Steady As A Rock: VMWare's Pat Gelsinger Leads The CRN 2018 Top 100 Executives Pack


MERGER ANXIETY

By the end of January, the financial picture was clearer, and VMware stock, which two years earlier was at $45 a share, hit $150 for the first time in its history.

Then dropped a news report that Dell was contemplating a buyout of VMware, followed by another of a potential reverse merger. VMware could provide Dell a route to the New York Stock Exchange, alleviating debt trouble, sans IPO.

Shareholders, partners and the larger industry feared a deal that could undermine VMware's independence, growth strategy, net cash picture, and software-derived valuation multiple.

As his multi-cloud strategy was gaining traction, Gelsinger found himself between disgruntled VMware shareholders, activist investors, two advisory commissions, and Dell Chairman and CEO Michael Dell as well as his private equity partner, Silver Lake.

For Gelsinger, CFO Zane Rowe, and VMware's finance and business development leaders, it was impossible not to be distracted by the process that ensued, Gelsinger acknowledged.

The CEO looked to compartmentalize operations, determined to prevent the turmoil from impeding progress. He told his lieutenants, "Your job is to keep us executing. Anything other than great execution by you weakens our position as we go through this period of uncertainty."

In May, VMware reported results for the previous quarter, and guidance for the next, that soundly beat analyst expectations.

"Q1 was a great example of the team staying highly focused, even as Zane and I were somewhat distracted as we had to spend a fair amount of time working through it," he said.

Gelsinger deserves credit for averting "a severe brain drain" across the executive, management and engineering ranks during that period, CloudPhysics' Blumenthal said.

"It would have been a disaster of the first order. The fact that [Gelsinger] somehow avoided that was remarkable and probably saved the company," Blumenthal said.

In July, Dell reached a plan to go public by buying up its VMware tracking stock, keeping VMware independent, at least for the time being.

That was "a very good outcome," Gelsinger told CRN.

THE DELL RELATIONSHIP

When Dell took the reins of VMware in 2016 -- well before all the merger and buyout speculation -- Gelsinger recognized shepherding the relationship was going to be a tightrope that would test his leadership.

The CEO saw his mission as maintaining VMware's independence while capitalizing on synergies with its powerful new parent.

Before the acquisition, as a subsidiary of EMC, "there was clear contention in the system," Gelsinger said. (At a Dell leadership meeting, Gelsinger once displayed a picture of himself on a psychologist's couch tagged "recovering [EMC] Federation addict.")

"Making that a successful partnership with Dell while simultaneously keeping the health of our partner ecosystem and our other OEM partners, there's hard decisions in that," he told CRN.

That goal has been realized.

"Collectively our sales relationship is strong, our channel relationship is strong, our strategy is strong, and the ecosystem is being turbocharged by the Dell relationship," Gelsinger said.

And now with Dell's future more certain, and VMware's accordingly, Gelsinger is ready to move past the distractions once and for all and accelerate efforts to leverage VMware's bulked-up portfolio and partnerships to deliver on a new vision.

The "any cloud, any device, anywhere mantra," said PhoenixNAP's Bell, "is effectively saying we think our future is our ability to manage, orchestrate, secure and automate platforms and compute infrastructure, whether on-prem, off-prem, or in the cloud."

"You're starting to see bits and pieces of that really come forward hard core," Bell told CRN.