What are some common concerns companies have that keep them from being more effective in the global market? In a global market, what should a company consider changing to better embody s

Senior Lecturer Homa Bahrami prepared this case study with Case Writer Victoria Chang as the basis for class discussion rather than to

illustrate either effective or ineffective handling of an administrative situation.

Copyright © 2015 by The Regents of the University of California. All rights reserved. No part of this publication may be reproduced, stored,

or transmitted in any form or by any means without the express written permission of the Berkeley-Haas Case Series.

Date: June 10, 2015

HOMA B AHR AMI

Nimble Storage: Scaling Talent Strategy Amidst Hyper-

Growth

We believe that if we give people the opportunity to

amaze us, they often will.

—PAUL WHITNEY, VICE PRESIDENT OF HR

In early 2015, Suresh Vasudevan, CEO of Nimble Storage, a rapidly growing hybrid data storage

system company, walked past bright orange Adirondack chairs at Nimble’s corporate offices in San

Jose, California. He was deep in thought as he smiled and waved to employees who were enjoying

Nimble’s 30,000-square-foot outdoor living room, designed for collaboration and social interaction. It

was not unusual to see pairs of managers and direct reports walking and talking, conducting their

quarterly coaching conversations. Vasudevan was on his way to meet Paul Whitney, Nimble’s Vice

President of Human Resources, to discuss several talent initiatives that had just been launched.

Founded by Varun Mehta and Umesh Maheshwari in 2008, 1 Nimble developed a hybrid storage

system that used flash memory and hard disks that allowed the company to offer faster performance

and lower prices to its customers. The company’s mission was to give its “customers the industry’s

most efficient flash storage platform.” 2

Even though Nimble had only begun shipping products in 2010, it was on a path of hyper-growth,

having gone public in December 2013. 3 For the year ended January 2015, Nimble’s revenue was

$228 million, almost doubling from $126 million the year before (Exhibits 1, 2, and 3). The

company was yet to be profitable, however, losing $32 million in the year ended January 2015 and

$43 million a year earlier, largely due to high operating expenses such as R&D, sales and marketing,

and administration expenses. The company had publicly announced its goal to become profitable by

January 2016 and had big ambitions to “transform the world of storage” with the goal of becoming a

billion dollar company in three years.

1 In March 2011, Varun Mehta became the vice president of engineering and Suresh Vasudevan became the CEO.

2 http://www.nimblestorage.com/company/how-we-are-different.php.

3 Nimble gained more than 60 percent to $33.93 from its opening price of $21 (raised from an initial range of $16 to $18). The company sold 8

million shares, raising $168 million at a valuation near $1.5 billion. The year 2013 was a popular year for data storage where NetApp, the

enterprise storage company, went public, as did SanDisk and Pure Storage.

B5839

This document is authorized for use only by Kevin Claven in OL-668-X3120 HR in Global Contexts 24TW3 at Southern New Hampshire University, 2024.

NIMBLE STORAGE 2

In 2013, the company added 1,300 mid-to-large customers—such as cloud-based service providers, as

well as those in education, financial services, healthcare, manufacturing, state and local government,

and technology—to reach over 1,750 customers as of July 31, 2013. And in 2014, the company added

more than 2,000 to end the year with over 4,000 customers, and over 5,000 by early 2015. Nimble

reached its customers through value-added resellers (VARs) and distributors, and to end-customers

directly through its global sales force. The company had 70, 220, and 600 VARs in 2011, 2012, and

2013 respectively.

From January 2011 to July 2013, the company experienced triple digit year-over-year revenue growth

rate and headcount with one employee hired per day—employees grew from 47 to 464, and by the end

of 2014, the company had over 800 employees with a small team of 15 HR staff. The company

expected to double its employees in the next 12 to 18 months. Despite such fast growth, Nimble was

selected as one of the Bay Area News Group’s Top Workplaces in 2013 (#9 in the medium category)

and #4 in 2014, based solely on employee feedback related to work conditions, pay and benefits,

engagement by managers, execution, career advancement opportunities, and overall direction. 4

As Vasudevan and Whitney sat down in a transparent glass-walled conference room overlooking the

company’s green park space, they were excited to talk about the new talent initiatives Whitney and his

team had just launched, including a new flagship leadership program called LEAD, a foundational

three-day program that had plans to become a nine-month development experience that included an

action-learning component. They shook hands and began their discussion.

Industry Growth

The data storage industry was in the midst of a hyper-growth phase. Enterprises gathered, stored, and

analyzed more data more frequently, requiring storage solutions that could scale with higher

performance and less cost. 5 Nimble’s S-1 stated: “According to the IDC Digital Universe Study…the

amount of digital information created, replicated, and consumed worldwide will grow exponentially

from 0.8 trillion gigabytes in 2010 to 40 trillion gigabytes in 2020. This exponential growth in data

and the need to rapidly access, efficiently retain, and protect data is driving a significant amount of

enterprise spend on data storage systems and software….Data has become a key strategic resource for

modern enterprises and cloud-based service providers. Transactional, analytical, communications,

and other applications that are critical to day-to-day operations and competitive differentiation in

today’s business environment generate and require an ever increasing amount of data.” 6

IDC estimated that enterprises will spend $42.5 billion worldwide on data storage systems in 2017,

while Gartner estimated an additional $21.3 billion in worldwide spend on storage software. “As a

result, storage systems that securely retain and supply data and applications are a core strategic

element of IT infrastructure today.” 7 Vasudevan added: “Business workloads have proliferated.

Whereas once they might have had 15 software applications, today, companies might have dozens or

hundreds [driven partly by the expansive use of smartphones]. Companies are gathering an enormous

amount of information and making lots of real-time decisions,” requiring faster and more efficient

storage technology. 8

Specifically, companies needed cost-effective storage capacity that could scale, high-performance

storage in an environment where data was transferred in and out of storage, comprehensive data

4 http://www.nimblestorage.com/news-events/press-releases/nimble-storage-named-top-workplace-by-the-bay-area-news-group.

5 Nimble Storage S-1, p. 83.

6 Ibid.

7 Ibid.

8 http://news.investors.com/technology/121313-682874-nimble-storage-rises-in-stock-ipo-debut.htm.

This document is authorized for use only by Kevin Claven in OL-668-X3120 HR in Global Contexts 24TW3 at Southern New Hampshire University, 2024.

NIMBLE STORAGE 3

protection that could prevent business disruptions from data loss or interruption in data availability to

applications, an optimized footprint and cost of operations so that storage solutions required less

space, and simplified management of ongoing system administration. 9

Several technology disruptions, such as the emergence of high-performance flash storage media and

powerful data analytics capabilities, have changed the storage industry. Flash, “a solid state memory

technology designed to provide rapid random access to data, has emerged as a high-performance

alternative storage media…because it can deliver significantly higher read performance than HDDs

[hard disk drives that supported legacy storage systems].” 10

HDDs “degrade in performance when

handling the random I/O [input/output] needs of today’s enterprise IT environments.” The second

technology disruption (powerful data analytics capabilities) have brought “significant improvements

in the ability to connect, analyze, and monitor large amounts of distributed data in real-

time…presenting opportunities to improve the operations and management of storage systems.” 11

According to Vasudevan: “For decades, HDDs have done well in helping to address data growth in

enterprises as they steadily increased in density, thus helping to store more and more data cost-

effectively. However, where storage systems based on HDDs have not done well is in cost-effectively

addressing application performance needs. This is because even though HDDs have improved in

density, their I/O performance has remained by and large unchanged over the last decade or so, with

the result that storage systems have had to over-provision HDDs to match an application’s

performance needs. Consequently, enterprise storage systems have traditionally been good at either

delivering capacity or performance cost-effectively, but not both simultaneously.” 12

Nimble’s Solution

Nimble’s founders, Maheshwari and Mehta had never started a company before Nimble, but had

worked in many companies in the industry and were known as storage gurus (Exhibit 4). Mehta was

Vice President of engineering at Data Domain, a data backup and recovery company and Maheshwari

was a legendary coder who had architected key parts of Data Domain’s file system. Maheshwari has a

Ph.D. from MIT and won a gold medal in computer science at IIT Delhi. “We were the classic, ‘two

guys and a PowerPoint deck of 10 slides and Sequoia gave us $8.8 million to get started,” recalled

Mehta. “Until that point, no one in the prior 10 years had successfully competed against big

entrenched storage players such as NetApp or EMC. And a bunch of storage startups had tried and

were faltering or had gone out of business because customers just weren’t buying from startups due to

the mission-critical function of data storage so investors were reluctant to fund anyone who would go

directly against those companies even though that was our secret ambition.”

The pair had pitched a two-phase product—one that would work with NetApp and EMC’s products on

the front-end as an accelerator and the second phase would be a product that competed directly against

them. The first-phase product was a flash-based caching appliance or “cacher” that sat on top of

existing storage systems and dramatically improved I/O performance. “What we realized is that our

funders loved the first phase and hated the second phase,” said Mehta. “But we discovered that

NetApp and EMC were taking major steps to incorporate flash into their products and doing it much

faster than we had imagined, so this basically obviated our need for our first phase product” (Exhibits

5, 6, 7, and 8).

The founders went back to the investors and made their case to pivot and focus on the second phase

product to build a primary-storage system that incorporated flash to pursue a much bigger opportunity.

9 Nimble Storage S-1, p. 83.

10 Op. Cit., p. 84.

11 Ibid.

12 http://www.networkworld.com/article/2224631/cisco-subnet/a-conversation-with-suresh-vasudevan–ceo-of-nimble-storage.html.

This document is authorized for use only by Kevin Claven in OL-668-X3120 HR in Global Contexts 24TW3 at Southern New Hampshire University, 2024.

NIMBLE STORAGE 4

“They basically told us, ‘you are out of your mind,’” said Mehta. “And we nearly shut down. So we

went back and worked on the first product and all the while continued working on the second product

too. It took us a year to convince our investors to let us pivot.”

Jim Goetz from Sequoia said: “Our co-investors from Accel and Lightspeed joined us in pressure

testing the plan—we pressed him [Varun] hard. He answered us at every turn and never wavered that

the pivot was the right thing to do, which after endless hours of debate won us over.” 13

During development, the founders talked to 100 customer prospects to find out what would convince

them to buy Nimble’s product and the prospects responded: “10x performance improvement for little

additional cost.” On customers, Mehta said he was influenced by Steve Blank’s The Four Steps to the

Epiphany: “His advice to determine whether customers are going to buy the product is to talk to them.

He said that if you give away a product for free and they still don’t want to use it, that is very telling.

For me, this has shaped everything we do across the company from product development to HR.”

Goetz said: “They drew on all their experience to build Nimble’s system. They took advantage of

flash in the areas it was best, but also used standard disk drives where it made sense. They combined

primary storage and backup in one architecture and developed new file-system software to manage it

all. After two and a half years of development, they’d achieved the impossible-sounding 10x

improvements at a competitive price.” 14

As Goetz explained further: “From a technology standpoint Nimble’s plan had merit. Flash drives are

a lot faster than traditional disk drives and provide businesses speedier access to their data. Because

flash is more expensive, established storage companies treated it as an option for the high end of the

market. Nimble saw a chance to target mainstream businesses, but thought the window wouldn’t stay

open long.” 15

Vasudevan said on flash and startups: “The unique thing about flash is also its problem, which is

that—if all I want to do is deliver performance, I don’t need to build a very optimized array. 16

It is so

fast that even a mediocre design is going to be way better than disk. That’s why there are over three

or four dozen companies all in storage. There are more storage startups than ever before simply

because it’s so easy to make a flash product and say ‘look how well I do on performance.’” 17

He added: “I think the first mistake is to only rely on flash as a performance medium, and go basically

build an all-flash array without data management, ease of operations, and other things. In the end, no

matter what you do, that means you’re going to be going after only the really high-performance

applications, because you can’t just ask a customer to pay four or five times more for an application

when they could absolutely get away with not spending that much. They’ll only buy if they actually

need it.” 18

Nimble’s products were based on its patented Cache Accelerated Sequential Layout (CASL) hybrid

storage architecture that leveraged fast read performance of flash and the cost-effective capacity of

hard disk drives. Nimble combined this flash-optimized architecture with Nimble InfoSight, a cloud

based management service that delivered predictive support and operational simplicity through deep

data analytics.

13

http://sequoiacapital.tumblr.com/post/69884048439/the-bet-the-company-pivot-that-led-to-nimble-storages. 14

Ibid. 15

Ibid. 16

A disk array is a hardware element that contains a large group of hard disk drives. 17

http://willemterharmsel.nl/nimble-storage-ceo-suresh-vasudevan-nimbles-culture-post-ipo-plans/. 18

Ibid.

This document is authorized for use only by Kevin Claven in OL-668-X3120 HR in Global Contexts 24TW3 at Southern New Hampshire University, 2024.

NIMBLE STORAGE 5

The company shipped its first product line, its CS200 series, in August 2010. The CS200 Series

systems were designed for midsize IT organizations or distributed sites of larger organizations,

supporting workloads such as Microsoft applications, virtual desktop infrastructure, or VDI 19

or server

virtualization. Customers signed up to buy the product with strong demand.

Dan Leary, Vice President of Worldwide Marketing, and one of the earliest employees said: “In

marketing, we were thinking about a scalable way to build up demand. We are a very metrics and

analytical company and we wanted to measure the effectiveness of everything we were doing as we

were building and nurturing leads to become deals. My belief was that if we could build up an

evangelical customer base of 1,000 or 2,000 customers, that will do much more than building

awareness of Nimble’s brand and other traditional marketing.”

At that point, the founders partnered with Vasudevan who joined Nimble’s board. Vasudevan became

Nimble’s CEO in March 2011, while Mehta became the Vice President of product development and

Maheshwari, the CTO. Vasudevan had “a spectacular” career at NetApp and spearheaded the

company’s go-to-market plans. Goetz said: “Unlike many leaders, Suresh [Vasudevan] can not only

convey a compelling vision, but he’s also a great listener and facilitator who brings the best out of

people around him. He created an environment that embraced new talent, while also getting the most

from the company’s original executives.” 20

In August 2012, Nimble launched its CS400 series of products and a number of scale-to-fit products,

including expansion shelves and controller upgrades. The CS400 series delivered higher performance.

In June 2014, the company announced the CS700 Series Arrays, including fibre channel protocol, 21

and an All-Flash Shelf. In August 2014, the company completed an overhaul of its CS series, and

added the CS300 and CS500 to their line-up.

One example of a Nimble customer was an Australian financial institution that needed additional

storage due to a significant growth in customer data across its 4,200 databases. The key requirements

for the new solution were reliability, performance, simplicity of management, data center space

requirements, power consumption, and overall cost. After deploying Nimble’s storage system and

expansion shelves, the company realized a 2.5x performance increase, a 4x reduction in power and

cooling costs, and significant capital cost savings. 22

Vasudevan said on Nimble’s competitors: “Our most frequently encountered storage vendors that

account for over 80 percent of the engagements, are: 1) EMC with their mid-range VNX products; 2)

NetApp with the FAS product line; and 3) Dell with the Equallogic and Compellent product lines.” 23

On the smaller companies, Vasudevan said that Tintri, Tegile, and Pure Storage were the most

important competitors. 24

Maheshwari said: “Our success has been based on customers actually liking

their experience, as opposed to a forceful marketing strategy. People pick us because our system just

works—you can trust it.”

Vasudevan added: “What they [big players like EMC] have done for the last three or four years, is

incorporate flash into their own product lines. But if you just do that, you’re missing out. You need

to build something new to take advantage of all the promise of flash. They fundamentally have to re-

architect it from the bottom up, from the ground up, and it’s going to be competing with their other,

well-established product lines. The challenge they face is, how do you start something from zero and

19

Virtual desktop infrastructure or hosting a desktop operating system within a virtual machine running on a centralized server. 20

http://sequoiacapital.tumblr.com/post/69884048439/the-bet-the-company-pivot-that-led-to-nimble-storages. 21

Which allowed customers to “get in the enterprise.” 22

Nimble Storage S-1, p. 94. 23

http://www.networkworld.com/article/2224631/cisco-subnet/a-conversation-with-suresh-vasudevan–ceo-of-nimble-storage.html. 24

http://willemterharmsel.nl/nimble-storage-ceo-suresh-vasudevan-nimbles-culture-post-ipo-plans/.

This document is authorized for use only by Kevin Claven in OL-668-X3120 HR in Global Contexts 24TW3 at Southern New Hampshire University, 2024.

NIMBLE STORAGE 6

have it go to several billion even as it cannibalizes your other products? How do you manage that

transition?” 25

Vasudevan believed that Nimble’s system would be able to grow with the industry’s evolution to

flash, because the company could easily engineer its system to include a lower tier for flash. “Hybrid

is often the name given to our solution and it brings along the connotation of ‘in-between,’” he said.

“We see it as being able to work with the best of both worlds. We have both flash and disk in our

scope and could easily adjust or diversify into all-flash.” 26

Chetan Rai, Vice President of Software

Engineering agreed: “We’re not wedded to any particular technology. We are trying to find the best

tools for the job. And if there are new tools that make more sense to us, we feel quite comfortable that

we can use those tools as well. As the cost of flash continues to drop, we can easily move in that

direction if we need to. We’re not a stop-gap technology.”

In essence, Nimble’s advantages over competitors were: “1) More and faster storage for the buck.

Two to five times more storage capacity and five to six times greater performance for the same

amount of capital spending. 2) More frequent backup. With a tiny increase in stored data, Nimble’s

system lets customers back up their networks every 15 minutes—or as often as they wish—far more

frequently than competing products. 3) Quicker recovery. Nimble’s storage arrays let companies

recover data in minutes compared to an hour for competitors’ products. 4) Simplicity. While it can

take four to eight hours to set up competitors’ products, Nimble customers are up and running in 20 to

30 minutes. 5) Service. At five minute intervals, Nimble analyzes the health of its customers’

networks and if it identifies a current or potential problem—such as unusually high temperature in the

data center—initiates a support call. Nimble spurs 75 percent of these calls to nip such problems in

the bud.” 27

Leary said: “Now, a lot of the focus is on how to deploy flash in the data center today and

talking about what we do or adaptive flash and helping to evangelize why our approach is the broadest

and allows customers to solve the broadest range of problems within a single platform.”

Talent Strategy: “Balancing Today with Tomorrow”

Anup Singh, CFO and head of HR in the early years, joined in 2011 when there were only 100

employees; and during that time, he and his team focused on building and articulating the company’s

core values and managing day-to-day HR issues. Nimble’s values were accountability, innovation,

initiative, integrity, listening, and teamwork and collaboration (Exhibit 9).

Terry Wong, who was the first HR person hired by Singh, discussed the earlier years of HR at

Nimble: “When I first came on in 2012, HR was very tactically driven and had a pretty weak

reputation because the person that was here didn’t have HR experience, having come from an office

manager position. We wanted to establish that HR does have value and we wanted to show value in

everything that we did.”

In January 2013, Nimble hired Paul Whitney as Vice President of HR. Whitney wanted to “think

about how to build and deliver on an HR organization that would address the needs of a hyper-growth

organization,” he said. “Nimble is experiencing a triple digit year-over-year revenue growth rate and

headcount, with 80 to 90 new people per quarter (one per day). I came in when there was very little in

place, a bare minimum HR structure. My job was to develop a strategy that would support growth and

maintain the things that were fundamentally important to the organization, like the culture.” He was

also hired to prepare Nimble to become a public company.

25

http://www.bizjournals.com/profiles/company/us/ca/san_jose/nimble_storage_inc/3324176. 26

http://willemterharmsel.nl/nimble-storage-ceo-suresh-vasudevan-nimbl