Cohesity CEO on Veritas integration and IPO plans

It has been about a month since the deal was closed. What are your immediate priorities, at least for the first 100 days?

There are three things I’m trying to do in the near term. First, I want to make sure our employees are engaged, so I’m traveling to different places to meet our employees. I’ve been in Bangalore, Pune and Mumbai in India. Then I went to Dubai, and now I’m in Singapore. I live in the US where we have about 2,000 employees and I want to make sure I’m there as well.

The second thing is to make sure our engineers have a very good vision of our product innovation. We’re a product company at heart. It’s very important that we have a vector of innovation. I believe what we’re doing is five or ten times better than every one of our competitors. I’m excited about our innovation roadmap especially in areas like security and AI [artificial intelligence], where we are years ahead of our competitors.

The third thing is to meet customers and partners. We want to help them understand that we’ve got their back. We just met NCS and some government customers here in Singapore. I met many customers in Abu Dhabi and Dubai as well. The customer feedback on our roadmap and vision has been amazing. NCS was telling us they haven’t seen anything like that. It’s like being reborn into this AI-powered, data security company that’s number one in market share. We’re profitable and do more R&D than many of our competitors put together.

In one of your earlier interviews, you mentioned that you’d call the top 1,000 Veritas customers. Have you started doing that and what did you say them?

I didn’t know who the top 1,000 Veritas customers were when we announced the deal because we were competitors. But I knew many of them, though I didn’t know what position they were on the list. So, between February and December, I was calling customers a lot. I knew they were Veritas customers, and they were reaching out to me as well.

We’ve been very clear about some product overlaps and areas where we're investing in the future. How we're sorting through that with clarity ensures the company is not moving around in a fog

First of all, they wanted to know the vision of the new company and what we are doing in what we call AI-powered data security. Our mission is to protect, secure and provide insights on the world’s data.

We protect every workload on private cloud and public cloud. We partner with the key cloud providers and provide security and AI capabilities for data that nobody in the industry has thought about. We’re also doing a lot with Nvidia which is an investor in our company.

Cohesity has put up a product roadmap strategy highlighting the integration between Cohesity and Veritas. What’s the overarching approach in your integration strategy?

Whenever you bring two good companies together, the 8,000 Veritas customers and 4,500 Cohesity customers will want to know what’s in it for them. Is there risk? Are you going to decommission one product? Then, your competitors start throwing fear, uncertainty and doubt at your customers. The most important thing you can do is to be crystal clear in communicating the roadmap and vision over and over again.

One of the first things I did on day one was to put up a 15-minute YouTube video on the story and vision of the new Cohesity. It’s at the bottom of my email signature, so every customer and partner can see it. And I want everyone in our company to tell that story in their own words. When we do that, the confusion goes away.

You don’t have to physically talk to all 12,000 customers – they will hear about it. They’ll hear about it from my teams. They’ll hear about it from watching my video. But I felt I needed to talk to the top 1,000 customers who spend the most with us because I want to understand where they’re going and make sure that they continue to run their business with us.

My hope is that none of the 12,000 customers will think about anything other than doing more with us so. But there’s always a risk that customers are nervous, and that’s why we call that campaign, no customer left behind. No customer should ever feel like their products and spend are at risk.

Let’s dive deeper into the specifics – how would the new Cohesity help customers to improve all aspects of data resiliency?

Bringing Cohesity’s security and AI technology to that Veritas base instantly creates a market leader with presence and product innovation that’s second to none. That, in itself, builds confidence. We can approach a customer with more bravado and tell them about our future. Before the deal, we could only talk to a Veritas customer about replacing Veritas with Cohesity. Now, we can build on top of Veritas and say these are the things we’re going to do. That’s a very different conversation.

Conversely, Veritas didn’t really have a good security and AI story, but now they can tell that story. So, both companies have new things they didn’t have before. And we’re bigger than our competitors Rubrik and Commvault put together. That gives us scale and punch if we execute well. We can take that same story to every country in the world and we’re very excited about it.

Does this deal give you access to customers that you wouldn’t have been able to go after before? Customers in Japan, for example, might be running legacy systems and not ready to embrace a cloud-native data security platform.

You’re absolutely right. Having been at VMware and SAP, I know these customers are not going to stop using Veritas. They would take a meeting with me, but you can’t begin the conversation by saying you got the wrong product. Now, it’s a very different conversation. If you’re a Cohesity sales rep, you have many more open doors because you have an install base. If you’re a Veritas rep, you’ve got all the security and AI that you didn’t have before.

It’s my job as CEO to open up those conversations and frame those conversations. You have to teach people how to articulate the message, embody the values of the company, provide a vision of where the product is going, and illustrate how we handle customers.

Bringing Cohesity’s security and AI technology to that Veritas base instantly creates a market leader with presence and product innovation that’s second to none. That, in itself, builds confidence

We have to do the same thing with partners who are talking to our customers so that they can amplify the same message. It’s a force multiplier if they get the story right. You typically have to refresh that message every six months. And the good news is, there’s going to be new innovation every six months.

You spoke about execution. Can you provide some examples of how the integration is going to be executed across the APAC region?

You measure execution by meeting your numbers. You have a top line revenue and bottom line cashflow. We have a plan to execute on that, which takes us to the vicinity of a $2bn company that’s growing very well with a 27% free cashflow margin. As we put the two companies together – we’re closing our quarter now in January and then we’ll close the year in July – we’ll see how we do. That will be a first indication that our execution is good.

We’ll start to bring teams together on 1 February. We’re merging the sales teams in every country. We are also creating centres of excellence where people can learn more about our products. If you came from Cohesity, you have to learn NetBackup. If you came from Veritas, you need to learn about DataProtect and Gaia.

We’ve got to make sure all of the enablement is ready, which we’ve been working on for months. The good news is the cultures of both companies are reasonably compatible. They seem to get along pretty well. There will always be politics here and there which no company is immune from, but my job as CEO is to make sure there’s cultural unification. We aren’t playing red team (Veritas’ brand colour) versus green team (Cohesity’s brand colour). I got to make sure there are no silos, that we take the best ideas and we’re not playing favourites. I want the best person in every job. When you create a culture that’s strictly driven by meritocracy, the team wins.

We’ve also been very clear about some product overlaps and areas where we’re investing in the future. How we’re sorting through that with clarity ensures the company is not moving around in a fog. You have to be very clear, precise and crisp about decisions. If you take a long time to make a decision that needs to be crisp, your team will just flounder. Sometimes you need to take more time because the decision isn’t clear, or the outcome isn’t clear yet. But for things that need to be clear, you need a crisp decision. By July, we’ll have a very good reading as to whether this is going well, but I think it has all the potential to work very well.

How much does Asia-Pacific (APAC) account for in Cohesity’s overall revenue? Are there plans to double down on certain markets in the region?

I can’t give you colour on APAC specifically, but international accounts for at least 45% of our overall revenue. Before the deal, 25% of Cohesity’s revenue came from international, so this is a huge progress. For Veritas, North America was a dwindling percentage while Cohesity’s North America business is on fire. We bring relative strengths to each other.

In APAC, we’re very strong in Japan, ASEAN, including Thailand and Vietnam, and we’re the only player in Korea. We’re number one in India and we’re very strong in the Middle East as well. It doesn’t mean we’re perfect – there are certain places where we can do better.

The way I measure it is I ask my leaders of those countries to benchmark themselves against the competition. It’s a like a football team or basketball team. You know you’re good because your win rates are high against a particular team. In countries where our win rates are high and we’re dominant, we like it, but if we’re not, we have some work to do.

With the closure of this deal, are you restarting plans for an IPO?

As you know, Cohesity had confidentially filed for an IPO in 2021 but we put those plans on hold because the market tanked, so we waited. Then, I joined the company as CEO, and I felt we should get this deal done first as opposed to going public right away.

We would be a strong company as a function of this deal. We plan to build a public-ready company, and we have all the potential and makings of a public company. We picked our bankers, but we’ve got to show some progress on the integration and running the company. At the right point in time, when we’re ready and the markets are ready, we can go public.

The IPO is always a milestone. It’s not the destination. You want to ask yourself: if you go public, can you create 10 years of success after that? If it’s a destination, then you will have no longevity.

Do you see further consolidation in the market down the road?

There could be other deals, but I don’t think any of the other major companies could merge. There could be one of the smaller guys that could participate, maybe private equity buyers and players, but the type of deal we did was once in a lifetime. I don’t think you’ll see it happening again in our space at all, because it’s just not possible. You’d have to have two public companies, but it’s very hard to do because you have to fight the shareholders on what the price should be.

With due respect, I don’t think many of the other companies have the DNA to pull off a big deal. We have very seasoned people who have done big deals before. We’ve had tremendous amount of investor interest in the company. The fundraising to get this deal done was oversubscribed. Investors were lining up to invest in this deal and we had to leave people out. That’s a good indication that when we go public, there will be a lot of interest.