At last week’s HPE Discover event in Las Vegas, Pathfinder, the company’s venture capital arm that identifies and finances promising startups and then takes them to market through the HPE Complete program, had no new news to announce. No new companies entered the program, which continues to have a roster of 18 members. Pathfinder has, however been realigning its activities, to more closely parallel HPE’s current strategy of emphasizing the Intelligent Edge, and artificial intelligence.
Pathfinder was started in 2016 as a technology feeder for HPE, with a financial objective that was not necessarily to make money, although not losing any would also be nice. Vishall Lall is both HPE Chief Strategy Officer and head of Pathfinder, two roles that are completely intertwined.
“I look at the strategy for the company from a portfolio perspective,” Lall said. “I reported directly to Meg Whitman, and now I report to Antonio Neri, making sure we make the right investments from a product portfolio perspective. I’m a clearing house for investments we do in the company – both inorganic and organic investments. Where do we make our bets – whether in investments or M&A – although I don’t actually do the deals.”
Lall has a staff of six people – half focused on solutions and half on investments.
“They get measured on the success of the companies they oversee and the revenue they drive, and have to sit on every board meeting,” Lall said. “The workload can get a little stressful at times, but that’s okay.”
Pathfinder works closely with HPE Complete to take their vendors’ products to market.
“HPE Complete is a platform, and all of our Pathfinder investments reside on HPE Complete,” Lall said. “That’s the way that we get them onboarded. Pathfinder is a mechanism to identify the right partners, to financially incent them, and then put them on the platform so the sales guys can sell them.” The two programs are not a complete overlap because HPE Complete also includes established vendors who are not startups and thus not in the Pathfinder program.
“We are also trying to take some of these companies and OEM them as well, so they can joint brand with us out in the market,” Lall indicated.
While HPE Complete also tries to add a certain number of new partners each quarter, Pathfinder is looser in this respect.
“We don’t have a set number,” Lall said. “We have allocated about $100 million a year for the program.”
Lall said that the Pathfinder program is also significantly different from other IT vendor venture programs.
“These programs are on a continuum,” Lall said. “At one end is organizations like Google [with GV, formerly Google Ventures] or Intel Ventures, which are pure investment arms. At the other is us, which have strong partnerships as well as investments. Cisco’s investment arm is somewhere in the middle. With other organizations, the funds also have a limited lifecycle. We don’t. We invest from a balance sheet perspective, although it will likely be five years in most cases.”
Given that Pathfinder is less than three years old, Lall said it is still pretty early days, given the time frame of these kinds of investments.
“Three of the investments we made early on just hit a billion dollars or close to a billion dollars in valuations,” Lall said. These are Cohesity , Mesosphere and ThoughtSpot. None of the Pathfinder companies has been acquired by HPE, but that is something that is definitely on my radar. We do have an unfair advantage in assessing them. We sit on their boards, and have access to their financials. At some point in time, we definitely hope to acquire some of the companies in the program. My goal is to make Pathfinder a pipeline for acquisitions.
Lall said that since Pathfinder was originally established, it has become much more focused on supporting HPE’s strategic technology directions.
“When we started out, Pathfinder was more of a standalone, but now we are more integrated into the overall strategy, to better align with its direction,” he noted. “On the data centre side, we emphasize artificial intelligence and infrastructure accelerators that enable machine learning and Big Data processing. We are also spending a lot of time on emerging areas, especially the edge. I’ve directed the team to find those compelling technologies.”
Three Pathfinder companies fall into the Intelligent Edge and analytics category. Chargifi, the most recent entry into the program, provides edge connectivity with tools to enable customers and partners to manage wireless power networks. Tamr uses machine learning supplemented by customer knowledge to unify and clean enterprise data and enable faster, more expensive and less expensive analytics to take place. ThoughtSpot provides a relational search engine designed for data analytics, that enables line-of-business people to quickly build reports and dashboards.
Many of the Pathfinder companies provide software-defined infrastructure capabilities around data automation and management. Chef makes a DevOps platform that lets enterprises automate infrastructure, compliance and applications. Cohesity has a hyperconverged platform for secondary storage that has expanded beyond its original base in backup into other functions like archiving. Hedvig’s software-defined technology collapses disparate tiers of storage and unifies block, file, and object interfaces within a single Hedvig Distributed Storage platform. Mesosphere is a cloud-native commercialization of the Apache Mesos open source software project, which manages clusters by unifying CPUs, memory, storage and other resources. Platform9 delivers OSS frameworks like Kubernetes and OpenStack on a SaaS model. Software-defined storage vendor Scality makes petabyte-scale object storage software. Barefoot Networks is focused on programmable networking technology by enabling programmable data planes. Fungible is an early stage startup, whose co-founders are Juniper’s founder and Apple’s former software engineering leader, and is developing a full-stack solution for cloud data centres.
“Like us, some of these companies are also moving some focus from the data centre to the edge,” Lall said. “Mesosphere, for example, started with a data centre platform, but over time have starting to sell more to the edge.”
Three cybersecurity vendors are also in the program. Safebreach provides a persistent assessment of security control by executing non-disruptive automated breach attempts. Shape is a botwall security service that defends against next-generation automated cyberattacks. Synack is an ethical hacker platform that provides crowdsourced penetration testing, and which has already been made available within HPE Pointnext’s PEN test consumption-based solution.