back to article Pure Storage opens wide, VCs shovel in yet MORE millions of $$$

All-flash array startup Pure Storage has just trousered another $225m of funding, less than a year after enjoying a $150m E-round. Why on earth does it need more cash now? The cash, according to a Pure press release, will “support the continued acceleration of its market trajectory and international business expansion through …

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  1. Anonymous Coward
    Anonymous Coward

    Not that Pure Storage makes a bad product, but this is already a glutted market. Many major players, EMC, IBM, Cisco, have acquired Pure Storage competitors. There are a host of other companies out there that offer similar all-Flash arrays. It is not the highest performance all-Flash array, IBM FlashSystem is, and I don't see anything else which is completely unique to Pure Storage. In order to be wildly successful, Pure Storage would have to be objectively better than the other better funded competitors or first to market.

    1. Matt Bryant Silver badge
      Happy

      ".....We here at the Reg storage desk think that Pure has decided not to have an IPO until it has shown it can meet and beat mainstream storage array supplier competition....." Me at the cynic storage desk thinks that Pure is gambling on being bought by a competitor, returning a nice profit for the investors.

    2. Anonymous Coward
      Anonymous Coward

      There's a difference between a glut of companies/products and a glut of comparable products. These guys have a product that works great (maybe not the best at any one parameter, but overall) while many competitors are "one spec wonders" or "can do a few things, but missing critical factors like real NDU".

  2. Trevor_Pott Gold badge

    "If it can do that and ride a growing flash array wave then a successful IPO at, say, a $3bn to $5bn valuation could be possible. That'd be highly profitable for the VCs who are now betting big on the outcome."

    Um...Pure has had at least $470M pumped into them. A $3B IPO would be substantially less than 10x flowing back to VCs and even $5B probably isn't going to see 10x flowing to VCs, depending on how big a share the founders still have. I humbly suggest that you're off somewhat in what they are going to be seeking from an IPO. $8b-$10b seems more likely...

    1. Chris Mellor 1

      Wow Trevor, just wow! An $8 billion- $10 billion valuation is .... well, wow!!

      Chris.

    2. Anonymous Coward
      Anonymous Coward

      There is no way they are going to get a 8-10b valuation or a 3-5b valuation. NetApp has an 11-12b value right now... and about 100x the revenues of Pure Storage. Violin Memory has less than a $400m value.

      1. Trevor_Pott Gold badge

        I didn't say they'd get it. I said that's what they'll be aiming for. I have no idea if they'll get it only because I am absolutely convinced that we are within 18 months of the collapse of the bubble. If they don't IPO before then, they're probably done for.

        But what VC doesn't make a play for at least 10X return? Let's be real here, people: venture capitalists don't invest a half a billion dollars into a company without expecting at least 10x. Not when there are WhatsApp deals going on left and right.

        NetApp is chained to the past. Technologically and culturally. They don't have the constitution to be cannibalizing their own efforts in order to feed the future and that is leading to all this nippy little rats eating their lunch. Their valuation is so low right now not because storage is inherently a low-valuation sector of IT, but because they are fundamentally unable to adapt to the changing landscape quickly enough.

        Could Pure get away with $8B? If they IPO very, very quickly and they manage every single aspect of it up to that point perfectly, then yes, I believe they could. Will they get $3-$5B? Unless something goes horribly, horribly wrong, yes they will.

        IPOs aren't about what the company is worth now. It's hype and drama about the "promise" and "potential" of the company.

        At the end of the day, storage is huge. Bigger in most ways than compute and bigger even than networking. China will cut networking to shreds in short order just as it has done with compute...but storage has a long way to go based solely on the promise of doing every increasingly clever things with infinitely expanding amounts of data. The market for storage is - quite literally - unlimited.

        Pure, like a few other storage startups, has a culture that seems able to innovate. To generate new ideas and proactively seek out new markets instead of react. Unlike a lot of storage startups they have a metric hoo-haw of money to play with and a few folks who are really, really determined to get things right instead of beta testing on live customers.

        Timing is everything. If they get in before the bubble collapses they could be one of the last big IPOs of this cycle. After all, they have real-world value when compares to a Twitter or a WhatsApp, and if you take a moment to talk to their actual customers, they don't just have "users", they have acolytes.

        It's going to be an interesting next year and change before the bubble goes pop. Then it's going to be a spectacular next 2 years while the carnage ensues and the body count rises.

        1. bytelover

          Not too sure if your analysis is correct ;-)

          Storage is a big market, correct. But there is a clear trend of moving functionality towards higher layers - vSAN, Microsoft Storage Server, OpenStack/CloudStack, etc. This reduces the storage array to a rather dumb box with little extra value and therefore is a risk to any of the array vendors. The market for storage is certainly not "unlimited" and it remains to be seen how much the array vendors can gain in this market. Definitely not a situation that is as easy for the array vendors as you seem to think...

          Culture at Pure? Well, most of the employees joined a few month ago and came from different places with very different culture. Hard to believe that any special culture already exists at Pure. It takes time to establish a really unique company culture with so many new people. They might be on a good way towards a unique culture but its just extremely unlikely that they current have anything special outside of a small inner circle of day 1 employees.

          Pure needs all the VC capital to headhunt good sales reps from the established array vendors in the hope that they can use them to get access to more potential customers. They have quite a few Ex-NetApp people on board (as well as many Ex-EMC). So people that come from a company you described as "culturally chained to the past". And all of a sudden these same people have a highly innovative culture the moment they join Pure? Does that sound strange when you read it out loud? ;-)

          There's nothing special about Pure products, in fact they still lack a lot of functionality that is considered standard in traditional storage arrays. And there are quite a few indictions (go through some of the SPEC benchmark results) that traditional arrays with SSD backends deliver the same performance as a Pure box - but will all the features and proven reliability of an established product. Is seems that you don't need as much secret flash sauce as some of the startups try to make you believe.

          1. Trevor_Pott Gold badge

            I agree 100% that the array vendor is ultimately toast. I also believe that Pure is one of the companies out there that not only know this, they have the will and capability to adapt to the reality of Server SANs ultimately taking over the market. NetApp does not. (And no, it won't be VMware that dominates storage with their VSAN, no matter what VMware's desperate "we are the one size that fits all" marketing would have you believe.)

            Culture flows from the top. My understanding of Pure - and please, do correct me if I'm wrong here - is that anyone can make a contribution. There is no massive internal red tape, no management egos to bruise; anyone can have a good idea, they are all accepted for consideration, everything is discussed and much is pursued. (Though limited resources dictate some level of choosing what to focus on at the moment.) I am led to believe employees at pure are excited, engaged and looking at how to leap beyond their current offering to take full advantage of the rapid evolution of the market instead of believing that they have the solution to everything as it stands now.

            Why do you think people leave EMC, NetApp and so forth, hmm? Have you ever talked to these people? Why did so many of them go and start a storage startup, or join one? It is because they felt they were working in straightjackets at their previous job. That they were being strangled by a joyless and feckless bureaucracy. That their contributions mattered even less to management than they did...and they mattered not at all.

            In situations like this it is usually the best and brightest that leave first. They are the ones who most readily chafe under the gravitational pull of stagnation and they are the most likely to be desired and demanded by others. VMware has had this problem for some time, and it's been an open secret in the valley for years now that if you want a VMware executive for your company it isn't particularly hard to get one. The joke is that all of VMware's top people can be found on Craigslist.

            So no, it doesn't sound at all weird to say that the culture of a startup composed largely of EMC and NetApp refugees is different from the companies they fled. The culture flows from the top and is given colour and flavour by those at the bottom (assuming they are given the opportunity to contribute). That you don't get that makes me question whether you actually talk to any of these people or whether you have a vested interest in the status quo.

            As for this statement: "There's nothing special about Pure products, in fact they still lack a lot of functionality that is considered standard in traditional storage arrays. And there are quite a few indictions (go through some of the SPEC benchmark results) that traditional arrays with SSD backends deliver the same performance as a Pure box - but will all the features and proven reliability of an established product. Is seems that you don't need as much secret flash sauce as some of the startups try to make you believe."

            Marketing horsepucky.

            I will agree that there isn't anything special about Pure products when compared to other similar startups, but don't pretend for a moment that big daddy EMC or NetApps's archaic trundling shite is anywhere near as good as the stuff turned out by the startup crowd.

            Today's startups are more performant in a wider range of real-world scenarios than either EMC or NetApp. More than that, they are more adaptable and less bogged down with legacy cruft. "Special Flash Sauce?" You're goddamend right it's necessary. More today than it was yesterday and more tomorrow that it is today.

            Flash is not the same as a hard drive. It cannot be treated like "just a fast hard drive". Doing so will not only wear a hole through the middle in no time flat, it isn't going to let you actually maximize throughput for the equipment you have, and that's important because flash costs $virgins. More to the point, workloads are becoming ever more densely packed as compute capacity within a single node soars.

            Network links are getting fatter and that means that we're trying to run more and more and more and more workloads off the same storage. To think that EMC and NetApp with their archaic operating systems and spinning rust drives are going to handle this going forward is the worst kind of bad joke. They aren't. They can't do it now. I have a list of sysadmins longer than a city block who spit out EMC's name like a curse and would rather work a road crew than deal with NetApp ever again.

            They put in a Tinrti, or a Tegile, a Nimbus, Skyera or Pure system and never looked back. People move to Nutanix, SimpliVity or Maxta and they don't come back, and of the few I know still stuck using EMC and NetApp where they have an actual say in which storage vendor gets bought, they are either trying to plot a quick exit or climbing the walls to get hold of Proximal Data.

            NetApp and EMC are expensive. Ridiculously, horrifically, hilariously so. They are expensive not just in the up-front cost of the array, but they need more space to do the same damned job as their more nimble brethren...and for what? And what does that future look like, when the people cheering rah-rah for those stagnant putzes are decrying the future and championing the past? Why would anyone attach their future to such an outfit except out of fear?

            (part 2 in next post)

          2. Anonymous Coward
            Anonymous Coward

            "Culture at Pure? Well, most of the employees joined a few month ago and came from different places with very different culture....So people that come from a company you described as "culturally chained to the past". And all of a sudden these same people have a highly innovative culture the moment they join Pure? Does that sound strange when you read it out loud? ;-)"

            This is completely wrong.

            The old companies you refer to are dead animal carcasses that represent zero opportunity for personal and professional growth. The best and the brightest flee. Pure is essentially an all-star team. Stars from losing teams are an amazing resource, and they share a passion that is a culture in and of itself.

            At other old companies, the meritocracy that attracted the best and the brightest gives way to the "Nouveaucracy". Shiny new people from other old failing companies come in under the banner of "they must know stuff that can save us". When a Nouveacrat arrives, existing employees become names on a chart. Rock Stars end up reporting to Middle School Music Teachers. It becomes "Survivor" where the strongest are voted off of the island. So the Rock Stars leave.

            And go to places like Pure and Nutanix and Nimble.

            The "culture" is simply "excellence" and the immigrants bring it with them to places where they find kindred spirits.

        2. Anonymous Coward
          Anonymous Coward

          Yeah, I think we just fundamentally disagree. Storage is not a great market anymore. Storage is commoditizing, prices are falling rapidly year after year. The overall market is growing rapidly in terms of capacity, but not the high end market (i.e. the sort of storage that would require $10,000 per TB Flash storage). The growth is in the "I don't know why we need to keep this data, but I guess we need to... lets buy another filer" market. Also, just because a market is growing doesn't make it a great market. x86 servers are a growing market, companies want out because they are all more or less the same and, as a result, profits are low.

          Why the VCs put up $500m for a hardware company is an interesting question.... I have no idea. I would imagine that Pure Storage convinced some VCs, who are not all that knowledgeable about storage, that their system would provide a "revolutionary" 10x improvement upon current disk systems... failing to mention that they are using industry standard components which anyone can buy... no barrier to entry. As anyone can buy SSDs and presumably other types of Flash media in the future, the high prices points are going to fall and keep falling. I don't think this is going to work out for the VCs.

          I agree that NetApp is old hat, technological painted into a corner, and valued as such. Still though, NetApp has a huge franchise and relatively loyal install base (not as loyal as they used to be though). The odds that Pure Storage does the same, in the face of competition from IBM, EMC, Cisco, and 20 other players offering the same thing, is unlikely. NetApp is the only storage company in the last 20 years to become large and successful and that is because they were playing in a space, NAS, that the major providers had neglected. None of the major providers are neglecting Flash arrays, it is their storage strategy.

          I would expect any IPO to look a lot like Violin's IPO. Lots of fanfare and then people realize that they are one among many in the market and have to compete head-to-head with the incumbents. Could be wrong, but I doubt it.

          1. Trevor_Pott Gold badge

            Spinning rust is commoditising. Building the physical box that storage goes on is commoditising. The features that yesterday EMC and NetApp could charge squillions for are commoditising. Storage is not.

            The demand for storage is unlimited. The challenges of storage are equally overwhelming. We continually need to store our stuff in new ways, with differing levels of redundancy, or long-term, or temporarily, or securely, or in a tiered fashion....the list goes on. There are storage challenges we haven't even thought of yet because the technologies to cause those challenges hasn't yet emerged.

            Compute is nothing more than a race to the bottom on the price of silicon. CPUs, GPUs, ASICs and more; who can make more numbers crunch faster. We hit the ceiling on single-threaded speed ages ago and it's been stagnant ever since.

            Networking is - like storage - a potentially unlimited market. Unlike storage, networking has been dominated by a monopoly for so long that the single biggest innovation that can occur is breaking the monopoly and commoditising what we already have. That is occurring as we speak.

            SDN in the form of Openflow and like things will occupy networking nerds for the next decade, if not more. There isn't room in that market for too much innovation, because the battle to defeat Goliath still hasn't been won. Cisco's icy claws need to be uncurled first, and that will stall networking for some time. Besides, networks aren't the bottleneck today: storage is.

            There is plenty of room for storage to grow yet. Whether you personally like the startup scene or not.

            Let me try to be clear about this: commoditisation is a good thing. Companies have only so many dollars to spend. When the money is no longer going into high margin proprietary hardware then it can go into actual innovation. Slash the margins and get the hardware for near-cost and then you can invest your time (as an industry) on doing amazing things in software. And amazing things are being done!

            The value of startups doesn't come from creating locking and milking customers for as much margin as possible by making things as incompatible as possible or requiring that you buy every replacement part/service contract/etc from the original kit shifter at stupid prices. It comes from making something people actually want using the best, brightest and most leading-edge talent that's out there.

            The value of startups comes from creating a culture and a working environment that lures away the best and brightest from the fossilized legacy vendors, starving them of talent so that they cannot possibly compete.

            Legacy vendors strangle customers, squeezing them until every last dime is extracted, then discarding them without a second thought. Startups strangle legacy vendors, draining the lifeforce from them, the customers and eventually the mindshare until they are top dog and must engage in legacy practices in order to defend their territory.

            This is the circle of digital life. You may not like it, but you do have to live with it.

        3. El Storage Master

          10x?

          Politely, you are inventing data here.

          Go into Thomson's/Dow Jones' VC databases (VentureExpert/VentureOne). Out of 10 investments, here is what VC investments look like over a 10-year placement period.

          3 fail

          3 drag on painfully

          2.5 get acquired via M&A (and not always for a profit)

          1.5 go IPO (this is growing due to secondary market activity)

          Nowadays, many VCs can get a small piece of an IPO via the new secondary markets hubs (SecondMarket, SharesPost, etc.). The reality is though, that most VCs don't even bat .350 when it comes to M&A/IPO activity on traditional rounds (not including secondary market tranches in this .350). The great ones may go 2 for 10, or 3 for 10 on IPOs, but the reality is most don't even average more than 1.

          VC's get out of bad companies all of the time for a loss. They get out for 1x, they get out for 1.5 x, they get out for less than 10x all of the time, and every once in a while, they hit a grand slam. That is VC investing. For you to say 10x, as a rule of thumb, is very uninformed.

          1. Trevor_Pott Gold badge

            Re: 10x?

            I am perfectly aware of the low rate of success - especially "grand slam" success - of venture capitalism. I don't know what gave you a different impression, but it wasn't anything I wrote.

            Additionally, I never said VCs get 10x. I said they want 10x. It's the goal they try for, especially in tech. Thus what they push companies to structure themselves for, especially those heading towards an IPO, as opposed to acquisition.

            Reading comprehension. Try it some time.

            Edit: I find it exceptionally weird that you signed up an account today just to post that one comment based on what appears to be a singular lack of reading comprehension. It makes me wonder all sorts of things about your motivations...but also why the above commentary so deeply upset you.

            1. El Storage Master

              Re: 10x?

              Was there emotion? I was simply trying to correct someone riddled with so many misunderstandings. I went for the low hanging fruit, but I could spend many more posts trying to help you. Not sure I will be able to do so though.

              I have an extensive background in venture capital. 10x is your thing. There is no rule.

              Your valuation assessment of Pure is quite ridiculous, especially given they will never achieve great margins as a purpose-built hardware solution. This company is bleeding cash for growth. Once they show the world how much cash they are bleeding, their valuation will look much more like Violin Memory's, and nothing like the one you are predicting.

              1. Trevor_Pott Gold badge
                Pint

                Re: 10x?

                How do I deduce there is emotion? You cannot separate a discussion of one item - in this case my assessment that "in general, VC of tech companies aim for 10X" from a discussion about Pure. They are two separate things entirely.

                Personally, I share some of your concerns about Pure. I don't personally believe they're worth 10X. In fact, based on publicly available information, I'd say even their current ~$3B valuation is more than a little hopeful. They're a niche hardware solution in a world going SDS; their current offering isn't revolutionary, it isn't going to change the world, and it isn't enough to see them through to the end of the decade. If this is all they have, they're dead.

                Now, that said, I don't believe for a second that Pure has all cards on the table. They have a lot of the top folks from the industry. EMC, Veritas, 3Par/HP and more have all lost minds to this lot. I am not so naive as to think that they don't have R&D ongoing and even - given their size - a skunkworks project internally working to get a "one more thing" ready for prime time.

                Is it enough/will it be enough to make $3B when the bubble collapses in 18-24 months? No idea. I don't have enough visibility in there to know what the cards held close really are. I do know that a lot of really bright, really experienced people have gone over to Pure; the sort of people who do structured Due Diligence before accepting positions. That says to me that there is something more than meets the eye there, even if I, personally, do not know what it is.

                I am, however, certain that the VCs involved would not be dumping this kind of cash into Pure unless they were convinced it wasn't going straight to hell in short order. Have you looked at who's investing?

                As regards my claim that "tech VCs generally seek 10X," I am basing this statement off of guidance given to me by numerous VCs, CxOs and VPs throughout the valley. I have good reason to trust their guidance and advice. I also made a gross generalization about a field in which there is a certain amount of subtlety, something that any reader of this comment thread should have easily been able to pick up on.

                You claim to have an "extensive background in venture capital." This then raises the following issue: I have on the one hand a pseudonymous commenter on an internet technology blog making an assertion about generalized guidance that runs counter to the claims made by individuals I know and trust.

                I do not dismiss out of hand that you could be correct. Alternately, you could be a pedant, taking offense at a generalization.

                Still further you could be someone emotionally invested in the fate of Pure, seeking to grasp at any available straw to discredit everything I said by focusing on a generalization for which any number of exceptions could easily be found. (Given your inability/unwillingness to separate Pure from the 10x statement in order to discuss this more granularly, I lean towards this interpretation.)

                Ultimately, I don't have enough information about you to judge. You're a pseudonym: functionally anonymous and with no posting history. I do have information from my sources, and even from just watching the market. I even - shocker of shocker - have information and analyses that I can't reveal because it would compromise my sources . That's part of the job.

                So, we're at a crossroads here. One one where you and only you can set the direction. This seems to matter a great deal to you - and it matters not at all to me - so it seems fair that the ball is in your court.

                I use my real name, and information about me is easy to find all about the internet. Send me an e-mail. Tell me who you are, what your credentials, work experience and so far are. Whom do you represent? Whom do they represent? What do you feel I am wrong about, and why?

                I'll gladly arrange to do a full-blown interview with you, then take that information and sit down with my other contacts and get their point of view on the matter. We'll see what they have to say and present the information in an article.

                I don't have a problem being wrong. When that occurs, I want to know how and why, where I made mistakes or was misled. I want to know what I need to know to correct the error and then I usually write a blog about it so that I can share my new understanding with my readers.

                So: who are you? An experienced hand attempting to correct the errant ways of a rookie, merely an anonymous voice on the internet, or someone with an axe to grind?

                Learning and spreading what I learn is my goal. What's yours?

                Have a great day! ---> Beer, because everyone needs to chill once in a while.

  3. Trevor_Pott Gold badge

    (this post is part 2 of the above post)

    Ahh, fear. We come to the heart of the matter! The meat of the entree, the very soul of your statement. All the features and proven reliability of an established product. Classic. Sew fear, uncertainty and doubt and ye shall reap the profits of the unrighteous who dared dream of a better world! Or so goes the theory, anyways. Protip: it isn't fucking working this time.

    Problem 1: The CIO is of decreasing relevance. So that business model where you schmooze the CIO, bribe him with various things and ram your sale down the throats of IT, typically over their voiceferous objections? Not working nearly so well. The CFO is the new black today, ladies and gents, and (s)he can look at the numbers and features being offered by the startups, look at what the nerds say is needed and ask that one, horrible, shattering question:

    "why is this one 5x as much for the same thing?"

    Problem 2: Pure - and Tintri, Tegile, Numbus, etc. etc. etc. - are filled with staff from EMC and NetApp. "OMG don't you trust an an established product product more than newbies, lololololol" doesn't mean a goddamend thing if it's not only many of the same people making said product, it's is more often than not the best and the brightest from those companies doing so.

    Do I trust Pure, or Tintri more than EMC or NetApp? Absofuckinglutely. Why? Because those who were most able to seek a better deal for themselves were the ones that left. They went seeking their fortunes elsewhere because they knew that they could; they were confident in their success. Why wouldn't I trust them more than the legacy vendor desperately trying to milk every last dollar out of R&D from 5 years ago staffed by those who couldn't make the leap to a bigger payout?

    Problem 3: we don't want the past, because we're careening headlong into the future. An "established product" is great at solving the problems of yesterday. That says fucking nothing about it's ability to meet the challenges of tomorrow. A company that needs to beat the drum of "establishment" in order to cling desperately to clients - and NetApp, I am looking at you square in the eyes as I say this - is already dead, they just haven't admitted it yet.

    Maybe what you need to do is actually talk to customers. Not to CIOs. Not to people who coughed up storage mafia "protection money" at the first hint of FUD, but to those who have made the jump into the future. Ask them why they did so. I think you'd be surprised.

    It isn't just about the money - although that's always a factor - it's about ease of use. We're not just talking about interfaces or management software here (although that does sell the odd array). It's about not having to futz around with an infinite number of options in the hopes of getting the optimal solution for your workload.

    Put simply: the startups are fast. Stupidly, gloriously, overwhelmingly fast. They are fast at a price far below that of the legacy vendors. That means you don't have to bring in a storage consultant to hem and haw and test. There's no poking and prodding and "sizing workloads." You buy the thing, it goes really, really fast. If you need more than one, you buy more than one. They all go really, really fast.

    In fact, you can - and do - completely overspecify your storage needs and you do so with the shit-eating grin to end all shit-eating grins because you're still significantly cheaper than EMC or NetApp, but the deal is done and the workloads are moved in the time it would have taken mummy and daddy to even figure out which overpriced tat they were going to try to pitch you for your requirements.

    I'm not talking in the abstract here. I can sit you down with real people who have done the dance of hate with legacy storage and ended up champions and evangelists for the new guys. In fact, I'm only even able to write about any of this because that kind of investigation is my job.

    All of this, from EMC to NetApp to Pure and so forth are so far beyond my price range that I don't have a stake in any of them. There are exactly two storage vendors I can afford: Proximal Data and Maxta. Maxta kicks right royal ass (and NetApp are the dumbest company on earth for not having bought them by now, but that's another story...) and Proximal can turn just about any ancient crap into workable storage for real-world workloads. (Again, you'd think these legacy cruft pitchers would have bought up Proximal by now, especially given the new project under development. *shrug* I guess they don't like having a snowball's chance in a neutron star at the future.)

    Ultimately, I don't care if EMC or NetApp, Tintri, Pure or Skyera win. It's abstract nonsense to me. I'm a reporter from the Canadian prairies and I don't have a stake in any of these folks, not as a customer nor as a shareholder.

    ...but my sources do. They run their businesses - I would argue they bet their businesses - on the outcome of such technological races. They are not stupid people. They are not making snap judgements or jumping on bandwagons. They test, they verify, and they are innately conservative engineering types who don't like change.

    Despite this, they are embracing change. They are stepping outside their comfort zone, walking away from the likes of NetApp and EMC and behooves you - and anyone else reading this - to find out why. Why are competent, capable, knowledgeable and experiences systems and storage administrators turning their backs on "proven reliability of an established product"?

    I'll tell you this much for free: it isn't because they're stupid. And that, sir, is more than good enough for me.

    1. Anonymous Coward
      Anonymous Coward

      "OMG don't you trust an an established product product more than newbies, lololololol" doesn't mean a goddamend thing if it's not only many of the same people making said product, it's is more often than not the best and the brightest from those companies doing so."

      Yeah, it matters a lot what name is on the box, even if the same people are making the new box. Way back machine, for an extreme example, look at Amdahl which tried to compete against the IBM mainframe. The IBM mainframe was created, the engineering lead anyway, by a guy named... Gene Amdahl. Even though Amdahl was the primary creator of the mainframe, people wanted that IBM name... because if something goes wrong and the IT guy says "we bought Amdahl", people are going to say "who? what?... where do you find this stuff? why didn't you buy IBM?"... If they buy IBM and something goes wrong, no one gets fired for buying IBM. Same is true today with EMC and IBM. The LOB heads and the CFO know those names and will blame the vendor instead of the IT staff.... Not that it is all name recognition and CYA. People also assume that, even if company x has a killer product today, the big guys will continue investing and be around... eventually they will be just as good as company x in due course.

      1. Trevor_Pott Gold badge

        You're right, of course. "Who's on the box" has mattered a great deal in the past, and will continue to be a strong factor into the future.

        That said, for all the reasons I argued above, I do believe that the power of name-brand inertia is less important. There is one other reason not mentioned there: scope. The Amdahl v IBM battle occured mostly back when there were far fewer companies with computers, period...let alone companies with the kinds of complex infrastructure that we have today.

        The impact of a few people who can be bribed or who are so conservative they can't conceive of alternatives is greatly diminished by the sheer scope of the marketplace.

        Unlike oh, so many of my peers I don't believe that "One size fits all." The idea that one - and only one - company must emerge dominant in a given field and that a company is only "worth" anything if it is that dominant company is completely fucking outdated and overwhelmingly ludicrous.

        Look at storage. Storage is huge. It's a truly enormous field with unlimited growth potential. There is more than enough room for multiple companies to do amazingly well and a great many people to get spectacularly, stupefyingly, mind-blowingly rich.

        You are absolutely correct in that people assume that large companies will "catch up" to the startups. Sometimes this assumption is right (usually because a big company acquired a startup, rather than innate innovation). Many times it's wrong. Even when it is right, the large company's solution is increasingly of lower quality, promotes lock-in and is frequently proprietary. This last is important in an era where so many are moving towards rapid-iteration technology departments powered by "as-a-Service" this and "Software Defined" that.

        This is more than just some buzzwords. It's a discussion about how IT should be delivered. The DevOps movement - amongst many others - is an acknowledgement that corporate - and especially enterprise - IT has failed both the business and the users. Consumer IT leaps ahead, corporate IT lags behind.

        You can't close that ever-widening gap by doing everything exactly like you've always done it before, relying on the same companies with the same release and refresh cycles. You have to take some "risks", even where the "risk" you're taking is simply stepping out of your comfort zone and using a different vendor.

        Will every single company on earth do this? No. Do they have to for everything I've said above to be true? No.

        That's where failure of imagination comes in to play. We live in a world where you no longer need "all" or even "most" of the world to follow, herd-like, in the same direction. The industry is diverse. It is complex. And companies seek the means to differentiate themselves form one another ever increasingly by doing their IT differently than their competitors.

        That's right: many of today's companies are finding that doing IT differently from the "established industry best practices and "safe" vendors is what is giving them their competitive edge.

        The old ways are dying. The idea that every single company will do IT the exact same way using products and services from the exact same vendors is almost extinct. There are so many vendors offering so many products today that this was ultimately inevitable.

        So yes, not everyone is going to take the "risk" of trying a startup." Then again, that no longer matters.

      2. Trevor_Pott Gold badge

        Addendum: the first hit for "nobody ever got fired for buying IBM" is the Wikipedia page for Fear, Uncertainty, and Doubt. Which largely makes my point for me, but just because I feel the need to ram this particular one home...

        Queensland bans IBM from future work. We live in a world where you absolutely can get fired for buying IBM.

        Welcome to the future. Your preconceptions are no longer valid. Enjoy.

  4. Anonymous Coward
    Anonymous Coward

    I'm really bored of these comments now. I'm only adding this one to try and reduce the average comment length.

  5. kenk

    To address @bytelover I am an employee at Pure and I feel compelled to chime in from my perspective. There is a lot of information out there addressing the question "what is special about our product?" Our marketing and sales team are doing a phenomenal job of sharing our vision, but I want to address a small number of the things I see that are special about our culture:

    First as to the "culture of Pure"; What is it that makes Pure different from the big incumbent storage vendors?

    1. We are not all just re-hashed EMC and Netapp employees reinventing the same wheel. I can't say what the culture of EMC and Netapp are, because I came from telecommunications. In fact part of the reason I was hired was BECAUSE I did not come from Storage. If you read up on our founders and our back story you will see that is a big part of what makes us different in a good way.

    2. This may sound cliche but Pure Storage really is a unique and special place to work. Recently I was recognized for my hard work and given an award for my contribution over the last year I have been with Pure. That in itself was not uniquely special. Any smart company rewards hard work, but what blew my mind away was that not only was I recognized but they invited my WIFE! This would be the first time I have ever been recognized by my employer where not only was my wife invited to the celebration but my wife was called up on stage and honoured as well. That speaks volumes to the culture of Pure to me (As a side note stuff like that makes the long nights and extra hours a ton easier to justify to my wife. She feels like she plays a role in Pure Storage as well).

    3. I daily have the opportunity to challenge the way we do things. If there is a better way to do something I can make it happen! How many software engineers get stuck "coding to spec" because that is what they are commissioned to do, knowing fully well that what that code accomplishes is worthless?

    4. There are a lot of incentives for me to be at Pure, health benefits, snacks and the shenanigans just like you see on the Pure Jobs page, but what really sold me was how passionate and excited about what Pure is doing. Sure we have a ton of fun, but I really believe the "special" is in how engaged everyone I work with is in solving real problems. I can't speak for Sales, Marketing, Operations or any of the other cogs that make Pure awesome but in Engineering it has been an AWESOME ride over the last year with Pure!

    I hope this does not come across as a recruiting pitch. My goal really is to say there is a damn good reason a bunch of very smart financial analysts continue to invest in Pure Storage.

  6. craigster0

    VERITAS Influence at Pure

    Folks keep mentioning former EMC and NetApp employees at Pure, but the biggest influence on the culture is from VERITAS -- and the Veritas folk understand how to write reliable storage software that makes commodity hardware do interesting things.

    John "Coz" Colgrove, CTO and founder, was one of the founders of Veritas (he went there from Amdahl, curiously enough). Ron Karr, Director of Tech Strategy was also a very early employee at VERITAS (also from Amdahl). Matt Kixmoeller, VP, Products was a very early Pure employee who also came from Veritas (by way of Symantec). Matt Burr, VP America's sales was at Veritas as well.

    Plus, they've been hiring a lot of other ex-Veritas folk lately, some of whom were early employees at Veritas.

  7. Anonymous Coward
    Anonymous Coward

    A little basic math from grad school days.

    Current Pure valuation is at least $3.225B (after the last raise). Assume Pure was valued like a normal public company and is a stellar profit machine giving it a P/E ratio of double the average - let's say 20. It's net earnings would be over $160M, with an operating profit of approximately $220M (before taxes). It's revenue would be a 4x multiple (representing stellar growth) - so around $800M. Now assume they make 65% gross margins (excellent, differentiated product), they would have $520M in gross profit. Subtract the $220M operating profit and their expenses would be about $300M for R&D and SG&A. Let's call it $200M for SG&A (25% of revenue) and $100M for R&D (12.5%).

    So here's the Pure Storage public company P&L to justify a $3.225B valuation:

    Rev $800M (probably need to be growing >40% to justify 4x revenue multiple when public)

    Gross Margin $520M

    SG&A $200M

    R&D $100M

    OP $220M

    Net Income after taxes $160M (big consistent growth in NI to justify 20X PE Ratio)

    Don't forget I am talking about when Pure faces the realities of being public, not now.

    The point I would make for anyone going to join Pure, is that to achieve these numbers for anyone in the enterprise storage systems space would require incredible execution. How long will it take Pure to get there? To maintain strong top line growth they need massive investment, but that will drive the operating profit figure heavily in the opposite direction (and crash the valuation). If they focus on operating profit attainment Pure will suddenly see R&D differentiation drop away and sales growth start to drop significantly (crashing the valuation). They need both very fast revenue growth and even faster profit growth at the same time. But the circle can't square. It may not be possible to get there, but even if it is, it is many, many years down the road.

    For new Pure employees, that "oasis paradise" you are being encouraged to see on the horizon may simply be a mirage. Just look at the facts. Beware of joining an "exciting" pre-IPO company that has a $3.225B valuation, you are almost certainly in for a disappointment, and it may take you a long time to realize it.

    1. El Storage Master

      Anonymous Coward, the fundamental problem you have arguing with Trevor is that you know what you are talking about, and he does not. Pure was convinced to do the Series F, dilute the heck out of the employees, and be swayed towards M&A versus an IPO. Violin Memory's experience was staring Scott Dietzen right in the face, and that is what happened here. He needed to raise money, so he had to do it this way. If they show the street their statements, they go the way of Violin Memory for the next 4-6 quarters. They are more likely to go M&A, where common gets conceded more against preferred, and they may never have to show the public how bad their run rate is/was/will be. Any Pure employees still excited after an F round clearly have no understanding of what just happened to them.

      1. Trevor_Pott Gold badge
        Unhappy

        I see that rather than participate usefully and transparently in this conversation, offering the benefits of your claimed experience in a trustworthy manner you have chosen instead to resort to assertion and belittling. How very disappointing. You almost had me believing you might be more than a pseudonym with an axe to grind. Sadly, however, the standard of discourse on the internet doesn't appear to have been raised today.

  8. Anonymous Coward
    Anonymous Coward

    From El Storage Master's post above: "Any Pure employees still excited after an F round clearly have no understanding of what just happened to them."

    That's exactly what I'm wondering. I don't see how any employee there, at least anybody who's not one of the first 100 employees or an executive with lots of options, could possibly think they're going to make any meaningful amount of money, certainly not a life-changing amount of money or what's known in the valley as "F YOU" money.

    After an F round, and almost half a BILLION dollars invested, they must be incredibly diluted.

    Time will tell I guess.

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