Doug Levin On Helping His Company Achieve A $572 Million Exit And Now Providing Advice To The Next Generation Of Entrepreneurs

In a recent episode of the Dealmakers’ Podcast, tech visionary Doug Levin shared his remarkable journey from a New York City upbringing to becoming a global leader in the tech industry. From early challenges to founding the groundbreaking company Black Duck Software, Doug’s story is one of resilience, determination, and a keen eye for disruptive technology.

His venture, Black Duck Software, attracted funding from top-tier investors like Next47, General Catalyst Partners, Volition Capital (formerly Fidelity Ventures), and Flagship Ventures. Eventually, the company was sold to Synopsis for $572 million.

In this episode, you will learn:

• Embrace independence and a “get-it-done” attitude, no matter where you’re from.
• Challenge conventions and pursue your passions, even if they diverge from family expectations.
• Learn from every opportunity – Levin’s time at Microsoft was invaluable in shaping his understanding of the software industry.
• Vision and persistence are key – Levin’s creation of Black Duck Software revolutionized software acquisitions.
• Adaptability and strategic positioning are crucial in navigating economic challenges.
• Cultivate a supportive culture and assemble a capable team for a company’s collective success.
• In today’s competitive landscape, differentiation, profitability, and strategic planning are paramount for startup success.

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About Doug Levin :

Doug Levin has over 30 years of successful experience as a business leader, technologist, and serial entrepreneur.

He is ReversingLabs’ independent Board Member. As the founder, first CEO, and Board Member of Black Duck Software, he built a company that solved the challenges of safely using open-source code and discovering malware in commercial products. (Black Duck was acquired by Synopsys in 2017.)

Today Doug serves as a Lecturer and Executive-in-Residence at the Harvard Business School. He also serves as a senior advisor to AccuKnox, FiVerity, Info Sec Global, Prescient Devices, Wabbi, and several other AI, cybersecurity, and technology companies.

Earlier in his career, Doug held senior management positions at Microsoft over a nine-year period. He has an advanced degree in International Economics from the Collège d’Europe in Bruges, Belgium, and a BA from the University of North Carolina at Chapel Hill.

Connect with Doug Levin:

• Crunchbase
• ReversingLabs
• SubStack
• LinkedIn

Read the Full Transcription of the Interview:

Alejandro Cremades: Alright, hello everyone and welcome to the dealmakerr show. So today we have with us you know a very seeson entrepreneur you know. Also an entrepreneur that that has given a lot. You know back, you know to the ecosystem he is very much involved with. Not only at the university level with the future generations but then also in several boards you know he has invested in many companies. Also advice. Plenty of others and day. He’s had some really good success stories. You know so without you know, further do what? I’d like to do is. Welcome our gift so that he can walk us through all the different journeys that he’s had and I’m sure that you’re all gonna be very much inspired with how he went about building scaling financing and exiting so without further ado dog Levin welcome to the show. So born.

Doug Levin: Hey thanks for inviting me on.

Alejandro Cremades: And raised in New York City so tell us about life growing up. How was that.

Doug Levin: Well it was rough it was ah you know I My my parents sent me out on the Subway fairly early on and said this is how you’re going to get around. So um.

Doug Levin: I’ve always enjoyed being a new yorker and and I’ve kept it with me but I’ve lived all over the world. It was an important background and um I don’t know it I have lived all over the world I currently live in Boston.

Alejandro Cremades: Now your parents were very much a big fans of you becoming a doctor you know I’m sure of academia because you have many many degrees you know mit. Also you’ve you’ve been in many different universities across Europe as well doing different degrees as well.

Doug Levin: Depth.

Alejandro Cremades: It sounds like economics and business was the way to go with a blend of computer science. But ultimately you decided to choose a different route which was an entrepreneurship down the line but I guess how do you think you know that it developed for you at what point did you know that. There was like that fire in you of wanting to perhaps build something down the line.

Doug Levin: Well, um I remember distinctly when I was around ten years old I was reading the wall street journal and that was unusual for a 10 year old and my parents you know they wanted me to to be a lawyer or a doctor. That’s all they talked about. In fact, ah. Come from an entire family of lawyers and so when I started talking about going into business. Ah and also technology. Um my parents and and the rest of my family found it just didn’t understand it didn’t support me and um, but. Simultaneously I had a firm self-belief in not only my ah myself. But also my own interests in this area. So I just decided I was going to pursue it and um, my parents simultaneously said you know you’re making a big mistake. You know. Love. Law is so helpful to to all of us look at us thriving in the family I mean they were they were good lawyers and they they had interesting careers. But um I was more interested in ah discovering what ultimately I understood as disruptive technology. So Clayton Christensen at the Harvard business school wrote this classic book about the ah innovative develop dilemma and I believed it from a very early age that ah technology was disruptive and furthermore I’m very supportive of entrepreneurs who come from various backgrounds.

Doug Levin: And you know you don’t have to come from a technical but you know you don’t have that parents who were entrepreneurs necessarily although it helps um but you should have a background in various um with various disciplines like math engineering. Um, computer science and and other areas to to help you and ultimately get there.

Alejandro Cremades: Now obviously for you once you got your degrees you went into basically the corporate world and you worked with Microsoft for about 10 years you know I’m sure that that was quite an amazing experience. But again you know you realize that perhaps there was something else for you and.

Doug Levin: Um, yeah.

Alejandro Cremades: You branched out of that path and and you became more of a founder on the consulting site. So what was that transition like and and how hard was it to to make that day shift.

Doug Levin: Well I had badge number 2552 at at Microsoft and when I was hired. There were a whole bunch of product managers who were hired and you know early on I discovered that everybody wanted to be a Ceo of a company but mainly Microsoft. But ah secondarily ultimately spin out their own companies and become ceos of independent companies and prove it outside of Microsoft um, over the course of time at Microsoft I learned a great deal about product and a great deal about markets and ah. Large software company influences and many other things I mean I think my training at Microsoft was just simply excellent and I often encourage um people who ah you know who have and mbas for example. To go to Microsoft as well as other companies like Google and even Ibm and other companies to get their um, their professional training augmented or finished by going to a company where communications are challenging and. You could learn a lot about management and many many other things for me. It was very clear even though I stayed at Microsoft for 10 years during the the during the one of its greatest growth periods that I wanted to go out and become a Ceo and also.

Doug Levin: Ah, secondarily. Although you know ultimately became primary. Um I wanted to be the founder of a company and ultimately bring that company to a successful exit. Well Microsoft doesn’t train you exactly on that that type of entrepreneurship that is building a company for exit. But it does give you all these types of I was on the excel team. For example, the original excel team. So I learned all about excel and how to how to market it and so those are skills that I use today and um, you know those are skills that I call on when I’m so when I’m advising startups. And those are skills that I ah that are part of my business analysis and business thinking. So um I think the I think it was very important but what I did was I limited it to 10 years and then from there. I went on to found a start found a consulting company and ultimately become an executive in 2 other companies and then subsequently found my own company that was black duck software.

Alejandro Cremades: Yeah, because as you were alluding to I mean you realized that you’re more of um, operator you know that was the ah what the calling you know the accountability you know you need it there and and you went on as you were saying you know to become the president and Ceo of 2 companies.

Doug Levin: Um, in fact.

Alejandro Cremades: Ah, and part of those say of those of those same I would say experiences was also going through the um acquisition or the exit of both. No one was intermetrix. The other one was message machines. But I guess as part of those transactions because you were the one that they pushed them. What kind of disability did that give you into the full cycle of a company.

Doug Levin: Well, that is a very good question because that was during the internet bubble and ah basically during the internet bubble this was Ninety Eight and Ninety nine and 2000 um, all you had to do in some cases when you had very hot technology. All you had to do was fog a mirror to prove that you’re alive and you could get it. You could get your company sold in both of these cases we had. We had disruptive technology and it required a narrative or a story around it in order to get the companies to acquire ah you know to acquire us we wanted to find a happy home for our engineers. Both companies were um, mostly had mit and Harvard software engineers and they had a particular vision about who they wanted to work for ultimately, they wanted to exit. But they wanted to work for public companies and ah companies that had already established their markets and so um, we found you know in in both of those cases. Um me in conjunction with the executive staff. We found 2 very good public companies. That um, we were able to integrate with and my job in many respects was to spin that story or or tell that narrative and ultimately ensure its integration. The company’s integration into those companies which in and of itself is a very challenging thing.

Doug Levin: Because ultimately you want to be a creative to the to the public company or the company that’s getting that that acquires you so in both of those cases we were integrated and um, ultimately I think we’ve contributed although we in both of those cases. We are not fully a creative. Um, and they were They were good at they were good exits for everybody involved.

Alejandro Cremades: Now after this, you know, Basically you started to really incubate what has say become you know one of your biggest team I would say Accomplishments or Rocket ships that you have built as on of trippping around that was black duck software out. Ah, what point do you start to incubate the idea and what was that process like of really bringing it to life.

Doug Levin: The answer to that question is ah also related to the prior to the prior question. The 2 companies that I was involved with in selling those companies. There were long due diligence lists I remember in 1 case, it was 10 page due diligence list. And some of the questions that were asked by the investment bankers as well as the acquiring company was does the code have any open source in it is the code proprietary has it been built by the company and written by the software engineers that the companies are acquiring or. Was it copied or acquired by other companies and in each one of those cases I went down to the engineering department and asked the Vp of engineering and the engineers have you put any open source software into it have you have you ah used software from other companies. Um. Is is this code our code or have you. Ah you know, liberally ah copied code ah code into our codebase and the answer to the question that they you know they looked me straight in the eye and they said yes this is our code we didn’t use any open source software. Because at the time this is the late 90 s people knew that ah using open source software would be problematic for the acquirers and so the engineers just basically said that they weren’t using open source software now they were they also qualified that by saying that they had ah overwritten some of this code.

Doug Levin: But they actually had not and so um, the truth in the matter is that that idea of ah, black up partially came from those experiences of having to rely on just interviews with the engineers and these. Engineering management as opposed to really knowing what was in the code and so ah, you know on in December of 2002 I was sitting on a beach in Cancun mexico with my family and I had the idea for black duck that came out of my regrets of you know. My approach to due diligence. Um I thought you know acquiring companies just could do a lot better off if they could use an administrative platform that interrogates the code and finds their codebase. And finds the open source code as well as non-open source ah code maybe in the form of binaries that were there was floating around the code base so source. So so what? an acquiring company could do is feel assured that their source code that they’re acquiring. Doesn’t have alien code in it or code written by others and ah the the people who are making um assertions about the code could really say well you know we have a little bit of open source code here and there but um.

Doug Levin: You know? Ultimately, it’s it’s our code.

Alejandro Cremades: And what was the the journey to of of putting together a team around you because say you know doesn’t sound like and there were plenty of co-founders there around at the table.

Doug Levin: No, there were you know I was the sole founder for many reasons. Um, first of all, ah, 1 of the reasons why I was a sole founder is that I had this idea and I really wanted to drive it through and they were. There were a number of people who just said it’s not going to work or you know I don’t think this company would ah good. You know there were several vc who said that it wouldn’t scale beyond 20 or 25000000 there were several vc who did not want me to use a subscription model. Um, I know their names and I often when I whenever I run into them I remind them of their of of the conclusions that they came to and their conclusions were entirely wrong and I was convinced as an entrepreneur that I had to do it on my own and um to a large extent I um I help. Ah, you know I funded the company. Um and then eventually got vcs to you know a couple of vcs to invest in the company and ah you know one Vc in particular um his name is Roger Hyen who’s really retired from the Vc. Profession he he and I worked together with Microsoft and he had a vision that was very similar to mine so he was very supportive of me as a founder and subsequently as a Ceo and Roger Hyan is them is to a large extent um functioned as my partner.

Doug Levin: Um, in building black duck.

Alejandro Cremades: Now in this case I mean you guys say as you were alluding to it. You guys raised some money So how much money did you raise prior to the acquisition.

Doug Levin: Oh around 70000000 give or take appear.

Alejandro Cremades: And then I guess just to make sure that we get it clear what ended up being the business model. How were you guys making money.

Doug Levin: The business model excuse me came down to a subscription to a service that interrogated software and provided enormous value for companies that were not only. In the m and a environment but also we’re building software in in the production environment. So in addition to that um code scanning capability for open source and compliance over a period of time we built in the ability to identify malware. And ultimately, um, the company became more of a security and open source company and ah the technology advanced and the product line advanced as well or expanded. So. The design from the beginning was to have more than 1 product and ultimately we had several and um, the products were all functional ah all in the area of software development and helping facilitate the creation of code. And also knowledge of the code base.

Alejandro Cremades: And I guess say also 1 thing that comes to mind is you were pushing this you know until the acquisition for 16 years I mean 16 years you know a startup level and is unbelievable. The amount of time. So what do you think? kept you you know going for so long.

Doug Levin: Well one a maniacal adherence to the to the vision of black dock in realizing the importance of disrupting the software industry that was my original vision coming from Microsoft and being involved with licensing at Microsoft. I knew that that was an ah one model that would persist but simultaneously I really believed in the open source model and furthermore I believed in the um, extending the open you know, ah the analysis of open source and source source code to the area of ah. Finding malware and other bad acting software code in ah in ah in a code base. But what’s really important so persistence was without a doubt a characteristic of mine I’m ah I’m just generally speaking a tenacious guy. Um, you know if I’m playing sports I want I play him hard. And in this case this the sport of startups I play hard and I play to win but the other factors that well I have to point out that during the course of black duck. There was a recession in the middle of it so that was the Obama recession from 2008 until 2011 or 12 and being persistent during that period was extremely important because during that period people turned to or large corporations turned to open source as a way of lowering the cost of software development and the value proposition of black duck.

Doug Levin: Increased substantially during that period as more and more enterprises used open source software and while using open source software brought more and more malware into um into enterprises so black ducks value proposition soared. In the aftermath of the ah of the Obama recession and you know in the years that followed our sales increased substantially and um, our product line also expanded substantially and took advantage of ah of ah of the third thing that ah. That we that I should really mention in this which is taking advantage of the cloud so over a period when we first started the company. It was a it was called Asp um, and asb was not what cloud became ah you know.

Doug Levin: Amazon was instrumental in in expanding the adoption of the cloud but it wasn’t until the Obama recession that people really saw the benefits of the cloud and um, so. You know I yeah later on blacked up really took advantage of the cloud with ah the hub product and um and that’s and that’s a large part of the story. So no single to so to come back to your question. Um, no single thing you know, kept me in the game. It was also the ah the change in the market and as well as the change in technology which also we took advantage of.

Alejandro Cremades: So at what point does say Syn upses come knocking and what was that process of you know, getting the company acquire like.

Doug Levin: Well, even before a synopsis started knocking on our door. We also had inquiries from many other companies. In fact, when I got um when I got ah term sheets for series. A I also got a a a purchase offer. Um, so simultaneously I had to weigh with so series a whether or not I want you know I wanted the company to be acquired for a small amount of money relative especially relative to the exit or do I did I want to get venture funded and go ah you know the distance. And I decided that we were going to be um, you know a company with an enormous enterprise value. So I wanted to go the distance and um so I decided to pass on that acquisition and then over a period of time. There were a number of acquisition offers. But they were small um in comparison to the exit amounts so they were in the you know hundreds of millions of dollars and ultimately um, you know, ah you know with the support of the with of our investors with the growth. Of our customer base um over a period of time and also with the support of our um of all of our employees. What what we were able to do in 2017 at the December Twenty seventh

Doug Levin: Is concluded deal with synopsis after you know multiple offers there were no question about it. They you know they did offer us several different. Um, ah you know exits. But ah ultimately we concluded an exit in December of. Um, 2017 that was that made both sides. Happy.

Alejandro Cremades: You know, kidding 572000000 tremendous outcome. So great. Great exit now after this, you know like basically you have now as the next chapter in your career. You have become an advisor also an investor in a bunch of companies and you were also a lecturer I since 2000 and doing. Institutions like mit and most recently harbor business school now 1 thing that they that I’ve come across as this you know piece of giving back and educating the ecosystem is a recent post that you did about your thoughts on the funding freeze. What? what what What’s going on.

Doug Levin: Well, this is a very good question. Um, so I just came back from the Silicon Valley and there I talked to a number of leading vcs who told me straight out that ah we are going through an adjustment process now we’re going through an adjustment process as a result of. The the changes in the economy as a result of covid the changes in the economy as a result of high interest rates and the impact of war in the Ukraine and now in the Israel. So what’s happened is that um and you might also add on top of that. Adjustments in the market as a result of Ai so Ai has been a giant um hype wave but simultaneously a very important technology wave that has occurred in the um, ah you know in the market and so what we ended up having is. A ah you know a a perfect storm of things which have occurred today in the um, you know in the industry and um, those things have combined to result in a funding freeze now and. Part of the funding freeze is a very pragmatic point of view from ah the um from the Vc and especially surprisingly the the pe companies that um, that basically.

Doug Levin: Right now. Only the companies with a p to p or path to profitability and only the companies with extraordinary differentiation and um, real tangible cash flow and excellent teams are the teams that are going to get funded in this period? um. You know there are ah certainly exceptions there are companies that ah they can ah they have gotten gotten funded over the last couple of months and certainly in this period. There’ll be others that are funded for any number of reasons but the leading vcs and p that I talked to last week were um, very clear. That this period is a period of analysis and kind of stepping back and not making a lot of commitments. Um, this is in contrast to 2021 or 2020, especially and 2021 where ah vcs were making real commitments. To early stage companies and you know, um, doing the venture game where they were investing in companies that could ultimately have great exits over a period of time but required a great deal of attention and a lot of investments. So. Um, this is a period of let’s call it retrenchment and um, that’s why you can see in the in the short term a funding freeze.

Alejandro Cremades: Now I’ve also heard you speak about the importance of corporate governance. You know and having a board of directors that is effective even you know at an early stage. Why is that the case.

Doug Levin: Well, this is also a a really interesting question because many of the startup founders and leaders that I’ve talked to today think of boards of directors as impositions or a waste of time in a couple of cases and they’ve said. Any number of things about having an early board of directors. They understand the ah importance of a board of directors at series a but prior to series a they. Ah there are many founders who shy away from boards of directors boards of directors from my point of view. Are a great source of inside knowledge and inside support. Um, this is about bringing in a group of people who are going to help the company get to where they want to get to and in many cases with ah vcs they have a lot of experience. With um, all kinds of finance related and accounting related and illegal related and operational type of things when you also bring independent independent board members onto the board. You oftentimes get a ah. Ah, group of people who can provide operational insights which can make a huge difference for companies and so I’m a firm believer in the addition of a board member a board early on especially as you’re raising you know, ah the first very large seed.

Doug Levin: Seed 1 maybe 40500000 then there’s an Mvp which proves out the product and and maybe there’s a c two which is 2 to 3000000 or 4 to 5000000 when you start getting into the couple of millions. You really want to get board members. Maybe 1 member 2 and 2 founders as as the other board members. Um, who can really help in understanding and making decisions on a timely basis related to the company and then subsequently you know expanding the board to 5 members. It’s some. It can really help ceos for me I’ve always felt that my board members have been really helpful. You know there’ve been 1 or 2 exceptions. But um, by and large they’ve been helpful in shaping my thinking in making me a better Ceo and making me a better board member. And ah, certainly making my companies um better in a loiter.

Alejandro Cremades: So let’s say I was to put you into a time machine dog and I bring you back in time to that moment where you were backationing with a family there at the beach and let’s say I had I give you the chance there of right when you were coming up with the idea andm thinking about this about you know, black do a software and let’s say. You had the opportunity of sitting down on that day summit that was closer to where your younger son was and you had the opportunity of you know, approaching that younger dog and giving that younger dog 1 piece of advice for launching a business. What would that be and why give me what you know now.

Doug Levin: Well I’ve been asking that ah that question of myself and people have been asking that for many years and my first response is actually not a direct answer to your question. It is I made a lot of mistakes. And um, over the course of being you know a Ceo and a venture back company. You know, moving at at such high speeds traveling around the world and running a company at the same time picking a lot of employees. Um, and that’s basically the answer to the to your question. Um I made a lot of mistakes. But I also made a huge number of great hires and my opinion is that the most important thing a Ceo does is create a supportive culture for the company and hiring great.

Doug Levin: Ah, great. Elt executive leadership team and ah in turn lots of employees who um, who believe in the vision and and love the culture when you had that combination of culture and great employees. You have a very high probability of bringing a team to a championship or a great exit and so I believe that ah you know like if I there were a number of hires that I made that were vanity hires um you know there were a number of hires that I made that were mistakes because I depended on back channel information from people who just ah, you know didn’t know what they were talking about and so um, those were some of the mistakes I made I do believe that I made making mistakes. But some of the hires that I made were just awesome and to to this day I’m in touch with these people and I’m just I’m thrilled that they’re part. They’re still part of my life. Sometimes I I put them into my companies after you know you know after they’re free. And um, they turn out to be great. Um, in you know, great people who prove themselves over and over and over again.

Alejandro Cremades: I Love it So doc for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Doug Levin: Oh um, they can find me on Linkedin and they can also email me at Doug Dot eleven that’s evin with the number one connected to my last name at Gmail.com but you can also find me on Linkedin. There are several Doug Levins out there but you’ll find me I’ve got you’ll you’ll find me because ah I’ve got the ugliest picture.

Alejandro Cremades: Amazing! Well hey doc thank you so much for being on the deal maker show today. It has been an honor to have you with us.

Doug Levin: Oh it’s been a pleasure. Thank you so much.

*****

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