Hot startup to Bankruptcy,
The sales CAGR from 2014 to 2018 is 48%
https://www.bizjournals.com/sanjose/news/2018/07/06/tintri-c…
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Does anyone understand what caused Tintri’s demise - and whether Pure and NTNX are immunie?
…Marc
Marc,
Since hardly anyone has heard to Tintri, that may be your explanation from a practical investor perspective. I know I do not, I have never seen Saul do so either, invest in beginning stage companies with small marketcaps, very small marketshare, and little known about them.
Sure, it is the dream. Buy Oracle as a penny stock and hold it through 1999. Reality, if you want to systematically invest successfully you ignore companies like Tintri until they reach a stage of maturity such as PURE has and Nutanix has and invest in established growth companies, not micro wanna bes.
More than this I do not care to know. Too many small companies start up with promise and then die out for so many reasons. From my perspective such companies are not investable material for us, and thus give us no lesson in regard to the more established companies that are and grew out of that initial stage of venture capital development.
Tinker
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Tintri isnt beginning stage. Founded in 2008, a year earlier than Pure.
They were all-flash too, but obviously didnt execute as well as Pure.
See 2014 article comparing AFA vendors: http://www.tomsitpro.com/articles/all-flash-storage-vendor-c…
Dreamer
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Dreamer,
What I mean is, not the age of the company, but the success of the company. From a business perspective, no matter how old it is, its business success never got past the beginning stages. Tintri is like an athlete who can play in college, or minor leagues, but never got to the point that it could play in the big leagues.
I see no reason to invest in any company, or even waste my time, unless they have hit the business equivalent of being part of that elite that can play in the big leagues. Tintri obviously never got there anymore than Violin (I think it was called). Pure is the only company from that ilk that showed clear business momentum sufficient to make it a talent sufficient to play in the big leagues.
There are so many investment opportunities out there, I see no reason to waste our valuable time on companies that just do not have the talent to be a big league player. Violin, Tintri, never demonstrated any such talent.
Tinker
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but the success of the company
They were able to grow revenue at the rate in which they grew and cannot without meaningful products or success. In fact their product adoption at earlier stages were slightly better than Pure’s of the world.
The company’s grow rate would be even more better, if you ignored the last year, in which they revenue was flat compared to the year before.
I see no reason to waste our valuable time on companies
I have learned some significant lessons from my failures. I think studying the failure of this high growth, high tech company will be of some value to the universe this board is interested in.
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Violin was doing well with its first product, but that is never enough in the Valley. They did not improve and they got more competition. Hardware always needs to get better, faster cheaper, use less power or cooling. The customers did not add use cases, they did not buy the second generation products.
Yup my husband worked there pre/post IPO and saw it all. Reading the s-1 convinced me not to invest, and my husband went looking for a new job. His boss put six figures into the IPO and got people he knew and cared about into the “friends and family” round. Bad enough to lose you own money but to convince friends and family, ouch.
There are lots of computer storage vendors and products. Flash and hyperconverged, heck some people are still buying tape! We know a guy who still sells tape for Oracle.
After watching my husband sell hardward and software, my advice is stick with software. Much better chance of investing success.
Flygal
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Mostly I’d pin this one to a leadership failure combined with a non-differentiated product. They didn’t stand out much or have anything “more” than other vendors at the end of the day, and due to the internal management issues I’ve heard about, they were probably doomed even if they did. But that’s just what I’ve heard from folks in the storage industry, none of whom actually worked at Tintri (but several that interviewed there, and one that turned down a job after doing so). And surely that isn’t an unbiased set of commentary, either.
Pure and Nutanix are not immune, either, to management decision-making flaws or leadership challenges any more than other companies, but I’d say they have better odds now that they’ve gotten a leg or two under them to build upon.
I know a few Storage Operations folks so I just asked a few of them for their thoughts on this forum discussion and got the following…
-
Tintri and Violin “both had great products but lacked in sales execution”
-
Nutanix “has serious technical limitations in their hybrid computing architecture” - hence the founder has left to re-architect “Cohesity” which is “an improved version of what he initially designed for Google internally and then improved upon when he started Nutanix”
-
Pure
- One guy told me “Pure’s All Flash” is largely “flash in the pan” I asked for elaboration on his comment and said that he and his mgnt had rejected a Pure bid since they saw Pure like another Violin with insufficient technology innovation and that Pure made misleading comments about futures.
- A second guy told me that “Pure’s performance and efficiency are great but we’d never buy their products since their analytics are not what a medium to large size enterprise requires.”
After reading this Forum and getting the above feedback, my personal takeaway is that product quality, market address-ability, and financial strength are table-stakes.
Marketing, sales, support execution, and leadership may be what separate the successful, from the doomed.
This has been an insightful dialog for me - thanks to all that contributed.
…Marc
PS I was considering Pure as an investment - I’m holding off now.
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Nutanix “has serious technical limitations in their hybrid computing architecture”
“Pure’s All Flash” is largely “flash in the pan”
Hi Tech,
Let’s start with Nutanix. Considering that they just reported another blowout quarter with revenue up 65% apples-to-apples, and after the quarter ended got a $45 million contract from the USAF, and they have a 90 Promoter score, which means their customers don’t just like them, but LOVE them, I’d have to say that your informants either don’t know what they are talking about, or are intentionally misinforming you.
Here’s a little more data from the last quarter:
• Billings: up 50%
• GAAP Gross Profit up 58%
• Adj Gross Profit up 57%
• GAAP Gross Margin: of 67.0%, up 7.5%
• Adj gross margin of 68.4%, up 7.2%
• Adj Net Loss of 12% of revenue down from 22% of revenue
• Adj net loss per share of 21 cents, improved from a loss of 32 cents.
• Cash was $924 million, up 164%
• Deferred Revenue: $540 million, up 62%
• Operating Cash Flow: positive $13 million, up from a loss $16 million
• Free Cash Flow: a loss of $1 million, up from a loss of 29 million yoy.
Yep, they are bulls—ing you.
Now that doesn’t give me a lot of faith in what they told you about Pure, but let’s look at the last quarter:
• Revenue: up 40%, (last year was up 31%)
• GAAP Op margin: -24%, up from -32%
• Adj Op Margin: -6%, up from -14%
• Operating cash flow: $18.6 million,
• Free cash flow positive $8.6 million, up from -$27 million !!!
• Net Promotor Score of 84 !
• Net Promotor Score of support team is in the 90’s !
Approximately 300 new customers, increasing the total to more than 4,800, and up 45% yoy.
After reviewing that, I have to ask: Are you sure that you are not short Pure, and are maybe feeding us a line? Just wondering, because what you posted was soooooooooo out of touch with reality.
Saul
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hence the founder has left to re-architect “Cohesity”
It is sad, companies like “cohesity” are not hitting the market to raise capital, and thus depriving individual investors to get in early, provide risk capital and benefit from the profits.
I would keep an eye on this company if you are an investor on the storage market.
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Are you sure that you are not short Pure
Anecdotal references are just that.
Never attribute to malice that which is adequately explained by…
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It is sad, companies like “cohesity” are not hitting the market to raise capital, and thus depriving individual investors to get in early, provide risk capital and benefit from the profits.
I would keep an eye on this company if you are an investor on the storage market.
I concur about keeping an eye on Cohesity. I said as much in the following linked thread from over on the NPI board (apologies that there may be a smidgen of political banter within the same thread).
http://discussion.fool.com/black-and-orange-33112110.aspx?sort=w…
As to Cohesity not being public, it simply hasn’t reached that stage as a company yet. They just had a $250M investment round announced as of June 11th led by Softbank.
-volfan84
Definitely planning to keep an eye on Cohesity…their founder (also a Nutanix co-founder) accepted my LinkedIn connection on July 4th
As to Cohesity not being public, it simply hasn’t reached that stage as a company yet. They just had a $250M investment round announced as of June 11th led by Softbank
If my memory serves me right, they have raised close to $500M so far. The current deal with Softbank is the stage where companies certainly could come to public markets. Remember, cohesity already has technology and equity participation from HPE, Cisco, etc, so it is not like they would have trouble raising capital in a public equity offering.
Now you see companies come to public much, much later and pretty much to liquidate VC’s and promotor’s stake and the chances for individual investors to get outsize gains are pretty much taken away.
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Saul:
After reviewing that, I have to ask: Are you sure that you are not short Pure, and are maybe feeding us a line? Just wondering, because what you posted was soooooooooo out of touch with reality.
I re-read my post, and it does seem like I’m shorting Pure. I’m actually not that sophisticated an investor. I’ve never shorted a stock before. I have never had a position in Pure long/short. My intent was simply to provide the “other perspective”.
If you look at the few posts I’ve put on your board, you’ll see one other similar post that I put re Nektar. The difference was that I owned Nektar ( and still do). I got similarly beaten up on my post for the mediocre views I relayed from a Pharmacologist who has been in drug discovery for 40 years. Ironically, a few people who questioned my Nektar post appear to have started selling Nektar about one month after my post - not me.
In the case of the sources that I went to for information on Tintri, Violin, and Pure…
I won’t give company names - but given I’ve been in the I/T industry for 34 years, I have some good contacts - the ones that I reached out to are very credible.
I wish everyone investing in Pure all the best - I actually have children who are invested in the company - so I wish the company and all Pure investors all the best. If the board prefers that I stay quiet on “alternate perspectives”, I’m happy to comply.
…Marc
PS I very much value this board - it is refreshing in that it has many viewpoints and great civil discussion/debate. Thank you to all.
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I re-read my post, and it does seem like I’m shorting Pure… I’ve never shorted a stock before. I have never had a position in Pure long/short. My intent was simply to provide the “other perspective”.
Hi Marc,
I’ve never had the guts to short a company either. I wonder if the guys you asked about Pure are with companies who are either competing with it, are tied into companies competing with it, or just are using a different product or a legacy product, and thus are defending what they are doing?
Alternate perspectives are welcome. Keep them coming. We often learn from them. Those sources though seemed as if they were just name-calling with “flash in the pan” or whatever it was.
Best,
Saul
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Very important and interesting discussion…
Trying to think about how to separate TNTR or the world from PSTG of the world (assuming PSTG continues on success path, which i believe it will)…
There are few pointers come to my head:
-
I tried this to when thinking of investing into Zoes’ kitchen… high growth restaurant… after Chipotle’s runaway success, fast casual restaurants have been where cloud stocks are today…
I struggled with ZOES stock price not responding to growth… and one day I started comparing its gross margin and cash flow to that of Chipotle’s (when it was also in early stage of life)…
it was striking to me that Chipotle had much higher gross margin very early on… and sustained through the growth… since then, I look for GM% to be above industry average as one of the basic criteria… -
Another one comes to my head is operating cash flow…
I looked at Tintri vs Pure and you can see that Tintri has had 65% GM, but over last four quarters, its been deteriorating… Pure’s GM% has been growing over few years and now stabilizing to 65% range… BTW TNTR’s GM% drop you could see in their 7/17 quarter… even though revenue grew from $28M to $35M (25% y/y), GM% dropped from 65% to 56%… and ofcourse the 10/17 quarter brought revenue down on y/y basis instead of growing… so there were enough indication of troubles coming in…
If you see cash flow, you could already see a lot of trouble…
Looking at Pure’s journey, they have had growing GM% with several years of revenue growth in triple digits… and now in 2018, its operating cash flow is not only positive, but growing at rapid pace.
I think TNTR was clearly dying in July last year… even if you bought at IPO, you had a good chance to sell through Sept of 2017… and also amazingly, its price did go up back to in March 2018…
If anything, this story is telling me to be ruthless and get out if revenue growth comes down suddenly and / or GM% and operating cash flow surprises show up…
For now, PSTG and NTNX looks as far from TNTR as one can imagine… i am not going to take TNTR as an example to hold me back on such fantastic companies as NTNX is specially… and also PSTG.
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One last thing I would say is on this topic is the power of this board…
even if you got sucked into TNTR, I am sure Saul and a few others would have brought up the falling revenue growth… the growing cash drain etc… and help you get out…
this is opposite if what many new visitors think… when they look at most people on the board very heavily aligned to few “darlings” of the board like NTNX and AYX and SHOP etc… Time and again, this board’s ability to see issues and get out has been phenomenal… to me the fact that TNTR was never even discussed here says a lot.
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Saul:
Those sources though seemed as if they were just name-calling with “flash in the pan” or whatever it was.
I think that the “flash in the pan” comment was an attempt at humor since Pure specializes in “All Flash” storage vs the hybrid disk/flash combinations that some other storage vendors promote. I don’t think he actually believed Pure to be a fly by night company - I certainly took it as a joke. I should have put an “LOL” or some kind of “emoticon” in my post to indicate that I was relaying an attempt at humor :-).
…Marc
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they have a 90 Promoter score, which means their customers don’t just like them, but LOVE them,
PSTG’s valuation requires a significant amount of new clients going forward, not just love, errr…LOVE from their existing ones.
Are you sure that you are not short Pure, and are maybe feeding us a line? Just wondering, because what you posted was soooooooooo out of touch with reality.
The ‘shoot the messenger’ mentality on this board reaches insane levels from time to time. Something for all to be aware of.
Naj,
not short any stocks on this board, long a few.
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