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Diane Greene, president, CEO and co-founder of VMware Inc., the Palo Alto, Calif.-based developer of the software credited with starting the move to virtualize x86-based servers, has steered VMware from its beginning through its acquisition by and subsequent growth under EMC through its wildly successful IPO. Greene recently sat down with CMP Channel to talk about how VMware started, and where it is going.
CMP Channel: Where did VMware get its start?
Greene: Mendel Rosenblum, our chief scientist, is a professor at Stanford University and a world expert in operating systems. He was doing research in bringing isolation to operating systems for security, fault-tolerance, and resource isolation. He went up to give a talk at Sequent before they were purchased by IBM, and they said, 'This is great, and we really would love an operating system like this, but we can't afford to build a new operating system, and even if we could, it wouldn't run any of the old workloads.'
You know I'm married to him? And he came home that night, and he's like, 'I got it. I'm gonna revisit virtualization and fix all the problems that Sequent brought up, and it still lets you have your isolation, because you can run the old code and the new code, and it's non-disruptive, and you don't have to build a new operating system.' So he just went to work the next day and started doing a project to prototype it. They did it on the MIPs[-based computer]. We got to talking with the grad students and we said, 'Look, this would be really valuable to bring to the x86 industry-standard systems.' So we launched the company.
What were you doing at that time?
Greene: I was just finishing up some consulting I was doing for a startup. So I said [to him], I'll wrap that up, and I'll help you get the company going. I had already done a couple startups. So I joined to get the payroll going. I negotiated our BIOS agreement with Phoenix [Technologies, Milpitas, Calif.]. That was the first business deal we ever did. And I never left. I anticipated leaving, but I didn't.
If you look at VMware's history, there's almost like three phases. There's pre-EMC, then there's the EMC period . . .
Greene: An unusual history . . .
. . . and then there's the post-IPO period.
Greene: Still EMC somewhat . . .
About 90 percent.
Greene: No, 86 [percent].
OK. What were things like before EMC acquired VMware and what were things like after EMC acquired VMware? What were some of the big differences?
Greene: Interestingly enough, things didn't really change that much. We didn't have a stock hanging out there that was going to have a lot of upside any more. That's something that went away. Up until the time we were bought, everybody had stock in the company that they expected to be really different in value someday. Once we were acquired, everybody had EMC stock, which was pretty predictable.
We anticipated that we were probably going to get integrated. But what happened was, the day we were acquired we realized that this was a company built to partner. It's just in our bones. We went to market with IBM, then HP and Dell, and we had really strong relationships with them. We've expanded our relationships with them since then in terms of making sure our virtualization works well with their servers. And our resellers and VARs, it was such a huge partner focus to the company and how we went to market.
We realized that, if we suddenly had EMC selling our software, that's going to be destructive to our partner channel. And so, I said to Joe [Tucci, EMC chairman and CEO]—and we were small then, miniscule compared to EMC's revenue—'I don't think you want to disrupt this, because it's really going well.' I [didn't] think EMC should sell our product because we had immediately heard from a lot of our partners, and they were pretty concerned. So [I told him,] 'Let's send out these rules of engagement to all of our partners about how we're going to sell, and that EMC is not going to be selling our product.' And he said OK.
And so we never integrated sales. And if you don't integrate sales, you actually don't integrate. I didn't really understand that fully at the time, but that's exactly why we never did. If sales isn't integrated, how do you integrate IT? Or how do you integrate anything else? It doesn't make any sense. So we operated as an independent subsidiary.
What was EMC's reaction when you said you don't want to do this sales integration?
Greene: Joe really understood. He said, 'You're right, it makes sense.' They had just bought Legato and Documentum, and were going to be integrating them into the sales force. So that was enough, right? Our growth was good. And because it continued so well, it's like, if it's not broken, don't fix it.