Defy Partners leads $3M round into sales intelligence platform Aircover

Aircover raised $3 million in seed funding to continue developing its real-time sales intelligence platform.

Defy Partners led the round with participation from Firebolt Ventures, Flex Capital, Ridge Ventures and a group of angel investors.

The company, headquartered in the Bay Area, aims to give sales teams insights relevant to closing the sale as they are meeting with customers. Aircover’s conversational AI software integrates with Zoom and automates parts of the sales process to lead to more effective conversations.

“One of the goals of launching the Zoom SDK was to provide developers with the tools they need to create valuable and engaging experiences for our mutual customers and integrations ecosystem,” said Zoom’s CTO Brendan Ittelson via email. “Aircover’s focus on building sales intelligence directly into the meeting, to guide customer-facing teams through the entire sales cycle, is the type of innovation we had envisioned when we set out to create a broader platform.”

Aircover’s founding team of Andrew Levy, Alex Young and Andrew’s brother David Levy worked together at Apteligent, a company co-founded and led by Andrew Levy, that was sold to VMware in 2017.

Chatting about pain points on the sales process over the years, Levy said it felt like the solution was always training the sales team more. However, by the time everyone was trained, that information would largely be out-of-date.

Instead, they created Aircover to be a software tool on top of video conferencing that performs real-time transcription of the conversation and then analysis to put the right content in front of the sales person at the right time based on customer issues and questions. This means that another sales expert doesn’t need to be pulled in or an additional call scheduled to provide answers to questions.

“We are anticipating that knowledge and parsing it out at key moments to provide more leverage to subject matter experts,” Andrew Levy told TechCrunch. “It’s like a sales assistant coming in to handle any issue.”

He considers Aircover in a similar realm with other sales team solutions, like Chorus.ai, which was recently scooped up by ZoomInfo, and Gong, but sees his company carving out space in real-time meeting experiences. Other tools also record the meetings, but to be reviewed after the call is completed.

“That can’t change the outcome of the sale, which is what we are trying to do,” Levy added.

The new funding will be used for product development. Levy intends to double his small engineering team by the end of the month.

He calls what Aircover is doing a “large interesting problem we are solving that requires some difficult technology because it is real time,” which is why the company was eager to partner with Bob Rosin, partner at Defy Partners, who joins Aircover’s board of directors as part of the investment.

Rosin joined Defy in 2020 after working on the leadership teams of Stripe, LinkedIn and Skype. He said sales and customer teams need tools in the moment, and while some are useful in retrospect, people want them to be live, in front of the customer.

“In the early days, tools helped before and after, but in the moment when they need the most help, we are not seeing many doing it,” Rosin added. “Aircover has come up with the complete solution.”

 


By Christine Hall

Busy day at VMware ended yesterday with Ragurham as CEO and COO Poonen exiting

They say for every door that opens another closes and the executive shuffle at VMware is certainly proving that old chestnut true. Four months after Pat Gelsinger stepped down as CEO to return to run Intel, the virtual machine pioneer announced yesterday that long-time exec Raghu Raghuram was taking over that role.

That set in motion another change when COO Sanjay Poonen, whom some had speculated might get the CEO job, announced yesterday afternoon on Twitter that he was leaving the company after 7 years.

Coincidence? We think not.

Holger Mueller, an analyst at Constellation Research says that he was surprised that Poonen didn’t get the job, but perhaps the VMware board valued Raghuram’s product focus more highly. “At 50, he [would have been] a long term solution, and he did a great job on the End User Computing (EUC) side of the product before becoming COO. I guess that it is still not VMware’s core business,” he said.

Regardless, Mueller still liked the choice of Raghuram as CEO, saying that he brought stability and reliability to the position, but he sees him likely as a solid interim solution for several years as the company spins out from Dell and becomes an fully independent organization again.

“Obviously the board wanted to have someone who knows product, and has been there a long time, and is associated with the VMware core success — so that creates relatability [and stability].” He added, “At 57 he is the transitional candidate, and a good choice, a veteran who is happy to run this 2-3 or maybe 5 years and won’t go anywhere [in the interim]. And the board has time to find a long-term solution,” Mueller told me.

Mark Lockwood, lead analyst on VMware at Gartner sees Raghuram as the right man for the job with no reservations, one who will continue to implement the current strategy while putting his own stamp on the position.

“That the VMware board chose someone in Raghu Raghuram who has been the technical strategy executive inside the company for years speaks volumes about the board’s comfort level with the existing strategy trajectory of the company. Mr. Raghuram will most certainly steer the company slightly differently than Mr. Gelsinger did, but at least from the outside, the CEO appointment appears to be a stamp of approval on the company’s broad portfolio,” Lockwood said.

As for Poonen, he says that the writing was on the wall when he didn’t get the promotion. “Although Sanjay Poonen has indeed been a valuable executive for VMware, it was always unlikely that he would remain if not chosen for the CEO role,” Lockwood said.

Stephen Elliot, an analyst at IDC, was also bullish on the Raghuram appointment, saying he brings a broad understanding of the company, and that’s important to VMware right now. “He understands VMware customers, the technologies, M&A, and the importance of execution and its impact on profitable growth. He has been central to almost every successful strategy the company has created, and been a leader for product strategy and execution. He has a very good balance of making tactical and strategic moves to anticipate the value VMware can deliver for customers in a 1-3 year horizon,” Elliot said.

Elliot thinks Poonen will be just fine and will find a landing spot pretty quickly. “He is another very talented executive; he will become a CEO elsewhere, and another company will be very lucky,” he said. He says that it will take time to see if there is any impact from that, but he believes that VMware shouldn’t have trouble attracting other executive talent to fill in any gaps.

For every every executive move, there are choices for replacements, and subsequent fall-out from those choices. We saw a full-fledged example of that yesterday on display at VMware. If these industry experts are right, the company chose stability and reliability and a deep understanding of product. That would seem to be solid enough reasoning on the part of the board, even though Poonen leaving seems to be collateral damage from the decision, and a big loss for the company.


By Ron Miller

Ahead of Dell’s spin out, VMware appoints longtime exec Raghu Raghuram as its new CEO

Five months after it was announced that Pal Gelsinger would be stepping down as CEO of VMware to take the top job at Intel, the virtualization giant has finally appointed a permanent successor. Raghu Raghuram — a longtime employee of the company — has been appointed the new CEO. He will be taking on the new role on June 1. Until then, CFO Zane Rowe will continue in the role in the interim.

Raghuram has been with the company for 17 years in a variety of roles, most recently COO of products and cloud services. He’s also held positions at the company overseeing areas like datacenters and VMware’s server business. Putting a veteran in at the helm sends a clear message that VMware has picked someone clearly dedicated to the company and its culture. No drama here.

Indeed, the move is coming at a time when there is already a lot of other change underway and speaks to the company looking for stability and continuity to lead it through that. About a month ago, Dell confirmed long-anticipated news that it would be spinning out its stake in VMware in a deal that’s expected to bring Dell at least $9 billion — putting to an end a financial partnership that initially kicked off with an eye-watering acquisition of EMC in 2016. That partnership will not end the strategic relationship, however, which is set to continue and now Raghuram will be in charge of building and leading.

For that reason, you might look at this as a deal nodded through significantly by Dell.

“I am thrilled to have Raghu step into the role of CEO at VMware. Throughout his career, he has led with integrity and conviction, playing an instrumental role in the success of VMware,” said Michael Dell, chairman of the VMware Board of Directors, in a statement. “Raghu is now in position to architect VMware’s future, helping customers and partners accelerate their digital businesses in this multi-cloud world.”

Raghuram has not only been the person overseeing some of VMware’s biggest divisions and newer areas like software-defined networking and cloud computing, but he’s had a central role in building and driving strategy for the company’s core virtualization business, been involved with M&A and, as VMware points out, “key in driving partnerships with Dell Technologies,” among other partners.

“VMware is uniquely poised to lead the multi-cloud computing era with an end-to-end software platform spanning clouds, the data center and the edge, helping to accelerate our customers’ digital transformations,” said Raghuram in a statement. “I am honored, humbled and excited to have been chosen to lead this company to a new phase of growth. We have enormous opportunity, we have the right solutions, the right team, and we will continue to execute with focus, passion, and agility.”

The company also took the moment to update on guidance for its Q1 results, which will be coming out on May 27. Revenues are expected to come in at $2.994 billion, up 9.5% versus the same quarter a year ago. Subscription and SaaS and license revenue, meanwhile, is expected to be $1.387 billion, up 12.5%. GAAP net income per diluted share is expected to be $1.01 per diluted share, and non-GAAP net income per diluted share is expected to be $1.76 per diluted share, it said.


By Ingrid Lunden

Google’s Anthos multi-cloud platform gets improved logging, Windows container support and more

Google today announced a sizable update to its Anthos multi-cloud platform that lets you build, deploy and manage containerized applications anywhere, including on Amazon’s AWS and (in preview) and Microsoft Azure.

Version 1.7 includes new features like improved metrics and logging for Anthos on AWS, a new Connect gateway to interact with any cluster right from Google Cloud and a preview of Google’s managed control plane for Anthos Service Mesh. Other new features include Windows container support for environments that use VMware’s vSphere platform and new tools for developers to make it easier for them to deploy their applications to any Anthos cluster.

Today’s update comes almost exactly two years after Google CEO Sundar Pichai originally announced Anthos at its Cloud Next event in 2019 (before that, Google called this project the ‘Google Cloud Services Platform,’ which launched three years ago). Hybrid- and multi-cloud, it’s fair to say, takes a key role in the Google Cloud roadmap — and maybe more so for Google than for any of its competitors. And recently, Google brought on industry veteran Jeff Reed to become the VP of Product Management in charge of Anthos.

Reed told me that he believes that there are a lot of factors right now that are putting Anthos in a good position. “The wind is at our back. We bet on Kubernetes, bet on containers — those were good decisions,” he said. Increasingly, customers are also now scaling out their use of Kubernetes and have to figure out how to best scale out their clusters and deploy them in different environments — and to do so, they need a consistent platform across these environments. He also noted that when it comes to bringing on new Anthos customers, it’s really those factors that determine whether a company will look into Anthos or not.

He acknowledged that there are other players in this market, but he argues that Google Cloud’s take on this is also quite different. “I think we’re pretty unique in the sense that we’re from the cloud, cloud-native is our core approach,” he said. “A lot of what we talk about in [Anthos] 1.7 is about how we leverage the power of the cloud and use what we call ‘an anchor in the cloud’ to make your life much easier. We’re more like a cloud vendor there, but because we support on-prem, we see some of those other folks.” Those other folks being IBM/Red Hat’s OpenShift and VMware’s Tanzu, for example. 

The addition of support for Windows containers in vSphere environments also points to the fact that a lot of Anthos customers are classical enterprises that are trying to modernize their infrastructure, yet still rely on a lot of legacy applications that they are now trying to bring to the cloud.

Looking ahead, one thing we’ll likely see is more integrations with a wider range of Google Cloud products into Anthos. And indeed, as Reed noted, inside of Google Cloud, more teams are now building their products on top of Anthos themselves. In turn, that then makes it easier to bring those services to an Anthos-managed environment anywhere. One of the first of these internal services that run on top of Anthos is Apigee. “Your Apigee deployment essentially has Anthos underneath the covers. So Apigee gets all the benefits of a container environment, scalability and all those pieces — and we’ve made it really simple for that whole environment to run kind of as a stack,” he said.

I guess we can expect to hear more about this in the near future — or at Google Cloud Next 2021.

 


By Frederic Lardinois

Should Dell have pursued a more aggressive debt-reduction move with VMware?

When Dell announced it was spinning out VMware yesterday, the move itself wasn’t surprising: there had been public speculation for some time. But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.

The dividend route, which involves a payment to shareholders between $11.5 and $12 billion, has the advantage of being tax-free (or at least that’s what Dell hopes as it petitions the IRS). For Dell, which owns 81% of VMware, the dividend translates to somewhere between $9.3 and $9.7 billion in cash, which the company plans to use to pay down a portion of the huge debt it still holds from its $58 billion EMC purchase in 2016.

VMware was the crown jewel in that transaction, giving Dell an inroad to the cloud it had lacked prior to the deal. For context, VMware popularized the notion of the virtual machine, a concept that led to the development of cloud computing as we know it today. It has since expanded much more broadly beyond that, giving Dell a solid foothold in cloud native computing.

Dell hopes to have its cake and eat it too with this deal: it generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned. Dell CEO Michael Dell will remain chairman of the VMware board, which should help smooth the post-spinout relationship.

But could Dell have extracted more cash out of the deal?

Doing what’s best for everyone

Patrick Moorhead, principal analyst at Moor Insights and Strategies, says that beyond the cash transaction, the deal provides a way for the companies to continue working closely together with the least amount of disruption.

“In the end, this move is more about maximizing the Dell and VMware stock price [in a way that] doesn’t impact customers, ISVs or the channel. Wall Street wasn’t valuing the two companies together nearly as [strongly] as I believe it will as separate entities,” Moorhead said.


By Ron Miller

Google Cloud joins the FinOps Foundation

Google Cloud today announced that it is joining the FinOps Foundation as a Premier Member.

The FinOps Foundation is a relatively new open-source foundation, hosted by the Linux Foundation, that launched last year. It aims to bring together companies in the ‘cloud financial management’ space to establish best practices and standards. As the term implies, ‘cloud financial management,’ is about the tools and practices that help businesses manage and budget their cloud spend. There’s a reason, after all, that there are a number of successful startups that do nothing else but help businesses optimize their cloud spend (and ideally lower it).

Maybe it’s no surprise that the FinOps Foundation was born out of Cloudability’s quarterly Customer Advisory Board meetings. Until now, CloudHealth by VMware was the Foundation’s only Premiere Member among its vendor members. Other members include Cloudability, Densify, Kubecost and SoftwareOne. With Google Cloud, the Foundation has now signed up its first major cloud provider.

“FinOps best practices are essential for companies to monitor, analyze, and optimize cloud spend across tens to hundreds of projects that are critical to their business success,” said Yanbing Li, Vice President of Engineering and Product at Google Cloud. “More visibility, efficiency, and tools will enable our customers to improve their cloud deployments and drive greater business value. We are excited to join FinOps Foundation, and together with like-minded organizations, we will shepherd behavioral change throughout the industry.”

Google Cloud has already committed to sending members to some of the Foundation’s various Special Interest Groups (SIGs) and Working Groups to “help drive open source standards for cloud financial management.”

“The practitioners in the FinOps Foundation greatly benefit when market leaders like Google Cloud invest resources and align their product offerings to FinOps principles and standards,” said J.R. Storment, Executive Director of the FinOps Foundation. “We are thrilled to see Google Cloud increase its commitment to the FinOps Foundation, joining VMware as the 2nd of 3 dedicated Premier Member Technical Advisory Council seats.”


By Frederic Lardinois

Pat Gelsinger stepping down as VMware CEO to replace Bob Swan at Intel

In a move that could have wide ramifications across the tech landscape, Intel announced that VMware CEO Pat Gelsinger would be replacing interim CEO Bob Swann at Intel on February 15th. The question is why would he leave his job to run a struggling chip giant.

The bottom line is he has a long history with Intel, working with some of the biggest names in chip industry lore before he joined VMware in 2009. It has to be a thrill for him to go back to his roots and try to jump start the company.

“I was 18 years old when I joined Intel, fresh out of the Lincoln Technical Institute. Over the next 30 years of my tenure at Intel, I had the honor to be mentored at the feet of Grove, Noyce and Moore,” Gelsinger wrote in a blog post announcing his new position.

Certainly Intel recognized that the history and that Gelsinger’s deep executive experience should help as the company attempts to compete in an increasingly aggressive chip industry landscape. “Pat is a proven technology leader with a distinguished track record of innovation, talent development, and a deep knowledge of Intel. He will continue a values-based cultural leadership approach with a hyper focus on operational execution,” Omar Ishrak, independent chairman of the Intel board said in a statement.

But Gelsinger is walking into a bit of a mess. As my colleague Danny Crichton wrote in his year-end review of the chip industry last month, Intel is far behind its competitors, and it’s going to be tough to play catch-up:

Intel has made numerous strategic blunders in the past two decades, most notably completely missing out on the smartphone revolution and also the custom silicon market that has come to prominence in recent years. It’s also just generally fallen behind in chip fabrication, an area it once dominated and is now behind Taiwan-based TSMC, Crichton wrote.

Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy agrees with this assertion, saying that Swan was dealt a bad hand, walking in to clean up a mess that has years long timelines. While Gelsinger faces similar issues, Moorhead thinks he can refocus the company. “I am not foreseeing any major strategic changes with Gelsinger, but I do expect him to focus on the company’s engineering culture and get it back to an execution culture” Moorhead told me.

The announcement comes against the backdrop of massive chip industry consolidation last year with over $100 billion changing hands in four deals with NVidia nabbing ARM for $40 billion, the $35 billion AMD-Xilink deal, Analog snagging Maxim for $21 billion and Marvell grabbing Inphi for a mere $10 billion, not to mention Intel dumping its memory unit to SK Hynix for $9 billion.

As for VMware, it has to find a new CEO now. As Moorhead says, the obvious choice will be current COO Sanjay Poonen. Holger Mueller, an analyst at Constellation Research says it will be up to Michael Dell who to hand the reins to, but he believes Gelsinger was stuck at Dell and would not get a broader role, so he left.

“VMware has a deep bench, but it will be up to Michael Dell to get a CEO who can innovate on the software side and keep the unique DNA of VMware inside the Dell portfolio going strong, Dell needs the deeper profits of this business for its turnaround,” he said.

The stock market seems to like the move for Intel with the company stock up 7.26%, but not so much for VMware, whose stock was down close to the same amount at 7.72% as went to publication.


By Ron Miller

VMware files suit against former exec for moving to rival company

Earlier this month, when Nutanix announced it was hiring former VMware COO Rajiv Ramaswami as CEO, it looked like a good match. What’s more, it pulled a key player from a market rival. Well, it seems VMware took exception to losing the executive, and filed a lawsuit against him yesterday for breach of contract.

The company is claiming that Ramaswami had inside knowledge of the key plans of his former company and that he should have told them that he was interviewing for a job at a rival organization.

Rajiv Ramaswami failed to honor his fiduciary and contractual obligations to VMware. For at least two months before resigning from the company, at the same time he was working with senior leadership to shape VMware’s key strategic vision and direction, Mr. Ramaswami also was secretly meeting with at least the CEO, CFO, and apparently the entire Board of Directors of Nutanix, Inc. to become Nutanix’s Chief Executive Officer. He joined Nutanix as its CEO only two days after leaving VMware,” the company wrote in a statement.

As you can imagine, Nutanix didn’t agree, countering in a statement of its own that, “VMware’s lawsuit seeks to make interviewing for a new job wrongful. We view VMware’s misguided action as a response to losing a deeply valued and respected member of its leadership team. Mr. Ramaswami and Nutanix have gone above and beyond to be proactive and cooperative with VMware throughout the transition.”

At the time of the hiring, analyst Holger Mueller from Constellation Research noted that the two companies were primary competitors and hiring Ramawami was was a big win for Nutanix. “So hiring Ramaswami brings both an expert for multi-cloud to the Nutanix helm, as well as weakening a key competitor from a talent perspective,” he told me earlier this month.

Mueller doesn’t see much chance of the suit succeeding. “It’s been a long time since the last lawsuit happened in Silicon Valley [involving] a tech exec jumping ship. Being an ‘Employment at Will’ state, these suits are typically unsuccessful,” he told me this morning.

He added, “The interesting part of the VMware vs Nutanix lawsuit is, does a high ranking executive interviewing a competitor equal a break of confidentiality by itself, or does material information have to be breached to reach the point. Traditionally the right to (confidentially) interview has been protected by the courts,” he said.

It’s unclear what the end game would be in this type of legal action, but it does complicate matters for Nutanix as it transitions to a new chief executive. Ramaswami took over from co-founder Dheeraj Pandey, who announced plans to leave the post last summer.

The lawsuit was filed Monday in Superior Court of the State of California, County of Santa Clara.


By Ron Miller

With $29M in funding, Isovalent launches its cloud-native networking and security platform

Isovalent, a startup that aims to bring networking into the cloud-native era, today announced that it has raised a $29 million Series A round led by Andreesen Horowitz and Google. In addition, the company today officially launched its Cilium platform (which was in stealth until now) to help enterprises connect, observe and secure their applications.

The open-source Cilium project is already seeing growing adoption, with Google choosing it for its new GKE dataplane, for example. Other users include Adobe, Capital One, Datadog and GitLab. Isovalent is following what is now the standard model for commercializing open-source projects by launching an enterprise version.

Image Credits: Cilium

The founding team of CEO Dan Wendlandt and CTO Thomas Graf has deep experience in working on the Linux kernel and building networking products. Graf spent 15 years working on the Linux kernel and created the Cilium open-source project, while Wendlandt worked on Open vSwitch at Nicira (and then VMware).

Image Credits: Isovalent

“We saw that first wave of network intelligence be moved into software, but I think we both shared the view that the first wave was about replicating the traditional network devices in software,” Wendlandt told me. “You had IPs, you still had ports, you created virtual routers, and this and that. We both had that shared vision that the next step was to go beyond what the hardware did in software — and now, in software, you can do so much more. Thomas, with his deep insight in the Linux kernel, really saw this eBPF technology as something that was just obviously going to be groundbreaking technology, in terms of where we could take Linux networking and security.”

As Graf told me, when Docker, Kubernetes and containers, in general, become popular, what he saw was that networking companies at first were simply trying to reapply what they had already done for virtualization. “Let’s just treat containers as many as miniature VMs. That was incredibly wrong,” he said. “So we looked around, and we saw eBPF and said: this is just out there and it is perfect, how can we shape it forward?”

And while Isovalent’s focus is on cloud-native networking, the added benefit of how it uses the eBPF Linux kernel technology is that it also gains deep insights into how data flows between services and hence allows it to add advanced security features as well.

As the team noted, though, users definitely don’t need to understand or program eBPF, which is essentially the next generation of Linux kernel modules, themselves.

Image Credits: Isovalent

“I have spent my entire career in this space, and the North Star has always been to go beyond IPs + ports and build networking visibility and security at a layer that is aligned with how developers, operations and security think about their applications and data,” said Martin Casado, partner at Andreesen Horowitz (and the founder of Nicira). “Until just recently, the technology did not exist. All of that changed with Kubernetes and eBPF.  Dan and Thomas have put together the best team in the industry and given the traction around Cilium, they are well on their way to upending the world of networking yet again.”

As more companies adopt Kubernetes, they are now reaching a stage where they have the basics down but are now facing the next set of problems that come with this transition. Those, almost by default, include figuring out how to isolate workloads and get visibility into their networks — all areas where Isovalent/Cilium can help.

The team tells me its focus, now that the product is out of stealth, is about building out its go-to-market efforts and, of course, continue to build out its platform.


By Frederic Lardinois

Unpacking how Dell’s debt load and VMware stake could come together

Last week, we discussed the possibility that Dell could be exploring a sale of VMware as a way to deal with its hefty debt load, a weight that continues to linger since its $67 billion acquisition of EMC in 2016. VMware was the most valuable asset in the EMC family of companies, and it remains central to Dell’s hybrid cloud strategy today.

As CNBC pointed out last week, VMware is a far more valuable company than Dell itself, with a market cap of almost $62 billion. Dell, on the other hand, has a market cap of around $39 billion.

How is Dell, which owns 81% of VMware, worth less than the company it controls? We believe it’s related to that debt, and if we’re right, Dell could unlock lots of its own value by reducing its indebtedness. In that light, the sale, partial or otherwise, of VMware starts to look like a no-brainer from a financial perspective.

At the end of its most recent quarter, Dell had $8.4 billion in short-term debt and long-term debts totaling $48.4 billion. That’s a lot, but Dell has the ability to pay down a significant portion of that by leveraging the value locked inside its stake in VMware.

Yes, but …

Nothing is ever as simple as it seems. As Holger Mueller from Constellation Research pointed out in our article last week, VMware is the one piece of the Dell family that is really continuing to innovate. Meanwhile, Dell and EMC are stuck in hardware hell at a time when companies are moving faster than ever expected to the cloud due to the pandemic.

Dell is essentially being handicapped by a core business that involves selling computers, storage and the like to in-house data centers. While it’s also looking to modernize that approach by trying to be the hybrid link between on-premise and the cloud, the economy is also working against it. The pandemic has made the difficult prospect of large enterprise selling even more challenging without large conferences, golf outings and business lunches to grease the skids of commerce.


By Ron Miller

Dell’s debt hangover from $67B EMC deal could put VMware stock in play

When Dell bought EMC in 2016 for $67 billion it was one of the biggest acquisitions in tech history, and it brought with it a boatload of debt. Since then Dell has been working on ways to mitigate that debt by selling off various pieces of the corporate empire and going public again, but one of its most valuable assets remains VMware, a company that came over as part of the huge EMC deal.

The Wall Street Journal reported yesterday that Dell is considering selling part of its stake in VMware. The news sent the stock of both companies soaring.

It’s important to understand that even though VMware is part of the Dell family, it runs as a separate company, with its own stock and operations, just as it did when it was part of EMC. Still, Dell owns 81% of that stock, so it could sell a substantial stake and still own a majority the company, or it could sell it all, or incorporate into the Dell family, or of course it could do nothing at all.

Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy thinks this might just be about floating a trial balloon. “Companies do things like this all the time to gauge value, together and apart, and my hunch is this is one of those pieces of research,” Moorhead told TechCrunch.

But as Holger Mueller, an analyst with Constellation Research, points out, it’s an idea that could make sense. “It’s plausible. VMware is more valuable than Dell, and their innovation track record is better than Dell’s over the last few years,” he said.

Mueller added that Dell has been juggling its debts since the EMC acquisition, and it will struggle to innovate its way out of that situation. What’s more, Dell has to wait on any decision until September 2021 when it can move some or all of VMware tax-free, five years after the EMC acquisition closed.

“While Dell can juggle finances, it cannot master innovation. The company’s cloud strategy is only working on a shrinking market and that ain’t easy to execute and grow on. So yeah, next year makes sense after the five year tax free thing kicks in,” he said.

In between the spreadsheets

VMware is worth $63.9 billion today, while Dell is valued at a far more modest $38.9 billion, according to Yahoo Finance data. But beyond the fact that the companies’ market caps differ, they are also quite different in terms of their ability to generate profit.

Looking at their most recent quarters each ending May 1, 2020, Dell turned $21.9 billion in revenue into just $143 million in net income after all expenses were counted. In contrast, VMware generated just $2.73 billion in revenue, but managed to turn that top line into $386 million worth of net income.

So, VMware is far more profitable than Dell from a far smaller revenue base. Even more, VMware grew more last year (from $2.45 billion to $2.73 billion in revenue in its most recent quarter) than Dell, which shrank from $21.91 billion in Q1 F2020 revenue to $21.90 billion in its own most recent three-month period.

VMware also has growing subscription software (SaaS) revenues. Investors love that top line varietal in 2020, having pushed the valuation of SaaS companies to new heights. VMware grew its SaaS revenues from $411 million in the year-ago period to $572 million in its most recent quarter. That’s not rocketship growth mind you, but the business category was VMware’s fastest growing segment in percentage and gross dollar terms.

So VMware is worth more than Dell, and there are some understandable reasons for the situation. Why wouldn’t Dell sell some VMware to lower its debts if the market is willing to price the virtualization company so strongly? Heck, with less debt perhaps Dell’s own market value would rise.

It’s all about that debt

Almost four years after the deal closed, Dell is still struggling to figure out how to handle all the debt, and in a weak economy, that’s an even bigger challenge now. At some point, it would make sense for Dell to cash in some of its valuable chips, and its most valuable one is clearly VMware.

Nothing is imminent because of the five year tax break business, but could something happen? September 2021 is a long time away, and a lot could change between now and then, but on its face, VMware offers a good avenue to erase a bunch of that outstanding debt very quickly and get Dell on much firmer financial ground. Time will tell if that’s what happens.


By Ron Miller

Google makes it easier to migrate VMware environments to its cloud

Google Cloud today announced the next step in its partnership with VMware: the Google Cloud VMware Engine. This fully managed service provides businesses with a full VMware Cloud Foundation stack on Google Cloud to help businesses easily migrate their existing VMware-based environments to Google’s infrastructure. Cloud Foundation is VMware’s stack for hybrid and private cloud deployments

Given Google Cloud’s focus on enterprise customers, it’s no surprise that the company continues to bet on partnerships with the likes of VMware to attract more of these companies’ workloads. Less than a year ago, Google announced that VMware Cloud Foundation would come to Google Cloud and that it would start supporting VMware workloads. Then, last November, Google Cloud acquired CloudSimple, a company that specialized in running VMware environments and that Google had already partnered with for its original VMware deployments. The company describes today’s announcement as the third step in this journey.

VMware Engine provides users with all of the standard Cloud Foundation components: vSphere, vCenter, vSAN, NSX-T and HCX. With this, Google Cloud General Manager June Yang notes in today’s announcement, businesses can quickly stand up their own software-defined data center in the Google Cloud.

“Google Cloud VMware Engine is designed to minimize your operational burden, so you can focus on your business,” she notes. “We take care of the lifecycle of the VMware software stack and manage all related infrastructure and upgrades. Customers can continue to leverage IT management tools and third-party services consistent with their on-premises environment.”

Google is also working with third-party providers like NetApp, Veeam, Zerto, Cohesity and Dell Technologies to ensure that their solutions work on Google’s platform, too.

“As customers look to simplify their cloud migration journey, we’re committed to build cloud services to help customers benefit from the increased agility and efficiency of running VMware workloads on Google Cloud,” said Bob Black, Dell Technologies Global Lead Alliance Principal at Deloitte Consulting. “By combining Google Cloud’s technology and Deloitte’s business transformation experience, we can enable our joint customers to accelerate their cloud migration, unify operations, and benefit from innovative Google Cloud services as they look to modernize applications.””


By Frederic Lardinois

VMware to acquire Kubernetes security startup Octarine and fold it into Carbon Black

VMware announced today that it intends to buy early-stage Kubernetes security startup, Octarine and fold it into Carbon Black, a security company it bought last year for $2.1 billion. The company did not reveal the price of today’s acquisition.

According to a blog post announcing the deal from Patrick Morley, general manager and senior vice president at VMware’s Security Business Unit, Octarine should fit in with what Carbon Black calls its “intrinsic security strategy” — that is, protecting content and applications wherever they live. In the case of Octarine, it’s cloud native containers in Kubernetes environments.

“Acquiring Octarine enables us to advance intrinsic security for containers (and Kubernetes environments), by embedding the Octarine technology into the VMware Carbon Black Cloud, and via deep hooks and integrations with the VMware Tanzu platform,” Morley wrote in a blog post.

This also fits in with VMware’s Kubernetes strategy, having purchased Heptio, an early Kuberentes company started by Craig McLuckie and Joe Beda, two folks who helped develop Kubernets while at Google before starting their own company,

We covered Octarine last year when it released a couple of open source tools to help companies define the Kubernetes security parameters. As we quoted head of product Julien Sobrier at the time:

“Kubernetes gives a lot of flexibility and a lot of power to developers. There are over 30 security settings, and understanding how they interact with each other, which settings make security worse, which make it better, and the impact of each selection is not something that’s easy to measure or explain.”

As for the startup, it now gets folded into VMware’s security business. While the CEO tried to put a happy face on the acquisition in a blog post, it seems its days as an independent entity are over. “VMware’s commitment to cloud native computing and intrinsic security, which have been demonstrated by its product announcements and by recent acquisitions, makes it an ideal home for Octarine,” the company CEO Shemer Schwarz wrote in the post.

Octarine was founded in 2017 and has raised $9 million, according to Pitchbook data.


By Ron Miller

VMware completes $2.7 billion Pivotal acquisition

VMware is closing the year with a significant new component in its arsenal. Today it announced it has closed the $2.7 billion Pivotal acquisition it originally announced in August.

The acquisition gives VMware another component in its march to transform from a pure virtual machine company into a cloud native vendor that can manage infrastructure wherever it lives. It fits alongside other recent deals like buying Heptio and Bitnami, two other deals that closed this year.

They hope this all fits neatly into VMware Tanzu, which is designed to bring Kubernetes containers and VMware virtual machines together in a single management platform.

“VMware Tanzu is built upon our recognized infrastructure products and further expanded with the technologies that Pivotal, Heptio, Bitnami and many other VMware teams bring to this new portfolio of products and services,” Ray O’Farrell, executive vice president and general manager of the Modern Application Platforms Business Unit at VMware, wrote in a blog post announcing the deal had closed.

Craig McLuckie, who came over in the Heptio deal, and is now VP of R&D at VMware, told TechCrunch in November at KubeCon, that while the deal hadn’t closed at that point, he saw a future where Pivotal could help at a professional services level, as well.

“In the future when Pivotal is a part of this story, they won’t be just delivering technology, but also deep expertise to support application transformation initiatives,” he said.

Up until the closing, the company had been publicly traded on the New York Stock Exchange, but as of today Pivotal becomes a wholly-owned subsidiary of VMware. It’s important to note that this transaction didn’t happen in a vacuum where two random companies came together.

In fact, VMware and Pivotal were part of the consortium of companies that Dell purchased when it acquired EMC in 2015 for $67 billion. While both were part of EMC and then Dell, each one operated separately and independently. At the time of the sale to Dell, Pivotal was considered a key piece, one that could stand strongly on its own.

Pivotal and VMware had another strong connection. Pivotal was originally created by a combination of EMC, VMware and GE (which owned a 10% stake for a time) to give these large organizations a separate company to undertake transformation initiatives.

It raised a hefty $1.7 billion before going public in 2018. A big chunk of that came in one heady day in 2016 when it announced $650 million in funding led by Ford’s $180 million investment.

The future looked bright at that point, but life as a public company was rough and after a catastrophic June earnings report, things began to fall apart. The stock dropped 42 percent in one day. As I wrote in an analysis of the deal:

The stock price plunged from a high of $21.44 on May 30th to a low of $8.30 on August 14th. The company’s market cap plunged in that same time period falling from $5.828 billion on May 30th to $2.257 billion on August 14th. That’s when VMware admitted it was thinking about buying the struggling company.

VMware came to the rescue and offered $15.00 a share, a substantial premium above that August low point. As of today, it’s part of VMware.


By Ron Miller

Making sense of a multi-cloud, hybrid world at KubeCon

More than 12,000 attendees gathered this week in San Diego to discuss all things containers, Kubernetes and cloud-native at KubeCon.

Kubernetes, the container orchestration tool, turned five this year, and the technology appears to be reaching a maturity phase where it accelerates beyond early adopters to reach a more mainstream group of larger business users.

That’s not to say that there isn’t plenty of work to be done, or that most enterprise companies have completely bought in, but it’s clearly reached a point where containerization is on the table. If you think about it, the whole cloud-native ethos makes sense for the current state of computing and how large companies tend to operate.

If this week’s conference showed us anything, it’s an acknowledgment that it’s a multi-cloud, hybrid world. That means most companies are working with multiple public cloud vendors, while managing a hybrid environment that includes those vendors — as well as existing legacy tools that are probably still on-premises — and they want a single way to manage all of this.

The promise of Kubernetes and cloud-native technologies, in general, is that it gives these companies a way to thread this particular needle, or at least that’s the theory.

Kubernetes to the rescue

Photo: Ron Miller/TechCrunch

If you were to look at the Kubernetes hype cycle, we are probably right about at the peak where many think Kubernetes can solve every computing problem they might have. That’s probably asking too much, but cloud-native approaches have a lot of promise.

Craig McLuckie, VP of R&D for cloud-native apps at VMware, was one of the original developers of Kubernetes at Google in 2014. VMware thought enough of the importance of cloud-native technologies that it bought his former company, Heptio, for $550 million last year.

As we head into this phase of pushing Kubernetes and related tech into larger companies, McLuckie acknowledges it creates a set of new challenges. “We are at this crossing the chasm moment where you look at the way the world is — and you look at the opportunity of what the world might become — and a big part of what motivated me to join VMware is that it’s successfully proven its ability to help enterprise organizations navigate their way through these disruptive changes,” McLuckie told TechCrunch.

He says that Kubernetes does actually solve this fundamental management problem companies face in this multi-cloud, hybrid world. “At the end of the day, Kubernetes is an abstraction. It’s just a way of organizing your infrastructure and making it accessible to the people that need to consume it.

“And I think it’s a fundamentally better abstraction than we have access to today. It has some very nice properties. It is pretty consistent in every environment that you might want to operate, so it really makes your on-prem software feel like it’s operating in the public cloud,” he explained.

Simplifying a complex world

One of the reasons Kubernetes and cloud-native technologies are gaining in popularity is because the technology allows companies to think about hardware differently. There is a big difference between virtual machines and containers, says Joe Fernandes, VP of product for Red Hat cloud platform.

“Sometimes people conflate containers as another form of virtualization, but with virtualization, you’re virtualizing hardware, and the virtual machines that you’re creating are like an actual machine with its own operating system. With containers, you’re virtualizing the process,” he said.

He said that this means it’s not coupled with the hardware. The only thing it needs to worry about is making sure it can run Linux, and Linux runs everywhere, which explains how containers make it easier to manage across different types of infrastructure. “It’s more efficient, more affordable, and ultimately, cloud-native allows folks to drive more automation,” he said.

Bringing it into the enterprise

Photo: Ron Miller/TechCrunch

It’s one thing to convince early adopters to change the way they work, but as this technology enters the mainstream. Gabe Monroy, partner program manager at Microsoft says to carry this technology to the next level, we have to change the way we talk about it.


By Ron Miller