Protocol | Enterprise

For VMware, replacing CEO Pat Gelsinger will be hard. Navigating the relationship with Dell will be harder.

Two early contenders for the role of CEO are operating chiefs Sanjay Poonen and Raghu Raghuram.

Incoming Intel CEO Pat Gelsinger

Pat Gelsinger is leaving VMware after eight years.

Photo: VMware

VMware CEO Pat Gelsinger's jump to Intel comes at a particularly precarious time for the company as it navigates a potential spinoff of the business from majority owner Dell.

Chief Financial Officer Zane Rowe is taking over the reins of the virtualization software provider temporarily as the board looks for a permanent replacement, according to a company statement on Wednesday. Two early contenders for the role are operating chiefs Sanjay Poonen and Raghu Raghuram, according to Morningstar analyst Mark Cash.

Whoever becomes the replacement faces a difficult undertaking. VMware is a complex organization, a challenge that Gelsinger navigated well in his more than eight years with the company, but still poses a potential hurdle for an outside replacement. Most urgently, however, will be the Dell problem. The company has an 80% stake in VMware, but is looking to spin off the business as it struggles to bolster its own balance sheet, a move that could force VMware to pursue cost-cutting initiatives and find new areas of growth.

"We view the management transition as an additional but manageable hurdle," RBC Capital Markets analysts wrote in a note to investors. VMware "will need a sizable debt raise and special dividend in order for Dell to complete a successful spin, and a new CEO will be an important part of such a move."

Any change in the ownership structure of VMware is unlikely to happen until September 2021 at the earliest, but it will still be imperative for a CEO to be named quickly to help with any transition. VMware has a special committee tasked specifically with negotiating with Dell.

"There's a lot of opportunity for someone to stamp their name on the company," Cash told Protocol.

The news comes after former Chief Operating Officer Rajiv Ramaswami left in December to lead rival Nutanix, a departure that clearly irked VMware. The company is suing Ramaswami for allegedly holding "secret meetings" with Nutanix while serving at VMware, a move that indicates just how fiercely the two firms compete.

Outside of Gelsinger and Ramaswami's departures, there were a few other high-level defections over the past year: Chief Customer Officer Scott Bajtos jumped to FinancialForce, general manager Ajay Singh left to be the chief product officer at Pure Storage, cloud services general manager Milin Desai departed to be CEO at Sentry, SVP Jim Delia left for ServiceNow, and senior director of global partner operations Jeanine Bierlein went to Zoom, among others.

"Leadership change is a natural part of every company's evolution," VMware said in a statement. "We have [a] strong executive bench across the company and are investing heavily in preparing our leaders to take on larger, higher impact roles as new opportunities arise. Interest from executive candidates in our company remains strong."

But Gelsinger leaving is, of course, the most significant, given the major impact he had on the company, taking it from a $4.6 billion midsize provider in 2012 to a $10 billion burgeoning power-player in the hybrid cloud industry. In that time, the stock price rose nearly 44%.

Gelsinger "profoundly pivoted the company over the last few years, turning VMware into a key component of cloud infrastructure while expanding into high-growth vectors and away from core virtualization solutions," Cash wrote in a note to investors.

Gelsinger also struck an important partnership with AWS in 2016 to allow VMware customers to run core products on its cloud. That, along with agreements with Microsoft and Google, will be paramount for any successor to continue. Gelsinger was also instrumental in pivoting the company's focus to Tanzu, a tool that effectively helps clients manage their applications across different cloud providers.

Gelsinger will remain on the board, but given the monumental task facing him at Intel, some industry insiders questioned his capacity to also help out his former employer. Investor hesitancy over any incoming new CEO was apparent, with the stock dropping as much as 7% in the hours following the news.

"It's a loss. No other way to say it. Pat is a key technical leader in the organization," IDC President Crawford Del Prete said. Still, the company "is in a strong position and is a key part of many customer's enterprise strategy."

Protocol | Workplace

Instacart workers are on strike. How far can it get them?

Instacart activists want a nationwide strike to start today, but many workers are too afraid of the company and feel they can't afford a day off of work.

Gig workers protest in front of an Amazon facility in 2020.

Photo: Michael Nagle/Bloomberg via Getty Images

Starting today, an Instacart organizing group is asking the app's gig workers to go on a nationwide strike to demand better payment structures, benefits and other changes to the way the company treats its workers — but if past strikes are any indication, most Instacart users probably won't even notice.

The majority of Instacart workers on forums like Reddit and Facebook appear either unaware of the planned strike or don't plan to participate because they are skeptical of its power, afraid of retaliation from the company or are too reliant on what they do make from the app to be able to afford to take even one day off of the platform. "Not unless someone is going to pay my bills," "It will never work, you will never be able to get every shopper to organize" and "Last time there was a 'strike' Instacart took away our quality bonus pay," are just a few of the comments Instacart shoppers have left in response to news of the strike.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

The way we work has fundamentally changed. COVID-19 upended business dealings and office work processes, putting into hyperdrive a move towards digital collaboration platforms that allow teams to streamline processes and communicate from anywhere. According to the International Data Corporation, the revenue for worldwide collaboration applications increased 32.9 percent from 2019 to 2020, reaching $22.6 billion; it's expected to become a $50.7 billion industry by 2025.

"While consumers and early adopter businesses had widely embraced collaborative applications prior to the pandemic, the market saw five years' worth of new users in the first six months of 2020," said Wayne Kurtzman, research director of social and collaboration at IDC. "This has cemented collaboration, at least to some extent, for every business, large and small."

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Kate Silver

Kate Silver is an award-winning reporter and editor with 15-plus years of journalism experience. Based in Chicago, she specializes in feature and business reporting. Kate's reporting has appeared in the Washington Post, The Chicago Tribune, The Atlantic's CityLab, Atlas Obscura, The Telegraph and many other outlets.

Protocol | China

WeChat promises to stop accessing users’ photo albums amid public outcry

A tech blogger claimed that popular Chinese apps snoop around users' photo libraries, provoking heightened public concerns over privacy.

A survey launched by Sina Tech shows 94% of the some 30,000 responding users said they are not comfortable with apps reading their photo libraries just to allow them to share images faster in chats.

Photo: S3studio via Getty Images

A Chinese tech blogger dropped a bombshell last Friday, claiming on Chinese media that he found that several popular Chinese apps, including the Tencent-owned chat apps WeChat and QQ, as well as the Alibaba-owned ecommerce app Taobao, frequently access iPhone users' photo albums in the background even when those apps are not in use.

The original Weibo post from the tech blogger, using the handle of @Hackl0us, provoked intense debates about user privacy on the Chinese internet and consequently prompted WeChat to announce that it would stop fetching users' photo album data in the background.

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Shen Lu

Shen Lu is a reporter with Protocol | China. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. She can be reached at shenlu@protocol.com.

Protocol | Enterprise

As businesses struggle with data, enterprise tech is cleaning up

Enterprise tech's vision of "big data" largely fell flat inside silos. But now, an army of providers think they've figured out the problems. And customers and investors are taking note.

Corporate data tends to settle in silos that makes it harder to understand the bigger picture. Enterprise tech vendors smell a lucrative opportunity.

Photo: Jim Witkowski/Unsplash

Data isn't the new oil; it's the new gold. And in any gold rush, the ones who make the most money in the long run are the tool makers and suppliers.

Enterprise tech vendors have long peddled a vision of corporate America centered around so-called "big data." But there was a big problem: Many of those projects failed to produce a return. An army of new providers think they've finally figured out the problem, and investors and customers are taking note.

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Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Protocol | Policy

What Frances Haugen’s SEC complaint means for the rest of tech

Haugen argues Facebook misled investors by failing to disclose its platforms' harms. If the SEC bites, the rest of tech could be next.

The question is whether the SEC will find the contents of Haugen's complaint relevant to investors' interests.

Photo: Matt McClain-Pool/Getty Images

Whistleblowers like former Facebook staffer Frances Haugen have pretty limited options when it comes to actually seeking redress for the harms they've observed and documented. There's no federal privacy law in the U.S. to speak of, Section 230 protects platforms for online speech and companies like Facebook are under no obligation to share any information with lawmakers, or anyone else, about what's happening on their sites.

But there is one agency that not only governs all publicly-traded companies, including in tech, but also offers whistleblowers like Haugen the opportunity for a payout: the Securities and Exchange Commission.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

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