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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."

Twitter’s future is newsletters and podcasts, not tweets

With Revue and a slew of other new products, Twitter is trying hard to move past texting.

We started with 140 characters. What now?

Image: Liv Iko/Protocol

Twitter was once a home for 140-character missives about your lunch. Now, it's something like the real-time nerve center of the internet. But as for what Twitter wants to be going forward? It's slightly more complicated.

In just the last few months, Twitter has rolled out Fleets, a Stories-like feature; started testing an audio-only experience called Spaces; and acquired the podcast app Breaker and the video chat app Squad. And on Tuesday, Twitter announced it was acquiring Revue, a newsletter platform. The whole 140-characters thing (which is now 280 characters, by the way) is certainly not Twitter's organizing principle anymore. So what is?

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Protocol | Enterprise

RingCentral is battling Zoom and Teams. Here's how it hopes to win.

Despite being an underdog, the videoconferencing company is banking on key partnerships as a route to success around the globe.

"Don't count us out," RingCentral CEO Vlad Shmunis told Protocol. "Rome lost many battles, but never a war."

Image: Chris Montgomery

The Roman Empire had many enemies in its over 1,000-year history, but ultimately prevailed against most. That's why RingCentral CEO Vlad Shmunis is so apt to use it as a comparison.

The company is in the midst of a fierce competition for dominance in the rapidly growing cloud-based communications industry against Zoom, Microsoft and others. But despite its position as a relative underdog, Shmunis is confident the company will emerge victorious in the end.

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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.

Power

How Zoom won 2020 — and how 2020 changed Zoom forever

Zoom never imagined being the company the pandemic forced it to become. Now it has to grapple with what's next.

Zoom got so big in 2020 that even competitors like Facebook have embraced it.

Photo: Facebook

Zoom never wanted any of this. Coming into 2020, the company was in great shape: It was growing quickly, making money and becoming an essential tool for tech-forward businesses everywhere. It's not that nobody at Zoom had ever imagined being a home for happy hours, book clubs, yoga classes, elementary schools and doctor visits. It's just that Zoom had decided, fairly definitively, it never really wanted to be any of those things.

At the beginning of 2020, just before the pandemic upended the world and the rest of the year, Zoom Chief Product Officer Oded Gal told me that Zoom had no plans to become a consumer application. "We are still a business application," he said, "and we don't see ourselves moving away from that." There were some prosumers using Zoom outside of the 9-to-5, he said, and he certainly understood that there were compelling uses for consumer videochat. But he and Zoom were happy to leave those uses to FaceTime and Skype. "We don't want to be a consumer product," he said.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

The New Enterprise

How Zoom pulled off the scaling event of a lifetime

Self-managed data centers with excess capacity, an application built to adapt to bandwidth and key cloud alliances all helped Zoom weather the work-from-home storm.

Zoom was able to handle that surge in demand this year with minimal service disruption, thanks to a global hybrid cloud network of self-managed data centers and cloud resources.

Image: Zoom/Protocol

All modern enterprise tech companies plan for scale. Few have been tested to the degree that Zoom was at the outset of the worst pandemic in modern history.

In December 2019, 10 million people a day participated in a meeting on Zoom. By March 2020, that number had grown to 200 million as governments imposed lockdowns around the world in hopes of containing the spread of COVID-19. And during the 90 days between Feb. 1st and April 30, Zoom experienced a 224% increase in the number of customers with 10 or more employees using its product compared to the previous 90-day period.

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Tom Krazit

Tom Krazit ( @tomkrazit) is a senior reporter at Protocol, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire. He served as executive editor of Gigaom and Structure, and most recently produced a leading cloud computing newsletter called Mostly Cloudy.

People

Is Hopin this year’s breakout tech startup? Investors seem to think so.

The online platform for events is now worth over $2 billion after growing to over 3.5 million users.

"This could be the fastest company ever to grow if we execute correctly," says Hopin CEO Johnny Boufarhat.

Photo: Hopin

To Hopin founder and CEO Johnny Boufarhat, using Zoom is the equivalent of having an event in a WeWork conference room. His platform, Hopin, wants to be the entire event venue downstairs.

"I would say any event you have over 20 people, that's when you should use Hopin," Boufarhat said. "Because after 20 people on meeting software, it becomes a little bit harder to manage. I think our biggest competitor is webinars, because that's what the previous conception of events were."

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

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