Serial entrepreneur Sunny Gupta has scored some big wins with previous startups -- selling Performant to Mercury Interactive in 2003 and selling iConclude to Opsware in 2007. Now he's heading up a new firm called Apptio that helps companies assess their IT costs and reduce them -- often by moving them into the "cloud." Gupta talked to TechFlash recently about dealmaking, the grim economy, and why he thinks cloud computing makes sense in the current environment. An early adopter of Amazon Web Services, he also gives his take on Amazon's cloud-computing business.

You've had a good run of selling startups. What lessons have you learned during those deals?
You have to believe that there's a very strong value proposition and you can go it alone. You have to be able to say no. We said no five times in the last company (iConclude) and that's pretty scary because you're looking at how something like this can change the life of yourself and your employees forever, how this can return a great result for your investors. People throw will throw multiples at you and say, "This is the standard multiple and you should get taken down for 3x your revenue or 5x your revenue because that's what enterprise software businesses get sold at." If that was the case, I would have been selling iConclude at $10 million instead of close to $70 million. ... More on the personal and people side of things, acquisitions create big turmoil in a lot of your peoples' lives. These people join a startup and now all of a sudden they're part of something bigger. Those sets of challenges tend to be pretty hard. Also during acquisition time, all the economics come out. It's almost like an open book of financials: "Hey, what do the founders own, what do the employees own?" It always comes out. There's been a lot of learning around that. I don't really openly discuss it, but if people ask me what percent of the company I own, I'd rather be upfront in the interview process, because I don't want the disappointment later.

What is it like as a startup to join a larger company?
The transition is pretty tough. As a CEO, it's pretty tough, not only for the CEO but for the employees. For me, it's hard because you're going from running the company to being part of a larger agenda and basically not being the person in charge, and actually losing a lot of control of your team and your process. That's the part I struggle with. Our employees struggle a bit too because all of a sudden they become a smaller division in a big company and you get demoted two levels below. On the positive side, the part which is pretty exciting is the broad level of adoption of your idea and your technology. If I look at the iConclude product, that's one of the industry leading products today ... A lot of that was a result of Opsware buying us, and then HP buying us, and all of a sudden getting this broad channel and sales access to customers which would have been much harder to do on our own in the same period of time.

What is Apptio's business model?
(It's) really helping understand the cost of delivering IT services. What is the cost of email? What is the cost of desktops? What is the cost of delivering applications? Once you understand the cost, it's helping businesses, especially in this current economic climate, reduce costs in their environment ... What if instead of using my storage, I outsource my storage? What if I move my infrastructure into the cloud? What is the impact on cost if I outsource my email? So making a lot of cost reduction decisions. For the first time (Apptio is) able to offer a bill of IT to the customers, just like you get a cell phone bill, to compare and benchmark your cost to other people in the industry. In this economy, it's all about optimizing the cost, understanding your cost and reducing your spend on IT.

What is your take on the economy now and how it will effect Apptio?
At a personal level, on the economy, it's pretty disheartening and it still seems like we've got another period of time, whether it's six months or 12 months, of a level of uncertainty and downward spiral. On the Apptio front, we believe we're one of the few unique companies which is taking advantage of the economy. Because the worse the economy gets, the better our business is getting. Because it (the economy) is putting increased pressure on businesses to examine every cost. And one of the big areas of cost tends to be IT. So everybody is looking at those costs and saying, "Hey, we have alternatives like outsourcing and going to the cloud. How can we reduce our costs?" In order to make the decisions, they first need to understand the costs. So Apptio is kind of playing the key role in helping companies in this economy to manage the IT spend and reduction of expenses.

How is the state of the M&A market affecting your plans?
We are pretty motivated to go for a long time on our own. We believe this is an opportunity for us to play offense rather than defense and really build the business. We have some work in front of us for the next couple years to really build out the company and the customer base. We think the valuations are pretty depressed. A lot of the big companies are just digesting their portfolios and cutting costs. We look at this economy as a good thing for us because we think there will be less people knocking on our door. It will give us an opportunity to build the business.

With iConclude you were one of the early adopters of Amazon Web Services. Tell me how you're working with Amazon now.
We're working with Amazon on multiple fronts. We're a customer of Amazon Web Services, especially EC2, for some of our nonproduction customers. So that's one element of the relationship. But the more interesting element of our relationship with Amazon is we're helping customers transition some of their infrastructure into the cloud, especially Amazon. So we can really help customers baseline their costs of IT -- running their storage, their servers or their databases -- and then help customers compare what would be the cost impact of moving to Amazon. So that's driving great opportunities for us in the market.

What's your take on cloud computing generally?
I'm a big believer of the cloud computing model. The question is always around the adoption. It's starting to happen ... We're seeing a tremendous around of adoption around test use cases, around development use cases, around non-mission-critical production use cases. As the cloud models incorporate more control and more security into their platforms, that, we think, is going to be e the big enabler of moving mission critical processes to the cloud.

Amazon Web Services attracted a lot of startups initially. What does the company have to do to attract larger enterprise customers?
It comes down to three things. One is the cost element. Showing customers how it's cheaper for them to move into the cloud. Certainly we think that's where Apptio plays a key role. The other two areas are really, enterprises want some level of control over their infrastructure. They want to make sure, for example, "Can I tweak my load balance? What kind of control do I have over my infrastructure because there are mission critical applications which are running." The third element is security ... A lot of the auditing requirements and security compliance is to let the enterprises feel their data and applications are secure.

You've worked with some of the same investors over and over again like Matt McIlwain of Madrona Venture Group (Madrona, Greylock Partners, and others invested $7 million in Apptio in late 2007). Is that something you prefer?
There's a set of people you develop a deep relationship with. They know your strengths and weaknesses and you know their strengths and weaknesses, but mentally you feel like you're on the same wavelength. So getting a new business going and getting one of the investors like Matt McIlwain -- who's just been a great partner to me all throughout my career -- is incredible because both of us understand each other's language and there's a lot of mutual trust. And I know he'll add a lot of value and he trusts that I'll create a lot of value for their portfolio. Sometimes getting a new person involved may create risk because you're going through that whole exercise of getting to know each other and feeling out what your strengths and weaknesses are. This way you can actually hit the ground running. When we funded Apptio, it was just a simple call to Matt, and over a coffee and a beer we worked out the investment.

Where are you from?
I grew up in India, in a town north of New Delhi. I did my high school in India and did my bachelor's in computer science at the University of South Carolina.

How did you make your way to Washington state?
I worked at a bunch of different companies. My first job was at IBM, then I worked for another software company out of Boston. Then I founded another company in 1996. I was close to 26 at that time. That was my first entrepreneurial experience. Within a year and a half we sold that company to Rational Software and Rational had a big presence in Seattle because of the Microsoft relationship. They were starting to build that. We ended up moving. I never thought we would stay here because of the rain, but I just fell in love with the place. So I've been here since '98.

What kind of car do you drive?
I drive a Porsche 911, a couple of year old car.

What's your favorite restaurant?
Harvest Wine. It's a small tapas place on Madison Avenue. It's one of those places where my wife and I escape away once a month.

What's something surprising people don't know about you?
Intensity. Sometimes people don't know how intense I really am.