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Tintri last week became the latest enterprise storage array vendor to become a public company, completing an initial public stock offering that brought in approximately $60 million.
Although it sells VMstore storage arrays, Tintri software has always been the vendor's bread and butter. Tintri started out selling storage for VMware virtual machines (VMs). Now it concentrates on software and systems for building private cloud storage. Tintri positions VMstore arrays as platforms to host cloud-based applications and storage services for enterprises and cloud service providers.
The Mountain View, Calif.-based vendor began selling its software on VMstore hybrid arrays in 2011 and added an all-flash array in 2015. VMstore arrays run the Tintri OS operating system software and remain tightly integrated with VMware.
The Tintri software portfolio includes analytics and cloud connectivity. Tintri Global Center is a predictive suite that displays intelligent analytics in real time on up to 160,000 VMs across multiple data centers. The Tintri Connect on-premises enterprise cloud platform supports easy-to-assemble web services built atop VMstore, along with connections to the public cloud.
Stand-alone Tintri software revenue has risen from 10% of its total sales in 2016 to 15% in 2017.
SearchStorage caught up with Tintri CTO and co-founder Kieran Harty to discuss the IPO and Tintri's strategy for growth and profitability.
What opportunities does going public bring? How quickly do you expect Tintri's software-based approach to gain traction?
Kieran Harty: The critical things for us as a company are getting cash flow to break even, and then getting to profitability. We had 45% revenue growth last year, at the same time that we grew expenses only 21%. That shows we are able to leverage our business model. It's also based on the fact that we have 21 of the Fortune 100 companies as customers, and they tend to buy on average 19 times their initial purchase. That gives us a high degree of confidence.
The actual proceeds are about $40 million less than Tintri's original plan. What adjustments will you need to make? Does this mean a change in spending priorities?
Harty: We believe we're a lot more loved by our customers than we currently are by investors, but we're confident we will close the gap. We are fully funded to be able to execute our business model. Our path to profitability is not predicated on having to raise additional funding.
How will Tintri balance the need to hit financial numbers against a culture of innovation?
Harty: We're not taking the approach of growth at any cost. We want measured growth. Part of that is the kind of customers we have. They expect us to continue to innovate. We also are getting more productivity from our sales team.
Kieran HartyCTO and co-founder, Tintri
Specifically, the customers I mentioned really want to work with other vendors that are public. Being public is significant, because when you are a private company, those customers can't see your financials and they also tend to have concerns about acquisition. We also believe going public will help us grow our deal size and win other Fortune 100 customers.
How has flash storage adoption changed since Tintri first launched?
Harty: The market has moved to us. The use of the enterprise cloud is particularly significant during the last couple of years. Traditional IT is in decline. Enterprise cloud is growing. IDC said enterprise cloud growth is at 51% [in 2015]. Large enterprises want to do that; that's proven by our repurchase rate of 19%, on average, for our 25 largest customers. They trust us to help them move their businesses to the cloud.
Where does Tintri fit now in the enterprise storage market?
Harty: We are much more of a software company than a hardware company. About 90% of our engineers are software engineers. The reason we've been able to achieve high gross margins is because customers are buying Tintri software. Many storage vendors bundle their software with their array. In our case, we charge the customer for additional software -- essentially web services that are built on top of the base storage as a web service.
Will Tintri continue to invest in VMstore arrays, or is the plan to cease selling hardware at some point?
Harty: We view storage as a very important problem to solve. Amazon started out with AWS with S3 [Amazon Web Services with Amazon Simple Storage Service] and then built services on top of that. We make storage into a web service. You will see a number of announcements later this year that will move [us] beyond storage, which is very important, very hard problem but really a starting point for us. Using storage as a wedge into the enterprise cloud market is absolutely critical for us, but we don't think being a traditional storage vendor is an interesting area at all.
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