The baton is passing


By Dheeraj Pandey
| min

The 5 yr journey

Nutanix will be exactly 5 years old in another month, since its incorporation in September 2009. In this time, we’ve raised $13.3M (July ’10), $25M (Aug ’11), $33M (Jul ’12), and $101M (Dec ’13) in a journey from Series A through D that had us join forces with world-class investors. Today, we are raising another $140M at a valuation greater than $2 billion — through an exclusive sale of preferred shares to two of the world’s largest institutional investors, who are Boston-based and manage around $3 trillion in combined assets. The baton is being shared between VCs on Sand Hill Road, world’s largest investment banks who invested in Series C and D, and now public market investors in Series E. The list of friends who want us to succeed is growing. While our well-wishers have always been long-term holders of stock, the newest investors are really (really) long investors.

So why didn’t we go public instead?

We raised an IPO-like amount, at an IPO-like valuation, in a private round with institutional investors who typically buy at IPO time. This company is not even 5 years old. Unicorns typically take 7+ years to liquidity. With our business momentum and our current valuation, we are already defying conventional laws of company-building. By staying private for another year or so, if we could take really good care of our employees, customers, and partners, we’d have built the foundation of a company that will take really good care of its investors when its public. We’re barely scratching the surface of what Nutanix could someday be — a technology bellwether built on the pillars of consumer-grade* design and web-scale engineering. Our ambition is much bigger than what you know and see of this company today, hastily classified by so-called experts as a hyperconverged hardware vendor. We surprised those industry pundits by doing the Dell OEM deal, and all the “software-defined” hypocrites were left scratching their heads on how to respond. We will surprise many as we continue down the path of building the baddest control plane in the industry — simple, intuitive, scalable, and consumer-grade. Once again, like our storage plane, we plan to kill it with our attention to design and web-scale engineering.

The baton will surely pass to the public investors some day. Between now and then, we will be heads down building the character of this company — culture, (business) values, and a social network of all-weather friends.

And what will the money be used for?

As you can see, we are at war. And to deal with the shenanigans of big companies, we don’t just need the technology muscle, but also some world-class sales, marketing, distribution, and packaging muscle. 

This battle with EMC and others will not happen purely on our turf (technology, product superiority), but on their turf (sales and marketing). Through their marketing flash-bang, they are used to befuddling the customer and selling a product roadmap that is intended more to slow down disruptors than to win in a head-to-head deal.

We’ll use the new money to innovate — on product, on sales, on marketing, on packaging, on distribution, and most importantly, on user experience (design). Every decade, a few bellwethers disappear, and new ones are born. In the 90’s, Wang Labs, DEC, and SGI were large companies that vanished almost overnight; Cisco and NetApp were born, and Oracle prevailed over Informix and Sybase. In the 00’s, Nortel and Sun disappeared; VMware was born and Cisco was reborn. In this decade, a few bellwethers will disappear under their own weight and shifting sands of enterprise computing. New companies will emerge. The baton will pass from the old to the new. We stand a chance to hold the baton. But it won’t be easy.