Flash array upstart Pure Storage aims to emerge from the herd and pull off a Data Domain, having secured $150m in E-round funding and hired former Data Domain head honcho Frank Slootman, who joins its board as "a key strategic advisor." Pure says the $150m is "the single largest private funding in the history of the enterprise …
Interesting with Slootman involved as it allows some comparison with Data Domain.
I think looking back at numbers, DDUP took $41m of VC funding from some of the big-boys of the VC world. DDUP was acquired in the heady days of 2009, for $2.4bn. Market cap I think was around $1.5bn tops before acquisition. It was formed in 2001 and was bought out in 2009 after IPO in 2007.
DDUP had a simple slot in proposed that was there to displace a tech that not many people loved that well. i.e. for a lot of people it was a purchase that easily could be fitted in without disrupting anything. It had little competition. It also made it a very sexy acquisition for two big players who tripped over themselves to buy it.
PURE have raised $240m+ already. Think they have been around for 4 years. The $240m apparently values them - unsure if this means market cap - of $1bn apparently. Only in VC land does this maths make sense, but lets go with it. The stated aim here is to get big enough to park a bus on EMCs front lawn and steal share. Congrats on them having a business model VCs will fund that well. I expect the early employees (directors excluded) will be waking up this morning to find their options dramatically decreased in worth, but thems the brakes.
Violin are trying something similar. Money is about the same in funding terms. They have opened the kimono this week so you can see more about them. They are having to spend a big chunk of money on Sales/Marketing activity I think it looks.
Neither company would be a simple tuck in acquisition that brings with it a new market. EMC, HP, IBM, HDS are unlikely to acquire either - all just about have product or marketeering snake oil that put them in the game. NetApp - neither run ONTAP so that rules them out and they just suck at acquisitions anyway.
So both assume that approx $150m bucks of marketing and sales snakeoil, coupled with product leadership, will start to put a dent in EMCs side. This means winning new customers at the same time as taking EMC ones.
3PAR struggled arguably for sales even though its tech was and is highly admired. HP were desparate to plug the product gaps they had so it fitted well. they went well at the same time as DDUP. Isilon which had also really struggled was bought around then too, and they too tucked into EMC nicely to fill a gap in the file/scale space.
So I just wonder where is the future here? There is a lot of money being thrown at these guys and the VCs will always win. Its a numbers game for them. Sure be fun watching...
I can't help but think that if I were at Pure, I'd be thinking about three things:
1) Why the need for such a large pre-IPO funding round? Are the founders/execs/early investors getting partially cashed out? $150 million seems like an excessive amount to take in, even if it was oversubscribed.
2) How badly I just got diluted. Did my percentage stake in the company just drop like a rock?
3) How much more I'll get diluted if/when they IPO and have to issue more shares for the IPO.
Maybe I'm just pessimistic.
They certainly made a statement
Kudos to Pure for doing this large round. It was clearly just to make a statement that they intend to be a serious all-flash vendor. They certainly gave up a lot of equity and normally would have raised $40-50M max, but they wanted the 'ink' and to rise above the smaller players (Nimbus, Solidfire, Whiptail, Skyera, Coraid, Astute, Virident, etc ) and try to get on the same 'visibility' page as FIO, Violin, and Nimble. I think they succeeded in that objective. Whether they can succeed in the longer term is still very much in question. It's clearly not easy - just look at the Violin S1 filing!