EXCLUSIVE: VMware employee reveals details on CEO firing, exposes Tucci and Maritz confidential emails

Posted by virtualization.info Staff   |   Wednesday, July 9th, 2008   |  

With an astonishing move yesterday the VMware’s board of directors fired the company’s co-founder and CEO Diane Greene.
Greene was immediately replaced with a Microsoft veteran, Paul Maritz, just arrived at EMC after the acquisition of his startup: Pi.
The stock market punished the move with a 25% negative performance.
Additionally, Cisco, which invested $150 million in VMware last year, just retired $78 million.

virtualization.info continues to update a detailed chronology of the events.

So far the company didn’t provide any additional information about the story.
The employees were told to not talk with the press. But the shock and the frustration derived from this unexpected change lead the desire to give a voice to the passionate workforce behind VMware.

virtualization.info received an exclusive document from the a VMware employee, revealing some critical details and sentiments that are animating the company right now.
Additionally, the document exposes two letters sent to all employees from Joe Tucci, EMC CEO, and Paul Maritz, VMware new CEO.

- The employee insight:

No exact details have been given, but it seems like the general idea is that she was fighting to get the company spun off fully. This might have worked for us in a better way as EMC in some ways was a millstone in our progress. I don’t know the exact details but it seems like Joe Tucci was not ready to let go yet. BUT a large number of VMware employees are not happy. And it seems that soon people could start leaving in a mass exodus if they do not get straight answers from management. Having an ex-MS employee in a company full of engineers who are pro-FOSS is just a bad idea and sends A LOT of the wrong messages.

The general consensus is that layoffs at the management level will be happening and it will trickle down. Restructuring was a repeated phrase in the company all-hands as well as the departmental meeting I attended. The general impression is that a number of people will be going.

The all hands meeting (referenced in the below Official Announcements) pretty much dodged those questions which raised the mood and anger level quite a bit. Paul used plead the 5th and SOX on 2 occasions during the all-hands Q&A session, which further raised everyone’s suspicions that things were going to go south.

The impression is that the culture at the company is going to change as well when new management comes in to take over. The analysts around the web speculating on this are not too far off. People internally seem to agree with the sentiments. Considering that Paul was involved with Windows development, a lot of people are not too impressed internally seeing what Microsoft has produced in terms of software quality over the years he was there. Marketing and market circumstance were their big drivers which they no longer have.

This message basically confirms a couple of points which virtualization.info speculated on in its coverage so far:

  • Diane Green was working to sell VMware and finally unchain it from EMC
  • Her departure will eventually lead to a mass-exodus, possibly starting from her husband: Mendel Rosenblum, Chief Scientist at VMware

- The Joe Tucci, EMC CEO, email to the company:

As you may have heard by now, the VMware Board has decided to change the leadership of the company, effective this morning.

We are all thankful to Diane for her tireless efforts in building VMware into a world-class software company with a market leadership position. The Board is disappointed that after exploring different opportunities for Diane to continue to play a significant role in the company, we were not able to reach an agreement, and we all wish her success in her future endeavors.

Transitions are never easy, but I ask each of you to embrace this change. Our incoming CEO, Paul Maritz, has the leadership skills and experience to enable VMware to extend its technology and market leading positions. VMware is one of the few companies in technology that has been able to create a new industry. To take advantage of this opportunity and to continue to lead as a new industry evolves into a more mature market will require tremendous leadership and operational experience, especially in today’s tough market conditions. Without a doubt, the competition is increasing and the economy in some of our major markets is uncertain. But equally without a doubt, the market for VMware virtualization is expanding. These factors require the experience our new CEO brings to VMware.

Effective immediately, Paul Maritz is the new CEO of VMware. A leader in the software industry, Paul has decades of experience building one of the greatest franchises in software history, Microsoft Windows. In fact, Paul was instrumental as part of the core executive leadership team in building much of Microsoft’s success.

The Board and I believe Paul is the right CEO at the right time to take VMware to the next level of innovation and success and to achieve the vision for the company that Diane had from the beginning.

Please join me in welcoming Paul to his new role. I know I can count on all of you to give him your complete support through this transition and into VMware’s next era of growth.

- The Paul Maritz, new VMware CEO, email to the company:

First off, I want to thank Diane Greene for her leadership and the legacy she has built at VMware. I am honored by the opportunity to continue to grow the leadership position that VMware has in the industry.

As you may know from Joe Tucci’s email this morning, I have been in the software industry a long time – by now I am sure you all have Googled me so I won’t bore you with my resume, but would like to say that I am excited about the challenges & opportunities that a competitive environment brings.

My passions in life are building great software products and helping build great teams. My operational style will be different than that in a founder-led company. As such, I will call upon our leadership team to be more empowered in decision making, as well as drive down accountability and decision making at all levels in the company. I will be conducting a variety of technical and operational reviews with many of you to make sure I understand and fully appreciate things. I know these are time consuming and require preparation, so I ask for your patience, and promise to keep reviews to the minimum necessary.

Finally, it will take me far longer than I want to get to know all of you. So do not be shy in emailing me or saying hi in the halls as I get to know the VMware family. I don’t believe in formality of position – so please don’t hesitate to reach out if you have concerns or suggestions.

Obviously the two letters fail in addressing the immense number of questions around the Diane Green sack, and less than ever the emails fail in calming down the employees and avoid the massive departure expected by virtualization.info and confirmed by the employee email above.

Expect another remarkable loss today for VMW.



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