VMware's new CEO Raghu Raghuram explains how he plans to use his insider status to lead the company at a critical time of transition

• VMware announced former COO Raghu Raghuram as its new CEO on May 12, succeeding Pat Gelsinger.
• Raghuram must navigate the company through a time of transition, including its upcoming spinoff from Dell.
• He told Insider that VMware will focus on building cloud technology and partnering with other firms.
• See more stories on Insider’s business page.

When VMware’s new CEO, Raghu Raghuram, first joined the company, it was a five-year-old startup with less than $100 million in revenue. Over the course of his 18 years working on the firm’s products, it has swelled into a $69 billion public company with 34,000 employees and nearly $12 billion in annual revenue.

Raghuram, formerly the chief operating officer for products and cloud services, succeeds CFO and interim CEO Zane Rowe who was standing in since Pat Gelsinger left the company to head Intel in February. While some analysts speculated that VMware would hire an external CEO — such as an exec from Amazon Web Services or Microsoft — Raghuram told Insider in an interview that his longevity with the firm — his knowledge of customers, culture, and products — has equipped him with the skills to take the firm to the “next level.”

“The next phase of VMware’s growth and success is to build upon the foundation that we have built,” Raghuram told Insider. “What I bring to the table is a combination of continuity and change.”

Because of his longevity with the firm, Raghuram has historical context of how the firm shifted from its focus on virtual machines into a broad platform of services, but he still has plenty of heavy lifting ahead to help VMware navigate the challenges before it, including its decelerating growth and its upcoming spinoff from Dell, a deal that should close in the fourth quarter of 2021.

VMware’s top goal is to become a leader in multi-cloud, Raghuram said, where customers can easily use its software to run their applications on any (and as many) clouds as they want. The firm will “build aggressively” to get there, he added, and expects the journey to span years. 

“I’m familiar with all our technologies and decisions that we have made to our product portfolio,” Raghuram said. “Most importantly, I’m familiar with our customers. These are all some of the advantages I bring to the table.”

Raghuram is taking over during a time of great transition

Without a doubt, it’s a time of transition for VMware.

Raghuram will be taking the reins as VMware is set to spin out from Dell in a $9.7 billion deal to become an independent company. Meanwhile, the firm has experienced a series of executive departures in recent months, leaving analysts concerned that there “may be trouble brewing beneath the surface.” 

Former COO Sanjay Poonen, who many analysts speculated would be the next CEO, announced his departure from the company on May 12, the same day VMware announced Raghuram as its new CEO. Apart from Poonen, VMware lost its SVP of worldwide customer services, Jim Delia, to ServiceNow in June, chief customer officer Scott Bajtos to FinancialForce in July, COO Rajiv Ramaswami to Nutanix as its new CEO last December, and cloud management general manager Ajay Singh to Pure Storage in January. 

“Individual employees find some attractive opportunities that meet their career development needs,” Raghuram said of the upheaval. “That’s a testament to VMware’s culture. Across the board, VMware’s employees are highly sought after. At the same time, there are lots of new employees and new executives coming over as well.”

To lead the company through this next phase, Raghuram says he takes inspiration from former VMware CEO Paul Maritz, who is now chairman of VMware’s Pivotal. He recalls that Maritz often spoke about “servant leadership,” where the goal of the leader is to serve. 

“The role of the leader is to make everyone more successful,” Raghuram said. “That’s the model I subscribe to. That is the core of my leadership philosophy. The many elements of course are to paint a clear picture of what to do and why. I  want to make sure that the roadblocks in the way are very quickly being moved and people are collaborating well.”

As a long-timer at VMware, Raghuram says he’s also highly familiar with its culture, which is one of the company’s strengths. VMware is also “customer-centric” and “team-oriented” with a “why” culture, where people are open to asking questions about a decision, rather than expecting leaders to simply give top-down commands, he said. 

“It’s a collaborative culture,” Raghuram said. “Secondly, it’s one of the places of very, very high emphasis on innovation and technical innovation in particular.”

VMware will focus on cloud and developer technology

Raghuram says VMware plans to establish itself as a leader in cloud technology while continuing to collaborate with cloud providers like AWS and Microsoft. 

VMware plans to continue building on some strategies it’s already laid in place. It recently started a business unit called the Modern Applications Platform Business Unit to build cloud and developer applications that help customers update their technology. This business unit has seen “tremendous” growth, Raghuram said.

“That is an opportunity that we are pursuing to help our customers effectively become software companies,” Raghuram said.

VMware’s relationship with cloud giants is both cooperative and competitive, Raghuram said. While VMware faces some competition from the cloud providers, many of its products also complement them. 

“It’s a competitive environment,” Raghuram said. “The reason why the hyperscalers partner with us is we help customers become successful on their cloud. We help customers move to use VMware on top of their clouds.”

VMware may also do some M&A in the coming years, Raghuram said. It’s looking for companies that could help its customers build modern applications and run them on the cloud – which would complement VMware’s home-grown technology, Raghuram said.

Historically, VMware makes smaller acquisitions to complement its own products, Raghuram said, and he doesn’t expect any change in that pattern. 

Ultimately, he said, not so much has changed since he first joined that tiny startup 18 years ago. 

“We truly are one of the main companies that customers rely upon day-in and day-out for their digital transformation so that’s the big change ,” Raghuram said. “What has not changed, which is equally important, is the culture, the values, the technical orientation, the drive towards innovation, and the drive towards really zeroing in on what customers want and building what customers love.”

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