March 2, 2021

INFRMER

KEEPING YOU INFRMED

Tech CEO moves $ 9B cybersecurity company’s HQ to Seattle area, says SF is ‘not the city it was’


Tanium CEO Orion Hindawi recently moved the company’s headquarters to Kirkland, Wash. (Tanium Photo)

Orion Hindawi was born in the San Francisco Bay Area, and helped build two successful companies there. But the 40-year-old co-founder and CEO of Tanium – a fast-growing cybersecurity company valued at more than $ 9 billion – is done with his hometown.

Really done.

Earlier this year, Hindawi packed his bags and moved with his family to Seattle’s Laurelhurst neighborhood, along the shores of Lake Washington. His father David, a successful Silicon Valley entrepreneur who co-founded Tanium with Orion in 2007, joined him in Laurelhurst as well. And his sister – an emergency room doctor —bailed on the Bay Area for Bellevue, Wash.

Now, Hindawi is bringing the Tanium headquarters along with him.

The privately-held Andreessen Horowitz-backed company – which topped $ 430 million in revenue last year – just established its headquarters on the waterfront in Kirkland, a short drive across the Evergreen Point Floating Bridge from Seattle.

Tanium is starting small in the Seattle area. Last week, the company inked a lease for just under 7,000 square feet of office space on the fifth floor of the 3000 Carillon Point building. However, Hindawi tells GeekWire that he expects to “expand pretty materially” in the region, noting that he wouldn’t be surprised if the company occupied as much as 50,000 square feet in the next couple of years.

Hindawi considered other locations, including Denver, Austin and Nashville. But Washington state struck a chord with its diverse economic base, natural beauty, proximity to the Bay Area, moderate political environment and robust enterprise software talent mix.

“I like the community feeling here,” said Hindawi, noting that his next door neighbor is a college professor.

In the Bay Area, with nearly everyone connected to tech, that would never happen, he said. “It’s nice to have a little variety,” he added.

Bailing on the Bay Area

Hindawi also realized that the “mythology around Silicon Valley” no longer resonated with him. He cited the expense of operating there, and “some asymmetries in the way that the Bay Area works that just didn’t really work well for us.”

He added: “San Francisco is not the city it was 20 years ago.”

Tough words from someone who has never lived outside of the Bay Area, and dropped out of the University of California-Berkeley as a freshman in 1998 to help his dad grow enterprise security company BigFix, which was acquired by IBM in 2010.

But Hindawi says the Bay Area changed, and he now describes California as having a “real governance issue.” Pressed on his choice to leave his hometown rather than sticking around to help it, Hindawi counters: “Blind support for a place that makes you unhappy? That doesn’t actually seem like a great decision to me. ”

And what started as a personal move, sparked in part by the pandemic, quickly morphed into a prudent business decision. The company already employed executives in the Seattle area, including Chief Marketing Officer Chris pick, Vice President of Product Marketing Gautam Mehandru and Vice President of Global Brand and Communications Rachel Pepple.

So after moving to Seattle in June and implementing a work-from-anywhere policy, Hindawi decided it was best to formalize the headquarters relocation.

“The center of gravity had shifted from the Bay Area up to Seattle,” he said. “So it was kind of a recognition of something that had already happened.”

Prior to the move, Hindawi consulted with technology leaders in the Seattle area, and weighed locations on both sides of Lake Washington before settling on Carillon Point. He’s connected with Seattle tech luminaries like Smartsheet CEO Mark Mader and Madrona Venture Group’s Matt McIlwain. He also chatted with Gov. Jay Inslee, walking away impressed with what he described as more competent and balanced political leadership than what he encountered in California.

No incentives were provided as part of Tanium’s headquarters move, and Hindawi said he didn’t ask for any.

A mass exodus

The company is retaining its high rise office space on the waterfront in Emeryville, Calif., At least for now. However, Hindawi said it’s likely they will sublet a portion of the 65,000-square-foot space.

Tanium implemented a work-from-anywhere policy earlier this year, including the ability for employees to retain their pay no matter the geography they chose. That sparked what Hindawi called a “mass exodus from the Bay Area.”

Since June, 99 Tanium employees have left the Bay Area, or roughly 20% of its California workforce, choosing new locations such as Denver, St. Louis and Austin.

“We applaud that because they tend to be, and we’ve actually looked at this, a lot happier,” he said. The company now employs 167 people in the Bay Area, and 1,500 worldwide.

Tanium occupies three floors at its headquarters building near Oakland. The company is assessing if it needs that much space as workers leave the Bay Area. (Tanium Photo)

The fleeing of the Bay Area is playing out beyond Tanium, with tech executives like Dropbox CEO Drew Houston and Splunk CEO Douglas Merritt also departing. Thousands of Silicon Valley employees are following suit, recruiting their lives during the pandemic.

Residential vacancy rates have more than doubled in San Francisco since last year, according to The San Francisco Chronicle. An august postponement from Zillow described a San Francisco exodus with rents and home prices falling and housing inventory rising, a trend not seen in Seattle. In fact, a recent report by KUOW found that Seattle continues to attract newcomers at a rapid clip, with nearly a quarter of new residents tracked by United Van Lines hailing from California.

A Zillow graphic shows rising housing inventory levels in San Francisco.

A strong pool of engineering talent

With the Tanium headquarters shifting to the Seattle area, Hindawi anticipates a few more members of its team will pick the Pacific Northwest. But he’s quick to note that the success of a “remote first” company will be judged on whether employees can find success no matter the location they choose.

“We actually have to run a company where things like promotions and recognition are based on productivity and commitment, not on proximity,” he said. “So I’m OK with people not choosing Seattle. Some people won’t like the rain. Some people want to be closer to their family. Some people want a lower cost of living and that’s great. I’m actually agnostic to that. And so my answer would be, I don’t know that Seattle is perfect for everybody at Tanium. In fact, I’m pretty sure it’s not. And that’s OK, because I’m not going to force people to move here either. ”

Still, Hindawi sees an opportunity to mine for engineering talent in Seattle, a region that he says is unrivaled when it comes enterprise software expertise.

“I actually don’t think there’s any stronger pool of engineering talent globally than there is here,” Hindawi said. “So, yeah, absolutely I expect that we’re going to be hiring a good number of engineers and relatively quickly.”

A ‘hard-edged’ style

Of course, maintaining a strong corporate culture is no easy task with employees dispersed across the globe. And Tanium has encountered pushback to its culture in the past.

In a 2017 Bloomberg News article titled “Tanium’s Family Empire is in Crisis,” Hindawi faced intense criticism about executive departures, unwarranted firings tied to employees’ stock option holdings and, perhaps most damning, a culture in which the CEO denigrated employees.

In a written response to the Bloomberg story, Hindawi admitted that he could be “hard-edged” and that his intense drive to protect and serve customers resulted in a highly-demanding culture that at times created a “stressful environment.”

Hindawi said the move to Seattle has nothing to do with escaping the blistering portrayal in the Bloomberg piece.

Since the publication of the article – which Hindawi said he didn’t take personally and didn’t blame the reporter for writing – he says he has taken steps to change his approach and Tanium’s culture. The pandemic also forced changes, with Hindawi stressing communication and accessibility. A fresh slate of executives also helped usher in a new chapter, and Hindawi said he’s now more comfortable in his role.

“I think that’s made it a lot easier to run the company, because I’ve got super strong people around me who can give great advice,” he said. They’re also able “to actually run their functions better than I could, and better than I think a lot of people have in the past. And so that’s a huge luxury. ”

Taxes and a billionaire’s pledge

Tanium sells its security products to some of the world’s largest banks, retailers, manufacturers and healthcare companies. And the company also has strategic partnerships with Google Cloud and Salesforce, both of which have fast-growing engineering centers in the Seattle area.

Those alliances are helping Tanium make inroads in the crowded security market, as is the company’s unique software approach which former Microsoft executive and Andreessen Horowitz board partner Steven Sinofsky once described as “magic.”

On its current growth path, Hindawi said the 1,500-person company could employ about 2,000 people by the end of next year. Tanium scored $ 150 million in venture capital last month, providing rocket fuel for future growth. Total funding stands at more than $ 900 million.

The most recent round valued Tanium at more than $ 9 billion and also cemented Hindawi’s position on the Forbes billionaire list, with an estimated net worth of more than $ 1.5 billion.

In 2018, Orion and his wife Jackie signed the Giving Pledge, committing their fortune to “causes that can help the world around us be a safer and kinder place,” specifically issues related to public education and veterans affairs.

Of course, Washington state does not levy an income tax – a possible benefit for entrepreneurs like Hindawi with large stock holdings and compensation packages. However, Hindawi said the tax structure did not play a direct role in his decision to move.

“This is less about personal taxes for me,” he said. “But I do think Seattle and Washington state have much better governance than California. And that is a factor for me. ”

Exploring a new community during a pandemic is a bit bizarre. But Hindawi and his family seem to be enjoying their new home in Seattle. We concluded our interview the day after Thanksgiving with Hindawi noting that his family was planning to go “find the snow.”

Asked what he likes best about Seattle, Hindawi responded like a proud Pacific Northwesterner.

“If you get a chance to get on a boat and sit in Lake Washington and look around,” he said, “I think really there are very few places that are more beautiful.”




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