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The $9 billion cybersecurity firm Tanium is facing a huge exodus over uncertainty about its IPO plans and business model

Tanium CEO Orion Hindawi.

  • Many employees have been leaving the cybersecurity firm Tanium.
  • Former employees say there was uncertainty over whether the company will ever have an IPO.
  • Tanium had also faced other issues, such as losing contracts in its military business, people say.
  • See more stories on Insider’s business page.

In April, employees at Tanium logged onto Zoom for a virtual town-hall meeting in which CEO Orion Hindawi had big news to share: The company had just hired a new chief financial officer – one tasked with officially exploring the possibility of an IPO.

The news was met with cheers – one person who was present recalled that the Zoom call’s chat was filled with exclamations like “yay!” or “yippee!” Some eagerly texted their former colleagues, as word spread quickly: After 14 years, Tanium was finally going public.

The announcement was a shock to many because Hindawi, who cofounded the company with his father, David, had always appeared adamantly opposed to taking his tightly controlled company public. As recently as early 2020 when the pandemic hit, Hindawi referred to Tanium’s private ownership structure as a “blessing.”

Hindawi did not explain what led to his change of heart about a public listing, according to the person on the call. But in the months since the April meeting, the elation those employees expressed has increasingly turned into wariness and disappointment.

In August, just a few months after Hindawi’s internal IPO announcement, Tanium’s marketing boss quit, and more than a dozen marketing staffers were subsequently laid off. A bitter legal fight with a rival company has exposed embarrassing internal messages about employee morale. And there’s been no concrete updates since April on the status of the IPO, let alone any sign of an S-1 filing that would make the company’s IPO plans official. Tanium did not respond to multiple requests for comment.

Some company insiders suspect the recent IPO talk might be just that – a “smoke screen” to obscure the challenges in the business and to keep employees from jumping ship. Former employees point to previous instances in which Hindawi has dangled the prospects of an IPO that never materialized, such as comments to the Financial Times in 2016 that a listing would take place within 18 months. Regardless of whether the company does go public, it’s clear that the confusion and uncertainty has taken its toll.

Now valued at over $9 billion, Tanium is a prominent player in a cybersecurity market that’s become red-hot as businesses of all sizes seek protection from the devastating hacks and ransomware attacks that regularly make headlines. Top-shelf investors like Andreessen Horowitz, Salesforce Ventures, and T. Rowe Price have poured roughly $1 billion of funding into Tanium.

But the company’s famously controlling family founders and growing business challenges have turned what should be one of Silicon Valley’s most celebrated public offerings into a case study of startup turmoil.

“Orion Hindawi will never take that company public,” a former employee said. “Those of us who know him know that Orion is not a post-IPO CEO.”

Tanium’s military ‘bedrock’ is cracking

The atmosphere at Tanium has become especially strained over the past year as Tanium’s business has hit a rough patch, people say.

In December, Tanium’s vaunted federal-government business suffered a big blow when the Army chose not to renew a $25 million contract. Other military contracts are at risk too, former employees said as the competition in the sector becomes more fierce. On top of that, Tanium’s two top federal executives had left and now work for the transportation-security startup Shift5.

Multiple tanks on a rail car.
The US Army chose not to renew its $25 million contract with Tanium in December.

“That sent a huge ripple across the company,” said a former employee, one of more than a dozen whom Insider spoke to for this story.

Tanium is considered a pioneer in “end-point security” – basically, protecting all of the devices an organization has on a network, like laptops, phones, and desktops, from cyberthreats. The company’s software has been part of nearly $200 million in Defense Department contacts over the years, according to USAspending, and the military business serves as a powerful seal of approval that helps Tanium win business from other customers.

“If you get these bedrock customers that are entrusted with our country’s national security and services, that makes it easier to sell to some of these other organizations,” another former employee said.

But while Tanium was ahead of the cybersecurity market a few years ago, it has “missed the boat” in going public, that former employee said. Increasingly it’s facing competitors like the cybersecurity company CrowdStrike.

Tanium generated $283.2 million in revenue for 2020, according to Gartner estimates, up a scant 2.5% year over year. By contrast, the overall security-software market grew 10.3% in 2020, reaching $49.7 billion in annual revenue. In the enterprise end-point protection platform business, Tanium’s market share shrank from 3.7% in 2019 to 3.2% in 2020, Gartner estimates.

Tanium devotes significant resources to keep customers happy – it spends about $250,000 on maintaining its relationship with executives of its customer Home Depot through charitable donations and networking dinners and lunches, Tyker Fagg, senior vice president of North America, testified in a recent lawsuit – but it has struggled to add new logos to its client roster, two former employees said.

Some former staffers in Tanium’s sales organization describe a job marked by long sales cycles, hard-to-meet sales quotas, and a brutal internal culture.

Tanium was meeting its financial goals on the backs of 20-30% of the salesforce, and the team got “limited support” from executives, a former employee said. Average sales cycles lasted 12 to 18 months, which means that salespeople “can go two years without a commission check,” according to another former employee.

Interactions with managers in the sales organization were often unpleasant, said another. “It was never a friendly call. It was, ‘What the fuck are you doing? Why isn’t this closing?'”

The Hindawis hold an ironclad grip over Tanium

Tanium’s cofounders, the Hindawis, represent an unusual father-and-son twist on the classic Silicon Valley startup story. Born in Baghdad to an Iraqi-Jewish family, David Hindawi immigrated to Israel as a child and later to the US, where he founded several companies, including BigFix, an IT firm that he later sold to IBM for $400 million.

The experience at BigFix, where Orion served as a senior executive, taught the two Hindawis to value control. Venture-capital investors owned a majority of BigFix shares, and the Hindawis “had a real challenge corralling the investors to do anything,” Orion Hindawi told Insider in 2017. When they launched Tanium together in 2007, they set up a multiclass stock structure that locked up their control. The father and son said in 2017 that they owned more than 50% of the company – and that’s still the case, according to a source.

People who have worked with the Hindawis describe two very hands-on managers with starkly different personalities. The father often chimes in on internal conference calls and says hello to employees in the office, while his son is known to keep his eyes fixed on the floor in the elevator without greeting others.

Orion Hindawi, the CEO of Tanium, wears sunglasses and walks outside with his hands in his pockets next to his wife at the Allen & Co conference in Sun Valley, Idaho.
Orion Hindawi, right, and his wife, Jackie, in 2021.

David Hindawi, who is the executive chairman, was famous for taking pride in personally interviewing job candidates while he was CEO and often talks about the importance of being a family. Orion has a less gentle touch. One person described him as a “control freak.”

Any discounts offered to customers during a sales pitch had to go through Hindawi, which slowed down deals, according to a former employee. It was always “Orion’s way or the highway,” recalled another Tanium ex-staffer.

A different source, who also worked at Tanium, recalled Orion getting on customer calls and telling the customer that they didn’t know what they were doing. “Orion always had what he believed was the right answer,” another former employee said. “There was really no alternative. He was right; the customer was wrong.”

As the Hindawis held tightly onto the reins of the company, they weren’t transparent about the company’s future – not even among top leadership, former employees say.

The cybersecurity industry is hungry for talent

As is the case at many Silicon Valley startups, the prospect of an eventual money-raining IPO is a powerful motivator for employees to stick around, even in less-than-ideal circumstances. But at Tanium, the decision to stay or leave is even more fraught because of a special claw-back clause in many of its employees’ equity contracts.

The provision allows Tanium to buy back a former employee’s vested shares for up to one year after their departure – whether the ex-employee wants to sell their shares or not. A Tanium spokesperson has previously said that the company determines a “fair market value” for its shares every three months and then decides whether to exercise the buyback clause. It exercised this clause twice in 2020.

None of this has stopped a talent flight in Tanium’s upper ranks, with more than half a dozen high-level departures in just the past year. In addition to the two federal-business executives – Ralph Kahn, the president of Tanium’s federal business and E. Egon Rinderer chief technology officer of the company’s federal-business group – Tanium co-CEO Fazal Merchant, CFO Jim Jackson, Chief Marketing Officer Chris Pick, and Vice President of Global Brand and Communications Rachel Pepple have all headed for the exits.

One former employee speculates that Hindawi brought up the possibility of an IPO in April only to “stop the bleeding.” But many current and former employees are skeptical that an IPO is really in the cards.

“Every six months, we would talk about an IPO,” another said. “They would say, ‘We’re looking at it.’ It was always intimated and never came into fruition. I don’t know if anyone believes it will happen any time soon.”

Orion Hindawi has even openly expressed his strong feelings against a public listing in the past, saying he didn’t like bankers and Wall Street and pointing to companies struggling in the public markets, former employees said.

Some Tanium insiders say the Hindawis are dragging their heels on an IPO because the pressures of leading a public company could threaten their near-total control of the company. They would also have to be more accountable to shareholders and make the company’s finances transparent.

“The founders were adamant about keeping the company private. They made it clear that they don’t want to be influenced by a public board,” a former employee said. “With Tanium, they wanted to hold the reins and control everything that goes on.”

It’s true that cybersecurity companies have a track record of staying private longer than other tech companies, but after 14 years, Tanium is well within the age range for an IPO, or some other liquidity event. At one point in 2019, a former employee told Insider, there were rumors internally that Cisco was interested in acquiring the company, though no such deal ever materialized.

Tanium’s VC investors, like Andreessen Horowitz and IVP, did not respond to requests for comment on their views on the company’s IPO or exit plans. Given the Hindawis’ majority control, there’s not much the VCs could do to pressure the company to go public.

Meanwhile, the cybersecurity industry is hungry for talent. Startups aren’t sitting still as they wage a ferocious talent war. It’s a hot market, and employees are leaving for other companies like Cybereason, SentinelOne, Shift5, and Wiz. (Tanium even sued Wiz after it hired four of its top sales representatives, accusing two of them of taking proprietary sales information.)

With no IPO in sight at Tanium, the only sensible option for some employees is to leave.

“We don’t believe Orion is ever going to take this to an IPO,” a former employee who left earlier this year said. “And if he’s not going to, what’s the point in staying?”

Got a tip? Contact this reporter via email at [email protected], Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request.



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