Adventures in entrepreneurship: CEO Diane Greene departs VMware
The news that EMC (EMC)has no intention of spinning off VMware (VMW) and expects lower than projected revenue growth for the company in 2008 are the primary reasons the two companies lost $8 billion in combined stock-market value over the last few days.
Another factor is the departure of VMware CEO Diane Greene, the company’s chief since she founded the software firm with engineer husband, Mendel Rosenblum, in 1998. EMC CEO Joseph Tucci reportedly said VMware had outgrown Greene’s leadership skills, and when Greene reportedly refused to take another position at VMware she was fired.
Anyone who knows Greene knows she’s impatient, peripatetic and inclined to chart her own course. Number 22 on Fortune’s Most Powerful Women list, Greene is an independent, free-spirited entrepreneur, as my colleague Adam Lashinsky portrayed her last fall in Fortune’s 2007 Most Powerful Women in Business issue.
Greene’s “boring life ,” as she called it, started when she settled in Silicon Valley following a stint at Windsurfing International (she’s an avid sailor). She jumped from Sybase to Tandem to Silicon Graphics (SGIC), then to two startups.
At VMware – which offers “virtualization” technology that tricks servers and computers into running multiple operating systems – she maintained her independent streak. She reluctantly sold her startup to EMC for $625 million in 2003.
However, the companies remained entirely separate entities. Greene says after inking the deal she realized that association with EMC threatened VMware customers IBM (IBM), HP (HPQ), Dell (DELL) and others who were its now-parent company’s direct competitors.
Only an anti-establishment type like Greene would frame her shot to stardom as “boring.” EMC spun off a piece of VMware in an August IPO last year that raised more than $1 billion. It achieved the highest market valuation since Google (GOOG) went public in 2004. VMware’s stock rose from $29 to $52 on the first day of trading.
Despite such success, Greene’s departure is not so suprising. VMware’s stock fell steadily since reaching its $125 peak last fall. Meanwhile Greene and her crew continued to clash with EMC’s senior executives. Reportedly Greene was pushing for VMware to be spun off early next year. And as her husband pointed out to Lashinsky last year, “If you look at her resume, this is far longer than any other job she has ever held.”
Now as former Microsoft (MSFT) executive Paul Maritz takes charge at VMware, Greene is likely headed for another big adventure. As Tucci told Fortune last year, “The No. 1 item that makes anyone successful is passion. Never bet against a person with passion. She [Greene] has an intense desire to win.” –Jessica Shambora
Funny how Bill Gates and all the mutual funds are dumping Microsoft stock — just when Microsoft claims they are releasing a product to compete against VMWare. Furthermore, Carl Icahn war path mentality to extort Yahoo’s independence and transfer ownwership to Microsoft, sounds like Microsoft is losing their edge — did they ever have one?
Microsoft, Icahn, Tucci, and Maritz are anti-capitalists! Afraid of competition, afraid to compete against Yahoo and VMWare.
VMWare’s stock decline has everything to do with the crumbling of the U.S. economy. It’s a shame that the board was so quick to fire the company’s founder — a woman with vision no doubt. EMC’s stock tanked in 2002 long before VMWare went public. VMWare is probably the only technology making EMC look good at the moment.
If you can’t compete in the marketplace, do a M&A. It’s like if you can’t be a competitive athlete, be an “athletic supporter”.
Let’s hope the Microsoft Drone CEO doesn’t ruin VMware.
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Patricia Sellers has written some of Fortune's most talked-about cover stories, including "Can Meg Whitman Save California?", Melinda Gates ("The $100 Billion Woman"), "MySpace Cowboys," Martha Stewart ("I cannot be destroyed"), Ted Turner ("Gone with the Wind") and Oprah Winfrey ("Oprah Inc."). And she has broken ground with insightful pieces on career management issues such as ego ("Get Over Yourself!"), and "Charisma: Do You Need It? Can You Get It?" Pattie chairs the annual Fortune Most Powerful Women Summit, the preeminent gathering of women leaders in business, philanthropy, government, academia, and the arts. And she has helped oversee Fortune's "Most Powerful Women in Business" cover package since its launch in 1998. She started at Fortune in 1984, covering the big consumer brand companies.
vmware’s product are so far ahead of the competition they probably can be static for 5 years. Their virtualization engine has remained fairly stable for the last 3 major releases (v4 to current v6). They have instead focused on making management as easy and reliable as possible.
Their enterprise ESX and HA products have no competition, which means they can still charge a premium for it. You may end up paying more for the software than the hardware it virtualizes, which is why we went through the hassle of using xen instead.