The Exchanges

Q mean, it's a hot space that you're in when you combine kind of AI plus cloud. I mean, it's a, that's probably, I mean, that's actually a question I had for you guys at Bain. Do you look at a market sector, then research every company and then pick who you think is going to win it and then go all in? Is that how you typically do deal flow?

A Yeah. As a matter of fact, in this example, um, there was, uh, not only have we spent our, our working life in, uh, in this sector, um, but we looked at a ton of startups and found that every one of them was competing against the 999 pound gorilla in VMware. And we said, look, they're going to die. So what we did is I actually went to go see this fellow, the founder, Shmuel Klieger, and I said, look, I remember your old company from the one that EMC had bought called System Management Arts or Smarts, and I said, why don't we take this same conceptualization and apply it to a new market? And from the ground up, he built just a phenomenal technology that was addressed for virtualization and now containers and clouds. But, um, but it was absolutely the realization that we couldn't fund any of the ones. Here was this big wave, tidal wave of growth coming into the, an important part of the market in which we, uh, invest, but there was, there was nobody that we thought, uh, had the capability. And just to make the case, um, roll the tape forward. And every one of those players that we looked at has either been acquired or gone.

AI assessment note: “Yeah. As a matter of fact, in this example... we looked at a ton of startups”

Q Ben, people are going to be watching Triponomic closely as you continue to drive growth. Where's the best place for them to connect with you online?

A Online, I would come to our website because we, we have a policy of transparency and really do post an enormous amount of information. And those who are particularly interested or practitioners should join our community called the green circle, which is when you have no red and yellow alerts in your data center, it's all green. But in there, you can ask questions directly of customers. You can talk to our partners. Um, you can get a sense on how people are deploying it and, um, and ways to apply, um, Real-time autonomic control to your operations, so you get the benefits of 37% on average application acceleration, 20% OpEx savings, and literally up to half your data center back.

AI assessment note: “Online, I would come to our website”

Q And so walk us. So, well, first off, tell us about the kind of the funding history there. What is just for people looking to raise capital right now, what does Bain Capital look for when you guys are making investments?

A Sure. Um, principally oriented around, uh, business to business. Uh, so, and very much of a sector focus. So we're looking for, um, we're almost stage agnostic. We do early, middle and late stage. But we like to have what we call a prepared mind, meaning, you know, really understanding a domain and therefore can evaluate, uh, through that lens, the, uh, disruptiveness, uh, of an idea and an entrepreneur's capabilities within that domain. So I would say it's very much of a sector focused fund. And, uh, and then we cover multiple sectors that range from, uh, healthcare, uh, services to, and business services, data services to, uh, Marketing automation technologies. And then obviously the, uh, infrastructure, uh, software group.

AI assessment note: “principally oriented around, uh, business to business. Uh, so, and very much of a sector focus.”

Q with that we thought were going to be great fits. We gave them a bunch of equity, even if there was a cliff and a vesting schedule, there's now unallocated or unactive equity on the cap table. Um, do you guys do anything at Turbonomic to manage that? Obviously keep private stuff private, but do you do anything to manage that? And if so, how do you think about it?

A Um, Well, so yeah, there's, there's, uh, obviously in, in the most obvious case, the, there's a typically a one-year cliff fest on, on anybody that's hired into the company. So make sure that you're, you're hiring well. Um, but to the extent, you know, inevitably there'll be churn as you build the life of a company, uh, there will be some, uh, passive equity in that company. Um, I think the biggest thing we do is try and keep, you know, those who are super talented, you know, focused in building, Uh, the value of the company and knowing that, that, that equity value, uh, will be best served and, and will grow the fastest by virtue of their continued, uh, commitment to the company. Um, but from time to time, uh, the company has, uh, retired, uh, passive shares. And, um, and there's typically a thing called an investor rights agreement that governs the way in which that is executed. And, um, and indeed we've done that as well, just to keep, uh, more equity and more active hands.

AI assessment note: “from time to time, the company has, uh, retired, uh, passive shares.”

Q I love that. Okay. Let's shift to the market now. So, so Turbonomic, if you had to describe in, you know, two sentences, what it does and how you make money, how'd you describe it?

A Sure. Um, well, what it does is no less than it's, we're the control system, real time and autonomic, meaning self-managing, self-organizing control system for the hybrid cloud. So if you think about, um, You know, a lot of workloads. There's a hundred and ninety four million workloads in 2016, um, between that which run on prem or premises and that which runs in the public cloud. And we have the capability to, uh, provide enhanced performance and also greater operating and capital efficiencies in both realms, as well as the ability to traverse the two realms and bring them into one. So it's a really big opportunity in terms of, uh, uh, where those, Um, uh, where the market's headed.

AI assessment note: “we're the control system, real time and autonomic, meaning self-managing, self-organizing control system”

Q series B. So series C or series D should they be thinking about in terms of how much of the business they want to give up? Should they be thinking about it in terms of, uh, just the amount of money and extending burn and runway? How should they be thinking about those later stage rounds? It's where we get someone that's already done a series D on the show.

A Okay. Um, well, what I would share with you is this, a lot depends on the nature of your, um, company. So in our case, this is an intellectual property, uh, strategy company. So the, the strength of the IP, the differentiation matters, and then you want the traction to support that the market is rewarding you for that. There are other companies that are pure business model companies. I don't think they have the sustainability and the worry you have there is ankle biters coming up through the ground. Think of, you know, Uber and Lyft as an example, great company, In Uber, but, but clearly got competitors, uh, globally and, and it's more of a business model and execution machine.

AI assessment note: “a lot depends on the nature of your, um, company.”