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How VCE created an amazing joint tech venture

Rob Enderle | Oct. 27, 2014
VCE is unique not only in how successful it is, but in that it is making an organizational shift not when failure is eminent but while it is still thriving, suggesting it has sidestepped the problems that might have derailed it.

partnerships
Credit: Thinkstock

VCE, the joint venture between VMware, Cisco, EMC and Intel is making a major organizational ownership shift. I remain fascinated with VCE both because it has been massively successful with an annual growth rate in the 50 percent range (fantastic for a company, unheard of in a joint venture) and because it was a creative way to successfully create a best-of-breed solution that actually was best of breed itself.

Both facts are unique -- generally joint ventures bog down because the related executives focus on announcing things and not on executing after the announcement. As a result, these joint ventures are lucky to break even due to lack of ability to execute. Instead they become a place where the partners dump underperforming employees or technologies.  

But no Joint Venture is sustainable forever. Things change, partners grow and conflicts arise.   Generally when this happens the joint venture, even if marginally successful, begins to fail, and if one of the partners buys the other out it typically happens too late to save the effort.  

VCE is unique not only in how successful it is, but in that when it is transitioning underneath one of the partners. It is making the move not when failure is eminent but while it is still successful, suggesting it has sidestepped the problems that might otherwise have occurred in the firm's future.

The Problem With Partnerships
There is an old joke and it goes like this "at the beginning of a partnership one partner has the money and the other has the experience, at the end of a partnership these two positions have swapped."   Having been through this personally I really don't find it funny.

Here is Silicon valley there are stories told about companies that have been historically horrid partners and how the relationships, when they came apart, were more like ugly public divorces than what you'd expect from public companies run by professionals. You get two or more entities run by very rich folks with surprisingly fragile egos and things can both go south and get expensive very quickly for the firms and their customers.  The Oracle/HP breakup was a vivid and very painful case in point.  

There was always a danger that even though VCE was very successful it would fall apart because of executive changes or changing competitive dynamics in the partner companies. I think all partnerships and joint ventures should have a "sell by date" that forces them to transition into something that has a better defined command and control structure.

VCE's Transition
In reality while there were four partners in VCE only two really counted: Cisco and EMC. VMware was subordinated to VCE and Intel simply provided funding and technical help to help the venture get started.  

 

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