Disclaimer: I recently attended Pure//Accelerate 2018. My flights, accommodation and conference pass were paid for by Pure Storage via the Analysts and Influencers program. There is no requirement for me to blog about any of the content presented and I am not compensated in any way for my time at the event. Some materials presented were discussed under NDA and don’t form part of my blog posts, but could influence future discussions.
Here are my notes from the “Chat with Charlie Giancarlo” session for Analysts and Influencers at Pure//Accelerate.
Chat with Charlie Giancarlo
You’ve said culture is important. How do you maintain it? “It’s the difference between hiring missionaries and hiring mercenaries”. People are on a mission, out there to prove something, drive the company forward. There’s not an exact, formulaic way of doing it. Hire people you have experience with in the industry. Pure does have a good interview process. It tends to bring out different sides of the interviewee at the same time. We use objective tests for engineering people. Check on the cultural backgrounds of sales talent.
Are there any acquisitions on the horizon? Gaps you want to fill? We have an acquisition strategy. We’ve decided where we’re going, identified the gaps, looked at buy versus build versus partner. There’s a lot of research to do around strengths and weaknesses, fit, culture. There are different types of companies in the world. Get rich quick, play in your own sandbox, people who are on a mission. We have gaps in our product lines. We could be more cloud, more hyper-converged. FlashBlade is still not 3.0 product.
Other companies are under pressure to be more software or cloud. Given your hardware background, how’s that for you? Our original product was software on commodity hardware. All except one SDS vendor sells hardware. At the end of the day, selling pure software that goes on any box is insanely hard to achieve. Majority of SDS still sell on hardware – one throat to choke. Some customers, at scale, might be able to do this with us. Why build our own hardware? 4RU and 1PB versus 1.5 racks. We understood the limitations of commodity hardware. We’re not wedded to the hardware – we’re wedded to providing more value-add to our customers.
Has anyone taken you up on the offer? Some are enquiring.
One of your benefits has been focus, one thing to sell. You just mentioned your competitors don’t have that. Now you’re looking at other stuff? We’re making data easier and more economic to consume. Making the entire stack easier to consume. When I say more HCI, what do I mean? Box with compute, storage and network and you can double it, etc. Another way to look at HCI is a single pane of glass for orchestration, automated discovery, ease of use issue. Customers want us to extend beyond storage.
Single throat to choke and HCI. You provide the total stack, or become an OEM. I have no intention of selling compute. It’s controlled by the semi-conductor company or the OS company.
How about becoming an OEM provider? If they were willing, I’d be all ears. But it’s rare. Dell, Cisco, they’re not OEM companies. Margin models are tough with this.
Developing international sales? Our #2 goal is to scale internationally. Our goals align the company around a few things. It’s not just more sales people. It’s the feature set (eg ActiveCluster). ActiveCluster is more valuable in Europe than anywhere else. US – size is difficult (distance). In Europe they have a lot of 100km apart DCs. Developing support capability. Scaling marketing, legal, finance. It’s a goal for the whole company.
The last company to get to $1B was NetApp. What chance does Pure have to make it to $5B? Well, I hope we do. It’s my job. Storage? That’s a terrible business! Friends in different companies have a lot of different opinions about it. Pure could be the Arista of storage? The people who are engaged in storage don’t believe in storage anymore. They’re not investing in the business. It’s a contrarian model. Compete in business, not just tech. We’re investing 20% in R&D. You need to invest a certain amount in a product line. They have a lot of product lines. We could be bought – we’re a public company. But Dell won’t buy. HPE have bought Nimble. Hitachi don’t really buy people. Who does that leave? I think we have a chance of staying independent.
You could buy somebody. I believe we have a very good sales force. There are a lot of ways to build an acquisition strategy. We have a good sales force.
You’re a public company. You haven’t been doing well. What if Mr Elliott comes into your company? (Activist investor). Generally they like companies with lots of cash. Or companies spending too much on R&D without getting results. We’re growing fast. We just posted 40% profit. Puritans might believe our market cap should be higher. The more we can show that we grow, the more exciting things might be. I don’t think we’re terribly attractive to an activist right now.
Storage is not an interesting place to be. But it’s all about data. Do you see that shifting with investors? What would cause that? I believe we need to innovate too. I think that the investors would need to believe that some of the messages we’re sending today, and over the next year, create an environment where our long term growth path is higher and stronger than it is today. Sometimes its sheer numbers, not storyline. The market believes that NetApp, EMC, etc that they can cause pricing and growth challenges for us for a long time. We need them to believe we’re immune to those challenges.
How about China as a marketplace? China as a competitive threat with new technologies? China is a formidable country in every respect. Competition, market. It’s more difficult than it was 10 years ago as a market. Our administration hasn’t help, China has put a lot of rules and regulations in place. I wish we’d focus on those, not the trade deficit. It’s a market we’re experimenting in. If it only works out as well as our competitors can achieve, it may not be worthwhile. And the issue of competition. I worry about Huawei, particularly in third world countries. Viable, long-lasting commercial concerns. In Europe it’s a bit different. The Chinese are very innovative. The US does well because of a market of 300 million, China has 1.4 billion people.
Joe Tucci said 4-5 years ago that the industry was merging. He said you can’t survive as a small player. How many times have we seen this picture? Huge conglomerates falling apart under their own weight. I hate to disagree with Joe. It’s a misunderstanding of scale. It’s about individual products and capabilities, not the size of the business. If you’re just big, and not growing, you no longer have scale. All you’ve done is create a large company with a lot of under scaled products. Alan Kay “perspective is worth 40 IQ points” [note: it’s apparently 80, maybe I misheard].
Interesting session. 4 stars.