Pivotal Labs finally made the news official yesterday: the pioneering agile development consultancy known for its influence on startups like Twitter and Square would be acquired by EMC Corporation, a publicly-traded corporation with a market cap of $59 billion that manufactures and sells cloud and storage hardware and helps IT departments move to the cloud. (If that tune sounds familiar, it’s because Om Malik broke the story last Friday.)
The size of the deal wasn’t disclosed, EMC said it was an all-cash transaction that wouldn’t be material to its 2012 finances. Pivotal will remain a separate legal entity and is contemplating global expansion. Along with the acquisition, EMC announced that its Greenplum division would be open-sourcing a Big Data platform called Greenplum Chorus and then hosted a Webcast to explain how these changes would help EMC go “social, open, and agile with Big Data.”
As to expected from a Fortune 500 company, EMC’s jargon was a little hard to parse. We weren’t the only ones scratching our heads at what, exactly, this would mean for Pivotal and its fast-growing Union Square office. So Betabeat talked to Edward Hieatt, principal and VP of engineering, who is based in San Francisco but oversees its offices in Boulder and New York, to find out how the acquisition will affect its clients and engineers, more commonly known as “Pivots,” and what a corporation with $20 billion in revenue knows about being agile.
How do you think EMC’s acquisition will affect Pivotal? Of course we’re particularly interested in how it will affect New York.
The acquisition of Pivotal means that we’re going to be able to spread our message faster and serve clients in more places faster. So that’s kind of the overall theme of this. We have this very special way of building software and with a parent like EMC, they’re going to help us grow faster than before and that applies for sure in New York. We were already outgrowing our space even before this announcement in New York and we’re looking to move this year. So you can expect us to take some bigger space frankly Q3, Q4 because it takes awhile to get it all settled. It may be a bigger space than we would have otherwise have done, I’m not sure yet. We’re definitely going to stay in Manhattan, it may be that we get some help finding space.
With the acquisition, does that mean you’ll have to have more enterprise clients or larger clients and maybe not some of the smaller startups you’ve worked with in the past?
We’re staying committed to working with startups. It makes sense business-wise because they keep us on our toes, they keep us learning the latest stuff. We’re able to start again every few months in a greenfield way. We need to keep that kind of client in our portfolio, but we’ve always had enterprise clients. Actually our largest client, the Annie E. Casey Foundation, is based in our Manhattan office. So that’s a very large project for us, it’s child welfare stuff for the foundation. We’re probably not going to change our mix that much, but EMC certainly has very exciting enterprise clients that we might tap into or they might send our way to help keep the enterprise side of our portfolio well-balanced.
In reading CEO Rob Mee’s blog post, it sounded the acquisition is just to scale what you already do. But there was a lot in the announcement about Big Data, and I don’t know how that relates to Pivotal.
From Pivotal’s point of view, the acquisition is like Robert’s blog post described. We’re gonna be Pivotal, but bigger. We’re gonna have more resources at our disposal. We’re probably going to be in more cities sooner. In addition, obviously, EMC has things that they’d love us to start thinking about helping with. We have this EMC client, Greenplum, which is how this whole thing came about. We already have 12 people on that project, we may end up adding two to four more to that project in the next month or so.
Can you tell me a little about Greenplum?
Greenplum is a startup in San Mateo that EMC bought less than two years ago. [EMC has] grown them from 150 people to 500 people in the last two years, that’s probably faster than we’re going to be helped to grow, but it’s a similar kind of acquisition. Their product called Chorus, which we’re helping them with, is being open-sourced. That’s an important thing from Pivotal’s point-of-view because we’re very much an open source company and EMC hasn’t been in the past. So the fact that we’re helping to open source the product that we’re helping to build is a really cool thing. It really makes the cultures mash-up better at that intersection. In addition, there may be some opportunities for our Pivotal Tracker [Ed. note: Pivotal Tracker is a project management tool for software development currently used by more than 240,000 developers] to integrate or work more closely with Chorus. And then really long term, we’re talking a year plus, EMC would like to explore the ideas with us of helping them get more modern about their software development. You know, being more Pivotal about it.
So all the emphasis on Big Data and social—
—That’s the Greenplum Chorus product.
Say you do integrate Pivotal Tracker with Chorus, will it effect how Pivotal Tracker is used currently?
No, so the idea there is Pivotal Tracker is going to stay Pivotal Tracker. Our vision is to make that the way software development is done in the future, like every team in the world. In terms of Chorus, the idea is to maybe have them talk to each other. Maybe have them integrate at API levels. Maybe take some of the ideas that are in Tracker and put them in Chorus. But that’s really it.
We talked to some people who speculated that the acquisition might prompt some Pivots to leave or make them ripe for poaching. Is that something you’re concerned about?
We don’t think so, no. The employees have had a lot of good conversations this week from EMC leadership, from the top-down. The CEO and I met with the [EMC] CEO and COO over lunch and there’s been a lot of our discussion with our Pivots. And there’s been internal talks in New York and San Francisco. So we’re fielding various questions, but we don’t anticipate any drop-off, no. In fact, I think there have been some Pivots in the past that have expressed concerns over stability given the fact that we’re not a huge company. They believe in the style of development we use so strongly that what they’re philosophically aligned with is spreading that message in the industry. We do software development in a very different way than its traditionally been done. Pivots stay at Pivotal because they want to keep spreading that message all over the place.
But Square already tries to poach from you, and I’m assuming clients do as well.
Yeah, we actively try to manage that. Although you’ll see the quote from Jack Dorsey about how cool this [acquisition] is. Of course with any acquisition, it’s a bit of a wait-and-see.
Under EMC, will Pivotal change how the NYC office has been a kind of startup community center–hosting the past two cycles of TechStars and a number of SkillShare classes.
A critical part of Pivotal is the community outreach, the tech talks, the open source contribution, the involvement with our employees and the community. That stuff, there’s really no choice but to continue. Pivotal is remaining a legal entity separate from EMC. So we’re Pivotal Labs, there’s not even a change to the brand or the tagline at all. They need us to keep doing that stuff.
Agile is not something you associate with a publicly-traded company with a $59 billion market cap.
[Laughs] Not yet! I think EMC would agree. No one is sort of suggesting that EMC is already agile. One of the primary drivers long-term is to learn from us about this kind of development. I think that’s how their acquisitions tend to go. They tend to buy companies who are doing things differently and their strategy is very much an investment one, where they invest in that entity and over time learn from it.
Is that what made you consider Agile?
We’ve been approached many times, but we never really considered it. The reason we considered this offer is because their whole strategy is to leave us, us. They want us for us. You don’t buy a services company to change it because all you are are people, so it’s different from a product acquisition. They don’t want to affect our culture, they’re very upfront about that.
No one from Pivotal is getting a role at EMC?
No, the management structure is staying exactly the same. Rob and I are in our position. There’s no internal change other than Rob having a boss [Laughs.]
New Context just launched with a similar concept with the help of your former colleague Ian McFarland, in San Francisco. It seems like it’s good time right now for the type of service Pivotal offers to scale.
I think what we’ve been educated about by EMC is just the worldwide demand for Pivotal. Especially Greenplum. They’ve been talking to us a lot about where they sell, offices that they have in Asia, South America, Europe, etc. So I’m pretty excited to address to those markets in a way we couldn’t before because we didn’t have the dollars or the know-how to go in there. But they’re very confident for the demand for us there.