HashiCorp Wants To Be The Next VMware

6 February 2020
Justin Warren

Infrastructure automation company HashiCorp wants to become the next VMware and is gearing up to expand its enterprise sales machine with new hire Brandon Sweeney as Chief Revenue Officer.

Sweeney joins HashiCorp from VMware where he spent 16 years in various senior leadership roles across its sales organization.

“Brandon brings to HashiCorp a unique breadth of experience in building and leading field operations—exactly what’s needed for a fast growing technology company that’s leading a generational shift in the infrastructure market,” said HashiCorp CEO Dave McJannet.

David McJannet, CEO HashiCorp
David McJannet, CEO HashiCorp

“There's a growing consensus about how to interface to the cloud ecosystem,” said McJannet. “People are trying to provide a consistent way to interface to cloud by providing a common foundation for how all their teams are going to go to cloud.”

Some years ago, VMware managed to provide a kind of neutral meeting ground for infrastructure vendors in an industry that had fragmented into multiple competing silos, particularly in storage. The customer love for VMware drove a market demand for a standard (VMware mediated) way to talk to different infrastructure components where all other attempts at standardisation failed.

That isn't quite what's happening now with HashiCorp, but there are similarities. Various infrastructure vendors are releasing Terraform providers for their systems, for example, making it easier for enterprises to standardise on HashiCorp's approach to infrastructure automation. I've spoken to more than one startup that are basing their product on the assumption that Terraform exists and is pervasive enough that there will be enough market for them to be successful by building on top of it.

“The market is asking us to play this role as the enabler of their cloud progression,” said McJannet. “While that was happening purely on open-source a few years ago, now as the early majority is moving across, they have a need for a slightly more sophisticated set of products that are commercially available from us.”

“Today we count seven of the Fortune 10, well over 100 of the Fortune 500, hundreds in the global 2000 as commercial customers,” he said. “Revenue has grown 100% a year for each of the last four years,”

This success has lead to a $100 million annual run rate as of last year, according to the company, and McJannet predicts HashiCorp will continue to scale up quickly to meet demand. “We're now at 900 plus employees and will hire another 500 at least this year, because the market is pulling us so quickly,” he said.

HashiCorp is staying focused on the enterprise infrastructure market and sees adoption coming from enterprises that are only just now really embracing the move to cloud-style operations.

“The leadership team is filled with enterprise software professionals that have built and scaled some of the world's largest companies, and that's the opportunity in front of us,” said McJannet. “That's the one we are pursuing.”

“That's why we continue to bring in folks like Brandon, both to help us navigate that transition as well as to provide that level of comfort to our customers that we view the responsibility as seriously as they would like,” he adds.

Growth is being managed carefully lest the company burn itself out with overly aggressive targets and the growth-at-any-cost attitude that has plagued the tech industry of late, something its enterprise customers are keen to avoid. HashiCorp claims that its growth is mostly constrained by its ability to hire and onboard new people.

“We are going about as fast as we responsibly can,” McJannet said. “The unit economics of our business are profoundly positive, so that gives us comfort that we have the opportunity to build an extraordinarily large company over time.”

“I think the profitability dial is one that we will have at our control as a result of the strong unit economics,” he said, “So for now we're really focused on investing as aggressively as we responsibly can.”

“Our customers need us to be a strong long term partner that has a sustainable model,” he added.

This is refreshing language given the obsession technology companies have had for so long with setting huge piles of other people's money on fire. Call me old-fashioned, but if you can't make a profit then you have a terrible business.

Any idiot can borrow money and throw a big party, and many do.

HashiCorp has followed a different path by carefully growing, quietly and mostly under the radar. It is now attracting wider attention as the kind of ‘overnight success' that shows up after many years of hard and boring work. The desire to become the next VMware is a bold one, and there is much work still to be done, but I, for one, welcome HashiCorp's more cautious approach to growth compared to the flashy “go big or go home” attitude we've seen from other startups.

Let's hope the next wave of tech companies focus more on creating value rather than destroying it, if only for novelty's sake.

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