HCI shop Pivot3 makes ‘significant’ layoffs

Pivot3, the hyperconverged startup, said the covid-19 pandemic has affected business and is axing staff in a cost-cutting drive.

There are no details of the job losses but one report talks of mass layoffs. LinkedIn lists around 250 Pivot3 employees at time of publication.

CMO Bruce Milne told Blocks & Files: “This market environment has put some extraordinary strains on the economy and on businesses of all sizes. Pivot3 is no exception; we’re seeing our customers’ timelines slip and decisions get suspended as everyone evaluates the impact of this slowdown on their own businesses. We also don’t have any clear insight as to how long this will last; while we can be hopeful that it’s short lived, we don’t have that certainty.

“In a situation like this, the responsible approach is to make some strategic and structural changes to our business to preserve resources and to ensure our continued ability to support our customers, who in many cases depend on us for mission-critical deployments.

“We are adjusting the size of our team and staying focused on our core mission. We have preserved all key operational aspects of our business so that we can continue to market, sell, service and support customer solutions. As this situation develops and we explore options, we remain committed to timely delivery and exceptional support of our customers and partners.

“This health crisis has created some uncharted waters for us all to navigate; we’re confident that the changes we’ve made will allow us to weather the storm and emerge stronger on the other side.”

Background

Pivot3 is a hyperconverged pioneer but has failed to gain traction as a generic HCI vendor as VMware’s vSAN gained mainstream popularity. Nutanix, which IPOed in 2016, is the sole HCI startup to progress that far.

Pivot3 was founded in 2003 and has taken in $247m venture funding across seven VC and other funding events. The founders are CTO Bill Galloway, and Lee Caswell, who is now works for VMware as marketing VP for the HCI business unit.

Pivot 3 edge HCI system

Pivot3’s funding and CEO history has been eventful.

  • 2002 – founded by Lee Caswell and CTO Bob Galloway to build converged server, storage and network system
  • 2005 – $9m B-round; Caswell becomes CEO
  • 2006 – $1.1m venture funding
  • 2007 – $7.34m in B-round; Caswell exits CEO role to be CMO
  • 2007 – May – Bob Fernander becomes CEO
  • 2008 – $24m C-round
  • 2009 – $2m top up
  • 2010 – $4m and $25m 2-part D-round; Caswell leaves
  • 2011 – November – Rich Bravman appointed CEO, replacing Fernander
  • 2012 – $23m funding
  • 2013 – $14m funding; Bravman leaves CEO slot in April
  • 2013 – November – Ex-Perot exec and Pivot3 chairman Ron Nash becomes CEO
  • 2014 – $2m and $12m in 2-part E-round
  • 2015 – $45m F-round from Argonaut Private Equity and some existing investors
  • 2016 – buys/merges with NexGen for all-flash arrays
  • 2016 – $54.6m G-round and bank funding

Ron Nash has brought some stability. Pivot3 began a focus on the video surveillance market and reported good growth in 2017. Last year it sealed a partnership with Lenovo and wrapped its video surveillance systems inside a smart cities marketing theme. 

Hyperconverged market consolidation

HCI startup GridStore bought DCHQ in July 2016, renamed itself HyperGrid and pivoted to hybrid cloud management. Other HCI startups were acquired, notably Springpath going into the hands of Cisco in late 2017 for $320m, and SimpliVity, which was bought by HPE in January 2017 for $650m. Maxta collapsed in January 2019. Atlantis also crashed, with assets bought by HiveIO in August 2018.

The HCI market has consolidated with two leaders, Dell EMC/VMware and Nutanix, leaving Pivot3 and Scale Computing as the remaining startups in the trailing group fighting for the rest of the market. Datrium has stepped smartly sideways into disaster recovery, though it still supplies its disaggregated HCI storage kit.

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