VMware’s Incredible Ascent From $2 to $70 Billion

It takes courage to set high expectations. It takes even more courage to consistently execute towards such expectations year in and year out regardless of how challenging things get. By that notion, Pat Gelsinger, VMware’s CEO may just be one of the most courageous executives in Silicon Valley. Under his watch, the company has continued its ascent to its current enterprise valuation of over $70 billion. While his predecessors certainly helped lay a solid foundation from which to build, it is Pat who has shepherded the company over the last six years setting the strategy and undertaking over twenty acquisitions.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

The story of VMware could be a case study of how to continually optimize along the path to becoming a market dominant corporation. The company began as a startup just a little over 20 years ago in 1998. Then five years later in 2003 the already established EMC (now Dell EMC) decided to acquire the company for $625 million in cash. Subsequently in 2007, EMC sold 15% of VMware to the public at an estimated valuation of $2.2 billion. From there, VMware began its steady acquisition pace absorbing anywhere from two to five companies per year. While not all acquisitions result in increased shareholder value, the company’s strategy has paid off and there’s no slowing down.

2019 indeed is shaping up to be VMware’s most active year. In just the first seven months of the year, it has announced four acquisitions – AetherPal, Bitnami, Avi Networks, and most recently BitFusion. Bitfusion was founded just four years ago in 2015. It was funded by early stage investors and participated in an accelerator program in San Antonio, Texas. The company makes software aimed at optimizing the way hardware such as graphic processing units function and is particularly useful for companies using artificial intelligence and machine learning technology in applications.

While some of VMware’s increase in public valuation may be a bit of ‘a rising tide lifts all boats’, there’s no denying that the company’s acquisition strategy is one to marvel at. Since its IPO just prior to the great recession of 2008, the company has acquired nearly 40 companies and has risen to a 35 fold valuation. And with Pat Gelsinger, a proven large company executive, firmly at the helm, the company is bound to reach new heights.