Red Hat 5-year plan: $5B in revenue, doubling work force

From $1 billion in 2012 to $2 billion in 2015 to $5 billion in 2020? That’s the Red Hat roadmap.

Red Hat (NYSE: RHT) just last year cracked $2 billion in revenue for the first time – a strong growth rate of 15 percent. But CEO Jim Whitehurst is far from satisfied. he wants $5 billion in five years – and he says the Hatters will have to double the size of their work force to get there.

Whitehurst wrote earlier this year that the “state of the Red Hat nation is secure.”

And after another robust quarter of growth as reported last month, Whitehurst forecast better days even though Wall Street reacted with a “ho, hum.”

Earlier this week in New Orleans at a meeting with Red Hat’s increasingly important channel sales partners, Whitehurst ramped up the Hatter hype even more with that $5 billion goal.

He acknowledged there are plenty of challenges to reaching that goal – not just competition from competitors but in scaling the company and in getting more from channel partners.

Keeping culture intact?

For example, how does Red Hat protect its highly valued Hatter culture if it doubles the size of its work force from 9,000 to 20,000?

“It’s not just a strategy problem, it’s a cultural problem,” Whitehurst said, according to Computer Dealer News. “You must change your culture. Technology is the easy part.”

He said staffing changes are the biggest challenge not only because of hiring more people but replacing those who leave.

“It’s the single largest challenge we have as a company,” Whitehurst explained. “Our entire competitive advantage is tied up in this capability that is tied directly to our culture. It’s daunting.”

Red Hat recruits heavily – and is poached for talent.

As Dave Yin reported for CRN:

“To get to a revenue target of $5 billion, Whitehurst claimed, the company would need the equivalent of some 20,000 employees. It currently sits at 9,000, and yet, he said that after factoring in attrition and promotions, the software vendor would need to hire some 17,000 people and make some 30,000 hiring decisions over the next five years. This also means that 75 per cent of current Red Hat employees will be gone in five years’ time.”

“Stake in the mud”

Whitehurst insists the $5 billion target is doable despite the obstacles.

“We had to put a stake in the mud somewhere so we can build plans to execute around that. To some extent it was a stake in the mud, but it’s very much informed on the size of the opportunity,” he told Channelnomics in an interview.

“Where we see the market going and how many of those things fit into technologies that we’re providing, really…we’re in, I think, an enviable position, [and] demand is not so much our problem, it’s our ability to scale into that demand.”

Red Hat also will have to bolster its channel efforts with some $4 billion in revenue to come from a group that now provides about $1.5 billion.

“We are not going to be able to scale this business at that level without working with you,” Whitehurst said.