Nutanix’s Dheeraj Pandey: ‘A Furlough Is Reversible, A Layoff Is Not’

‘Coming out of the COVID-19 crisis, we think we’ll be perfectly placed to be one of the largest, and honest, hybrid cloud subscription software companies in the world,’ says Nutanix CEO Dheeraj Pandey.

Pandey On Furloughs And A Bullish Post-COVID-19 Future

Nutanix founder and CEO Dheeraj Pandey said temporarily furloughing 1,465 employees is a “reversible” move, not permanent, that was made to “minimize any customer service impact” amid economic uncertainty caused by the coronavirus pandemic.

“We’ve thoughtfully taken steps to help minimize the long-term impact to our employees and our customers, given how incomplete the information in front of us was,” said Pandey in an email interview with CRN. “A furlough is reversible, a layoff is not. Period.”

The San Jose, Calif.-based hyperconverged software and hybrid cloud specialist company has implemented two separate, one-week unpaid furloughs effecting at least 1,465 employees.

In an interview with CRN, Pandey talks about the thought process behind the company’s furloughing strategy, wanting to “renew our offer to work with VMware” on Nutanix’s AHV hypervisor, his advice to channel partners, as well as why Nutanix will come out of the coronavirus pandemic stronger than ever.

“Corporate initiatives around remote work, hands-free IT automation, disaster recovery, and lift-n-shift to public cloud data centers will be some of the pillars of a crisis-triggered digital transformation, and we believe we will be at the center of these conversations, in conjunction with our best partners,” he said. “Coming out of the COVID-19 crisis, we think we’ll be perfectly placed to be one of the largest and honest hybrid cloud subscription software companies in the world.”

What was your strategy on the recent decision to furlough 1,465 employees in California?

The biotechnology research team at Morgan Stanley came up with its research on April 3 named ‘COVID-19: A Prescription To Get The US Back To Work.’ As you read their thesis, you realize that there are a myriad of scenarios that we don’t fully understand, including a sobering reality of a potential second wave coincident with the seasonal flu, which even the CDC (Centers for Disease Control and Prevention) warned about on April 21. In the midst of all of this, there are conflicting reports of how long the vaccine itself will take, and whether testing for virus or antibodies will be widely available with high quality -- low false positives/negatives -- any time soon. And in the last two weeks, there are reports that children might be at risk as well.

So how does a business make a decision with such incomplete and developing information? How do you maximize the wellness of your people, your customers and partners, with such an undefined business and social climate around you? Well, you need a framework or two for decision-making. In the spirit of what Jeff Bezos calls a Type 1 vs. Type 2 decision, we had to think hard about which one makes most sense in our context. We realized we needed to make a ‘Type 2’ decision, which is reversible, both for the company and for an employee’s career. A furlough is reversible, a layoff is not. Period.

What was the other ‘framework’ Nutanix used to make this furloughing decision?

The other framework that we heavily used to make our decision was the concept of ‘The Most Good.’ I had read a deeply moving article in The New York Times on how doctors are having to make extremely difficult rationing choices. Over time, that has now taken the shape of a nationwide debate on the tradeoffs between lives and livelihood, as we struggle to find consensus on how and when to open our economy. [Author and motivational speaker] Simon Sinek refers to ‘The Most Good’ rule as, ‘Better we should all suffer a little than any of us should have to suffer a lot.’

Between these two guiding philosophies, we’ve thoughtfully taken steps to help minimize the long-term impact to our employees and our customers, given how incomplete the information in front of us was. These steps include two, one-week-long unpaid furloughs for many of us -- including my executive team -- over the course of the next six months. In typical Nutanix fashion, which means empathy for and subservience to our end users, we have carefully scripted these time-offs -- staggered them for essential services -- to minimize any customer service impact.

Will this pandemic change in any way the product innovation or software subscription roadmap for Nutanix?

This pandemic will fundamentally change the way we live, work, and transact business. On a broader scale, this virus will retool humanity, meaningfully alter the future of work, and I hope make us a stronger species as we come out on the other side of this.

Speaking of gaining from this disorder, the recessionary macro-environment makes our subscription transformation and our delightful zero-touch products even more impactful, as we enable our customers to be resilient, prepared, and productive. Corporate initiatives around remote work, hands-free IT automation, disaster recovery, and lift-n-shift to public cloud data centers will be some of the pillars of a crisis-triggered digital transformation, and we believe we will be at the center of these conversations, in conjunction with our best partners.

Talk about Nutanix’s strategy around the new remote workforce.

On the topic of remote work, we are working closely with Citrix on [Nutanix] AHV delight, and our core HCI product has indeed become an invisible infrastructure for all things EUC (end-user computing): VDI, DaaS, security and disaster recovery of desktops, and file storage for desktop users. After all, we’ve delivered millions of desktops reliably in the past decade to enterprises large and small. Beyond EUC, our core engineering is working closely with AWS and Azure on Nutanix Clusters, so that our entire portfolio could be delivered in a customer’s cloud-premise, hyperconverged in their networks and integrated seamlessly with their cloud.

Almost all our software also runs very well on VMware’s vSphere platform. We’d love to renew our offer to work with VMware on AHV as well, for the sake of our joint customers, who during and after this recession, will continue to look for ways to save money with license-free virtualization.

Do you expect the make-up of Nutanix employees to change in terms of the type of skills you will hire during and post pandemic?

Last week, [global management consulting company] McKinsey published a very interesting article on how COVID-19 has become a B2B digital inflection point. The cycle of research-evaluate-order-reorder is going to turn upside down with this consumer-grade notion of self-service, i.e., an era of true cloud commerce. That is why our business is making such important strides in digital prospecting, virtual selling, and digital subscription renewals. Our entire product portfolio is now available on Google GCP via Nutanix Test Drive. Our prospects can go from banner ads to our demo site, and tinker with our products without ever calling us, until they self-select themselves for human touch.

Field marketing talent is increasingly focused on all things digital and virtual. Sellers are mastering virtual selling over video as we speak. Our business development, alliances, and channel talent is also orienting itself to the multi-cloud posture of the company going forward.

What about any changes to Nutanix’s R&D?

On the R&D side, our developers are deeply grasping the meaning of subscription economics, cloud engineering, and container-based microservices. Our newer products like Lifecycle Manager (LCM), Objects, and Prism Pro are completely based on Kubernetes containers and an agile delivery model. Most importantly, our Xi Cloud services are designed to be 24x7x365, and that is a huge shift towards a DevOps mindset, as we try to bring our signature Net Promoter Score of 90 to cloud SLAs of security, availability, and performance.

Nutanix was preparing for this transformation for a while, as you must have seen us fully committing to subscription and our Xi [product line including] Frame, Leap, Beam, and Clusters. Test Drive, the latest addition to our thinking, has the potential to change everything we do on the go-to-market side.

What is your message to Nutanix channel partners?

Just like we are at an inflection point in our business, so are our partners. They must think hard about knowing their customer and their customer’s digital journey during these extraordinary times. Work from home, disaster recovery and business continuity, and lift-n-shift to the public cloud are very important initiatives for their customers’ hands-free IT aspirations.

On work from home, we suggest our channel VARs build the muscle to sell end user computing (EUC) by learning from the Citrix M7 partners. Global system integrators such as Wipro, with their VirtuaDesk and Database as a-Service product lines, are also a great example to emulate on how to move fast. Or federal system integrators such as L3Harris who are going really deep with Nutanix Calm on application orchestration and containers. Our Desktop as-a-Service partners, those who sell Xi Frame, should work closely with Google and Google Cloud Platform on affordable desktop delivery, not just in education, but also in other verticals such as healthcare and public sector.

What should partners be doing in the sales trenches and customer-facing front right now?

The name of the game right now is speed: of learning and delivery. That is why our OEM partners -- especially HPE, Lenovo, and Dell VARs and VADs -- should look deeper at our FastTrack EUC program, which we launched recently to teach new partners how to sell, deploy, and manage EUC environments. Even though the large majority of our business is not VDI-based, we are known in this market for being a highly reliable and available solution for EUC for both Citrix and VMware Horizon deployments. And now with Frame, we have a multi-cloud desktop delivery service that works equally well with AHV on-prem. Note that with such a high Net Promoter Score, we make repeat business a breeze for our partners.

The channel has, and will continue to be, reinvented for cloud. Our DRaaS product, Xi Leap, for example, is one such service that is going to help with this channel reinvention. We’ve made disaster recovery so simple and so predictable, that our partners should always ask the customer for ‘fries’ when selling the ‘burger’. Partners who focus on the trifecta of services -- professional, managed, and cloud -- will have learned to work the whole body with us and our joint customers in this journey towards all things streaming. Speaking of trifectas, the thing that will create the most business tailwind for our partners will be building their Nutanix business around new workloads, new products in our portfolio, and new logos via our WoW [War on Whitespace] Partner Incentive Program. WoW will come in various formats over time. For now, let’s wow our customers with delight.

Do you expect these furloughs to impact Nutanix in either the short-term or long-term?

The company as a whole is an epitome of what [scholar and former trader and risk analyst] Nicholas Taleb calls, ‘Antifragile: Things That Gain From Disorder.’ In preparation for cloud, we’ve embarked on two business model transitions in the last three years, and our people have evinced an amazing appetite for what I call ‘long-term greed.’ Coming out of the COVID-19 crisis, we think we’ll be perfectly placed to be one of the largest, and honest, hybrid cloud subscription software companies in the world.

How are you handling the new work-at-home environment?

Time-offs are an ideal time to pause, make your mind wander, give it solitude to think, and bring back new ideas to life and the workplace. It’s unfortunate that we are having to do this, but we have to make the most of it now, between kids at home, parents, partners, significant others... and reading. I am writing during this week, as much as I am reading. I have carefully selected my work-from-home toolkit, between the high-rise table to monitors to zero-gravity recliner to a beautiful yet inexpensive handcrafted barstool from Etsy. I’ve also become a power user of MindNode, a mind map tool, Apple Pages, Shutterstock -- I hope my fellow Adobe board members aren’t reading this -- Things, Zoom, and of course my favorites, Pocket and Slack. Having said that, I do miss my office wall (photo above).