David Young On Selling A Company For $170 Million To Samsung And Now Providing Global Businesses With Economical Open Source Software

David Young’s journey to becoming a tech entrepreneur is anything but conventional. His career path took him from studying ancient Greek at Indiana University to Wall Street, and eventually to Silicon Valley, where he founded and scaled successful technology startups, including Joyent.

David’s latest venture, Federated Computer has attracted funding from top-tier investor, Lightning Ventures.

In this episode, you will learn:

• David’s journey from studying ancient Greek to tech entrepreneurship highlights the value of analytical thinking and problem-solving across disciplines.
• His early startup, manageStar, didn’t succeed, but it taught him critical lessons that helped shape Joyent’s success in cloud computing.
• Joyent’s breakthrough came by aligning with the Web 2.0 movement, proving that market timing and strategic partnerships are crucial for scaling a startup.
• Transitioning from CTO to CEO, David learned that scaling a company requires different skills, including communication, culture-building, and managing rapid expansion.
• Raising $120M for Joyent was not just about pitching a vision but also about transparency and finding a great communicator to craft compelling narratives.
• From cloud computing to ice cream and now Federated Computer, David continues to explore new industries, proving that adaptability and innovation drive long-term success.
• While resilience is key, David emphasizes the importance of recharging to sustain long-term productivity and creativity in entrepreneurship.

 

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About David Young:

David Young is a visionary leader and the founder of Federated Computer, where he is currently driving the development of an open-source platform designed for distributed, private, and secure applications.

With a rich background in technology and entrepreneurship, David leverages his extensive experience in digital media, agile methodologies, and platform-as-a-service (PaaS) to shape the future of cloud computing.

His previous venture, Joyent, not only pioneered the creation of Node.js but also played a pivotal role in establishing the infrastructure for major platforms like Twitter and Facebook, showcasing his expertise in building scalable mobile applications and big data solutions.

At Federated Computer, David is spearheading key projects that aim to redefine how organizations approach application development and deployment.

His focus on creating a secure and collaborative environment aligns with the growing demand for privacy-centric solutions in an increasingly interconnected world.

With a strong emphasis on strategic partnerships, David is dedicated to fostering an ecosystem that empowers developers to innovate without compromising on security.

In addition to his technical acumen, David’s entrepreneurial spirit is evident in his ability to raise and deploy venture capital effectively, a skill honed through his experience with Joyent, which he successfully sold to Samsung in 2016.

With seven patents to his name, David continues to push the boundaries of what is possible in technology, making him a key player in the ongoing Kubernetes revolution and a sought-after expert in the fields of storage and business strategy.

His journey from founding an ultra-premium ice cream brand to leading Federated Computer exemplifies his diverse interests and relentless pursuit of excellence in every endeavor.

Connect with David Young:

• LinkedIn
• Crunchbase
• ContactOut
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty, hello everyone and welcome to the DealMaker Show. Today, we have an incredible founder, someone who has done it multiple times. We’re going to dive into the entire journey of building, scaling, financing, and exiting businesses.

Alejandro Cremades: In this case, our guest has completed a few successful exits and is now embarking on his latest journey, which involves open-source technologies and all that exciting stuff. So, without further ado, let’s welcome our guest today, David Young.

Alejandro Cremades: Welcome to the show!

David Young: Thank you, Alejandro. It’s great to be here. I’m looking forward to the conversation.
Alejandro Cremades: So, originally born and raised in Dallas, Texas—give us a walk down memory lane. David, how was life growing up for you?

David Young: I love Texas. I was born there and am a Cowboys fan, so you could say I’m a full Texan. I was recently back there with my wife, and we visited this old, run-down apartment building where I used to live when I was a baby.

David Young: My mom used to tell me all these crazy stories. I’m just glad I got out of there alive! But Texas is a great place. There are so many great entrepreneurs, and it’s sort of a culture built around the West, where people go out looking for opportunities. That was the culture I grew up in as a Texan.

Alejandro Cremades: Now, in your case, you went to school and, of all things, studied ancient Greek! It’s quite different from the things you’re doing today. How did that happen?

David Young: Yeah, that’s right. When I went to university, I went to Indiana University, and my major was not computer science or anything related to tech. It was ancient Greek, in the field of classics. I really stand by that decision. I feel that one of the things missing in today’s tech-centric culture is an understanding of the past, the depth of knowledge that people in the ancient world had.

David Young: One of the best ways to connect with that knowledge is through learning the language. So, I did intensive study of Greek and Latin, and a lot of work on a Greek poet called Pindar. I think it really helped me. You can always go back and become an engineer, learn the principles of software engineering—it takes hard work, no doubt. But having that classics background has helped me tremendously as a writer, a thinker, and someone interested in new ideas and the opportunities they bring.

Alejandro Cremades: So, after that, you ended up on Wall Street, which seems like a pretty different path from your entrepreneurial journey. It didn’t quite align with the entrepreneurial drive you have, but it did serve as a stepping stone. How did that transition happen?

David Young: You’re right. I went to Wall Street after coming from a classics background. I had been accepted into a Ph.D. program at a really good school, but the head of the program told me, “You may want to look around. We don’t make a lot of money as professors in ancient Greek.” So, I ended up getting recruited by a bank.

David Young: At the time, Wall Street was investing a lot in tech startups. They saw technology as a game changer, as a differentiator. Goldman Sachs, for example, was investing in a little company called Next Computer. They used the Next Computer and Next Step tools to differentiate their trading practices.

David Young: There was this culture in Wall Street about how to use technology to differentiate your business, and I was part of that. But ultimately, you’re right: working at a big company means navigating a lot of politics. I had ideas and a couple of friends on the West Coast working on startups, so I decided to leave the bank, leave Wall Street, and head to the Bay Area to work on my first startup.

Alejandro Cremades: Your first startup, Joyent, was quite successful. What were the key events that led to Joyent’s creation?

David Young: Actually, the first startup was a failure—it wasn’t Joyent. My first company was a little SaaS business called Managed Star. We were trying to help construction and task management, but it was too early for what we were trying to do. We grew to about 100 people, and I was the CTO. We learned a lot, but it didn’t work out.

David Young: I remember sitting in a hotel room in Seattle, realizing that Managed Star was probably coming to an end. But I had another idea. Back then, it was really difficult to get the infrastructure you needed for a startup. You had to buy expensive servers, set up a data center, get a database administrator—the whole works.

David Young: I thought, wouldn’t it be great if we could use emerging open-source tools to create a way for people to get a data center on-demand? This is what we now think of as cloud computing, but at the time, we called it “data center on demand.” So, a few engineers and I put the idea together, and it worked out.

Alejandro Cremades: Amazing. So, you got the idea off the ground and found success. But when you were pitching the idea to potential customers, most of them thought you were crazy, right?

David Young: Yes, that’s true. In the early days, when we went out to pitch the idea, most people thought we were crazy. We said, “You can go to a website and spin up your own data center.” Keep in mind, there was no Amazon or Google Cloud back then. People thought it was crazy—they liked holding on to their infrastructure.

David Young: But we got lucky. We connected with what was called the Web 2.0 crowd—entrepreneurs who were looking for ways to innovate quickly and experiment with user-generated content. They needed a flexible, fast infrastructure, and that’s where we were at the right place at the right time.

David Young: We ended up having some amazing early customers like Twitter, Tumblr, and the Facebook Developer Program. Ultimately, we sold the company to Samsung. And today, if you use a Samsung phone or device, you’re probably tapping into a Joyent backend.

Alejandro Cremades: What an impact! So, Joyent was your first major entrepreneurial experience, and you were in a CEO role. Going from the technical side to taking on a more business-oriented role must have been a big shift. How was that transition?

David Young: It was definitely a big shift. I found that, as CEO, I loved developing the product. The most enjoyable part for me was the early days—sitting with a blank slate, working with the initial customers, and shaping the product based on their feedback.

David Young: But you’re right, Joyent grew quickly, and I was the first CEO. We eventually grew to over 500 people. You go from knowing everyone in the office to, at some point, wondering, “Is this person a customer or a colleague?”

David Young: That was a tough transition. I’ve been very open about my time at Joyent. When we sold the company to Samsung, I wrote a long reflection about my time there. I learned a lot, including how easy it is to get sidetracked by things that aren’t helpful for the business. I’m talking about substance abuse, personal struggles—things that I don’t want to make into an Alcoholics Anonymous session, but you learn a lot about yourself.

David Young: Fortunately, I was surrounded by good people at Joyent, people I trusted and who helped me face the challenges of being a founder and CEO, both among my investors and my colleagues.

Alejandro Cremades: It’s great that you had that support. And speaking of growth, you raised quite a bit of money—$120 million. How was your experience navigating the fundraising process?

David Young: I was very fortunate to have a great colleague and friend, Brian Brown, who helped me throughout the fundraising process. He’s now the head of Corporate Development at Brave. Brian and I were very honest with each other as we went through the process.

David Young: Fundraising is an interesting experience. It’s about communicating the potential of your company, where you’ve succeeded, and where you still have work to do. Without Brian, it would have been a lot harder. I recommend that other entrepreneurs find their “Brian,” someone they can be completely honest with about the struggles of fundraising.

David Young: Brian, who used to work at The Wall Street Journal, was great at writing and communication. We would sit in a room, refine our pitch, and make sure our messaging was clear. This process wasn’t just for fundraising, but also for thinking about the business itself. It’s important to honestly assess your position—it helps with fundraising and with moving the business forward.

David Young: When you get in the habit of honestly assessing where you stand, it leads to a much more positive and productive fundraising experience. You know how to position the problems and opportunities you’re facing, and you begin to think about how to use that money wisely—not just for the investors, but also for your colleagues and customers.

Alejandro Cremades: I totally agree. You’ve emphasized the importance of honesty and good communication. Why is that so crucial for building a great founding team?

David Young: Because it’s so easy to deceive yourself. As entrepreneurs, we have a tendency to be self-deceptive. It’s a coping mechanism, especially when you’re facing so many challenges. But at the same time, you must maintain a positive outlook. There are always tough moments, like when you haven’t hit your sales projections or your product isn’t where it needs to be.

David Young: The key is to stay positive, even when things aren’t going perfectly. At Joyent, we faced a number of moments when we had just a couple of weeks of cash left, and we had to get creative to figure out how to keep the business going.

David Young: But even with that positivity, you need someone who can bring you back to reality—someone who can ask, “What’s our real position? Where are we right now?” Without that honesty, you won’t know the right steps to take next.

David Young: Both aspects—positivity and honesty—are vital for success. I’ve been very lucky to work with people who share that perspective.

Alejandro Cremades: Absolutely. Now, after such an amazing outcome with Joyent, how do you go from selling the company to Samsung to suddenly selling ice cream? That’s quite the turnaround!

David Young: Well, um, yeah, I mean, a successful startup—and I think I’m not just speaking for myself. I’ve talked to other entrepreneurs who have started software companies, hardware companies, and have had successful outcomes.

David Young: They’re always brutal, and it just sucks the life out of you. And, you know, my personal story is— and I sort of intimated this—by the end of it, I was really wiped out and just didn’t want to do anything with cloud computing. And frankly, I think, you know, not to pat ourselves on the back, but I think most of the innovations in cloud computing started at Join. I’m not saying our competition at Amazon and Google Cloud haven’t continued to innovate, but most of the ideas about microservices, about containers, and the way those things are done, all came out of Join. So, there wasn’t really a lot of new work to be done, and I was really looking for something absolutely different.

Alejandro Cremades: You…

David Young: And I guess with a little bit of arrogance as well, I sort of thought, “Hey, I was able to get Join done well. I can do just about anything.” So, sort of like running off to the circus, I decided I would start an ice cream company.

David Young: Now, the through-line here is that I love ice cream, and who doesn’t love ice cream? At the time, I lived in a place just north of San Francisco called Marin County. We have a real culture there for dairy and for fine cheese.

David Young: So, we used this great milk from amazing Jersey cows to build this incredible ice cream. It even came in a beautiful glass container, looked amazing on the shelf, and tasted fantastic.

David Young: Savoir Magazine, one of the big gourmet magazines in the U.S., picked us as a top ice cream. But guess what, Alejandro? I knew nothing about ice cream. I knew how to build a product, but food—if anyone’s listening here thinking about getting into food—is just an order of magnitude more difficult, in my experience, than doing software or hardware. You have supply chain, distribution, and all sorts of other challenges.

David Young: After product development, and we had some really great flavors, homemade candies, homemade jams—the whole thing at Honeymoon Ice Cream—the rest of it is pure, grinding execution. My partner and I ended up selling it to an industry insider who knew exactly what to do with it. We were happy to exit that company.

Alejandro Cremades: So, two exits here—two acquisitions that you had the opportunity to go through. What can you tell us about your top three lessons learned from M&A, from selling your business?

David Young: That’s a great question because, you know, it’s not a simple thing. There’s the old saying, “If you’re for sale, then you’re not going to be bought.” You really need to figure out a way to excite the buyer about the possibilities.

David Young: At Join, it meant great partnerships. We had great partnerships with companies like Sun Microsystems, which is now part of Oracle. We had great partnerships and investments from Intel Capital, from Dell Computer, from big customers like Telefonica.

David Young: So, those are where your M&A opportunities come from—these big strategic partners who are kicking the tires, figuring out what this little business does, how it operates, and how they can connect it to their own business to make it an even bigger opportunity for them at Big Co.

David Young: And that’s what you need to be sensitive to—getting out there and working with those. There’s no real way to fake it. It’s very rare, though there are examples, that people make purely emotional decisions on acquisitions.

David Young: These are big companies with very, very talented teams, and you need to be able to make the case to them— even more than you did with your investors—that this is a business that’s going to blow up when it’s combined with their resources and opportunities.

David Young: So, I’d say that’s really the big insight I have—who’s going to benefit from the opportunity that my business is bringing to their business?

Alejandro Cremades: For you, it sounds like after the exit with Honeymoon, you went at it again with building another business. But in this case, it was more on the open-source side of things—a completely different direction. But here you are with Federated Computers. How did the idea of Federated Computers come about, and why did you think it was meaningful enough to take action?

David Young: Yeah, that’s true. I got out of the ice cream business. I was really intending to sit around, get outside, and do other things. But really, this was during the COVID pandemic, and I began to notice that privacy was a big concern. People were upset that their data—whether it’s with a big SaaS company like Google Workplace, Zoom, or Slack—was being used and disseminated for advertising purposes.

David Young: And then, of course, what came after that was using that data to train AI. I wondered, what’s the state of open-source tools? As I began to dive into these tools, such as NextCloud, Jitsi, and BaseRow, I was really impressed by the quality of them.

David Young: The problem is that in order to adopt them, a business required an IT professional to stand it up, keep it running, keep it patched, and do all the integrations. It was a bit of a mess.

David Young: So, talking with one of my past collaborators, someone I really trust, I said, “What if we put together a Linux distribution in the cloud, where we grab a bunch of these different packages, integrate them so it’s easy to manage users, and we do all the updates and backups?” That way, everyone gets the experience of great SaaS software without the cost, with privacy, and with flexibility.

David Young: It’s full circle now because, if you’re using open-source tools, you can use them to fully differentiate your own business. That’s where Federated Computer came from. It’s really exciting because the cloud computing industry I helped start at Joyent is valued at over a trillion dollars this year. But the SaaS industry will be worth about one and a half trillion dollars this year. So, we’re attacking an even bigger market.

David Young: We think there’s tremendous opportunity. These open-source tools have great functionality and capability. What was required was a platform like Federated Computer that put it all together and made it super simple for users to adopt these tools.

Alejandro Cremades: What’s the business model at Federated Computer? How do you make money?

David Young: The typical SaaS customer today spends about $300 to $400 per user per month. But with Federated Computer, they get everything included. They get video conferencing for up to 500 users, workplace tools, databases, mailing lists—everything you need to run your business—for just $120 per month. We even have cheaper tiers.

David Young: So, you get everything you need at a great price. It’s absolutely private, completely flexible. It’s a very disruptive, simple model. It’s a lot like how it was when we started the cloud—our pricing when we started was very, very disruptive.

David Young: You didn’t have to spend thousands or tens of thousands of dollars upfront to get a data center as a service.

Alejandro Cremades: Thank you.

David Young: And the same is true at Federated Computer. There’s no need to spend all this money on different SaaS solutions that don’t integrate with one another. You come to Federated, and everything works together. It’s a killer price, and you’re off to the races. You can spend your money on other things, like hiring someone or maybe investing in marketing your business to attract customers.

David Young: We think it’s a great opportunity for businesses.

Alejandro Cremades: So, imagine you go to sleep tonight, David, and you wake up in a world where the vision of Federated Computer is fully realized. What does that world look like?

David Young: Well, I think because it’s open source, over time there will be other Federated Computers—and that’s not a problem. Just like with Joyent, we were the first to do cloud, and quickly had other clouds out there, which just validated the vision. But, you know, over time,
Federated Computer continues to service and support thousands of customers around the globe.

David Young: And that’s the case today. We continue to introduce ourselves to customers, and they really appreciate the price, the value, and the flexibility they get from Federated Computer.

Alejandro Cremades: So we’re talking about the future here, but I want to talk about the past, doing so with a lens of reflection as well. If I were to put you in a time machine and bring you back to the moment where you were jumping from one tech startup to another—let’s say now you had the opportunity to be right there with that younger David before launching your first company—and you could give that younger David one piece of advice before starting a business, what would that be, given what you know now, and why?

David Young: You know, I don’t really have many regrets. It’s not to say that I haven’t made mistakes, but I think the key thing I’d say to myself is to be even more insistent on trying new things.

David Young: There’s no way to solve the anxiety you feel as an entrepreneur. There are many unknowns, but continue to trust your team, trust in what you’re doing, and sleep well.

David Young: Oh, and one more thing—take the vacation. It’s always easy to push off taking a vacation, but what I found is you can only burn the candle at both ends for so long.

David Young: Take the vacation, get yourself out, refresh, and then get back into it and fight, fight, fight.

Alejandro Cremades: I love it. So, David, for the people who are listening and would love to reach out and say hi, what’s the best way for them to do so?

David Young: Yeah, feel free to drop me an email at da***@fe*******.computer. That’s computer, f-e-d-e-r-a-t-e-d dot C-O-M-P-U-T-E-R. I’d love to hear from people.

David Young: If you’ve got a great idea, or maybe you’re a SaaS company just starting out or an entrepreneur yourself, we work with startup SaaS companies and help them come to market with all the federated customers we have today.

David Young: I’d love to collaborate with you. It’s been great talking with you today, Alejandro.
Alejandro Cremades: Likewise, David. Thank you so much for being on the Dealmaker Show today. It’s been an absolute honor to have you with us.

David Young: Thank you very much.

*****

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com

 

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