Bryan Stolle, MDV partner and former Agile CEO, says "go with what's in your heart"

Bryan Stolle, a partner with the Silicon Valley venture firm Mohr Davidow Ventures, has insight into an aspect of entrepreneurship that relatively few executives get to ponder: what to do when a big rival wants to swallow you up.

Stolle, who co-founded Agile Software in 1995 and served as CEO until 2006, remained as its board chairman and major shareholder until this year, when Oracle bought the company for $495 million.

Letting go wasn't easy for Stolle, who built Agile into the leading provider of product lifecycle management software, took it public in 1999 and watched its stock price rise and fall with the boom and bust.

Although he wasn't exactly bowled over by the takeout offer from Oracle CEO Larry Ellison, he eventually agreed to back the sale, helped by pressure from an activist hedge fund that had accumulated Agile shares, and by more personal concerns.

Faced with the prospect of selling your company, "you have to go with what's in your heart and what's in your gut," he says. "It really boils down to what you want to do."

If the money being offered will make a difference for your family, "and you're kind of done, then you need to be honest with yourself.  On the other hand, if you feel like you've got a long way to go and your business is still full of potential, you should go for it" and refuse to sell, Stolle says.

Earlier in our video interview, Stolle gave three pieces of advice to entrepreneurs: focus on a very specific problem, surround yourself with great people, and "know your customer -- understand what their pains are." 

While he didn't say so on camera, Stolle told me during our conversation that while he's no fan of activist hedge funds, he respects what Ellison has done with Oracle's string of billion-dollar acquisitions.

"You've got to hand it to him. He came out a few years ago and said that software was a portfolio play, then he went out and hired a couple of investment bankers (Oracle co-presidents Charles Phillips and Safra Catz) and they've pursued that strategy aggressively," Stolle says. 

To read or see interviews with other venture capitalists, click on one or more of the following links:

Ray Lane of Kleiner Perkins

Scott Raney of Redpoint Ventures

Michael Moritz of Sequoia Capital

Jim Smith of Mohr Davidow

Roland van Der Meer of ComVentures

Nick Sturiale of Sevin Rosen Funds