VMware Buys AirWatch for $1.54 Billion

Thanks for replying! That's what I love about HN - someone almost always has an expert/inside answer.

I gather when it's that fast and that big, you might not need that 10x multiple.

It's definitely not a total win - first, the return isn't actually ~50% given the $365M in installment payments and assumed unvested equity; second, your LPs committed capital to your fund expecting a certain IRR over the length of the fund (7 years i'm guessing? 10?). Getting them a low- to mid-double digit IRR over 1 year is nice, but it also means that they now have to spend money figuring out how to redeploy that capital for the next 6 years.

Hi mlyang, can I contact you next week to quickly talk about a product for the desktop virtualization market that I think have a good potential?

(Per above comment, I work at the VC that invested in Airwatch): Because Insight is a growth stage VC deploying a significant amount of capital with each investment (in AirWatch's case, it was 200M), it's aiming for virtually all hits (unlike an earlier stage VC that's aiming for 1 out of 10 of their portfolio co's to succeed wildly)-- which it almost always succeeds in achieving. This also means that it gets lower returns on its funds relative to an earlier stage VC. Given the growth stage focus, that's to be expected and its LPs prefer the reliable (and relatively substantial) upside given the fund sizes. AKA Insight's not dealing with 55%-100% losses on other investments.

That's only true if the investment was participating preferred equity (sometimes known as "double-dipping"); if it was convertible preferred equity then it's an either/or scenario (they choose between getting their liquidation preference, or converting to common equity and getting their pro rata %). Insight used to be big on participating prefered so I wouldn't be surprised if you're right, but things may have changed..

Never is ;-)

That's a really simplistic speculation. VMware management is considerably more measured than that. VMware has had an End-User-Computing units for years now. With more computing done on mobile and less on PCs, it stands to reason that VMware would like to move in that direction too for their EUC group, especially if the disruption upends the entrenched position Citrix has had on the PC.

From my point of view MDM is more and more getting legacy and most corporations have already chosen a MDM platform, MobileIron has to hurry to find a vendor who is late to this market - like Microsoft maybe?

Completely lapsed and left that out. Support is very cavalier. If you submit a web ticket, it can be days before they even look at it. A lot of problems are just brushed off, you're given a curt "its not a problem with our software" and that is that. I understand they are at the mercy of the device vendor when it comes to certain things, for example Apple cutting off device tracking of WiFi-only iPads.

I really dislike the blackbox aspect of AirWatch itself. You prep the servers, but they perform the install and the updates. You have to pay for updates out of a bank of paid hours. For example, you want to go from 5.5 to 5.6. If it takes an hour and a half, it is taken out of your bank. You also pay for every device you have checked into AirWatch. It just reeks of double-charging. You don't get charged if you have a problem stemming from a bug.

I install and maintain much more complicated software. I'd really rather they give me the update and if it goes awry then I'd call support. It runs on Windows server, it isn't rocket science.

The initial install support and training was sub-par, too. The same engineer that performs the install also gives you a basic rundown on the console. Very quick, and sometimes the best technical people shouldn't also train people on its usage.

That all being said, I have about 1200 devices in AirWatch. More or less I am the only person for the deployment and maintenance of these devices. I have very little complaints about the use of AirWatch, my job would be a lot more difficult without it.

You also need to keep in mind that this is an Atlanta-based company and not a Silicon Valley based one. The employees are likely to have worse contracts that what you'd find in the Bay Area, especially if the original and seed investors were local to the Atlanta region or Southeast. I know that term sheets from Raleigh-Durham investors are typically less favorable than out here in the Bay Area and I would expect the same in the Atlanta ecosystem.

In secondary funding markets, VCs have far more bargaining power. If you have real traction and are in those markets, you simply don't raise money there. You come out to the Bay Area instead where more VCs will compete to invest in you.