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Storage & Data Center Solutions

Pure Storage CEO plays long game despite stock wobble

In technology, where shares in companies can soar and plummet like Icarus of old, it’s not always smart to take stock valuations too seriously. After all, you could have picked up the whole of Apple for next to nothing in the mid-1990s and now the company is the most valuable in the world. Google and Facebook were doubted on IPO and now have valuations many times larger than on the days of their respective floats.

Flash-centric datacentre company Pure Storage got a taste of what life on the public markets can be when it slipped down the metaphorical rollercoaster in November, losing about a third of its value in a week before bouncing back a few weeks later and then seeing a slower slide since.

So what does that feel like, I asked Pure CEO Scott Dietzen when we spoke by phone recently.

“This is a marathon not a sprint,” Dietzen says. “Our job is to grow the business and were doing that phenomenally well.”

Dietzen who took Pure public in October, points to indicators beyond the raw share index, including 167% annual revenue growth, cash reserves of $517m and a burn rate (speed at which it is digging into cash reserves) of a modest $13m per quarter.

Some CEOs get so tired of the vagaries of the public markets that they take their companies private, Michael Dell being a notable example, but Dietzen says he has enjoyed the ride so far.

“It’s been great, having $517m in the bank and having the market moving in our direction.”

That market move is Dietzen’s classic refrain that the previous generation of storage hardware needs to be thrown away and he points to old-school storage giants purchasing storage startups as evidence that even they agree.

“The 25-plus year technology needs to be swept out and we’re at the beginning of a bigger wave,” he says. “The competition remains fierce because the stakes are so high but the storage technology designed for mechanical spindles is going to be replaced. All primary data today should be stored on Flash.”

Cost was an issue for Flash for many years but Dietzen says that with volumes having grown so quickly, some mechanical drives can now be more expensive than solid-state drives.

Storage opportunity is being driven by the need for speed within organisations and the ability of Pure and peers to make processes that would once of have taken days or hours achievable in minutes.

But what of modern rivals like Nutanix and SimpliVity that have focused on hyperconvergence, putting storage, compute and other tasks into a single appliance?

“The appeal of the hyperconverged approach is mostly downmarket – there’s only one box so if you’re in a branch office that’s fine,” Dietzen says. But for enterprise datacentre scalability storage must be separated from the compute layer, he argues.

There might be a new threat where, as companies like Spotify move to the big cloud services, the corporate datacentre goes away altogether in some organisations. But Dietzen says cloud is a big growth driver for Pure with customers including the likes of LinkedIn, Workday and ServiceNow, even if the biggest cloud platforms tend to be mostly self-assembled.

“We don’t think we’re going to sell to Google or Amazon,” he says. “If we had the opportunity to try to negotiate a deal it would be fun but it’s deep in the DNA of those companies that they want to maintain control. They are hard-core DIY-ers.”

Dietzen sounds relaxed about whatever the Masters of the Universe in Wall Street say his company is worth and with a market cap of almost $2.5bn at time of writing, Pure looks a solid company. Besides, Dietzen says other KPIs are important too, notably Pure’s Net Promoter Index score which is higher than that of Apple’s iPhone.

He says that for every dollar he can sell in to a new customer, another $9 will follow within 18 months and the challenging part is to get a foot in the door to prove superior value over incumbents. But the switch to the New Storage is inexorable and irreversible, he says – whatever the stock does at any given time.

Related reading:

Pure leads charge of Flash-y storage startups

SimpliVity aims high with datacentre hyperconvergence

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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