SaaS Interviews with CEOs, Startups, Founders
EP 467: $60M Raised To Help CIO's Manage Their Cloud with CEO Ben Nye
03 Nov 2016
Chapter 1: How did Ben Nye become the CEO of Turbonomic?
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Chapter 2: What is Bain Capital Ventures looking for in investments?
Nathan Latka here. This is episode 467. Coming up tomorrow morning, you're going to learn from Craig Valentin. They did $6 million in 2015 revenue with his health and wellness info product. Top of the tribe. Good morning. Our guest this morning is Ben Nye. He joined Bain Capital Partners in 2004 and leads their infrastructure software team.
But more importantly, and really where his mind is focused, is on his company, Turbonomic, which we're going to focus on today. Ben, are you ready to take us to the top?
Absolutely.
Thank you. Yes. Hey, thanks for coming on. I appreciate it.
Chapter 3: How does Turbonomic manage equity and employee shares?
So tell us first, what was first, Bain Capital or Turbonomic?
Well, actually, so I joined Bain and Bain Capital has been around for about 30 years, but I joined Bain in 04 and built out the infrastructure software practice. And then we actually capitalized Turbonomic as an investor together with an awesome founder named Shmuel Klieger back in 09 and first delivery of product in GA in 2010. And then I joined the company full time in 2013.
And so walk us. 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?
Sure. Principally oriented around business to business. So and very much of a sector focus. So we're looking for 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 through that lens the disruptiveness of an idea and an entrepreneur's capabilities within that domain.
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Chapter 4: What unique features does Turbonomic offer its customers?
So I would say it's very much of a sector focused fund. And then we cover multiple sectors that range from business. healthcare, uh, services to, and business services, data services to, uh, marketing automation technologies. And then obviously the, uh, infrastructure, uh, software group.
Great. And, and let's now kind of shift over to Turbonomic. So you guys led around, did you get into Turbonomic? Was it series B or did you get in earlier?
No, no. The original first round of funding.
Oh, you were?
Okay. Yeah.
Yeah. Okay, great.
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Chapter 5: How does Turbonomic's pricing model work?
So how much capital total have you guys put in the company to date?
On behalf of Bain, I think we're in roughly the young 20s.
Young 20s. Yeah. And total raise is Crunchbase right in saying 60 million?
I think it's just slightly ahead of that, but yeah, roughly.
Great. That's great. So walk us through the decision you made. I assume you were the lead investor at Bain for Turbonomic.
Yeah.
Yes, I was. I've been since the very get go.
So how'd you decide? How'd you make the decision to?
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Chapter 6: What challenges does Turbonomic face in the cloud market?
I mean, there's probably some complicated stuff here. One, what happened to the past CEO? I'm sure there was a good discussion there and there's a lesson in there. And then why did you decide to jump in full time as CEO?
OK, well, a couple of things. One is there's actually been three CEOs. The founder was the first CEO and then we hired a career CEO. Um, there was a point at which the company was outgrowing him.
And, uh, sorry, Ben, what does that mean when you say career CEO?
Meaning for hire CEO, non-founder CEO. Came from a strategic partner. In this case, I think it was Citrix. And so they got to a point where they said, okay, now we need to really step up the execution. There were some issues between the founder and the CEO hire.
And and so that's that was the time when the board made its decision and asked me to step in on an interim basis, which I agreed to, partly because of my history with the company, going all the way back to the conceptualization of it and and funding of it.
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Chapter 7: How has Turbonomic achieved significant revenue growth?
And then also just because, you know, somebody had to do it. And so. And what happened was, you know, you fall in love in these things. And this is such a big idea and such a great company. I ultimately decided it was important to to run it.
Yep. Well, and I mean, part of that part of that transition period, I imagine it can just be tricky. I mean, there's a lot of the a lot of the equity this is. You're a little later stage, I think, than what most of my listeners are going to be.
But we typically have a situation where listeners are going, Nathan, we have founders that we founded the company with that we thought were going to be great fits. We gave them a bunch of equity, even if there was a cliff in investing schedule. There's now unallocated or unactive equity on the cap table. 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?
Chapter 8: What advice does Ben have for future entrepreneurs?
Yeah.
Well, so, yeah, there's there's obviously in in the most obvious case, there's a typically a one year cliff vest on on anybody that's hired into the company. So make sure that you're you're hiring well. But to the extent, you know, inevitably there'll be churn as you build the life of the company. There will be some passive equity in that company.
I think the biggest thing we do is try and keep those who are super talented focused in building the value of the company and knowing that that equity value will be best served and will grow the fastest by virtue of their continued commitment to the company. But from time to time, the company has retired employees. passive shares.
And there's typically a thing called an investor rights agreement that governs the way in which that is executed. And indeed, we've done that as well, just to keep more equity in more active hands.
Yeah. So does that mean at a high level, Ben, are you buying back some of that equity if people are leaving the company or not typically?
Uh, it's a voluntary choice, but we have, we have done that in the past when people have wanted to sell, because I think we're big believers in, um, in the prospects of the company.
I love that. Okay. Let's shift to the market now. So, so Turbonomic, if you had to describe in two sentences, what it does and how you make money, how'd you describe it?
Sure. Well, what it does is no less than it's where the control system, real time and autonomic, meaning self-managing, self-organizing control system for the hybrid cloud. So if you think about, you know, a lot of workloads, there's 194 million workloads in 2016 between that which run on prem or premises and.
and that which runs in the public cloud and we have the capability to 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 where those where the market's headed.
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