Pure Storage IPO Date: 7 October 2015

Pure Storage held its inaugural Accelerate conference in San Francisco in 2016. (Photo: Justin Warren)

Pure Storage have announced their IPO date as 7 October 2015, according to Chris Mellor over at The Register.

I know and respect Chris, and you should take the time to read his article, which provides a good summary of the market in recent years, and how IPOs have performed.

I agree with Chris that the IPO is needed to fund the company because of the cash burn rate. That’s not really surprising, because that’s what funding is for, be it money from private investors or from public markets. What matters is whether those funds can be turned into profit.

To say there is intense competition in the enterprise storage market right now is to vastly understate things. It feels like if you turn around too fast you could accidentally form a storage startup. Everyone and their dog is coming out with an all-flash version of their product because the technology is clearly useful, but not all of them are doing well. Again, that shouldn’t be surprising due to the law of averages; some new products will suck.

EMC are clearly worried about Pure because they’ve emailed out a pre-IPO ‘fact sheet’ that casts aspersions on Pure’s prospects. Standard competitive stuff, but if XtremIO really is so amazing, why punch down? I’ve long thought Pure should concentrate more on themselves and less on worrying about EMC so now I get to say the same about XtremIO. All EMC are doing, in my mind, is lending credence to a competitor. The lady doth protest too much, methinks.

Based on Gartner’s updated market share numbers, which EMC helpfully included as a chart in their email, Pure is one of only five companies to gain share from 2014 to 2015. They moved from 7% to 12%, and were one of only three to grow strongly, the others being EMC from 12% to 34% and HP from 1% to 8% (SolidFire went from 3% to 4% and Kaminario grew share ever so slightly but it rounds off to 4%). I’m not clear on how this sort of growth in a startup is bad, given the reach of EMC’s (and HP’s for that matter) sales-force relative to Pure’s.

This is splitting the pie stuff, and it’s pretty obvious that the size of the pie is growing because people are taking up flash at a huge rate, and the storage market overall is growing strongly. Market share just tells you how much of the growing pie goes to a single company, and maintaining share of a growing market is nothing to be ashamed of.

What matters on the day is whether public market investors think Pure’s prospects for the future are rosy enough to sink money into. As a technology company with major investment needs, it’s highly unlikely investors will see a dividend paid out any time soon, so it’s all about capital growth. This is as much about confidence as it is about fundamentals, and this is where things get really interesting.

There are plenty of other storage startups waiting in the wings to go public. Pure’s IPO gives us the first real data point about what the market mood is, and everyone will be watching with bated breath. If it goes well, expect to see a rush of other storage startups going public while the getting’s good. We’ll then have some solid data on whether private valuations hold up to public scrutiny, though I fully expect people to draw major conclusions from the single data point of Pure’s IPO. One occurrence is not a trend.

Get your popcorn ready, because it’s going to be a hell of a ride.

This article first appeared in Forbes.com here.