Pandey On Who Will ‘Carry The Torch Forward’
Nutanix co-founder and CEO Dherraj Pandey dives into a slew of questions around his sudden retirement, who will replace him and the future of Nutanix and its channel community.
“All 6,000 of our employees, all 18,000 of our customers and all 10,000-plus of our channel partners, I know they’re carry the torch forward. I think they’ll understand that this is an extremely personal thing, where, this pandemic did make me think a lot about what really matters,” said Pandey when questioned by CRN about his message to channel partners.
Partners were shocked to learn this week that Pandey is leaving the company he started in 2009 and elevated into a $1.6 billion hyper-converged and hybrid-cloud software superstar. The CEO announced his plans to leave at the same time Nutanix unveiled a whopping $750 million investment from Bain Capital Private Equity as well as reporting a successful fourth fiscal quarter with revenues of $328 million, up 9 percent year over year.
“We figured the best thing to do was make an announcement and sort of disarm the environment, where everybody who reads the news says, ‘You know what? I’d be interested in taking Nutanix to the next level,’” said Pandey. “So casting a wide net was the biggest goal here.”
Pandey takes a deep dive into the type of person Nutanix will select as his successor, if the company is going private and his message to channel partners.
When did you first begin thinking about leaving Nutanix?
None of these things happen overnight. I’ve been thinking about this since the pandemic began. It’s always a process. It takes a little while to get to like, ‘What’s the right time?’ I figured it’s always best to leave on a high. And the high is here. Nutanix had a great quarter and really good growth, all things considered. We have a great investment from Bain coming in, which shows strong confidence in our company. I started to look at what happened at Microsoft, or at Google or at Twitter, where you needed fresh talent to come in and lead the business.
With you leaving the same time as Nutanix announces the $750 million investment from Bain Capital, does this suggest that Nutanix will go private soon or some sort of change of ownership?
No, I think there’s no such plan. I mean PIPEs (Private Investment In Public Equity) are very standard. Just in the last three months, if you follow Twitter, Airbnb which is now filing to go public, Wayfair, Expedia, they’ve all taken PIPEs. I think it’s basically to shore up your balance sheet and to be able to do all the things you want to do. This is a multi-year thesis, more than a five-year thesis from their point of views. Bain looks at this as an extremely transformational place where we are with respect to our business model as well as the overall hybrid cloud landscape.
You seem to be the type of leader who could do a lot with $750 million. Why are you leaving now?
When you have this maniacal focus and energy to really bring ideas to life, it takes a toll. It really takes a toll on you, your family and people close by. The pandemic was hard on all of us. Children are sheltered in place, they’re still being homeschooled on Zoom. There’s a lot going on with families. I figure there’s no better time for a succession plan and really focus on things that really matter. I look forward to spending more time with my kids, my family and my wife. And just having the space and flexibility to read and write.
Obviously, I’m going to continue to lead the board and management team until a successor is appointed. It’s very important to make sure the baton is passed to the right person. We’re going to take the time to find the correct person. All in all, I think there’s no better time to leave on a high. It’s been 11 years. One of those things I look at is that the company is so well-positioned right now. Not just from the last years’ results, but also from where we’re heading as a hybrid cloud infrastructure company. When I look back, there was a ton of soul searching. COVID changes everything. The way it has changed my personal relationships, it’s very important that I focus on things that matter.
Why announce your plans to leave when Nutanix hasn’t formally started searching for a replacement?
The most important thing is to cast a really wide net for talent -- like a really, really wide net. Doing it confidentially, you’re always restricted and sort of contrived. We figured the best thing to do was make an announcement and sort of disarm the environment, where everybody who reads the news says, ‘You know what? I’d be interested in taking Nutanix to the next level.’ So, casting a wide net was the biggest goal here.
At the end of the day, we have great talent on the inside, but we wanted to go out to external candidates just as well. Doing this with external candidates will be the easiest if you really made an announcement first like this, as oppose to doing this with an executive search firm very confidentially. We figured as a board, it’s best to do this publicly.
Will the new CEO be channel-friendly and not take Nutanix direct? Can you talk about the succession plan as it relates to channel partners?
We’ve always had this channel DNA of the company and the channel is transforming to the cloud. The truth is there’s two kinds of customers: We have the end-user customer, but you also have the channel as a customer. So anybody who comes in has to have extreme customer centricity. What we’re doing with our digital strategy, Test Drives, the fact that everything is available to our channel partners to go do proof of concepts, and now all our products are available in the cloud -- we want to be the company that helps transform the channel.
Like the way Cisco did it 20 years ago, away from IBM to appliances. We would like to be that company that really takes the hard work of the last decade and use that as a springboard to make the channel extremely cloud friendly.
Do you have a shortlist of CEO candidates? How long are you expecting it to take to find a replacement?
We’re not putting a timeline on it. We will take our time. We’re forming a CEO search committee that will lead the effort. The best part is, with such goodness right now in the company, it will attract a lot of really good talent. There’s always good names out there, but I think we have to really look at this by working with the whole board of what a search should look like.
There’s lots of stakeholders. It’s not just employees, not just customers, but also partners, global systems integrators, cloud partners, alliance partners, etc. There’s quite a few stakeholders out there, including Wall Street, to look at.
What’s the future for Nutanix’s channel?
The things we’re doing now with global system integrators like Wipro, for example, doing database-as-a-service, desktop-as-a-service, disaster recovery-as-a-service, et cetera. They’re all building solutions that are really a pull-threw of our services. So, if anything, we are getting more and more meshed with partners’ products and services. The same thing what we’ve done with VARs: The value added resellers are working on cloud services, managed services, professional services – we are so deep with them. No new CEO will come and unravel that. If anything, they have to go deeper simply because our customers are asking for those partners to be helpful in their cloud transformation.
Partners say you’re the soul and spirit of the company. What’s your message to all your channel partners?
The most important thing is that the soul of this company is our customers, our product – there’s no better time for a succession. This will settle down over the next couple of weeks and months, but I’m here until the next CEO is found. I would love to talk to some of these partners as well, as to what they would like me to convey to the next CEO. Obviously, they want to build a relationship with the new CEO.
To me, the important thing is how we take what we have and take it to the next level. The mark we’ve made on simplicity, on hyper-converged infrastructure, and the mark we’ve made with our customers with a Net Promoter Score of 90 – those things are basically my legacy. Our 6,000 plus employees, I’ve received so many emotional messages in the last few hours, that I know they’re really going to root for everything I stood for.
All 6,000 of our employees, all 18,000 of our customers and all 10,000-plus of our channel partners, I know they’re carry the torch forward. I think they’ll understand that this is an extremely personal thing, where this pandemic did make me think a lot about what really matters.