From Hardcore Techie to Unicorn Entrepreneur: Dheeraj Pandey, Founder of Nutanix (Part 4)

Sramana Mitra: What was the size of your Blumberg Capital round? What milestones were you able to achieve with that?

Dheeraj Pandey: It was a million and a half. Word spread out that three Aster Data people had started a company. Lightspeed came within 10 months and we raised a $10 million round and converted the safe. We were trying to use our skills to try and build a distributed system story around one of the favorite movements at that time – virtualization.

Sramana Mitra: That $10 million round brought you to a full product and you have customers at this point. We are now in 2012?

Dheeraj Pandey: We raised in July 2010. In 2011, we raised another $25 million. By this time, we had zero revenue. We had no customers. We had launched briefly at VM World in August of 2011. We got an award. The product was beta for four to five months. The biggest assumption we had made about VMWare was turning out to be wrong. We thought our thesis would be proven wrong, but we were tenacious. We didn’t give up.

In January 2012. VMWare refreshed the software and all the problems vanished. Our first quarter was a million dollars. In the second quarter, we did $3 million. Then we did $5 million and then $8 million. There were a couple of near-death experiences that would have completely shut down the business. We didn’t give up. There was no drama in the company. There was no finger pointing. We just rolled forward.

Sramana Mitra: Was VMWare a big part of your go-to-market? Were they helping you?

Dheeraj Pandey: It was like the early Google/Apple honeymoon. We kept getting Best of VM World every year for three straight years. Then at some point, they realized that they needed to get into our space, which was data management. Compute virtualization was a relatively saturated market by that time. Again, it was a near-death experience.

We tried open-source under our product. It became ours. We made it enterprise-grade and made it simple to use. There’s an operating system under the operating system. That paradox of being a frenemy is how the game is played. We never complained. We always behaved. There was this internal conviction that we had to control our destiny. The reason that Nutanix continues to be an independent company is because of that big decision.

Sramana Mitra: At that point when VMWare became your competitor, around what time did you start winning deals from VMWare?

Dheeraj Pandey: It was never one moment. We had to win with them in many cases. That’s the paradox. We also have to win without them. It was a continuum. It was not one moment. We kept hiring a lot of their people. I authentically believed that this had to be a paradox. Every coin has two sides.

Sramana Mitra: You said you had two more near-death experiences. What was the third one?

Dheeraj Pandey: There was a third one where we thought we could do exactly what the public cloud does with commodity hardware coming out of Taiwan. 20% of that hardware is dead on arrival. We didn’t have the luxury to have 20% mortality. We had to go back and the rest is history. There was this moment when we had to stop shipment and revert back to our old strategy.

The scar that it left made us respect commodity hardware. If anything, the rigor that it brought to us made us take other bolder decisions like becoming a pure software company and portable software that runs on all commodity hardware. That became our biggest differentiator. That would not have happened if not for this early scar that we had.

Sramana Mitra: What year was that?

Dheeraj Pandey: This was late 2012.

This segment is part 4 in the series : From Hardcore Techie to Unicorn Entrepreneur: Dheeraj Pandey, Founder of Nutanix
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