Question of the Day: Tortoise or Hare?

With the roaring IPO this week of virtualization software company “VMWare”:http://www.vmware.com/, there can be no question that the company’s “cofounder and CEO, Diane Greene”:http://www.vmware.com/company/leadership.html, has earned what so many founders aspire to: strategic and financial success. VMWare’s marketcap is already north of $20 billion, valuing Greene’s hard-earned stake at $63 million. (The company’s shares trade under the ticker, “VMW”:http://finance.yahoo.com/q?s=VMW.)

But, as most of you know by now, Greene isn’t the only founder who made good off VMWare’s IPO on Monday. On Tuesday, a three-year-old venture backed competitor, “XenSource”:http://www.xensource.com/Pages/default.aspx was “acquired by Florida-based Citirx Systems for $500 million”:http://www.mercurynews.com/ci_6630304?source=rss. According to some analysts, this acquisition price equates to a valuation as high as *500x on Xen Source’s revenues,* estimated at just $1 million, “according to a Wall Street Journal Online report”:http://online.wsj.com/article/SB118718362916698432.html?mod=yahoo_hs&ru=yahoo today (behind paywall).

*So, you say, $20 billion vs. $500 million. No debate?*

Now conisder that Greene, 52, has been slogging it out in the virtualization space — which VMWare has been credited with forging — since 1998. And the long path to being publicly-traded included VMWare being acquired by EMC, and then spun out again. Read: headache for founders — so much change in control might also explain Greene’s comparatively modest remaining stake in her company of 1.13 million shares, per the S-1. (Not that $60 million is anything to shake a stick at; Greene grossed another $2.5 million on shares she put up for the offering Monday.). The Journal also reports that EMC paid $625 million for VMWare in 2004, a valuation at that time of just 7x on VMWare’s revenues — which makes Citrix Systems’ valuation of XenSource look richer still.

XenSource, as we said, was founded in 2004. I don’t think one needs to think too hard about the possiblity that XenSource’s founders, “Ian Pratt and Simon Crosby”:http://www.xensource.com/about/Pages/management.aspx are the clever hares here. According the startup’s site, XenSource has “5 venture backers”:http://www.xensource.com/about/Pages/investors.aspx through whom the startup raised $45 mililon. They’re all top tier (as in, aggressive, including KPCB and NEA and Accel), but according to reports by our friends at “VentureBeat”:http://venturebeat.com/2006/10/30/xensource-raises-15m-for-open-source-virtualization/, the company raised only three rounds of capital, which leads us to believe Ian and Simon still own a nice chunk of their shop.

Even if Ian and Simon only own 20% of the company today, they’re still ahead of Greene in terms of IRR. Moreover, now people are starting to say that VMWare is overvalued, and there is “criticism of the way the company handled its IPO in the firstplace”:http://techdirt.com/articles/20070814/124357.shtml (Found|READers, if you don’t already read “TechDirt”:http://techdirt.com/index.php, you should.) I know only a little about VMWare from friends who work there, but it’s enough to make me guess that those on the XenSource speed train might have had a bit more fun, too. But none of this is the point.

*All three founders have made good. But who fared better here? Put another way, which founder would you rather be?:*

*The trailblazing tortoise,* who sees a new opportunity, and is credited to history with helping to create a new industry?
*Or the clever hare,* who follows the lead of the trailblazer, capitalizing on the opportunity with more speed and apparent ease?

Tell us what you think.

Some notes:
VMware at a Glance (source: VMWare’s company website)
Founded: 1998; acquired by EMC in 2004; IPO in August 2007 (NYSE:VMW)
Revenues: $703.9 million (FY06)
Customers: 20,000+, including 100% of Fortune 100
Employees: 3,000+
Headquarters: Palo Alto, CA, USA
Locations: 40+ offices worldwide
Partnerships: 200+ hardware, software, network and storage companies; 5000+ resellers, distributors, and systems integrators