Acquisition Close! Cohesity and Veritas – World’s Largest Data Protection Provider

Patrick Moorhead: The Six Five is On The Road at Cohesity headquarters here in Silicon Valley. It’s an exciting day. It is deal close day, Cohesity acquiring the data protection assets of Veritas. Dan, don’t you love these deal close days? So exciting.

Daniel Newman: Yeah, Pat, it’s a lot of fun to be on-site, be on the ground. There’s a ton of energy when you see two great companies come together and really form what’s going to be the biggest in the data protection space. And, Pat, you and I have followed this deal very close. We’ve known the leadership teams from both companies, our firms have worked with these companies together, and just having this come to fruition. These deals, they’re complicated. They take time. There’s a lot of work, a lot of regulatory. It’s thrilling to be part of this.

Patrick Moorhead: Yeah, and the need out there. I mean, we see, every month, some major issue that just screams for data resiliency, data protection strategies and offerings, and it’s just great to see these two awesome capabilities coming together. You going add something there, Dan?

Daniel Newman: No, I was just going to say it’s just … you mentioned that there’s a lot of need, and security is just ramping up. The need for companies to take care of their data, to deal with the complexity, and in this era with generative AI and how much it has accelerated enterprises, but it’s also accelerated complexity. Yeah, I guess I did have something to add.

Patrick Moorhead: No, it’s good, and it’s a maturing of the industry too. I guess, when I first started my career, it was called perimeter-based, where it’s like nothing is getting in, therefore we’re not going to talk about what to do when they get in and then how to get people out. And then it’s mature that, okay, we know some people are going to get in. The true value is the data that’s inside. How do we recover that data? How do we get the bad guys out? So, enough of us. Let’s bring in the man of the hour. Sanjay Poonen, great to see you.

Sanjay Poonen: Patrick and Daniel, thank you for having me on your show.

Patrick Moorhead: Such an exciting day.

Sanjay Poonen: Yeah, it’s very exciting. Listen, it’s hard work to get these things through the finish line. I’m super grateful for a lot of different things, first off, to our employees on both sides, a lot of the people that made this happen, but it’s an epic day, and we’re looking forward to the future.

Patrick Moorhead: Absolutely.

Daniel Newman: And with this combination, you’ll be the CEO of this new larger combined company, as you heard me in the preamble, now the biggest, as far as we know, data protection companies coming together. Number one, is it number one?

Sanjay Poonen: Yes, number one.

Daniel Newman: Number one, I just want to let you say that. Talk to us. We’ve had a lot of conversations. You’ve been part of our summits, you’ve been on the pods with Pat and I. But here we are. We’d love to share not just with us, with our audience, tell them again, tell us why this deal made so much sense and why you’re so excited to take the helm of this company.

Sanjay Poonen: Yeah, I think when you look at data is the gold, the oil, whatever you want to think about it, and we think of the world’s data needing to be protected. So our mission is to protect the world’s data and covering any workload in the world, whether it’s private or public cloud, all of those have lots of data. We now have that ability with the innovation or the depth and breadth to cover any workload, but then do two things with that data. First off, protect it from being a liability. That’s all about the brake of a car, security, resilience, recovery really fast. But just having the brake of the car isn’t good enough if you can’t leverage that data as an asset. So first off, the most important thing is security from the bad guys. Cyber criminals, one in every 20 seconds ransomware attacks happening.

But this combination of any workload in a multi-cloud world, protecting that and then applying security to protect the data and AI to illuminate the data is a powerful combination. Now you’re creating the number one player that’s going to be the most profitable and fast growth. That combination is a really, really strong sort of foretell of where we can take this company going forward.

Patrick Moorhead: Yeah, it’s super exciting and always amazed at how deals come together, but in the end it’s all about the customer and unique value propositions, the scale and what you can do for customers. What does this mean for customers? We did an analyst write-up on it and like good analysts, we talk about, hey, what would be some of the questions that your customers might have about a combination coming in? So can you talk about the customer impact of this?

Sanjay Poonen: Yeah. Fortunately, I’ve been contemplating this for 15 months before we announced it since in February 2024 to now, I’ve had a chance to talk to hundreds of customers. Obviously many of our own customer advisory board, but also many Veritas customers, and they’re super excited because it starts with innovation. We will have the largest engineering team of anybody in our space to innovate for them. The second is we’ve told customers from the day we announced it, no customer left behind. It’s a little bit of a play of that no child left behind slogan, and we meant it. And that’s what we have been talking to them. We’ve been sharing with them our roadmaps. So to our customer, you’re in great safe hands. None of you have to ever worry about us falling through on our commitments, and we have found a way by which customers can stay on their current platforms but still get the benefit of some innovation that we have chalked out to them.

That’s the best of both worlds. And the innovation really is a very simple, beautiful experience, that simplicity of experience and then being able to protect any workload. Veritas brings a whole bunch of connectors that we didn’t have. Together we’ll have both the private and the public cloud figured out, and then Cohesity had a cloud architecture that was second to none and a security and AI investment that’s second to none. This really allows us to take the speed and scale together, the speed of Cohesity and the scale and profitability of Veritas. That’s the combination that customers want.

Patrick Moorhead: Does the scale benefit have everything to do with the scale of the resources that can be invested or is it something a little bit more complex?

Sanjay Poonen: No, it’s that to start with, obviously we are a bigger company now, 5,000 plus employees, so we have a lot more engineering. That’s important. But we now are also in 140 countries. Cohesity was a much more North American phenomenon. Veritas had 45% plus of their revenue coming in from international. So we together now have an international base and a federal customer base. We were probably on our own Cohesity protecting single digit exabytes. We’re now in the combination with Veritas protecting hundreds of exabytes.

Patrick Moorhead: Leaving no customer behind, that’s a huge commitment. And I’ve seen that used with some other acquisitions and it really puts everybody on notice, puts the entire senior leadership team on notice, puts engineering, customer success, sales, puts everybody out there. So I’m glad you did that, and at least from what we’re hearing out there on the street is that was a really good first expression out there. It did calm. People did calm down a little bit.

Daniel Newman: So let me dive a little deeper into what Pat just started insinuating because what he is really going down the path is look when deals this big happen, customers on both sides, you’ve worked in and around companies that you’ve seen go through major transformations. I’m sure your phone still rang when some of them have and people are calling you asking you a question, what’s going to happen to me? Same thing’s happening here. You’ve got a massive combination, two companies that serve thousands of customers all over the world and some that feel that this deal is going to give them more. Some that are like, I liked what I had, I don’t want this. How do you deal with taking the nerves out of it, making sure that customers feel supported from day one? What are the keys in your strategy to make sure that happens? That to Pat, what you said, no customer left behind.

Sanjay Poonen: I mean it’s a little bit like a doctor. If you’re basically looking at a patient, you want to basically ensure that they feel that there’s no risk to their health. And to a customer, they want to know that their roadmap, that there’s no risk to the products they’re using. And if you’re going to take them to a new platform, it’s seamless. I’m a very hands-on CEO. I’ve always been, whether it was at SAP where I was running a much bigger business, whether it was VMware, slightly smaller, but now this one’s also going to be, I hope a business as big as VMware one day. But I plan to call the top thousand customers of our mutual base and if you do 30-minute calls, it won’t take too long to sort through a thousand and assure them personally, and I’ll have my leadership team also doing that, that they’re in great hands. When you apply that hands-on from the top down intimacy to customers with a very clear statement about our roadmap, a lot of our competitors have been throwing fun at this just because that’s the best thing now, but all of us are giving crystal clarity to that roadmap and then taking them to something even better when they’re ready. So if they’re totally happy with their current platform, we’re going to support that and features for a long time. We have plenty of engineers to do that.

But as they look at the next generation innovation, we’ll be creating them and have seamless push button tools. If you can go from whatever car you’re using to a Tesla and it’s seamless and all of your apps still work, and that’s going to be beautiful, that’s what we’re going to show our customers. Our engineers have been thinking about this, some of which we could plan before day one. And now starting day one, we’ll be able to deliver on innovations very quickly. If we innovate like crazy, really, really fast and take care of our customers, this company can go a long way.

Patrick Moorhead: So first of all, impressed that, I guess I’ve known you for a while, so I would expect you to personally call all of these customers and talk through them. There’s you as the leader of the company, then there’s the combined leadership team of the two entities, but what does it mean about support, day in day out support? It’s something customers get nervous about when any two companies come together, a part of a company is split off and becomes another part. Support really comes up, and support really hits the rank and file. Right? How are you thinking about addressing this? I know you touched on it a little bit. Can you talk a little bit more about the day in day out support?

Sanjay Poonen: Patrick, you’re absolutely right. It’s not just about me. I’m very excited about the leadership…

Patrick Moorhead: It’s important because they want to see the leader making commitments and the leadership team that has to trickle down to everybody in the company.

Sanjay Poonen: Whatever your favorite example is, a president, if you think of Abraham Lincoln or anybody else, you’ve got to have a great cabinet. And I feel really good about this leadership team. When you look at this leadership team that’s on our website, some of them you’re interviewing later, this is the best leadership team in the data protection industry bar none in go-to-market in engineering and in support. And particularly in support, the folks who’ve been in this area have been watching these customers for a couple of decades. So they’ve experienced, they know the Cohesity side, they know the Veritas side. And then when we look at the regional locations, whether it’s North America, federal, international, we’re putting people who are experienced people from either the Cohesity or Veritas side who have great connection to those customers. So I feel like when you go down from my leadership team, we would call that the L-one down to an L-two, an L-three. Many of these folks over the last few months whom I didn’t know, I’ve been meeting.

Patrick Moorhead: Yeah.

Sanjay Poonen: Getting them galvanized about this, and I feel the team’s really fired up. I think those top 50 leaders, we plan to get them in a room, fire them up, we’re going to be hands-on with customers, and then we just have to go out and sail the boat and see how it goes. Yeah, we’re going to hit a few bumps, but I’m very confident that the leadership team and the layers at the base touching the customer will execute well.

Patrick Moorhead: Yeah. KPIs are paramount with things like this. Getting everybody focused on the top five metrics almost on a real-time basis, particularly when it comes to support, is really important out there.

Sanjay Poonen: I think NPS, right, net promoter score, I think you really want to have, the core of our engine needs to be innovation. So we’re going to be talking about speed of innovation, how fast releases we get out. But our customer support, you’re absolutely right, Patrick, we will have metrics.

Daniel Newman: So let’s pivot to that. I’d like to wrap the conversation a little bit more around how the company will innovate. In our conversations over last year, Sanjay, you’ve dove in on GenAI. You’ve been, “Hey, we’re going to be the first company in this space that’s using GenAI.” You partnered with NVIDIA, got some great shout-outs. I remember getting some pretty good attention, I believe it was on the stage at Dell Tech world.

Sanjay Poonen: GTC.

Daniel Newman: GTC.

Sanjay Poonen: March 2024, with Jensen.

Daniel Newman: And so I mean, look, you’re in the conversations now, the biggest, I mean, what does that innovation roadmap look like and how do you keep that momentum and not become another company that’s just AI washing and keep pushing? You’ve said innovation no less than a dozen times. You’re talking about it. What does that look like to you?

Sanjay Poonen: Well, Daniel, I’m an engineer at heart. So I start with, as much as I love customers, I’m going to plan to call many of them, I’m a product guy at heart. When I was at bigger companies, even though they were bigger, I was very fortunate to drive innovation of new things, whether it was analytics, we call it now, AI at SAP or security and some of the capabilities I did at VMware, and that’s how I approached this. When you think about our mission in life to protect the world’s data, it starts with what do we want to do with that data? We want to cover every workload, and that connector list needs to be the most abundant, and when new ones get done, we’re going to build it faster than anybody else. That’s really important. So think of that as having the world’s greatest highway connections or flight connections to every possible place, whether it’s New York City or wherever, Atlanta, wherever your favorite place is on the earth.

We want to be able to connect to every workload, infrastructure is a service, platform is a service, software is a service. We will have the greatest amount of connectors, and there’s a lot of innovation to be done there, so you can do that fast. No one’s done that. We will have the best sort of flight connection list, if you want to think of that in a metaphor. But then in security, there’s a lot of things that drive AI and ML that we’ve been investing in, that we have been talking to the market, and now with the combined resources of both sides, we’re going to see us do even more to protect data. You don’t even get to the GenAI part before you’ve done those two for sure.

But now when you get to the third part, for the last year, we’ve been working closely with Microsoft and NVIDIA and then later on with Amazon and Google on what generative AI with retrieval log, what the generation could mean for data. And that’s where we pioneered something courtesy Gaia that got the interest of Jensen. He decided not just to highlight it at his conference in March 2024 at GTC, but also invest in this company. We’re the only company in the data protection space that he chose to invest in, and we’ve been working very closely with that. We think that this is just the first step of many things. We patented that technology. I think this is going to be a major breakthrough of many, many more things we’re going to do with these great partners, NVIDIA, Microsoft, Google, Amazon.

Patrick Moorhead: Yeah, it was quite the move on Gaia. I mean, it seems like right there waiting for somebody to do that, and you did it and you did it first. That’s kudos to you. And hopefully with a larger entity, you can keep the stroke of that engine, that innovation engine going as well because as you know sometimes bigger isn’t always faster.

Sanjay Poonen: Well, you want to be as often as possible first and only, and I think in this case, we’re still our first and only. And then at some point in time, someone’s going to copy you. Then you want to be the best in that category. So it’s not guaranteed in life that you will be the only one doing it forever because people do catch up even if you’ve got a patent on that technology. But competition’s a good thing. There are competitors in a space. We now have the opportunity to be bigger, faster growing and profitable. One of the things that the space has struggled with is how do you create a profitable company?

Many of our honorable competitors, I call them out, have gone public and are not profitable. Some have been public for a couple of decades and are barely profitable. This is an immensely profitable company now that’s also fast-growing. That’s a combination, whether you call it rule 40 or whatever have you, that we’re very excited about to the right point in time, we get to take this company public. I’m super excited about the potential. I think we have an opportunity. We can see 2 billion in our sites in revenue. That’s in itself a record for somebody in the space, but we want to set a sight of creating a 5 billion revenue company. That’s never been done in this space. And if we do that, there are incredible companies in that league whether it’s a Snowflake or a CrowdStrike or a Palo Alto or VMware SAP, that’s very few companies get to two, much less get to five.

Patrick Moorhead: Speaking of Gaia, that was quite the move. I mean the data is right there from the enterprise. Let’s put a generative AI front end on it and put that data to more work. Can you talk to me a little bit about Gaia?

Sanjay Poonen: Well, I think what we found was that, as I talked about, when chip covered every workload in that hundreds of exabytes of data that you protect of the world’s data, you want to first ensure it’s not a liability. That’s all about security, protecting them from cyber crime and making sure you’re resilient with fast speed of cyber recovery. You don’t get to have a conversation about generative AI without protecting your data. Like driving a car, the brake’s more important than the gas pedal. But every now and then you want to let loose and drive that gas pedal, and that’s what generative AI has, which allows your data to now become an asset.

There’s no point having all this great data that’s in a bunker that you can’t actually get value out of it. And for the first time with techniques that came out of the generative AI innovations like retrieval augmented generation, which people weren’t talking about in prior, we were able to take our data platform was set and ready with the heavy index capability and a fast file system for generative AI. So once it came out, we were able to work with Microsoft and NVIDIA, build out Gaia really rapidly. The investment from NVIDIA really helped us. This is a breakthrough product. We have applied for a patent on it. I think it’s going to be an incredible way to now treat data like an asset. You can actually search a million PDFs and get some summarization out of it, bury inside your backup without having to do what’s called re-hydration of that data. So I’m personally excited about it. I’m excited for what our engineers have done and will do, and we’re just getting started. This AI revolution is going to be another decade.

Patrick Moorhead: Yeah. I like the way you framed it too, because it really reflects the conversations that we’re having with CIOs and enterprises is that they need to get their data estates in order first before they unleash generative AI on it. And it’s no coincidence that a lot of the tech companies out there are investing, I like to call it the communications budget.

Sanjay Poonen: Yes.

Patrick Moorhead: These aren’t necessarily data companies like you are, but talking about what they can do with data before they can light up the generative AI capabilities.

Sanjay Poonen: Right. And mention what’s happening, what’s called primary data, there’s the prepping of data and the cleaning of data before you can get value out of it.

Patrick Moorhead: Right.

Sanjay Poonen: I would say in secondary data, think of that sort of the bottom of the iceberg, the top of the iceberg being primary data, backup vaulted archive data. You’ve got to secure it first, but then because it’s highly indexed and ready in our formats and we will be able to easily build vector databases, large language models that allow you to get the power of Gaia. It’s a very, very innovative breakthrough technology.

Daniel Newman: Hey, Sanjay, it’s really good to hear about how you plan to grow and build this leadership team. Talk a little bit more about the broader Cohesity, Veritas employee bases, the culture, the shared values, even a message to all of them out there today. How do you see this all coming together?

Sanjay Poonen: Well, Daniel, I’m super excited. Yes, the leadership is good, but I’ve always talked about this from all of my last two decades and career as servant leadership. What matters to me the most is the rank and file employee at the leaf level. That first level manager and their employees at the leaf level are what control the power of this company. All of us up the chain are just like layers. And so in some senses, I’m deeply grateful for all of the combined company’s employees. I’m looking at you, I’m watching you, and I’ve got your back. And I’m looking forward to building a great company together. We all have to be builders. And part of what’s amazed me about the Amazon culture is you talk to Andy Jassy or Matt Garman now, or Jeff Bezos, it’s always day one. They don’t forget. Their building is called day one.

Patrick Moorhead: Right.

Sanjay Poonen: We have to have that day one mindset. Veritas invented many things 40 years ago in backup and secure backup. Cohesity invented many things, Hyper-Converged Cloud 10 years ago on day one there. We’ve got to act like a day one company, whether it’s a decade ago or multiple decades ago, and that’s what I’m looking for. And that power comes from engineers who are super smart or innovating like crazy, and all of those account executives and pre-sales teams that cover customers.

Daniel Newman: What I’m hearing here is that the innovation has just begun, but you’re going to stay customer-centric, you’re going to stay focused on innovation. You’re going to keep trying to outpace and outstrip the market, and of course, just the deal the way this came together itself, Sanjay, under your leadership, I think it’s going to be about continuing to be creative, continuing to be thoughtful, doing what no one would’ve expected, and figuring out a way to get it done.

Sanjay Poonen: Well, we’re very fortunate. I mean, the bankers, the lawyers, the folks who helped us think about this was really possible in two private companies. I think that this combination, number eight combining with number three to create a number one profit growth would’ve been tougher in the public markets. I’ve certainly been no stranger to deals in my past four or five, but those were all in public company context. This in some senses, I’m not a deal junkie, but there was a creativity to this deal that was also something that I think one day will be a case study in itself.

Daniel Newman: Well, as someone that loves trying to figure out how to do deals, Sanjay, I want to congratulate you. You pulled off something very substantial, and we are very excited to continue to track your progress, continue to have you on the show and continue to consider you a friend. So thanks so much, Sanjay for joining us here on Deal Day. We’re really excited that you took the time to sit down with us.

Sanjay Poonen: Thank you, Daniel and Patrick, real pleasure.

Daniel Newman: All right, everybody, The Six Five is On the Road. We are at Deal Day as Cohesity and Veritas come together. What a great conversation there with CEO, Sanjay Poonen. We’re going to have more coverage here. We’re going to be talking to other executives, more on innovation, more on customers, more on what to expect. But for this conversation, we got to go. Subscribe, tune in, stay with us for all this coverage. We’ll see you soon.