He Cold-Called Microsoft, and They Bought His Company. Startup Spotlight with Sonu Aggarwal, TiE Seattle President

 What does it really take to build multiple successful startups—and recover from failure along the way?

In this episode of Startup Spotlight, hosts Shirish Nadkarni and Gowri Shankar sit down with Sonu Aggarwal, serial entrepreneur, former Microsoft executive, founder of Flash Communications, Cordon, and UnifiedSquare, and current President of TiE Seattle.

Sonu shares an honest and insightful account of his entrepreneurial journey—from building one of the world's first enterprise instant messaging platforms and selling it to Microsoft, to experiencing the hard lessons of startup failure, and ultimately building UnifiedSquare into a global leader acquired by Unisys. Along the way, he offers practical advice on fundraising, product-market timing, enterprise sales, founder transitions, and the importance of perseverance.

The conversation also explores Sonu's vision for strengthening Seattle's startup ecosystem through TiE Seattle and why he believes the region is poised to become one of the world's premier entrepreneurial hubs.

Whether you're a first-time founder, an experienced entrepreneur, investor, or simply fascinated by startup stories, this episode is packed with hard-earned wisdom from someone who has lived every stage of the entrepreneurial journey.

In this episode, you'll hear:

• How an MIT brainstorming session led to the creation of one of the first enterprise instant messaging platforms.
• The remarkable cold call that resulted in Microsoft acquiring Flash Communications.
• Why Sonu's second startup failed—and the invaluable lessons it taught him about enterprise sales, revenue, and founding teams.
• How recognizing an unmet customer need inspired the creation of UnifiedSquare.
• The realities of leading a high-growth startup through years of ups and downs before achieving a successful exit.
• The difficult experience of stepping down as CEO—and why founders should view leadership transitions through the lens of what's best for the company.
• How UnifiedSquare's acquisition by Unisys unfolded through a structured M&A process.
• His vision for making Seattle one of the world's leading startup ecosystems through TiE Seattle.

Brought to you by TiE Seattle
Hosts: Shirish Nadkarni and Gowri Shankar
Producers: Minee Verma and Eesha Jain
YouTube Channel: https://www.youtube.com/@fromstartuptoexitpodcast

Transcript

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SPEAKER_00 0:00

In this episode, we dive into Sonu Ogrewal's incredible journey from founding startups and selling one to Microsoft to learning hard lessons from failure, scaling enterprise communication technology, and shaping the future of Seattle's startup ecosystem. It's a candid look at resilience, timing, and the bold decisions that can turn an idea into something industry changing. If you're interested, stay tuned and keep listening. Welcome to the Startup to Exit podcast, where we bring you world-class entrepreneurs and VCs to share their hard-earned success stories and secrets. This podcast has been brought to you by Thai Seattle. Thai is a global nonprofit that focuses on fostering entrepreneurship.seattle.tai.org Welcome everyone.

SPEAKER_01 1:11

We are very pleased to uh have with us uh Sunu Ogarwal, who is a very successful serial entrepreneur. He's also the president of uh Thai Seattle. He started that role late last year, and he's been serving on the board of uh Thai Seattle for some time now. Welcome Sunu.

SPEAKER_05 1:31

Thank you, Shish. Pleasure to be here. And Gaurie as well.

SPEAKER_01 1:35

So you have uh a lot of history as a as an entrepreneur. You've started three companies, so we'd like to kind of explore your journey um as an entrepreneur, and also you know that uh Microsoft spent uh quite a few years. So let's start um with your first company, uh which you started after uh a few years after school called uh Flash Communications, which you then sold to Microsoft. Tell us more about what was the opportunity you saw observing it.

SPEAKER_05 2:05

Absolutely. So about two years after I finished my studies at MIT, um I'd been in management consulting and uh one afternoon decided to come up with a list of ideas for an internet startup. The internet was hot around the time. I came up with about 10 ideas, and then in the same afternoon session, zeroed in on instant messaging as what we were going to build. I recruited seven classmates from MIT as co-founders. And we built initially what we thought was the world's first instant messaging system, which then turned into the world's first enterprise instant messaging system. So world's first business chat technology. And then we would see that concept of a message going from one screen to another instantly work at MIT on local networks, but we thought it would be really interesting to build that out at internet scale. And then along the journey, we decided to pivot from consumer to enterprise and um uh had had a couple of customers in trial. One day I decided to uh we decided to pick up the phone. I called Microsoft, called the central Microsoft operator uh who connected me. So essentially a cold call that connected me with uh a vice president at Microsoft, and that led very quickly to Microsoft acquiring us as the first version of its real-time business chat technology that has since evolved into Microsoft Teams.

SPEAKER_01 3:46

Right. So at that time, uh, did you have AIM, uh, you know, AO Legition Messenger and uh uh ICQ and so forth?

SPEAKER_05 3:55

They were just coming out, and in fact, we saw ICQ during our journey when at the point we noticed ICQ, literally a day after they released their initial alpha, that's when we decided to pivot from consumer to enterprise. And the other players were all, as you observed, focused on the consumer game.

SPEAKER_01 4:19

So how did you uh decide to sell to Microsoft as opposed to continuing uh, you know, this was in the heady days of the uh internet, and you know, this was a land grab for new technologies. So when did you decide to uh sell to Microsoft?

SPEAKER_05 4:34

Well, it would sell to Microsoft would be a great avenue for distribution. We were really excited about the impact this could have on the business world. We were really excited about the potential of getting the technology into the hands of tens of millions of users very quickly. We could have done very well continuing to build and grow on our own, but we just saw this as a great opportunity at um at a great time.

SPEAKER_01 5:03

Right. Did you even raise money for this or did you guys just build it on your own before you?

SPEAKER_05 5:08

We raised angel money and we were on the cusp of raising our Series A VC round when we decided to sell to Microsoft. Right.

SPEAKER_01 5:18

So then you joined uh Microsoft uh to integrate uh the flash communications technology. So tell us more about uh the work that you did in integrating Flash, uh, what product it became, and then what it was like working at Microsoft versus being a founder.

SPEAKER_05 5:33

We were acquired into the Microsoft Exchange group, and the technology was first released as Exchange instant messaging in the Exchange 2000 release, which coincided with the Windows 2000 release. So that really was Microsoft's first release in the real-time business messaging space. Um, and it was a fascinating experience working at Microsoft. As a startup, as you know, we were quite under-resourced. A big technical challenge is just one example was how do we tunnel messages through firewalls? Have we managed to do that successfully? Just understanding how firewalls work, observing actual protocol transactions on the wire. At Microsoft, there's a totally different ballgame because Microsoft also made firewalls uh in and internet servers and so on. And so suddenly uh we found ourselves in a position, in a very different position of actually being involved in the protocol design committees on the internet. The I co-authored IETFRC uh 2779, for example, uh, and it was a uh a very different, very fascinating experience. Also at Microsoft, it was it was really fun to be able to work, to be able to see Bill Gates and Steve Bomber in action. These were figures we'd only read about in newspapers and so on previously. Uh it was great to be actually able to present our work to them and and engage with Microsoft in that sense.

SPEAKER_01 7:09

Right. Uh, did you miss uh your time as a startup founder, or was that you didn't uh spend enough time there uh to really find the difference?

SPEAKER_05 7:18

Well, I did miss my time as a founder in some ways. And so when my minimal required two years were up at Microsoft, I decided to go found my next startup. Yeah, yeah. Even though I was having a great time at Microsoft.

SPEAKER_01 7:35

Um yeah, so um uh what was interesting about Corton uh was that it uh you started that just on the uh dot-com bus. Probably with before the dot-com bus. So tell us more about uh the company, uh what is the vision behind it, and uh uh were you able to raise uh you know funding at that time and so forth?

SPEAKER_05 7:56

We had a big vision. It was to take instant messaging to the next level and leverage it for enterprise to consumer transactions. So, for instance, when a user booked an airline ticket on Delta, at least back then, and even to some extent today, back then it's very painful to contact the enterprise, contact Delta in this case, to say get a window seat on the flight or to make a trivial change to their itinerary. And that was an airline example, you'd have a similar issue play out over and over across other verticals, like banking or retail or what have you. And so uh um we we started right after the dot-com bust.

SPEAKER_04 8:43

Right after the dot-com bus.

SPEAKER_05 8:47

While the bust was carrying was in progress. Yeah. And we we did get about a half a million in revenue ultimately from large enterprises, but ultimately failed to grow the business at enough velocity to succeed. It was probably the richest learning experience of my life, that startup failure. It it taught me that we learn a lot more from our failures, especially from startup failures and startup successes. And among other things, for example, I learned that a true enterprise sales cycle might take six months and perhaps 80 pages of paperwork. Prior to that, my only sales cycle, if you could call it that, was helping sell Flash to Microsoft. A very different and much quicker experience in that particular case. Yeah. Um, I also learned that the cohesion of the founding team is critical to the success of the startup. That that means the word and is foundational. And I learned that revenue is king when it comes to building, scaling startups. That is really the pillar on which everything else rests. And that when seeking BC funding or seeking to scale, it's important to have those proof points with sufficient velocity to be able to uh to scale.

SPEAKER_04 10:19

Right.

SPEAKER_05 10:19

So just a few of the many, many learnings through through that startup experience. Right.

SPEAKER_01 10:24

But your question has been realized for a long time through other companies. Um why do you think you didn't get the traction? Was it the fact that the economy was in recession and companies were not willing to make new investments and so forth?

SPEAKER_05 10:38

That was a big part of it. I think the the investment climate wasn't the most conducive to starting enterprise startups um around that time in the wake of the dot-com bus. And also the idea was perhaps a bit too far ahead of its time. It perhaps made more sense with the smartphone and later technologies, 2000, probably too ahead of its time.

SPEAKER_01 11:03

Right. Got it. So then you went back to uh Microsoft uh for some period of time, uh, but that set up the opportunity for you to start Unify Square, your third company, which is your most successful company. Uh tell us about uh what motivated you to start Unify Square and what is the reason behind it.

SPEAKER_05 11:21

Sure. At Microsoft, after Courtney, I continued I ended up again on the real-time communications group.

SPEAKER_04 11:30

Yeah.

SPEAKER_05 11:30

Which eventually shipped live communications server in 2005, then office communications server in 2007, which was Microsoft's first play in the enterprise telephony space. And as I was talking to CIOs about our new product, um, I realized that CIOs loved the technology. They loved the opportunity to, for great cost savings, essentially shaving half their corporate phone bill across the entire enterprise, but were terrified uh about the reliability and quality aspects that they might reasonably expect from Microsoft with this technology.

SPEAKER_04 12:17

Yeah.

SPEAKER_05 12:18

They were coming from a five lines world where telephony infrastructure was essentially always up without question. And here they were asking questions like what the uptime of their Microsoft infrastructure would be like, server infrastructure, data center infrastructure. What would voice quality be like? Could they really trust Microsoft with that? And might their users need to reboot their phones in the middle of calls? And so even though they love the prospect of bringing a hundred million dollar year phone bill down to $50 million, these kinds of questions really kept them up at night. And it's with that opportunity of doing something, building something in the space that would address their concerns and help Microsoft deploy the technology broadly across the enterprise, that I decided to leave Microsoft and start Unify Square.

SPEAKER_01 13:19

I see. Um were you not concerned that uh Microsoft would would eventually solve the problem on their own, thus obviating the need for your solution?

SPEAKER_05 13:30

That is always a concern with anything anyone does in the tech space more broadly. But we did see that the solution is having enough complexity to it that it was hard for Microsoft to single-handedly solve everything required, just from its vantage point in the ecosystem. For example, a single phone call over, voice over IT would typically need to touch six different technologies across six different vendors. Not just Microsoft code at the servers, but also go through carriers, go through gateways, go through firewall infrastructure, other network gear, go through end-user telephony devices, etc. etc. And we believed it was structurally impossible for Microsoft to sort of take ownership of that entire end-to-end ecosystem on behalf of that end user.

SPEAKER_04 14:29

Right.

SPEAKER_01 14:29

Over to you, Gauri.

SPEAKER_04 14:31

Yeah.

SPEAKER_03 14:31

So the fascinating journey uh that you that uh you didn't get knocked down uh success, failure, back to it. You so it was ingrained in you. When you look at the journey of Unify Square, right? Uh, how would you rate that over the first two? Uh outcome, of course, investor outcome, personal outcome, and then the your customers and employees that were there. How would you rate that journey? Because that was a little later in your life with two stints at Microsoft. So a slightly different um, you know, you come to it with a slightly different uh approach than when you were just out of college, as an example. So, how would you compare that journey over the first two that it didn't bother that the first twos were uh you're playing 500 ball at that point? One win and one not so great.

SPEAKER_05 15:28

So entrepreneurship is all about trying, um, about testing, trying, repeating, persevering. Um, and the Unify Square journey, as I look back, the outcome was fantastic for all involved, all stakeholders, um, all employees at the time we we exited, um, and all investors, et cetera, et cetera. What's not as apparent is all the blood, sweat, and tears that led to that point. If if I was playing 500 ball in my first two startups, think of Unify Squares as a series of events where you put ups and downs as is typical in a startup, but over a long period of time, that through perseverance, through the right actions from all stakeholders involved over that time really helped drive the company to a great eventual outcome. So absolutely fascinating experience and entrepreneurship.

SPEAKER_03 16:32

Got it. So let me kind of uh dig a little deeper, right? During your Unify Square journey, you and the board and the investors decided to change management. You brought in an outside CEO as an example, and you change your role compared to the first two, where you stayed as a founder CEO through its exits, whatever they may be. As entrepreneurs who listen to you now, uh it's jarring. You know, you could classify and put yourself in the category of Steve Jobs, who was also asked to step down from the CEO role in a different light. But how would you advise entrepreneurs today who are passionate founders, who understand it, that um the change was, whatever it may be, good or bad, was was executed and you stayed with the change to come to a successful outcome.

SPEAKER_05 17:24

That's really key. And in my own experience, as you observed at Unify Square, at one point I was actually asked by my board to step down from my CEO role, but then continue on in a CTO role. And at the time, I was very confused about why that happened. There was no explicit dialogue with the board about that upcoming change. It sort of came completely by surprise. And on a friend's counsel, I decided to stay with the company. I was advised that my staying on as CTO, just as the board was asking me to, was actually vital to the company's success in the long run. And that's how it ended up being. And um, it was then that through really understanding what had happened, which is a multi-year process for me personally, I realized a couple of things that I would advise future founders, my situation. One, it's just reality that 80% of founder CEOs don't continue as CEO at some point as their business scales. So it's actually the common mode of operation at some point before a company goes public. And two, um, the point at which a company, at which the founding team gives up more than half the company's control to investors, as you might expect, tends to be a super important trigger point where investors look seriously at just bringing in a CEO of their choosing to run things. And that's just the way things are. Everybody in the Unify Square case was doing what they were expected to or were supposed to do in situations like this. Uh that that that's how things roll. And um third piece of advice would be it's not for a founder, it's not about them personally, it's about the company's success. So to to the extent they remain deeply invested in the company's success, um, they they would seek to do founders should seek to do what's what's right uh for for the company as a whole.

SPEAKER_04 19:46

Right. So the advising just go ahead. Go ahead.

SPEAKER_05 19:52

And and just just to follow on, in my case, after the transition, and as I look back um on the four years after that transition through exit, the board brought in um someone uh brought in a leader with a sales and marketing background uh from Microsoft. Um, that helped the company get to a predictable growth curve. And so that did good things for the company in a different dimension than I had getting the company stood up from scratch and getting to uh a significant revenue point and global footprint and so on. And so in the end, it was great teamwork all around that that that carried it in.

SPEAKER_03 20:39

Yeah. So you sold Unify Square to UNICES, right?

SPEAKER_04 20:44

That's right. What was so was this your old instinct of cold calling UNISIS like you did with Microsoft?

SPEAKER_03 20:52

How did this start? Was UNISUS a partner, customer already, or you said, hey, let me just call call them. It's worked for me before.

SPEAKER_05 21:02

So it's background. Uh when when I first picked up the phone to call Microsoft, my first startup, the average age of my company's management team was something like 25. This time, fast forward uh to Unify Square. Um, when we decided it was time to exit, our average age of our management team was double that.

SPEAKER_04 21:26

Something like that.

SPEAKER_05 21:32

And so wiser heads prevailed. Uh, we decided this was during COVID. We we realized enterprise communications was just uh void communications and virtual meetings were taking off during COVID. Um great opportunity to get our Unify Square footprint into uh a broader platform, just like we had done at um at Flash a long time before. And so this time we actually began a very deliberate process. We recruited an investment banker, insight partners, and went through a very structured six-month process to determine who might be the best fit for Unify Square into a deliberate process.

SPEAKER_03 22:19

So it was a this time around, you said the opportunity is now, let's go through a structured process. But still, the picking of UNICES over other shooters was one that made sense, right? Was there something about them that they already had a relationship? Or you I'm trying to see, are there signals you picked up with that interaction that made you think this is the right fit for us as a company?

SPEAKER_05 22:49

We did not have a prior relationship with UNISIS at all. And as the process unfolded, um, and I gather our bankers reached out to 150 potential candidates, so companies that might potentially be interested in acquiring us. Uh UNISIS emerged as a front runner early in that process. We then understood with some more context on UNISIS that we could actually add a lot of value to UNISIS's existing business. As you know, UNISYS has a storied almost 2005-year-old plus business doing large-scale mission-critical infrastructure, mainframe computer systems, and large footprint computer installations for some of the largest customers in the world. For example, McDonald's is one of several large global corporations relying significantly on Unisys to run key aspects of their day-to-day operations on the IT front. And so in Unify Square, UNISYS saw an opportunity to incorporate not only the latest technology in enterprise communications, and so be seen as more of a modern leader in enterprise communications, but also saw an opportunity to acquire early innovation in AI. As CTO, I personally led our AI efforts at Unify Square, applying AI to all kinds of enterprise AI communications situations. And Ulysses recognized that potential early to really incorporate AI into the fabric of what it operates, what it offers, these large enterprises as a company. And so today you have many folks on the Unify from my Unify Square team senior leadership positions at UNICES. Helping take the company boldly into the modern era.

SPEAKER_03 25:00

So when this transaction happened, was there, did you stay on for a while? Or because you've taken time off since Unify Square, you've not publicly announced anything yet. Was this while in the case of when you sold to Microsoft, you went and joined there? So was this something that you deliberately decided, hey, I want to pause to consider, or UNISIS said, we got it, just uh hand us the ball. What what was the the thinking behind your pause?

SPEAKER_05 25:28

I was asked whether I was uh I wanted to stay on. Normally I would have loved to see my work through to large footprint success, like we now have at UNISIS with my previous team members and co-founders and so on. But at the same time, I did around that time have in my mind the notion of starting another startup, um, uh one that um ideally has even more impact out there in the world. And so, given that, I decided to take some time off, uh tend to a whole bunch of personal priorities and life priorities, family priorities before diving into my next startup, which I saw as being a 10 to 20 year long calling, a fairly intense calling as these startups go. So I wanted to get prepared, myself and family prepared for all of that, and decided to not participate in um a 5 square post-acquisition.

SPEAKER_03 26:35

Got it. So have you now that you have spent enough time away from uh a startup, as do you wake up and said, I gotta get going, or how what what does it feel for you to get your morning started? Because there's no real going anywhere currently.

SPEAKER_05 26:56

Yes. So I I'm about I'm nearing the end of wrapping everything I set out to to do during my couple years of uh time off. Family members will on their way, whether to school or jobs, et cetera, et cetera. And yes, I do wake up every morning um with a primary goal of um getting my next startup off the ground. I'm actively in that phase right now, or have been for the last few months.

SPEAKER_03 27:27

Awesome. So one of the uh things that uh uh Thai Seattle has benefited from your pause is you joined the board. What was your motivation? Because you've been in the community for a while, you're a very successful entrepreneur. What was your motivation to join? You were part of Thai, but you joined the board of Thai. What was the motivation to spend the time with whether it's not for profit or not is secondary, but you still have to commit time. What drove you there?

SPEAKER_05 27:57

Uh I was actually a founding member of Thai Seattle way back when in 2000, when we started, and have been involved through the years in different capacities. This time around, I felt like I have an opportunity to step up in terms of giving back to the entrepreneur community. To step up in terms of sharing my experiences, sharing advice, et cetera, et cetera. Uh, in and doing more for the entrepreneur community than I have been. That that was my primary. That's my essentially my motivation.

SPEAKER_03 28:32

Shirish and I are uh very glad that you accepted the invitation to lead Tai Seattle as the president. So, as uh those listening to us and viewing this, what is the vision you've drawn up in the last you've been there for about four months now. 2026 is a real lift when uh your presidency sets in. What is the appeal and vision that you have drawn up for Thai Seattle that you can share with our listeners?

SPEAKER_05 29:02

Great question. Seattle has a ton of promise on the entrepreneur front, as we all know. Everyone knows about Silicon Valley and its prowess and entrepreneurship. I think Seattle has absolutely has that kind of potential. And so it feels like we have significant undertapped potential across the entrepreneur community here, right here in town, given all of the tech activity, which by some measures rivals Silicon Valley, the tech footprints of Microsoft and Amazon combined, plus the others, the technology companies in town. But and then you have many, many entrepreneurs here, successful entrepreneurs ready to give back to the community and to share experiences. And we have thriving AI centers, whether, and AI talent, whether at the tech companies or at incubators like AI2 or the University of Washington, uh uh, et cetera, et cetera. So we are a world center for AI. We are a leading center for AI, right alongside Silicon Valley. So given all of that and Seattle's fantastic growth over the last 20 years, I feel like we have a very real opportunity to move the needle on impact, helping especially first-time entrepreneurs get to success. And it starts by recruiting or getting more organized around the pool of successful entrepreneurs, ready to give back to the community, ready to spend time with the entrepreneur community. That's our Thai charter membership right there. It's a great opportunity to expand that. But then the more structured and more prolific, if you will, in opportunities to help first-time entrepreneurs. Other uh, I feel we actually have an opportunity to significantly increase the number of events we do at Thai, the number of to something like 50 to 100 a year. Other Thai chapters are able to do that. There's no reason we shouldn't be able to do that and more. And also, we have an opportunity to deliver value to entrepreneurs at every stage of their life cycle. So, for instance, as a foundational event, having a monthly cadence where any entrepreneur can come, can show up, speak for a couple of minutes about their startup, and in general connect with the community in a safe space, so to speak. For many Thai chapters, that's their home. So we want to establish sort of that feeling of home for entrepreneurs. And then building on that foundation, it'd be great to have a quarterly funding workshop where any entrepreneurs in a fundraising process can show up for effective mentoring, perhaps one-on-one mentoring and coaching, in addition to group coaching and coaching that stays with them through the fundraising journey. And similarly, have a quarterly scale, growth and scale workshop, where, especially in Seattle's tech-heavy founder community, founders can show up and get coaching on how to go to market. Um, what are sales operations that might work for them? What are GTM motions that might work for them? Again, in coaching settings that stay with them through the journey. So that's just the tip of the iceberg in in terms of the potential we have for our programming. Um, I think if in uh 2026 we could establish that infrastructure or or a little chunk of it, that'd be a great foundation to build on for the years ahead.

SPEAKER_03 32:58

Sort of we are Sharish and I are extremely glad that uh uh you're leading Thai Seattle this year and giving us all the leadership that it requires and deserves so that the community can benefit. So thank you very much for that. Appreciate it. I'll send it back to Sharish to uh wrap the podcast. It's been fascinating to hear your journey. I'm sure entrepreneurs will enjoy listening to you.

SPEAKER_05 33:25

Thank you so much, Gauri and Sharish.

SPEAKER_01 33:28

Thank you, uh Soro. Um remarkable story. Uh thanks for uh sharing some of the lessons from your experiences. And uh I uh concur with Gauri. Uh you have a great week. Look forward to working with you in really uh making sure that we can implement many of the programs that you uh have articulated today. So thank you again.

SPEAKER_05 33:49

Thanks. Really looking forward to working with you as well on this.

SPEAKER_02 33:53

Thank you for listening to our podcast from Startup Biggsit, brought to you by DAI Seattle. Assisting in production today are Isha Jain and Mini Varma. Please subscribe to our podcast and rate our podcast wherever you listen to them. Hope you enjoyed it.