An alternate point of view to the one you are hearing
This is not a deal done in happy times
Veritas and Cohesity's customers will have to make a choice
Cyber Resilience is the new imperative
My first reaction when I heard the news of the merger between Veritas and Cohesity was one of jubilation. I've personally battled Cohesity and Veritas. I thought to myself, this is actually great news for all three companies.
Veritas gets something to do. Veritas has been struggling for relevance for the last ten years, having been acquired by Carlyle Group and gone through the PE austerity, milking the install base for all the cash it can get without delivering any real innovation.
Cohesity gets something to do. Cohesity has not been growing fast enough to raise another round of capital at an acceptable valuation. Or be interesting enough to be bought by another tech company looking to leverage their technology.
Rubrik can focus on the future. Rubrik can continue to focus on its business and the market's transition to Cyber Resilience, Data Security, and the Cloud.
Upon reflection, while the merger may make sense for Veritas and Cohesity, it will have a negative impact on their customers who are facing exploding volumes of data across Data Centers, Cloud, and SaaS with unrelenting threats of cyber attack, ransomware, and data exfiltration.
Wonky Math
A red flag for both companies' customers is how the merger is being marketed. This is not a deal done in happy times. Cohesity's valuation in 2021 was 3.7B. It should have increased considerably in the past three years if they had been healthy. Veritas was acquired by Carlyle Group (a Private Equity firm) for $7.4B in 2016. This would be a minimum $11B+ business if these businesses were growing. Instead, the combined valuation is presented as $7B, of which $2B is new debt used to finance the acquisition. Based on past performance, we believe the combined entity will struggle to create new products and greater value for its customers.
Architecture Matters
Veritas had two backup products, Backup Exec and NetBackup, and despite promises for years to merge the two, it never did, couldn't, or wouldn't.
Will "Cohesitas" have one architecture or two? Which one? or both?
If your catalog is Veritas NetBackup, how will you move to Cohesity other than a B2D target?
If your catalog is Cohesity, what value would you get from Veritas that is different from two distinct solutions?
If the products are merged, that would be best. Difficult to do – particularly in a timely manner given the number of employees made redundant and the implementation of the "PE playbook."
PE Austerity
Private Equity deals in tech slow or kill new customer growth and lead to accelerated customer churn. Broadcom is currently enacting the PE playbook on the VMware business, and the change in dynamic is evident. Increasing margins means increasing customer prices, reducing or eliminating R&D, and layoffs. We can anticipate Carlyle to bring the same playbook to the combined entity - no improved quality, higher prices and less choice.
Dear Veritas and Cohesity Customers
We would like to share an alternate path for your consideration.
We are Rubrik. Our business is built on the concept of Cyber Resilience. We were founded at the same time as Cohesity but have grown in size and value rapidly over the past ten years. We have over 6,000 customers and have been a Leader and the vendor furthest in vision in all of the last 4 Gartner Magic Quadrants.
We provide core backup and recovery services that compete with and displace both Veritas and Cohesity, as well as cyber recovery and cyber posture solutions, which together we define as "complete cyber resilience." As a result, we have a $10M Ransomware Recovery Warranty, not because we are in the business of paying warranties, but because we have never had to pay one. We have a Gartner Peer Insights score of 4.7/5 and an NPS score >80. We support leading enterprises, healthcare systems, and government entities that believe data is a critical asset worthy of the best protection.
We'd love to connect with you and show you what a partnership with us could look like.