Tanium is a bit like the Uber of cyber-security companies. The California startup is good at what it does, commands an eye-popping valuation, and is led by a mercurial CEO whose aggressive tactics sometimes rub people the wrong way.
And like Uber, Tanium is taking its time going public. On Thursday, the company announced it is raising $100 million through the sale of common stock, which it will use to repurchase shares from one of its founders and to provide liquidity for early employees.
The new funding round is being led by TPG and gives Tanium, which sells tools that allow companies to monitor any device on its corporate network, a new valuation of $3.75 billion. The round is somewhat unexpected considering that the company had been expected to announce an initial public offering in the near future.
According to CEO Orion Hindawi, the purpose of the new round is to give the company extra time to fine tune its operations, and to let employees get familiar with selling stock away from the price gyrations that come with a public listing. The money will also come from Institutional Venture Partners, and from earlier investors, though not Andreessen Horowitz, which is Tanium’s largest and highest-profile backer.
In a phone interview, Hindawi also told Coins2Day that Tanium’s strong balance sheet, which includes $300 million in cash and investments, affords it the luxury of undertaking an IPO when it wants. He contrasted this with other high-profile tech companies whose financial situation forced them to go public before they were ready.
As for product strategy, Hindawi said Tanium will stay focused on creating technology that lets companies view every so-called endpoint on their network—from a desktop to a mobile phone to a virtual machine—and deploy security to them as they see fit. Under this model, Tanium clients can either add external security products from other vendors or ask Tanium to develop a customized one.
The approach has worked so far. In security circles, many people hold Tanium’s services in high regard. Its corporate culture, however, is controversial.
“We’re just not that cuddly”
In April, at a time when IPO rumors were bubbling, Tanium had a PR week from hell. A Bloomberg report claimed how Hindawi, in a bid to maintain total control, unceremoniously sacked long-time employees shortly before their stock was to vest. The report also included accounts of the CEO picking on employees about their weight and spreading rumors about their sexual habits or drug problems.
Meanwhile, the Wall Street Journal reported on an executive exodus at Tanium as well as a marketing scandal involving the company showing clandestine views of a hospital’s network to potential customers without the hospital’s permission.
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The alleged litany of bad behavior led some to speculate that Hindawi lacked the skills to manage the company without hands-on help from his father, David, who is the other co-founder and was instrumental in building Tanium.
Orion Hindawi responded by publishing an open letter in April acknowledging he can be too hard-edged and has had to apologize to people. On Wednesday, speaking to Coins2Day, he said the company culture is tough but is healthy and has emerged stronger from the controversies.
“We run a different style of company. We don’t market a ton and we’re not just not cuddly,” Hindawi said. We’re mission oriented and demanding—if you don’t work hard you don’t make it here. We run a company that looks a lot more like the Navy Seals [than a regular company].”
He added that, following the controversy, he phoned more than 150 of Tanium’s 400 clients, and that they are staying with the company. He also said speaking with his employees has made him more introspective, and that he never wants to be misconstrued as being aggressive. (Again, echoes of Uber’s Travis Kalanick).
In the wake of all this, the latest funding round might best be interpreted as a way for Tanium to take a breather, and reset for that IPO late this year or in 2018. Or later.
“We don’t need to change our culture. We have to choose who we want to be, and double down on what we want to be,” said Hindawi.