Everyone’s talking about them lately because the company acquired four Israeli startups in 2007 merged them all into one entity just a few weeks ago, renovated their Herzliya branch while they were at it. We visited and were impressed with the look inside
This post is a part of our “Israel Inside” feature series, where we take an in depth look inside large international tech companies with presence in Israel and try to learn how they leverage the resources of the Startup Nation to get ahead of their competition.
Not many people are aware just how prevalent it is for large high – tech companies to have major development centers in Israel. The small hi-tech powerhouse has a pool of talent and start-ups that attract attention from larger organizations from all around the world, with many of these startups becoming development centers for the larger organizations as part of buyout deals agreed upon by the two parties. In a series of articles titled A View From Inside, we’ll be visiting these startups turned R&D centers for a better understanding of exactly what role these companies are playing in the R&D of their parent organizations and how they fit in to the company’s global operations.
“Maybe we need to plaster our logo over everything like they did at Intel with Intel Inside”, they joked over at in VMWare when I told them that a lot of people (consumers mostly, rather than industry insiders) do not really know who VMWare is and what their wide spectrum of products offer.
VMWare is an international company that provides solutions for virtualization and cloud computing services to businesses of all sizes. The company, founded in 1998 by Diane Greene, Mendel Rosenblum, Scott Devine , Edward Wan and Edouard Bugnion, has offices all over the world, their corporate headquarters being located in Silicon Valley.
The company is best known for its virtualization tools: VMWare Workstation (the free VMware Player) first launched in 1999, allowing users to run multiple operating systems on a single computer, and which now allows users in an operating system to run another operating system on top of their base system, allocating resources from their hardware capacity (like RAM, disk space, etc.) to whichever system, and in whichever amount they see fit. VMWare Fusion enables users of OS X to run Windows applications on demand and to have the two systems sync and transfer data between themselves. But outside of the end consumer market, VMWare has dozens of products in the space of virtual data centers, cloud infrastructure, networking, information security, IT management and more.
Building a development center in Israel
In 2007, three years after VMware was acquired by EMC for $625M in cash, the company established their first branch in Israel and among the founders was Ophir Zamir, currently VMWare Israel’s Regional CTO. Ophir’s team was the first to handle customers from Israel and from Turkey, and with time the team grew to dozens of people handling customers throughout the EMEA region – Middle East and Africa.
Ofir relates that at the time of their founding the market was already well established, “Israeli customers have always been very important to large organizations. When we established our first office in Israel, the market was highly developed and very advanced technologically. Israelis are much more than just Early Adaptors, and in VMWare we understood that very well. Our primary goal in 2007 was to better cover the company’s business partners in the region and to build an ecosystem consisting of a range of other partners that would be able to deliver our technology directly to customers.”
It was a very successful initiative according to Ofir who relates how in 2007 20% of customers adopted virtualization solutions and in 2008 that number rose to 50%. “In the past, the Bank would need thousands of servers to run its banking infrastructure, today that number has shrunk to hundreds. This has a lot of ramifications but they all boil down to huge savings in time, money and resources. VMWare’s ability to produce such a server in a few hours has made the things that much easier.”
Number of strategic acquisitions in Israel
In 2008 the VMware made its first significant step in Israel when it acquired B-Hive in a transaction valued at over $50M. The acquisition gave VMWare access to B-Hive’s technology, mainly related to Application Performance Management such as tracking the performance of users, solving problems, automation of operations, transfer of applications to other servers etc. – to be included as part of VMWare’s product offering. Employees of the B-Hive along with the existing sales team became the core of the company’s Israeli development center.
In 2010, the company acquired VMWare nLayers in a round of purchases of products and companies made by the parent company, EMC, in a bid to incorporate nLayers technology, which automatically discovers complex applications within components on multiple servers – both virtual and physical. nLayers itself, it should be noted, was acquired by EMC four years ago and that deal was also estimated to be valued at around $50M. In June of 2011, VMware made another acquisition in Israel – Digital Fuel, which developed business management services for a SaaS models. The deals value was estimated to fall between $80-90M. As part of the transaction, the Company transferred one-third of their workers (about 50 in total) to VMWare’s development center in Israel.
VMWare’s most recent acquisition in Israel was in May of 2012 when the company acquired the Israeli Wanova for an estimated $90-100 M. In the acquisition the Haifa based employees of Wanova were all consolidated VMWare’s main development center. As part of the acquisition, Wanova’s Mirage solution became part of VMware’s product basket to provide Centralized Image Management and Persistent User Installed Applications For virtual desktops and physical computers. Following the recent acquisitions, VMWare’s development center is now home to close to 200 employees; 20 in sales and 160 in R&D. The company intends to recruit an additional 50 employees in for R&D by the end of the year.
Blue and White
Among VMWare’s various products developed in Israel, first and foremost is the Mirage, VMWare Israel’s pride and joy from their Horizon Suite. Mirage allows secure access to corporate information from any mobile device. This is actually the Desktop Image Management technology that separates the computer layers owned and managed by IT from endpoint users. The system effectively synchronizes the work environment of the user through the use of Snapshots to backup and store in the company’s data center, helping to minimize downtime should the servers go down for any reason, allowing IT to save time and resources in their fix when they need to collect user data before returning to the regulatory servers.
Another product developed entirely in Israel is the Navigator, part of a product from the company’s vCenter. The Navigator allows for the the automatic discovery of Application Services, the visual mapping of relationships and dependencies between applications and virtual computing, storage and network resources. The Navigator, as part of the vCenter, enables management, applications and infrastructure operations to better understand the effects of changes to the system and provides the option of rapid recovery in extreme cases to help minimize downtime of the servers for next time.
Let’s not forget the Hypiric, product offered as part of VMware’s vFabric that allows customers to find, fix and prevent performance problems in custom web applications. Whether they work on physical machines, virtual or cloud based infrastructures, Hypiric allows for the continuous monitoring of 50,000 metrics across 120 different technologies, providing administrators with all the visual tools to monitor and ensure the performance of the server.
Impact and innovation in the workplace
From conversations I had with company employees, you can tell that VMWare is an open and independent work environment very much based on Scrum and Agile. Employees are exposed to the heart of the IT field where the company’s most significant operations lie and that affect every industry. Every employee wields their own degree power and influence as opposed to being cliché cogs in the wheels of a large organization. “From a technological standpoint, we still have the same privileges that typical startup employees enjoy” relates one employee. “The reality is making quick decisions and promoting ideas quickly – something made possible thanks to our business partners and loyal customer base. The average engineer feels that they can affect and grow the company and its products. Unlike other companies we don’t operate by the book and the results come much faster because of it.”
The company also organizes a conference called VIIF, or VMWare Israel Innovation Fest, where employees take a break from their projects and connect to one of 11 other development groups for 48 hours. Together the groups develop a number of interesting ideas; some past examples being as an application for testing salary slips, a complimentary application to Waze, an application testing user interfaces, and so on. The ideas come from the employees themselves and a special panel rates the most popular ideas. “VMware is an organization that encourages such events even though it’s a big company” says another employee.
Privileges of a start-up, the resources of the organization
A source from nLayers, which was acquired by VMWare in 2010, told Geektime in an interview that the difference in pressure from working in a startup to working in the large company who bought that startup is small – but the experience is totally different: “The same pressure applies, that of feeling caught between the hammer and the anvil and going from sale to sale. In big companies the pressure is reflected in the push to meet Milestones and the need to follow through on various commitments to customers. But between the two, there isn’t much of a difference in the level of stress.”
“VMware Israel was built from 4 startups acquired over four years, after which they went on to build and develop new products from small dedicated teams within the company. Three years I worked here at VMWare and what’s special to me is that we were still able to maintain our original startup autonomy as nLayers. As a group, we have a unique character and yet there’s still something very fun, challenging, interesting and constructive to being part of a large organization; more resources and customers, more interesting and more frequent opportunities to get to know new technologies.”
In Wanova as well, acquired by VMWare in 2012, a similar picture is painted. A company source told Geektime: “We have a kind of autonomy within the company. VMWare took the people from Wanova and transferred them to VMWare as is, without any organizational change so that we continue to function as a cohesive group. There are benefits to working in a large company such as VMWare: You’re exposed to people on different levels, informing on different levels. In terms of products, you’re exposed to the source code at another level and actually see the root of the company’s products. Additionally, you have tremendous resources available to you with entire departments there to help you out with a specific application, as opposed to in a startup where the budget is small and there isn’t much room for extra help on any significant scale.”