Cohesity to Acquire Veritas – Sanjay Poonan

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All right, so you're watching, I'd like to call all of my guests special, but I really enjoy interviewing Sanjay Poonen, CEO of Cohesity One. He shocked us by going to Cohesity. Sanjay, I interviewed you right a couple of months before you took the job. We talked about faith and leadership. Really great guy. Yeah. I remember that. It was a beautiful park location. I remember that. So first, I haven't gotten the opportunity to congratulate you on video.

We did record something at VMware Explorer 2022, I think, by the Airstream. That's right. But I didn't get the opportunity to congratulate you officially, so congratulations. Thank you, Keith. And congratulations on your Airstream. I see it all over the place. I hope you're getting some benefit from them, too. You're a big guy for the Airstream business. You know what? They follow me on Twitter, or X. They have yet to reach out and cut me a deal.

We'll keep pounding at them. It is one of those things. Even when I go to the European conferences, people are asking me, where's the Airstream? And I have to find an answer other than giving them a little key chain with the Airstream. You need one located in Europe that you can drive around to, like a mini Airstream. Exactly. Like a van version, because Europe is big. Yeah. Some mini version of it that at least gets the brand there.

You guys made a really big splash. When I saw it, I said, I have to interview Sanjay. This isn't sponsored by Cohesity. This is just two buddies in the industry chatting about a big move. Data protection, data backup, data resiliency. This market is fairly mature. Since you and your main competitor came into the industry a few years ago, there's really not been a lot of attention to this space from an M&A perspective. Pre-recording, we talked about Symantec and Veritas joining some while back ago.

That was undone. And maybe, maybe the biggest splash was Commvault buying a storage company a few years ago. That was a billion or $2, a $7 billion deal buying Veritas. Both of us are old data experts, hands at this, so we understand the complexities of it. On the surface, this seems like a perfectly interesting deal. Two companies with seemingly overlapping markets coming together, one plus one should equal three in this case. Make that case to me first. Why is this a one plus one equals three deal?

Well, I hope, Keith, it's a one plus one equals 11, but I'll start with three. I'll start with three. One and one next to each other is 11. Yeah, actually, correction. 5 billion. I think Commvault bought a smaller company, Hedwig, many years ago. Yeah, I respect all our competitors. You named one, but I'll give you a little bit of the history of what's happened the last 10 years in the industry. It's a very fragmented industry. 8% in data protection.

Now, by the way, the shares that IDC tracks does not include the public cloud players. I believe if you add the public cloud players and their data protection or their secondary data management business, they are probably both AWS and Microsoft, number one and number two by a country mile. I think that the analysts don't fully track that adequately. That aside, it's a fairly fragmented market. You've got Dell and Veeam and IBM and then Kaseya and I think sort of six, seven and eight are Commvault, Rubrik, Cohesity, and we're all clustered.

We've been the fastest growing in that group of those three that I think are six, seven and eight and all kind of reasonably closely clustered in relative share, three, four, five percent. I would say that the thing that we invented 10 years ago and Mohit was the first to do this was to build this sort of hyper-converged approach to data protection. And that came from his invention of Nutanix. He was the CTO of Nutanix, wrote the code there. Rajiv, I think, tells me, CEO of Nutanix, and by the way, they're doing really well.

I'm really happy for my friend Rajiv, that I think a good part of the code may still be Mohit's code there. So he invented that based off the sort of software-defined file system work that he did at Google. So once he did that at Nutanix, they're doing it a third time. And Cohesity was not too difficult to imagine, but it was a brilliant idea to take the idea of a software-defined file system and build a hyper-converged secondary storage appliance and then take that same architecture to the cloud.

And I don't think he gets enough credit for being the first to do it. Everyone thinks today that there were two companies, Rubrik and Cohesity, were good companies, but he did it first. And the other companies emulated that architecture a year later or a year. And there were two companies, Rubrik that emulated that architecture, and then Hedwig, I think, also did, and they got acquired by Commvault. But Cohesity was the first to do it. And I think that that sort of invention culture at Cohesity was always sort of what I respected.

And the tech has been the best in the industry since then. But, you know, I think for all of our success, we have today about 44 percent of the Fortune 100. The biggest projects in the world today run on Cohesity. So when we say we, you know, protect and secure the world's data and provide insights into that, and then, you know, the largest organizations rely on us for resilience. That's our mission statement, what I just said. , but what was happening was, A, we were number eight in the market.

We were not where we needed to be in the international markets. If you look at, you know, Japan, Germany, France, Australia, we were doing OK, but not, I mean, the bigger vendors were all fairly, you know, concrete, locked in there. I'm talking about Dell and Veritas and IBM and certainly the federal segment, too. And even after, you know, kind of 10 years of having enormous success and being the fastest growing, we were sort of single digit exabytes under management and protection. If you add up all of, I think, you know, Veeam, Commvault, Rubrik and us, you probably have no more than 20 or 30 exabytes under management across all three of us.

Veritas has hundreds of exabytes under management just because of the benefit of many of their large base. Together, we will have 96 percent of the Fortune 100 and 80 percent of the Global 500. So it's a kind of a fast way I describe it as we were walking up the stairs and, you know, it allows us to press the button and now the escalator starts and it gives us a cost of acquisition of customer that's practically zero in many of those markets. We just have to do something that, you know, all of our competitors are going around saying companies and customers are going to defect.

We both, both Veritas and us can't obviously collaborate right now until we pass the regulatory process. But we have a letter that we've written to our customers. The title of that letter are four words, Keith, No Customer Left Behind. And that's my goal. It's sort of a take on that previous theme. I think it was during the Bush administration called No Child Left Behind for education. Our theme is going to be no customer left behind. And that's the attitude we're taking, certainly as separate companies today.

But then as we come together, I'm looking forward to that journey. So let's dive into some of the potential synergies and challenges and why you folks had to write the letter to your joint customer base. Veritas' little known history, CTO advisor history back in 1998, Veritas was the first backup solution that I deployed. That was in 98. So when you talk about exabytes under management, the way Veritas got there, I was at a Fortune 500. We were using Unix based systems and we needed rock solid backup and data protection.

Veritas was one of the couple of solutions that was on the market that supported tape libraries, all of this rock solid advanced technologies that Fortune 500 depend on. What makes these solutions so entrenched is that. Enterprises don't change those traditional systems for those traditional backup motions, Cohesity, Rubrik, Lesser Extent, Commvault came along and offered a modern take on backup. So as you're looking at your new virtualized environments, your new cloud like environments, basically you folks beat the incumbents to that market space and you made it you made backup simple again, cloud native.

So in my purview, there's kind of a delineation. There's traditional state backup, you know, I'm backing up my Unix based SAP systems to Veritas, these hard, these these bare metal mission critical systems, this data, this enterprise data is in Veritas. Now I have my enterprise cloud native apps again, mission critical stuff. That stuff is in Cohesity. These two worlds do not talk like when I go into customers, the team that's backing up and using Cohesity is not the same team that's protecting their data with Veritas.

There are just two silos, great opportunity, but that silo. So talk to me about both the opportunity and the challenge of breaking down the walls of that silo. This is why you have to send the message to customers. No, Veritas, we're not going to leave you, Veritas customers, we're not going to leave you behind. No, Cohesity customers, even though you're a fraction of the data size of Veritas, we're not leaving you behind. Talk about the opportunity and the challenge. Yeah, I think, listen, those worlds have been sort of coming together.

One of the largest customers in the world, I can't name the bank, but you can take some guesses, is one of the largest projects of data protection in the hundreds of petabytes. They have had a lot of experience of running Veritas on top of data domain and have been effectively been able to move to Cohesity. And we've had a lot of experience working with them and a few other big banks, banks and federal customers, and to some extent, health care, the biggest projects of data protection.

Think of them like in my SAP days, we would have the biggest ERP customers, right? Oil and gas because they were manufacturing or automotive or whatever have you right. The banks, federal customers, and to some extent, health care are the biggest and they often have very big VMWare footprints, which I know is a big part of the audience too. We've had experience at taking that stack, Veritas on top of data domain or and sort of helping migrate that. S. Now, that's a fairly, you know, there's tools to do it.

There's ways in which you can do that with some manual and also some configuration tools and because the formats of both these products, Veritas and Cohesity are proprietary to themselves, right? Think of it as a deduped, highly compressed database or store of data blob. When that's done, both sides don't share the format with each other because they're trying to protect it on their format and kind of that's the nature of the data protection industry. Rubrik has its proprietary format, Commvault has his, Veritas does.

And here's the part that will be beautiful when we come together as one company. We can't share those formats as two separate companies, certainly even as competitors during the regulatory process. When we come together, we will be able to share that in a format of what each other does and easily migrate to whatever the destination appliance or hyperconverged architecture is. We're going to take the best of both worlds. And then you have a way by which you can go from your existing hyperconverged architecture, you know, either both of us have appliances or from a disaggregated stack.

That example is Veritas running on top of data domain to a hyperconverged stack. And we will have all the conversion tools to make that practically push button. And that's what typically I would call that private cloud, hybrid cloud data center data protection use cases. And those are typically sort of three or four key workloads, virtual machines. And today that would be VMware or Nutanix or Red Hat databases, Oracle, SQL Server, but then also the modern databases like MongoDB and so on.

No SQL ones. Files, NAS files, you know, it could be NetApp. It could be a variety of other sort of file and object solutions. And then typically some kind of app on prem, email systems or so on. And the fast growing new area is the cloud. And in the cloud, you have a similar IaaS, PaaS, SaaS. It could be EC2 or Azure VMs. And of course, their equivalents and containers, you know, databases like, you know, either the regular databases running on prem or Aurora, RDS, Azure SQL, Azure AD, or NAS files, S3, sort of file equivalents in storage options in the cloud would be S3 or Azure Blobs.

So if you look at a matrix and then one of my slides, I have a view of that. You have all of VMware and its cousins in the cloud, EC2, Azure VMs and, of course, containers, all of databases and their cousins in the cloud, all of storage formats, maybe its NAS files and their cousins, the cloud S3, Azure Blobs and so forth. That matrix is a fairly rich one in terms of breadth and depth. You need a lot of engineering resources to build that out because it's a bunch of adapters.

It's not complicated computer science in terms of architecture. It's just labor. The good news is Veritas has 500 adapters, the largest adapter framework of anybody. And I'm super excited about that IP coming to us. It's not difficult for anybody else to build it. It just takes time. And we will have 2x the engineering size of any other company when we come together. That mass of engineering will certainly help us build out a fairly large adapter framework for the companies.

That's very exciting. So when companies hear this and say, listen, give us some time post the regulatory process and post us coming together to give you the prescribed architecture, because we're thinking about it. And under NDA, we are sharing some of the early thoughts with customers for their feedback. I actually think we can absolutely deliver on our commitment to no customer left behind. All these other attacks by the competition to try and say, oh, you know, a competition is basically going around saying we're going to try and get customers to move off Veritas.

And that's so much coming after Cohesity, going to Veritas, I think they're going to fall flat because of a customer who is interested in migrating off one platform or the other. You know what they need to do? They need to come and talk to us. We will have a very clear roadmap between Cohesity on our side today and Veritas on their side as separate companies, but then eventually as one company that will absolutely, when I talk to customers, we both have very high NPS scores today and they know that we will take care of them.

So I'm actually very confident. And Keith, it's not my first rodeo to doing these M&As. I did this, you know, AirWatch acquired inside VMware. There was some overlap. I did business objects inside SAP. There was some overlap, Sybase inside SAP and then later on Carbon Black, you know, overlapping assets. You know, I've dealt with that before. You just have to have a very strong customer mindset to how you take care of customers and then you should be fine.

So, you know, I'll give you your kudos. You know how to do M&A. You ran the EUC business at VMware for a while and VMware, congratulations, VMware just turned that into Broadcom, just turned that into a four billion dollar sale. So the new leader, he's very excited about it. That's great. Yeah. And so I'm going to leave on this note, I'll give you your kudos on not just that previous M&A activity, but I'll show the kudos to Mohit when he formed Cohesity and we interviewed him during the very early days of Cohesity.

We were confused by the model of using Cohesity as a target for companies like Veritas, you for solutions like Veritas. You hit it to that, that there are already Veritas customers using Cohesity basically as the scale out storage for the solution. So that late low hanging fruit, fruit, as you talk about your vision around security, metadata, et cetera, Veritas, there's a good chunk of Veritas customers that already adopted the Cohesity scale out model is just a matter of opening the formats and allowing your gear and all of your security solutions access to that metadata so you can layer on the Cohesity goodness.

I see a path forward. I think there's going to be Veritas customers that stay purely Veritas customers and doing what they enjoy doing. There's going to be Cohesity customers that's going to embrace this. They're going to look at this from a ability to do cover more systems with a platform they love without sacrificing months in a form of complexity or risk. Sanjay, I wish we had another half an hour to talk, but you have a tight schedule. I have a tight schedule.

For those of you want to find out more about the Cohesity solution, look in the links below. com. com, where you can find out more about this Airstream that Sanjay mentioned. Talk to you next, CTO Advisor, CTO Dose. Thank you so much, Keith. And make sure next time we'll talk about AI. There's a lot of great innovation going on in that area, too, with our new. It has been. We got to have you at AI Field Day and all the goodness that we've been doing around AI as part of everything we do.