“I do not take it for granted that we will IPO,” says Rob Mee, CEO of Pivotal,
a software company spun off from EMC and VMware that helps its customers build better software, faster.
If Pivotal does one day want to have a public stock offering, it’s on the right track: Ford recently led a $253 million round of funding into Pivotal, in a deal valuing the privately-held company at $2.8 billion. Pivotal says it’s generating $116 million in revenue on an annualized run rate basis.
Still, when thinking about the possibility of going public, even in this lukewarm market for tech companies, Mee cites words of wisdom from his predecessor in the role, Silicon Valley legend Paul Maritz: There are “two great motivators” for a startup — fear and hope. Fear that you’ll be disrupted by someone else, and hope that you actually have a product people want.
“We don’t take anything for granted,” Mee says.
Now, that fear and hope has motivated Mee to expand his executive team with the hire of Cynthia Gaylor, a 20-plus year tech corporate finance veteran formerly of Twitter and Morgan Stanley, as Pivotal’s new CFO.
Fear and hope
Over the course of her career, Gaylor worked on Goldman Sachs’ investments in companies like Facebook and Netflix; and helped broker deals like the sale of Zappos to Amazon. At Twitter, where she worked from the summer of 2013 to the summer of 2014, she oversaw 14 acquisitions.
Gaylor has known Mee for some time, she tells Business Insider, and jumped at the chance to work with him at Pivotal. She calls him a “world-class operator.”
The cool part about Pivotal, says Gaylor, is that they already have strong fundamentals. Not only does Pivotal actually have money coming in, but former parent company EMC even forgave $400 million of debt, converting the balance into equity in Pivotal. That makes Pivotal free of any major debts, the company has said.
“They’re, quite frankly, already at scale,” Gaylor says.
Right now, the company’s flagship Pivotal Cloud Foundry platform is on a $200 million annual bookings run rate this year, with its Pivotal Big Data Suite doing $100 million in annual bookings. Mee says 80% of customers are large-scale businesses, including Home Depot and Mercedes-Benz.
Pivotal has a unique place at the center of the cloud wars, as a partner to Google, Microsoft, and Amazon. It means Pivotal gets a cut of the deal, no matter which tech titan its customers decide to go with.
Mee hopes that Pivotal can keep that train rolling along. And Gaylor says that from her new perch as CFO, there are huge opportunities for Pivotal to further penetrate the market. But he also says that his big fear is that maybe someone else will come along and smash Pivotal’s business, too.
That means that in addition to helping Pivotal make more money, Gaylor’s job is also to help Pivotal control its burn rate — the measure of how much more money a startup is spending than it’s taking in. The fastest way to crash a startup is not controlling burn.
But Gaylor is more concerned with the potential upside. By controlling the burn rate, and focusing on its successful businesses, she says, there’s no reason why Pivotal shouldn’t hold its own IPO, sooner rather than later, and regardless of broader market conditions.
“A good company can go public in any market,” Gaylor says.