Readers of this blog know how well Pure Storage has been doing in our mission to replace performance (oxymoron) disk arrays with All-Flash Arrays (AFAs). And now we have yet another proof point: Pure Storage has just raised another $225M, our largest round to date, taking our total raised to $470M. The pre-money valuation established by our public market investors was over $3B. (We did tell you that the business grew nearly three fold with no slowing of growth since it was valued at over $1B last summer. ;-)) We are pleased to welcome Wellington Management as a new investor in this round, which included super pro-rata participation from our existing public market investors T.Rowe Price, Fidelity, and Tiger Global, and pro-rata or better from each of our venture capitalists—Sutter Hill, Greylock, Redpoint and Index Ventures. We are hugely grateful to our institutional investors for their continued enthusiasm for our business. (And let me again add our sincere thanks to Allen & Co., who facilitated this raise and has been a great friend to Pure.)
Pure’s hefty valuation reinforces the overall health and unprecedented growth in our business to date. But more importantly, it reflects the hugely disruptive impact that an AFA that costs less than disk will have in the years to come. With our top-tier partners and investors, Pure is well positioned for long-term independence and ultimately to fulfill our mission of leading a fundamental shift in the storage market as we leave the mechanical legacy behind.
Obviously, this round is another significant milestone for Pure Storage, and no doubt raises some interesting questions:
With most of the $150m in the bank from our round last summer, why raise again nine months later?
Pure Storage is growing really fast. Pure may well be growing faster than any hardware systems company in tech industry history. Our average of >50% sequential quarterly growth puts us at about twice the pace of storage bellwethers like NetApp and Data Domain, and new public company entrants like Nimble. Our rate of growth also compares favorably to Cisco, Riverbed and Palo Alto Networks, each considered best in class.
We believe that we have a 2-year technology lead on the market for AFAs, and when you have a proven product and technology advantage, the right thing to do is (1) grow as fast as you possibly can while the market window is wide open, and (2) increase your spend on R&D to grow your technology lead, increasing the pressure on the competition to keep pace. You can read more about how Pure will use our new funds to accelerate innovation, global growth, and partner success here.
Finally, we believe that a multi-billion dollar valuation and now deeper pockets gives greater confidence to our customers and to our partners about our long-term independence. If there’s one plea I hear every day from customers, partners and our employees, it’s “Please don’t let anyone buy Pure—another owner would only muck it up.”
Is growing so fast prudent? Wouldn’t it be easier to dial it back?
Well, it might be easier, yes, but you forget why Pure Storage was founded. We are convinced that customers deserve much better than they are getting from incumbent storage vendors. Billions of dollars are going to be wasted this year buying antiquated disk-centric arrays to run mission-critical database and virtualized applications. In the second half of 2014 (with innovations coming shortly from Pure), no customer should be buying disk or hybrids of disk and flash to run these workloads.
For the same out of pocket money (CapEx), you can get an AFA that will remove more than one million hours of latency in your business applications this year alone! (Yes, there are way less than one million hours in a year, but your business applications, employees and customers are striving to do many things in parallel, and each Pure array eliminates >1m hours per year of waiting time in the aggregate vs. the disk-centric alternatives.) Moreover, that same AFA will save you enough in power and cooling costs as well as reduced maintenance (OpEx) that it can pay for itself over it’s first 4 years in your data center. (And unlike the disk array it’s displacing, that AFA can serve your needs for a decade and beyond—see Forever Flash.)
The Pure Storage value proposition is so profoundly disruptive to the legacy vendors that they are spending a great deal of energy trying to slow Pure down: see, for example, our blogs on the inflection point in the transition to AFAs, the FUD wars, and our plea for employee freedom. At this point, the all-flash future for performance storage is inevitable. The only question is how quickly will the industry be liberated from storage that’s 1000 times slower than the rest of the data center?
Given how well satisfied our customers are (Pure’s Net Promoter Score is currently 74, more than 2-3X better than the big disk storage vendors!), the best thing for customers is for us to continue to grow fast. And given the technology lead we enjoy, it’s actually more prudent to keep our ‘foot on the gas’—i.e., maximize our growth while the competition is back on their heels.
Why not an IPO? An IPO is, after all, another fund raise. Why another private round rather than just taking Pure Storage public?
We at Pure view the IPO to be a step along the journey rather than the goal. We remain convinced that Pure’s opportunity is to build the next great storage company, and staying private for now affords us the greatest flexibility in continuing to make the right long term investments and to fend off prospective acquirers.
But the biggest reason to stay private for a while longer is recruiting: lots of people want to be part of a company when it goes public. First, there’s generally a material uplift in the stock price and each Pure employee has an ownership stake in the business. Second, the IPO is rightly seen as a fun, exciting rite of passage that tech entrepreneurs want to be part of. So the longer we wait to IPO, the more incredibly talented individuals we will be able to recruit to join the Puritan cause.
While we won’t set a time line for that IPO just yet, rest assured we’re doing our pre-IPO homework now so that we’ll be ready to take that next significant step in building the next great storage company.
A final word of thanks to all of our customers and partners. We exist to deliver more value to you than our competitors can and certainly wouldn’t be where we are today without you. This funding is ultimately about empowering Pure to better serve your needs and many more like you—that businesses worldwide need not throw good money after bad on four more years of mechanical disk that Pure’s innovations have rendered legacy.