have a searcher. The Americas and Australia we do indirectly via funds (we are LPs of Ambit, Vonzeo, Scipio and Magnum). We are now assessing a Brazil-focused fund. Africa, we have a startup in our portfolio operating there and it is a completely different paradigm. Huge opportunities but many things work differently. We will likely let the Ambit guys lead the way.
