Cohesity CEO On Veritas Acquisition Update, Delayed IPO And Latest Funding Round

'I've always believed in what Isaac Newton said: You see clearly because you stand on the shoulders of giants. It's a great phrase. Nvidia is a $2-trillion market cap company. IBM is almost $200 billion market cap, but an incredible brand in U.S. history, a 100-year-old incredible brand. We are now more visible because we stand on their shoulders,' says Cohesity CEO and President Sanjay Poonen.

Waiting For The Right Moment

Cohesity checked off all the key boxes expected by a company ready to file for an IPO. The data protection and security technology developer had the right size, the growth, and profitability that would add up to what could be a successful IPO.

However, the San Jose-based company did a 180-degree turn on its IPO plans last year when it unveiled a planned acquisition of data protection software producer Veritas, a company much larger than Cohesity, in a blockbuster $7-billion deal.

Cohesity CEO and President Sanjay Poonen told CRN in an exclusive meeting that the Veritas acquisition took all his company's focus, but that the IPO delay would be worth it.

“We believe that's the right thing for us to do and consummate and finish, and then take the company public,” Poonen said. “So we've delayed. We're not going to go public this year. We're going to get the Veritas deal done. We are making good progress on that. We are still expected to close it this calendar year. And once we close that transaction, get the approvals and things that need to happen, the goal would be to show its success. … We will then get to the No. 1 position, pro forma, in [data protection] market share. That puts us in a much stronger position to go public.”

For Cohesity, Veritas is only one of a couple moves that is giving it and the data protection industry increased exposure. IBM last week joined Nvidia as Cohesity's latest strategic investors, joining Cisco, HPE, Amazon, Google, and Qualcomm not only as investors but as technology and sales partners, Poonen said.

“Every company who invests in us that is a tech company wants us to also partner with them,” he said. “They're saying, 'We're not just putting money behind you. We want to have strategic partnerships with you.'”

What follows is more of CRN's interview with Poonen.

First of all, what's the latest on Cohesity filing for an IPO?

We filed the confidential IPO filing in 2021. Then the market took a different turn. This was all before I joined. When I got here, I said, 'The IPO is an important milestone, but not the destination. Our goal is to build a true lasting company that's $5 billion in revenue and several times that multiple market cap.' We want to build a company that is a 'Snowflake meets Palo Alto'-type of opportunity, or 'CrowdStrike meets Databricks.' I was very fortunate to be part of the executive team that built that type of company at VMware, where I was COO, from $6 [billion] to $12 billion, and then at SAP where I was president, from $10 [billion] to $20 billion. [We want to take Cohesity] from north of $500 million, which is where we are now, to $5 billion, which is 10x our current size. So an IPO is an important milestone, but it's not the destination.

As we were thinking through the possibility of when that milestone could be met, about 12 or 15 months ago the M&A transaction we're doing with Veritas came. And that took a lot more of our time and focus. We believe that's the right thing for us to do and consummate and finish, and then take the company public. So we've delayed. We're not going to go public this year. We're going to get the Veritas deal done. We are making good progress on that. We are still expected to close it this calendar year. And once we close that transaction, get the approvals and things that need to happen, the goal would be to show its success. The good news in that transaction is, we're No. 8 in data protection and management, according to IDC. Veritas is No. 3, pro forma. We will then get to the No. 1 position, pro forma, in market share. That puts us in a much stronger position to go public.

If we went public today, we'd be going public as number eight. You know Rubrik filed its S-1. They're going public as number seven in this market. I think we're in a much stronger position to go public as number one in the market next year, so we're not going to put a timeline on when that happens. The key right now for us is to focus on the close of this transaction with Veritas, integrate it, and keep our fingers crossed. If that goes well, which I believe it will, we're in a much stronger position. …

With this deal, we still get to be, I believe, the fastest growing company in this space, and the most profitable. Rubrik is a good company and going public. We wish them a very good IPO. They are in that $500 [million] to $600 million range, $628 million was their last revenue, [but] growing actually only 4 [percent] or 5 percent in revenue terms. There's a lot of companies that are of that size, but they're not very profitable. But they have the size to go public. There are very few companies are at the $1.6-[billion] to $2-billion size that are both growing—we are still the fastest growing, we believe, in the data protection space—and also highly profitable. We said we'd be 27-percent EBITDA. That is more profitable than Rubrik and Commvault for sure. I think Veeam has good profitability. So our focus right now is to consummate the Veritas transaction, get that done, integrate it, put the teams together, and build a No. 1 company focused on innovations like AI and security and cloud. …

At the right point in time, we intend to go public, but we'll do it in a way that's thoughtful. For this year, the focus is consummating the Veritas transaction.

What is Cohesity doing with AI?

We're making great progress. You probably saw our 15 seconds of fame where Jensen [Huang, Nvidia CEO] spoke at GTC about the partnership with us. They are investing in our company. That was a big moment for us a few weeks ago to have the godfather of AI announce that the only protection company they are working with is Cohesity. And his words, it's a beautiful 15-second clip I put on LinkedIn, he said Cohesity is sitting on a goldmine of data, hundreds of exabytes of data, 10,000 customers, Cohesity is going to be working with Nvidia video to build out [Cohesity's AI-powered enterprise search assistant] Gaia. And to me, it's an incredible statement for Nvidia to not just say they have a strategic partnership, but also an equity investment.

So IBM is Cohesity's latest strategic investor, after Cisco, HPE, Amazon, Google, Qualcomm, and Nvidia. Why are major tech companies interested in Cohesity?

Every company who invests in us that is a tech company wants us to also partner with them. They're saying, 'We're not just putting money behind you. We want to have strategic partnerships with you.' Nvidia a few weeks ago announced a strategic partnership, the only data protection company that they're doing generative AI with. That's a very unique position. And they're also investing in us. That's a double win for us.

IBM is the same way. Last year in the partnership piece we had announced with them, they are exclusively OEMing our product as they modernize what used to be Tivoli Spectrum Protect. Now it's known as IBM Storage Defender. And underneath the covers, Storage Defender is really Cohesity. That's an exclusive OEM with us. They're not OEMing anybody else. They looked at all the players in the market. Very good players: Veeam, Rubrik, Commvault. And they decided the best technology platform was Cohesity. I've had a strong relationship with [IBM CEO] Arvind Krishna, [IBM Senior Vice President of Infrastructure] Rick Lewis, [IBM General Manager of Storage] Denis Kennelly, and [IBM Senior Vice President Software and Chief Commercial Officer] Rob Thomas from my years at both SAP and VMware.

Let me tell you a short story. When I was at SAP, we did a lot of work with IBM Db2. The person running the Db2 business was Arvind Krishna, who's now the CEO at IBM. When I was at VMware, we did a lot of work with software and the IBM Cloud. The person running that business was Arvind Krishna. So we've built a good relationship with IBM of trust as many of us worked with them before. But they also did their analysis of the technology platform and assessed that Cohesity was the best platform. … Many of the largest customers in the world were telling IBM that they were going with Cohesity, including some of the biggest banks and largest companies. We have 44 percent of the Fortune 100 today. Cohesity with Veritas will be in 96 percent. Nobody in this space has that level of Fortune 100 concentration. These are the same types of companies that IBM talks to. These companies were telling IBM the best tech platform, bar none, is Cohesity.

What is the significance of companies like Nvidia and IBM investing in Cohesity?

I've always believed in what Isaac Newton said: You see clearly because you stand on the shoulders of giants. It's a great phrase. Nvidia is a $2-trillion market cap company. IBM is almost $200 billion market cap, but an incredible brand in U.S. history, a 100-year-old incredible brand. We are now more visible because we stand on their shoulders. And Nvidia picked us. We're a diamond. There are many others out there, but they picked us exclusively as the company they want to work with. It's a huge honor to us. And we sit on their shoulders. Same with IBM. They picked us. And both these companies are only working with us. So that's a huge significance. And they join the other companies that have already made equity investments in us, namely HPE and Cisco and Amazon and Google and Qualcomm.

You said Cohesity with Veritas will count 96 percent of the Fortune 100 as customers. What will you do to get those last four as customers?

Once we close the transaction, I first want to make sure those 96 are happy. And then we'll go get those remaining four. And by the way, the same thing with the Global 500. Fortune 100 are the biggest 100 accounts in the US. There's 80 percent of the Global 500 who are our customers, which is phenomenal. That's even bigger, because many of the younger companies who have come up in the last 9 or 10 years like us and Rubrik haven't had much success internationally. The international markets are still focused on Dell and Veritas and IBM, some of the biggest players. … After all the success companies like us, Rubrik, Commvault, or Veeam have had, the amount of data protected on these companies' platforms is in the single-digit exabytes. I think if you add up the amount of data protected by Cohesity, Rubrik, Commvault, and Veeam altogether, you'll probably get to about 20 or 30 exabytes combined. Veeam has the highest capacity protected, Commvault the second, we have the third, and Rubik has the fourth. That's just my estimate. Veritas has hundreds of exabytes it protects, almost 100 times the size of the rest of us put together, just because there's a huge base of customers on their platform. …

We see it as a tremendous show of support to now have Amazon, Google, HPE, Cisco, Qualcomm, Nvidia, and now IBM as investors in this company. That's the largest set of tech companies that has invested in anybody in the data protection space. We're not raising infinite amounts of money, but there may be more companies interested in backing us, and we're very excited. And for each of them, the recipe is, 'We want not just your money. It's great that you are investing in us. We want a strategic partnership with you.' It doesn't have to be exclusive. In the case of IBM, it's an exclusive relationship right now. We want some kind of preferential way in which we work together with them, and help them be successful, help us be successful, and then extends the channel.

What does IBM have that we don't have? They have an incredible brand. And they have a reach in the international markets which we don't as a standalone company, and may not even have as a combination of Cohesity and Veritas. So we're excited about this. We're a very channel-friendly company. This is an example of a channel partnership done well. I'm very proud that Cohesity has the best ecosystem. Our ecosystem is the envy of every other data protection vendor.

How does Cohesity's funding impact its acquisition of Veritas?

The total funding in Cohesity includes some funding now, some funding at the time of the close, but it's all done in a very creative way that allowed us to make the Veritas transaction happen. I think the closest I could come to thinking of an example is, it's a mini version of Dell EMC. Dell's $67-billion acquisition of EMC was an incredible, successful success. And I had a front row seat to see how well Michael Dell and Jeff Clark and some of those executives made that acquisition. A lot of our thinking on this transaction is to model the success of how Dell and EMC became successful in their transaction. What happened then was, Dell went public. So our thinking about this mirrors how Dell and EMC came together, in a much, much smaller way. We are making a $7-billion transaction vs. $67 billion.